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 June 30, 2017March 31, 2018

 

OR

[  ]

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

 

 

 

For the transition period from __________ to ___________

Commission file number 0-8463

Commission file number 0-8463

 

PISMO COAST VILLAGE, INC.

(Exact name of registrant as specified in its charter)

California                                                                                                                                                                                          95-2990441

(State or other jurisdiction of                                                                                                                                                     (IRS Employer ID No.)

incorporation or organization)

165 South Dolliver Street, Pismo Beach, CA                                                                                                                                                  93449

(Address of Principal Executive Offices)                                                                                                                                                     (Zip Code)

(805) 773-5649

Registrant’s telephone number, including area code

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.          YES [X]            NO [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Subsection 232.405)232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).          YES [X]            NO [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

[  ] Large accelerated filer

[  ] Accelerated filer

[  ] Non-accelerated filer

[X] Smaller reporting company

 

1



Indicate by check mark whether the 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 Section 12, 13, or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.           

YES [  ]            NO [  ]

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.            1,775

 

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.

 

2



OVERVIEW

The Company continues to promote and depend upon recreational vehicle camping as the primary source of revenue. The rental of campsites to the general public provides income to cover expenses, complete capital improvements, and allow shareholders up to forty-five free nights camping annually. Additional revenues come from RV storage and spotting, RV service and repair, on-site convenience store, and other ancillary activities such as laundromat, arcade, and bike rental.

 

The Company has been fortunate not to have significant impact due to the current economy.economy volatility. 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. Total year-to-date site occupancy is down 0.16%up 6.8% compared to this time last year primarily due to earlier winter weather conditions.nice weather. Occupancy projections look equal to last year throughout the remainder of the fiscal year. Revenues from ancillary operations such as the store, arcade, laundromat, and bike rental are trending below last year, and management feels this is directly related to the economy, and that this trend will continue throughout the remainder of the fiscal year.

 

RV storage continuesand towing continue to be a majorprimary source of revenue for the Company, and has enjoyed growth of 7.3% for the quarter. At this time, RV Storage is considered at maximum capacity with a substantial waiting list.3.8% year-to-date. 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,Woodall’s, 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 2016.

 

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 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, 2017,March 31, 2018, increased $242,678,$189,949, or 13.8%13.6%, above the same period in 2016. Resort Income for the nine months ended June 30, 2017, increased $282,661, or 6.2%, above the same period ended June 30, 2016.2017. This increase in the quarter ending June 30, 2017, is due primarily toincome reflects a $227,691,$163,672, or 18.4%17.6%, increase in site revenue, due toand an increase of $16,515, or 3.8%, in RV storage and spotting activity. This increase in site revenue reflects good weather, and the timing of Spring Break an annual high occupancy period of two weeks, whichcompared to last year was during the previous quarter, and a site rental rate increase effective January 1, 2017. Also, there was an increase of $32,303, or 7.5%, in RV storage and towing activity. The increase inyear. Resort Operations Income for the nine-monthsix-months ended March 31, 2018, increased $311,737, or 11.0%, from the same period reflects increasesended March 31, 2017. This increase is due primarily to an increase of $255,982, or 13.4%, in site rental revenue which was driven by good weather and the timing of $217,728, or 6.9%, and $68,111, or 5.6%, inSpring Break. RV storage activity forincreased by $42,507, or 5.0%, compared to the reasons mentioned above. Management feels these increases in revenue reflect ongoing loyalty from return customers that appreciate the Resort’s location and commitment to quality guest services.previous year.

 

Seasonal fluctuations within this industry are expected, and management projects that income for the fourth quarter will be approximately 40% of its annual revenue. This approximation is based on historical information.

 

3



Income from retail operations for the three-month period ended March 31, 2018, increased $9,925, or 4.2%, above the same period in 2017. The General Store revenue was up $24,657, or 21.6%, and RV Service revenue decreased $14,372, or 12.1%, from the previous year. Income from Retail Operations for the three-monthsix-month period ending June 30, 2017,March 31, 2018, decreased $16,114,by $6,726, or 4.5%1.3%, below the same period in 2016. This decrease reflects a $24,467,ended March 31, 2017. The General Store was up $32,291, or 15.9%13.1%, decrease inand RV Service revenue, and anwas down $39,019, or 15.0%. The increase in the General Store revenue reflects increased resort occupancy and the timing of $8,355 or 4.2%. Income from Retail Operations for the nine-month period ending June 30, 2017, decreased by $116,908, or 12.1%, below the same period ended June 30, 2016. This reflects a $28,650, or 5.9%,Spring Break. The decrease in the General Store income, and an $88,258, or 18.4%, decrease in RV Service income. Management feels this decrease inprogram revenue from RV Service operation reflects the current shortageloss of trained technical staff. Management continues to place importance upon ongoing review of retail product mix, pricing, attention to service, and staff training. The Company anticipates similar activitypositive performance in both income from resort operations and retail operations through the remainder of fiscal year 2017.2018.

 

Operating expenses for the quarterthree-month period ending March 31, 2018, increased $52,577, or 4.3%, above the same period ended June 30, 2017, decreased $62,461,March 31, 2017. This increase in expense primarily reflects labor, employee benefits, travel and training, electricity, property tax, credit card processing, and television. For the six-month period ending March 31, 2018, operating expenses increased by $78,908, or 4.9%3.2%, fromabove the same period in 2016.2017. This decreaseincrease reflects labor, employee benefits, water and sewer, credit card processing, television, Wi-Fi, uniforms, and small equipment. Management continues to review and scrutinize expenses in order to maximize efficiency and profitability. Due to the age of the Resort, the Company is undertaking maintenance activity that is considered necessary in order to continue providing quality facilities and services. Some of these projects include road repair, utility improvements, landscaping, and building repair.

Cost of Goods Sold expenses, as a percentage of retail income for the three-months ended March 31, 2018, are 48.6% compared to 43.2% for the same period in 2017. For the six-months ended March 31, 2018, Cost of Goods Sold expenses were 46.5 % compared to 42.3% the previous year. These levels are well within the guidelines established by management for the individual category sales of RV supplies and General Store merchandise.

Interest Expense for the three-months ended March 31, 2018, is $2,395, compared to $18,777 for the same period in 2017. For the six-month period ended March 31, 2018, compared to the same period in 2017, interest expense iswas $4,803 and $38,865, respectively. This expense primarily a resultreflects financing for the purchase of reduced tree maintenanceadditional RV storage properties that closed escrow January 11, 2006, April 6, 2006, and March 5, 2008. The note for financing the RV Storage properties was paid off in September 2017.

Income before provision for income tax for the three-month period ended March 31, 2018, increased by $144,294, reflecting increased total income compared to the previous year workers’ compensation, and repairs and maintenance. Operating expenses for the nine-month period ended June 30, 2017, decreased $78,273, or 2.1%, from the same period in 2016. This decrease is primarily due to reduced tree maintenance, workers’ compensation, interest, and garbage expense.

Cost of Goods Sold for 2017 are within projected levels at 43.6% of retail sales for the quarter and 42.8% year-to-date. Cost of Goods Sold for 2016 was 39.2% and 41.2%, respectively.

Interest Expense for the three-month and nine-month periods ended June 30, 2017, is $13,086 and $51,951, respectively, compared to $25,704 and $77,641 the previous year. This decrease in interest expense reflects the current interest rate, and the Company’s decision to make accelerated payments towards the note.

Net Income for the quarter ending June 30, 2017, increased by $271,293, or 120.0%, compared with the same period ending June 30, 2016. This quarterly increase in Net Income is primarily due to increased resort operations revenue, decreased operating expenses, and decreased interest expense. Net IncomeFor the six-months ended March 31, 2018, income before provisions for the nine-months ending June 30, 2017,income tax increased by $166,437, or 30.0%, compared$237,414, reflecting increased total income and decreased interest expense. Revenues during this period are directly attributed to and are consistent with the same period ending June 30, 2016. This increase in Net Income isseasonal occupancy of a result of an increase in resort operations revenue, decrease in cost of goods sold, and a decrease in operating expenses and interest. The last quarter of 2017 is expected to provide adequate resources for continuing business and provide for planned capital expenditures.tourist-oriented business.

 

Management has introduced various marketing promotions with reducedThe Company recognized an income tax benefit of $105,250 compared to expense of $192,000 due to changes in the Federal tax law effective January 1, 2018.

Upon review of operational expenses, occupancy, and competition, the Board of Directors may approve adjustments to the nightly site rental rates to increase revenues during low occupancy periods. However, dueor towing and storage rates. 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 asat 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.

 

4



LIQUIDITY

The Company's current cash position as of June 30, 2017,March 31, 2018, is $3,376,892,$3,337,288, which is 41.5%8.5% more than the same position in 2016.2017. This increase is primarily due to increased revenues, decreased operating expenses,an increase in rental deposits and timing ofdecrease in capital expenditures. The cash balance increased $760,222$525,522 from fiscal year ended September 30, 2016,2017, due to increasedincrease in rental deposits.deposits and timing of capital expenditures. The present level of cash is being maintained in anticipation of large capital expenditures inexpenditures. Management is planning and implementing long-term renovations to the upcoming fiscal year,Resort property, which includes redesigning sites and utilities to accommodate the needs of modern recreational vehicles and replacing restroom buildings. The Company has also maintained a new RV service and repair facility.line of credit of $500,000 to insure funds will be available, if required.

 

4


Accounts Payablepayable and accrued liabilities increased $54,561 to an amount of $236,541 for June 30, 2017, compared to$39,159 above the same period ending 2016. This increase was primarily due tolast year and decreased $20,977 since the 2017 fiscal year end, which reflects a timing of payment of monthly liabilities.capital projects and accrued property taxes. All undisputed payables have been paid in full according to the Company's policy.

 

Accounts Receivable forWorking capital increased to $1,358,578 at the period ending June 30,end of the second quarter of fiscal year 2018, compared with $861,070 at the end of fiscal year 2017, increased $15,264 above June 30, 2016, and reflects the increase in our annual RV storage business.$960,958 at quarter end March 31, 2017.

 

The Company has consistently demonstrated an ability to optimize revenues developed from Resortthe resort and Retail Operationsretail operations during the summer season. During other lessHistorically the Company, because of its seasonal market, has produced 60% to 65% of its revenue producing periods, RV storage spaceduring the third and site rentalsfourth quarters of the fiscal year, with more than 40% being produced during the fourth quarter. The third and fourth quarters' occupancies are paid for in advance and used for Resort improvements and cash reserves. The Company has a revolving lineexpected to be consistent with that 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.past years.

 

CAPITAL RESOURCES AND PLANNED EXPENDITURES

The Company plans capital expenditures of approximately $900,000 in fiscal year 20172018 to further enhance the resort facilities and services. These projects include building a new RV Service and Repair facility, purchase of a new RV storage tow vehicle, purchase of new vehicles for maintenance, security,resort surveillance upgrade, and RV Service, upgrade RV storage security, and repairinstall HVAC in the Overlook ramp.General Store. Funding for these projects is expected to be from normal operating cash flows and, if necessary, supplemented with outside financing. These capital expenditures are expected to increase the resort’s value to its shareholders and the general public.

 

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

5


 

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, 2017,March 31, 2018, 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, 2016.2017.

 

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-monthssix-months ended June 30, 2017,March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

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

 

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

Not Applicable

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable

 

ITEM 5. OTHER INFORMATION

Not Applicable

 

6



ITEM 6. EXHIBITS

 

Exhibit No.

Description of Exhibit

Sequential

Page Number

 

 

 

27

Financial Data Schedule

 

 

 

 

99

Accountant’s Review Report

 

 

 

 

31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Terris Hughes, President and Chairman of the Board)

 

 

 

 

31.2

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

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

 

 

 

 

31.3

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

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

 

 

 

 

32.1

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

(Terris Hughes, President and Chairman of the Board)

 

 

 

 

32.2

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

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

 

 

 

 

32.3

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

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

 

7




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:

Date:          May 14, 2018

Signature:   /s/ TERRIS HUGHES                                                                      

Terris Hughes, President and Chairman of the Board

Date:          May 14, 2018

Signature:   /s/ WAYNE HARDESTY                                                                   

Wayne Hardesty, V.P. - Finance/Chief Financial Officer

(principal financial officer and principal accounting officer)

Date:          May 14, 2018

Signature:   /s/ JAY JAMISON                                                                            

August 11, 2017

Signature:

/s/ TERRIS HUGHES

Terris Hughes, President and Chairman of the Board

Date:

August 11, 2017

Signature:

/s/ WAYNE HARDESTY

Wayne Hardesty, V.P. - Finance/Chief Financial Officer

(principal financial officer and principal accounting officer)

Date:

August 11, 2017

Signature:

/s/ JAY JAMISON

Jay Jamison, General Manager/Chief Executive Officer

(principal executive officer)

 

8



REPORT OF INDEPENDENT REGISTERED

 

PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Pismo Coast Village, Inc.

165 South Dolliver Street

Pismo Beach, California 93449

 

We have reviewed the accompanying balance sheets of Pismo Coast Village, Inc. (Company) as of June 30,March 31, 2018 and 2017, and 2016, and the related statements of incomeoperations and retained earnings and cash flows for the three and nine-monthsix-month periods ended June 30, 2017March 31, 2018 and 2016.2017. These interim financial statements are the responsibility of the Company's management.

 

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

 

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

 

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheet of the Company as of September 30, 2016,2017, and the related statements of incomeoperations and retained earnings, and cash flow for the year then ended, and in our report dated November 12, 2016,15, 2017, we expressed an unmodifiedunqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of September 30, 2016,2017, is fairly stated, in all material respects.

 

 

BROWN ARMSTRONG ACCOUNTANCY CORPORATION

 

Bakersfield, California

August 11, 2017May 14, 2018

 

9


 

PISMO COAST VILLAGE, INC.

BALANCE SHEETS

JUNE 30, 2017 AND 2016 AND SEPTEMBER 30, 2016

PISMO COAST VILLAGE, INC.

BALANCE SHEETS

MARCH 31, 2018 AND 2017 AND SEPTEMBER 30, 2017

PISMO COAST VILLAGE, INC.

BALANCE SHEETS

MARCH 31, 2018 AND 2017 AND SEPTEMBER 30, 2017

June 30,

2017

(Unaudited)

September 30,

2016

(Audited)

June 30,

2016

(Unaudited)

    March 31,

2018

  (Unaudited) 

September 30,

2017

     (Audited)   

   March 31,

2017

 (Unaudited) 

ASSETS

    March 31,

2018

  (Unaudited) 

September 30,

2017

     (Audited)   

   March 31,

2017

 (Unaudited) 

ASSETS

Current Assets

Cash and cash equivalents

$

3,376,892

$

2,616,670

$

2,387,331

Cash and cash equivalents

$

3,337,288

$

2,811,766

$

3,075,801

Accounts receivable

27,181

42,327

11,917

15,732

21,261

18,976

Inventory

207,835

191,229

228,888

Inventories

215,535

191,023

197,280

Prepaid income taxes

9,300

156,200

223,900

277,800

               -

203,600

Prepaid expenses

10,644

23,745

10,621

 

46,914

 

19,976

 

39,283

Deposits

 

3,611

 

-

 

32,592

Total current assets

3,635,463

3,030,171

2,895,249

3,893,269

3,044,026

3,534,940

Pismo Coast Village Recreational Vehicle

Resort and Related Assets –

Net of accumulated depreciation and amortization

14,683,452

14,827,813

14,893,971

Property and equipment

Net of accumulated depreciation

14,625,671

14,725,872

14,700,319

Other Assets

1,941

3,688

4,271

 

-

 

-

 

2,524

Total Assets

$

18,320,856

$

17,861,672

$

17,793,491

$

18,518,940

$

17,769,898

$

18,237,783

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Current Liabilities

Accounts payable and accrued liabilities

$

236,541

$

266,482

$

181,980

$

246,773

$

267,750

$

207,614

Accrued salaries and vacation

80,684

285,679

84,495

87,475

326,082

77,681

Rental deposits

1,980,097

1,340,592

1,916,798

2,158,472

1,488,886

2,158,853

Income taxes payable

-

52,600

-

Current portion of note payable

841,986

116,048

118,829

-

-

99,933

Current portion of capital lease obligations

 

36,211

 

39,856

 

41,438

 

41,971

 

47,638

 

29,901

Total current liabilities

3,175,519

2,048,657

2,343,540

2,534,691

2,182,956

2,573,982

Long-Term Liabilities

Long-term deferred taxes

799,700

846,200

823,300

Note payable, net of current portion

-

1,315,842

1,340,126

Deferred taxes

466,700

810,600

822,800

Note Payable, net of current portion

-

-

974,320

Capital lease obligations, net of current portion

 

70,606

 

98,034

 

106,820

 

112,977

 

131,101

 

89,075

Total Liabilities

 

4,045,825

 

4,308,733

 

4,613,786

 

3,114,368

 

3,124,657

 

4,460,177

Stockholders’ Equity

Common stock – no par value, 1,800 shares

Issued, 1,775 and 1,775 shares outstanding at

June 30, 2017 and 2016, respectively

5,569,268

5,569,268

5,569,268

Common stock – no par value, 1,800 shares

Issued, 1,775 and 1775 shares outstanding at

March 31, 2018 and 2017, respectively

5,569,268

5,569,268

5,569,268

Retained earnings

 

8,705,763

 

7,983,671

 

7,610,437

 

9,835,304

 

9,075,973

 

8,208,338

Total stockholders’ equity

 

14,275,031

 

13,552,939

 

13,179,705

 

15,404,572

 

14,645,241

 

13,777,606

Total Liabilities and Stockholders’ Equity

$

18,320,856

$

17,861,672

$

17,793,491

$

18,518,940

$

17,769,898

$

18,237,783

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

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

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

 

10


 

PISMO COAST VILLAGE, INC.

STATEMENTS OF INCOME AND RETAINED EARNINGS

(UNAUDITED)

THREE AND NINE MONTHS ENDED JUNE 30, 2017 AND 2016

PISMO COAST VILLAGE, INC.

STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

(UNAUDITED)

THREE AND SIX MONTHS ENDED MARCH 31, 2018 AND 2017

PISMO COAST VILLAGE, INC.

STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

(UNAUDITED)

THREE AND SIX MONTHS ENDED MARCH 31, 2018 AND 2017

Three Months

Ended June 30,

Nine Months

Ended June 30,

Three Months

Ended March 31,

Six Months

Ended March 31,

2017

2016

2017

2016

2018

2017

2018

2017

Income

Resort operations

$

1,995,578

$

1,752,900

$

4,841,724

$

4,559,063

$

1,581,566

$

1,391,617

$

3,157,883

$

2,846,146

Retail operations

 

338,218

 

354,332

 

845,611

 

962,519

 

245,582

 

235,657

 

500,667

 

507,393

Total income

 

2,333,796

 

2,107,232

 

5,687,335

 

5,521,582

 

1,827,148

 

1,627,274

 

3,658,550

 

3,353,539

Cost and Expenses

Operating expenses

1,206,474

1,268,935

3,682,865

3,761,138

Operating expenses

1,263,620

1,211,043

2,555,299

2,476,391

Cost of goods sold

147,540

138,786

362,242

396,384

119,347

101,754

232,901

214,702

Depreciation and amortization

 

105,169

 

105,392

 

312,895

 

310,849

 

106,887

 

104,444

 

213,742

 

207,726

Total cost and expenses

 

1,459,183

 

1,513,113

 

4,358,002

 

4,468,371

 

1,489,854

 

1,417,241

 

3,001,942

 

2,898,819

Income from Operations

 

874,613

 

594,119

 

1,329,333

 

1,053,211

 

337,294

 

210,033

 

656,608

 

454,720

Other Income (Expense)

Interest and dividend income

1,098

1,017

3,214

3,536

Interest/dividend income

1,146

495

2,276

2,116

Interest expense

(13,086)

(25,704)

(51,951)

(77,641)

(2,395)

(18,777)

(4,803)

(38,865)

Loss on disposal of fixed assets

-

-

(1,304)

(1,551)

 

-

 

-

 

-

 

(1,304)

Total other income (expense)

 

(11,988)

 

(24,687)

 

(50,041)

 

(75,656)

 

(1,249)

 

(18,282)

 

(2,527)

 

(38,053)

Net Income Before Provision for

Income Tax

862,625

569,432

1,279,292

977,555

Income Before Provision for Income Tax

336,045

191,751

654,081

416,667

Provision for Income Tax Expense

365,200

343,300

557,200

 

421,900

Income Tax (Expense) benefit

 

241,650

 

(79,600)

 

105,250

 

(192,000)

Net Income

$

497,425

$

226,132

 

722,092

 

555,655

$

577,695

$

112,151

759,331

224,667

Retained Earnings – Beginning of Period

7,983,671

7,245,681

 

9,075,973

 

7,983,671

Redemption of Stock

-

-

-

(190,899)

Retained Earnings – End of Period

$

9,835,304

$

8,208,338

Retained Earnings – End of Period

$

8,705,763

$

7,610,437

Net Income Per Share

$

280.24

$

127.40

$

406.81

$

313.05

$

325.46

$

63.18

$

427.79

$

126.57

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

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

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

 

11


 

PISMO COAST VILLAGE, INC.

STATEMENTS OF CASH FLOWS (UNAUDITED)

NINE MONTHS ENDED JUNE 30, 2017 AND 2016

2017

2016

Cash Flows From Operating Activities

Net Income

$

722,092

$

555,655

Adjustments to reconcile net income to net

    cash provided by operating activities:

Depreciation and amortization

$

312,895

$

310,849

Decrease in accounts receivable

15,146

31,999

(Increase) in inventory

(16,606)

(38,446)

(Increase) Decrease in prepaid income taxes

146,900

(223,900)

Decrease in prepaid expenses

13,101

18,413

(Increase) in Deposits

(3,611)

(32,592)

(Decrease) in accounts payable and

    accrued expenses

(29,941)

(42,659)

(Decrease) in accrued salaries and vacation

(204,995)

(199,931)

Increase in rental deposits

639,505

655,607

(Decrease) in Income taxes payable

-

(50,700)

(Decrease) in long term deferred

    income taxes

 

(46,500)

 

(1,600)

Total adjustments

 

825,894

 

427,040

Net cash provided by operating activities

1,547,986

982,695

Cash Flows Used in Investing Activities

Capital expenditures

(168,091)

(251,161)

Loss from sale of assets

 

1,304

 

1,551

Net cash used in investing activities

(166,787)

(249,610)

Cash Flows from Financing Activities

Redemption of Stock

-

   

(216,000)

Borrowings (payments) on notes payable, net

 

(620,977)

 

(365,561)

Net cash provided by (used in) financing activities

 

(620,977)

 

(581,561)

Net increase in cash and cash equivalents

760,222

151,524

Cash and Cash Equivalents – Beginning of

    Period

 

2,616,670

 

2,235,807

 

Cash and Cash Equivalents – End of Period

$

3,376,892

$

2,387,331

Schedule of Payments of Interest and Taxes

Cash paid for interest during the period

$

51,951

$

77,641

Cash paid for income taxes during the period

$

456,759

$

649,000

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

PISMO COAST VILLAGE, INC.

STATEMENTS OF CASH FLOWS (Unaudited)

SIX MONTHS ENDED MARCH 31, 2018 AND 2017

2018

2017

Cash Flows From Operating Activities

Net Income

$

759,331

$

224,667

Adjustments to reconcile net income to net
   cash provided by operating activities:

Depreciation and amortization

$

213,742

$

207,726

Decrease in accounts receivable

5,529

23,351

(Increase) in inventory

(24,512)

(6,051)

(Increase) in current deferred taxes

-

(23,400)

(Increase) in prepaid income taxes

(277,800)

(47,400)

(Increase) in prepaid expenses

(26,938)

(15,538)

(Decrease) in accounts payable and
   accrued liabilities

(20,977)

(58,868)

(Decrease) in accrued salaries and vacation

(238,607)

(207,998)

Increase in rental deposits

669,586

818,261

(Decrease) income taxes payable

(52,600)

-

(Decrease) deferred taxes

 

(343,900)

 

-

Total adjustments

 

(96,477)

 

690,083

Net cash provided by operating activities

662,854

914,750

Cash Flows From Investing Activities

Capital expenditures

(113,540)

(80,371)

Loss on sale of assets

 

-

 

1,304

Net cash used in investing activities

(113,540)

(79,067)

Cash Flows from Financing Activities

Principal payments on long term debt

 

(23,792)

 

(376,552)

Net cash used in financing activities

 

(23,792)

 

(376,552)

Net increase in cash and cash equivalents

525,522

459,131

Cash and Cash Equivalents – Beginning of Period

 

2,811,766

 

2,616,670

Cash and Cash Equivalents – End of Period

$

3,337,288

$

3,075,801

Schedule of Payments of Interest and Taxes

Cash paid for income tax

$

499,050

$

262,759

Cash paid for interest

$

4,803

$

38,865

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

 

12



PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

JUNE 30,MARCH 31, 2018 AND 2017 AND 2016 (Unaudited) AND SEPTEMBER 30, 20162017 (Audited)

NOTE 1 – NATURE OF BUSINESS

Nature of Business

 

Pismo Coast Village, Inc. (Company) is a recreational vehicle camping resort. Its business is seasonal in nature with the fourth quarter, the summer, being its busiest and most profitable.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Revenue and Cost Recognition

 

The Company’sCompany's revenue is recognized on the accrual basis as earned based on the date of stay. Expenditures are recorded on the accrual basis whereby expenses are recorded when incurred, rather than when paid.


Cash and Cash Equivalents


For purposes of the statement of cash flows, the Company considers all highly liquid investments, including certificates of deposit with maturitiesan original maturity of three months or less when purchased, to be cash equivalents. As of March 31, 2018, September 30, 2017, and March 31, 2017, the Company had $6,061, $11,444 and $11,435 of cash equivalents.

 

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 JuneMarch 31, 2018, September 30, 2017, September 30, 2016, or June 30, 2016.and March 31, 2017.

 

InventoryInventories

 

Inventory has been valued at the lower of cost or market on a first-in, first-out basis. Inventory is comprised primarily of finished goods in the general storeGeneral 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

5 to 40 years

Furniture, fixtures, equipment and leasehold improvements

5 to 31.5 years

Transportation equipment

5 to 10 years

 

Earnings (Loss) Per Share

 

The earnings (loss) per share reported on the financial statements are based on the 1,775 shares outstanding as of the balance sheet dates.issued and outstanding. The financial statements report only basic earnings per share, as there are no potentially dilutive shares outstanding.

 

13



PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF JUNE 30,MARCH 31, 2018 AND 2017 AND 2016 (Unaudited) AND SEPTEMBER 30, 20162017 (Audited)

PAGE 2

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


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 $39,454$19,132 and $28,516$33,007 for the ninesix months ended June 30,March 31, 2018 and 2017, and 2016, respectively, and $6,447 and $5,205 for the three months ended June 30, 2017 and 2016, respectively. Advertising expense was included in operating expenses on the statement of operations.

 

Concentration of Credit Risk

 

At JuneMarch 31, 2018, September 30, 2017, September 30, 2016, and June 30, 2016,March 31, 2017, the Company had cash deposits of $1,471,482, $725,895,$1,452,818, $946,168, and $598,133, respectively,$1,206,089 in excess of the $250,000 federally insured limit with Pacific Premier Bank (formerly Heritage Oaks Bank)., respectively. However, because Pacific Premier Bank is a member of the Certificate of Deposit Account Registry Service (CDARS), large deposits are divided into smaller amounts and placed with other FDIC insured banks which are also members of the CDARS network. Then, those member banks issue CDs in amounts under $250,000, so that the entire deposit balance is eligible for FDIC Insurance.

Reclassificationsinsurance.

 

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.

Subsequent Events

Events subsequent to June 30, 2017 have been evaluated through August 11, 2017, which is the date the financial statements were available to be issued. Management did not identify any subsequent events that require disclosure.

Income Taxes

 

The Company uses the asset-liability method of computing deferred taxes in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Income Taxes topic. FASBtopic 740. ASC 740 requires, among other things, that if income is expected for the entire year, but there is a net loss to date, a tax benefit is recognized based on the annual effective tax rate.

 

14


PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND 2016 (Unaudited) AND SEPTEMBER 30, 2016 (Audited)

PAGE 3

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes (continued)

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, 2017,March 31, 2018, 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 DecemberMarch 31, 2018.2019. Although the Company does not maintain any uncertain tax positions, tax returns remain subject to examination by the Internalinternal Revenue Service for fiscal years ending on or after September 30, 20132014 and by the California Franchise Tax Board for fiscal years ending on or after September 30, 2012.2013.

14



PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2018 AND 2017 (Unaudited) AND SEPTEMBER 30, 2017 (Audited)

PAGE 3

NOTE 3 – PISMO COAST VILLAGE RECREATIONAL VEHICLE RESORT AND RELATED ASSETSProperty and Equipment

 

At JuneMarch 31, 2018, September 30, 2017, September 30, 2016, and June 30, 2016,March 31, 2017, property and equipment included the following:

June 30,

2017

September 30,

2016

June 30,

2016

March 31,

2018

September 30,

2017

March 31,

2017

Land

$

10,394,746

$

10,394,746

$

10,394,746

$

10,394,746

$

10,394,746

$

10,394,746

Building and resort improvements

11,357,992

11,295,967

11,227,437

11,353,982

11,343,482

11,295,967

Furniture, fixtures, equipment and

leasehold improvements

680,157

661,583

710,084

666,766

666,766

661,380

Transportation equipment

681,016

632,779

628,999

710,425

704,358

657,518

Construction in progress

 

140,153

 

105,660

 

92,587

 

241,301

 

144,328

 

156,734

23,254,064

23,090,735

23,053,853

23,367,220

23,253,680

23,166,345

Less: accumulated depreciation

 

(8,570,612)

 

(8,262,922)

 

(8,159,882)

 

(8,741,549)

 

(8,527,808)

 

(8,466,026)

$

14,683,452

$

14,827,813

$

14,893,971

$

14,625,671

$

14,725,872

$

14,700,319

 

Depreciation and amortization expense was $312,895$213,742 and $310,849$207,726 for the ninesix months ended JuneMarch 31, 2018 and 2017, respectively.

At March 31, 2018, September 30, 2017, and 2016, respectively, and $105,169 and $105,392 for the three months ended June 30,March 31, 2017, and 2016, respectively.

At June 30, 2017, September 30, 2016. and June 30, 2016, the cost of assets under capital lease was $292,802, $292,802,and $263,077 and related accumulated amortization was $190,099, $160,772,$169,155, $147,336, and $150,615,$180,323, respectively. Amortization expense on assets under capital lease was $29,327$10,910, and $26,882$19,551 for the ninesix months ended June 30,March 31, 2018 and 2017, and 2016, respectively, and $9,776 and $10,156 for the three months ended June 30, 2017 and 2016, respectively.

 

15


PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND 2016 (Unaudited) AND SEPTEMBER 30, 2016 (Audited)

PAGE 4

NOTE 4 LINE OF CREDIT

 

The Company has a revolving line of credit with Pacific Premier Bank (formerly Heritage Oaks Bank) for $500,000, which expires onexpiring March 20, 2018.24, 2019. There was no outstanding balance on the line of credit at Juneas of March 31, 2018, September 30, 2017 September 30, 2016, and June 30, 2016or March 31, 2017.

 

NOTE 5 - NOTE PAYABLE

 

At JuneMarch 31, 2017, the Company had a note payable to Pacific Premier Bank (formerly Heritage Oaks Bank) with a remaining outstanding balance of $1,074,253. Although the note’s original maturity was May 2018, during 2017 the Company paid off the note in its entirety. As of September 30, 2017, September 30, 2016, and June 30, 2016, the note payable consisted of the following:there was no remaining balance on this note.

 

June 30,

2017

(Unaudited)

September 30,

2016

(Audited)

June 30,

2016

(Unaudited)

Note payable to Pacific Premier Bank
(formerly Heritage Oaks Bank) with
monthly payments of $15,416,
including a variable interest rate
currently at 5%; note matures May
2018 and is secured by property.

$

841,986

$

1,431,890

$

1,458,955

Less current portion

 

(841,986)

 

(116,048)

 

(118,829)

Total

$

-

$

1,315,842

$

1,340,126

 

At June 30, 2017, future minimum payments on the note were as follows:

For the Year Ending June 30,

 

2018

 

$

841,986

1615



PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF JUNE 30,MARCH 31, 2018 AND 2017 AND 2016 (Unaudited) AND SEPTEMBER 30, 20162017 (Audited)

PAGE 5

4

 

NOTE 6 – Capital Lease Obligations

 

At JuneMarch 31, 2018, September 30, 2017, September 30, 2016, and June 30, 2016,March 31, 2017, capital lease obligations consisted of the following:

 

 

June 30,

2017

(Unaudited)

September 30,

2016

(Audited)

June 30,

2016

(Unaudited)

 

 

 

 

A 2008 tow truck leased from Donahue Transportation
Services Corp, payable in monthly installments of $799, including interest at 8.39% per annum, through
February 2017.

 

$

-

$

5,739

$

7,987

 

A 2013 Hino truck leased from Donahue Transportation Services Corp. payable in monthly installments of
$1,046, including interest at 4.75% per annum, through
April 2019.

 

22,004

30,469

33,224

 

A security system for Lot-K leased from RLC Funding,
payable in monthly installments of $1,295, including
interest at 13.54% per annum, through October 2018.

 

18,860

28,072

30,942

 

A 2016 Hino truck leased from Donahue Transportation Services Corp, payable in monthly installments of
$1,116, including interest at 4.53% per annum, through
January 2023.

 

 

65,953

 

73,610

 

76,105

 

Total capital lease obligations

 

$

106,817

$

137,890

$

148,258

March 31,

2018

(Unaudited)

September 30,

2017

(Audited)

March 31,

2017
(Unaudited)

A 2008 tow truck leased from Donahue Transportation
Services Corp, payable in monthly installments of $799,
including interest at 8.39% per annum, through February 2017.

 

$

1,764

A 2013 Hino truck leased from Donahue Transportation
Services Corp, payable in monthly installments of $1,046, including interest at 4.751% per annum, through April 2019.

$

13,233

$

19,115

25,796

A security system for Lot-K leased from RLC Funding,
payable in monthly installments of $1,295, including
interest at 13.537% per annum, through October 2018.

        8,669

15,576

22,034

A 2016 Hino truck leased from Donahue Transportation
Services Corp, payable in monthly installments of $1,116, including interest at 4.532% per annum, through January 2023.

 

58,032

 

63,342

 

69,382

 

 

 

 

 

 

 

 

 

A 2018 Hino truck leased from Donahue Transportation
Services Corp, payable in monthly installments of $1,116, including interest at 4.644% per annum, through September 2024.

 

75,014

 

 

80,706

 

 

-

Total capital lease obligations

$

154,948

$

178,739

$

118,976

 

At June 30, 2017,March 31, 2018, future minimum payments on the capital lease obligations were as follows:

 

For the Year Ending June 30,

2018

$

41,488

For the Twelve Months Ending March 31,

2019

29,076

$

48,401

2020

13,392

27,830

2021

13,392

26,784

2022

13,392

26,784

2023

24,552

Thereafter

 

7,811

 

20,088

174,439

Less amount representing interest

 

(19,491)

Present value of future minimum payments

118,551

154,948

Less amount representing interest

 

(11,734)

106,817

Less current portion of capital lease obligations

 

(36,211)

 

(41,971)

Total capital lease obligations, net of current portion and
amount representing interest

$

70,606

Total capital lease obligations, net of current portion

$

112,977

 

1716


 

PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF JUNE 30,MARCH 31, 2018 AND 2017 AND 2016 (Unaudited) AND SEPTEMBER 30, 20162018 (Audited)

PAGE 65

NOTE 7 - COMMON STOCK

 

Each share of stock is intended to provide the shareholder with free use of the resort for a maximum of 45 daysnights per year. If the Company is unable to generate sufficient funds from the public, the Company may be required to charge shareholders for services.

 

A shareholder is entitled to a pro rata share of any dividends as well as a pro rata share of the assets of the Company in the event of its liquidation or sale. The shares are personal property and do not constitute an interest in real property. The ownership of a share does not entitle the owner to any interest in any particular site or camping period.

 

NOTE 8 - INCOME TAXES

 

The provision for income taxes for the threesix months ended March 31, 2018 and nine months ending June 30, 2017 and 2016 is as follows:

 

Three Months Ended June 30,

Nine Months Ended June 30,

2016

2017

2016

2017

Income tax expense

$

365,200

$

343,300

$

557,200

$

421,900

Six Months Ended
March 31,

 

2018

2017

Income tax (expense)/benefit

$

105,250

$

(192,000)

Recent tax reform was passed on December 22, 2017, commonly referred to as the “Tax Cuts and Jobs Act.” This Act changes the US federal corporate tax brackets--that had a maximum effective rate of 35%--to a flat rate of 21% for tax years beginning after December 31, 2017. Consequently, deferred tax assets and liabilities have been remeasured, resulting in a deferred income tax benefit of $252,100, which is included as a component of income tax expense (benefit) from continuing operations for the six months ended March 31, 2018.

Pursuant to the above mentioned federal tax rate change, the Company has used a blended tax rate for the six months ended March 31, 2018. This has been done by applying the Company’s previous bracket rate of 34% and the new 21% flat rate pro rata, based on the number of days in the fiscal year before and after January 1, 2018.

 

The Company uses the asset-liability method of computing deferred taxes in accordance with FASB ASC TopicAccounting Standards Codification (ASC) topic 740. The difference between the effective tax rate and the statutory tax rates is due primarily to the effects of the graduated tax rates, state taxes net of the federal tax benefit, and nondeductible variable costs of shareholder usage.usage, and the use of the blended tax rate and remeasurement of deferred tax assets and liabilities due to the federal tax rate changes noted above.

 

As of JuneMarch 31, 2018, September 30, 2017, September 30, 2016, and June 30, 2016,March 31, 2017, the Company’s deferred tax liability was $799,700, $846,200$466,700, $810,600, and $823,300,$822,800, respectively. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. The majority of the balance is due to timing differences of depreciation expense, caused by the use of accelerated depreciation methods for tax calculations.

 

17



PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2018 AND 2017 (Unaudited) AND SEPTEMBER 30, 2017 (Audited)

PAGE 6

NOTE 9 - OPERATING LEASES

 

The Company leases a lot, located in Oceano, California, to use as storage lot, atfor $2,933 per month. The lease has converted to a month-to-month lease; however, the lessor is considering a long-term renewal at this time.lease.

 

The Company has a five-year lease obligation for a copier. Rental expense under this operating lease is $384 per month. Future minimum lease payments under this obligation are as follows:

 

18


For the Twelve Months Ending March 31,

2019

$

4,608

2020

4,608

2021

4,608

2022

 

3,840

Total

$

17,664

PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND 2016 (Unaudited) AND SEPTEMBER 30, 2016 (Audited)

PAGE 7

NOTE 9 - OPERATING LEASES (continued)

For the Twelve Months Ending June 30,

2018

$

4,608

2019

4,608

2020

4,608

2021

4,608

2022

 

2,688

$

21,120

 

Rent expense under these lease agreements was $33,853$21,674 and $39,759$18,570 for the nine monthssix-months ended June 30,March 31, 2018 and 2017, and 2016, respectively, and $12,283 and $21,482 for the three months ended June 30, 2017 and 2016, respectively.

 

NOTE 10 - 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 $43,909 and $43,591$33,876 for the ninesix months ended June 30, 2017 and 2016, respectively, and $12,568 and $11,800March 31, 2018. The contribution to the pension plan for the threesix months ended June 30,March 31, 2017 and 2016, respectively.was $31,341.

NOTE 11 – SUBSEQUENT EVENTS

Events subsequent to March 31, 2018, have been evaluatedthrough May 14, 2018, which is the date the financial statements were available to be issued. Management did not identify any subsequent events that require disclosure.

 

1918