<PAGE>
QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
TO THE 1934 ACT REPORTING REQUIREMENTS
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
Commission file number #0-8463
PISMO COAST VILLAGE, INC.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 95-2990441
------------------------------- --------------------------
(State or other jurisdiction of (IRS Employer I.D. Number)
incorporation or organization)
165 South Dolliver Street, Pismo Beach, California 93449
(Address of Principal Executive Offices)
---------------------------------------------------------
(Issuer's telephone number) (805) 773-5649
---------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
--- ---
Page 1 of 16
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
--- ---
FORM 10-QSB
State the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practicable date: -1800-
Page 2 of 16
<PAGE>
PART I
----------
FINANCIAL INFORMATION
-------------------------
ITEM 1 - FINANCIAL STATEMENTS
The following financial statements and related information are included in this
Form 10-QSB, Quarterly Report.
1. Accountant's Review Report
2. Balance Sheets
3. Statement of Operations and Retained Earnings (Deficit)
4. Statement of Cash Flows
5. Notes to Financial Statements (Unaudited)
The financial information included in Part 1 of this Form 10-QSB has been
reviewed by Glenn, Burdette, Phillips and Bryson, 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 within the meaning of Section 21E of the Securities
Exchange Act of 1934, 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.
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 restaurant, 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.
Page 3 of 16
<PAGE>
Resort Operations Income for the three-month period ended June 30, 1998,
increased $33,865, or 6.52%, from the same period in 1997. Retail Operations
Income increased $17,620, or 15.5%, for the same quarter. These increases are a
result of the Spring Break period, a higher occupancy period, occurring in April
1998 rather than the Fiscal Year 1997 Spring Break which occurred during the
second quarter. Also, the weather pattern improved allowing for a higher
occupancy in June. For the nine-month period ending June 30, 1998, Resort
Operations decreased $72,453, or 5.5%, from the same period in 1997. Retail
Operations increased $1,779, or 0.6%, from the same nine-month period in 1997.
The decrease in Resort Operations Income for the nine-month period reflects the
tremendous impact of the El Nino weather pattern on paid site occupancy.
Increased occupancy in the third quarter reversed the decline experienced during
the first two quarters, and the Company anticipates continued growth in
occupancy over its peak summer period and into the first quarter of next fiscal
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.
On April 20, 1998, the Company opened escrow for a parcel of property to be
developed as an additional RV storage facility. The Company currently does not
have other plans to increase or decrease its property and anticipates it will
continue to operate the restaurant by lease to an outside vendor. Effective,
April 3, 1998, and with the end of the prior lease agreement, the Company
entered into a restaurant lease with an equally experienced vendor.
Operating Expenses for the quarter ended June 30, 1998, decreased $16,415, or
3.5%, from the same period in 1997. This decrease in expense is a result of
lower utilities from reduced occupancy and management's decision to postpone
major maintenance due to decreased Winter and Spring revenues. Operating
Expenses for the nine-month period ended June 30, 1998, increased $46,411, or
3.5%, from the same period in 1997. In addition to the explanation above for
the quarter, the Company has continued maintenance tasks on its campsites and
vehicles, in addition to an increase in weather-related repairs and expenses.
Increase in minimum wage, group health insurance premiums, and property taxes
have increased operating expenses. However, many Operating Expenses were
intentionally managed to lower levels to compensate for the reduction in resort
revenue caused by lower occupancy.
Cost of Goods Sold for 1998 are within projected levels at 60.3% for the quarter
and 58.9% year-to-date. Cost of Goods Sold for 1997 were 60.6% and 59.9%
respectively.
Interest Expense for the three-month period ended June 30, 1998, was a zero
balance after being reduced by $4,371 below the same period in 1997, and $14,459
below the nine-month year to date expense of 1997. These reductions are a
result of the Board of Directors' decision to eliminate all outstanding debt in
September 1997. The Company has renewed its $150,000 line of credit and is
currently seeking financing for the proposed RV storage expansion. Further
details regarding financing are found in the Liquidity section below.
Net Income for the quarter ending June 30, 1998, increased by $79,549, or
2,429.0%, as compared with the same period ending June 30, 1997. Net income for
the nine months ending June 30, 1998, decreased by $67,485, or 68.8%, as
compared with the same period ending June 30, 1997. The last quarter of 1998 is
expected to provide adequate resources for continuing
Page 4 of 16
<PAGE>
business and provide for planned capital expenditures. Of the last eight
years, with each year-end being profitable, the Company has shown losses from
$42,475 to $229,759 as of the end of the first nine months. Losses during
this period are consistent with the seasonal occupancy of a tourist
orientated business.
Published occupancy rates for the resort operations have remained consistent for
the past three years. These rates are formally reviewed annually by the Board
of Directors and were last changed in October 1994. Upon review of occupancy
and competition, in July 1998, the Board of Directors decided not to increase
site fees for the Fiscal Year beginning October 1, 1998. However, the Board
did vote to increase RV storage, towing, and set-up fees effective October 1,
1998.
Management has introduced various marketing promotions with reduced rates to
increase revenues during low occupancy periods. During the past three years
the Company has seen some of its fixed and variable costs increase and decrease
and has not seen any significant trend to warrant an increase in rates.
However, 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 at 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.
LIQUIDITY
The Company planned capital expenditures of $295,000 in Fiscal Year 1998 to
continue its enhancement of camping sites, upgrade restroom buildings, equipment
upgrades, expand administrative and guest contact areas, maintenance area
improvements and upgrade of computer information systems. Funding for these
projects will be by revenue generated from the normal course of business and
some projects may be reallocated to Fiscal Year 1999. The Company's current
cash position as of June 30, 1998, is $650,136, which is $63,172, or 10.8%, more
than the same period in 1997, and an increase of $240,074, or 58.5%, from
September 30, 1997. This increase in cash is a direct result of the retirement
of all debt during Fiscal Year 1997 and increase in rental deposits.
With past growth in its Recreational Vehicle Storage operation and upon reaching
full occupancy of its owned and leased lots, the Company is currently pursuing
ownership and development permits for a new storage property. Funding for this
project is expected to be obtained through a banking institution with which the
Company maintains a business relationship.
Capital projects are designed to enhance the marketability of the camping sites
and enhance support facilities. Fourth quarter site occupancy, storage fill,
and retail sales are expected to be consistent with that of the past year.
Capital projects not completed prior to the busy summer season will be completed
after Labor Day.
The Company has consistently demonstrated an ability to optimize revenues
developed from Resort and Retail Operations during the summer season. During
other, less revenue producing
Page 5 of 16
<PAGE>
periods, RV storage space and site rentals are paid for in advance and used
for Resort improvements and cash reserves. The Company has a revolving line
of credit for $150,000 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.
Accounts Payable and accrued liabilities decreased $38,807 for June 30, 1998,
compared to the same period ending 1997. All undisputed payables have been paid
in full according to the Company's policy.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Not Applicable
ITEM 2 - CHANGES IN SECURITIES
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
On July 3, 1998 Comptroller Allan Bristol resigned to pursue other
opportunities. Linda Davidson was hired and began employment on
July 15, 1998. Linda has extensive experience as Comptroller and
Human Resources Director.
ITEM 6 - EXHIBITS AND REPORTS ON THE 8-K
(a) Exhibit Index:
Sequential
Exhibit Number Item Description Page Number
-------------- ---------------- -----------
27 Financial Data Schedule **
99 Accountant's Review
Report
Page 6 of 16
<PAGE>
------------------------------------------
* Contained in Accountant's Review
Report, Exhibit 28.
** Filed Electronically Only
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
PISMO COAST VILLAGE, INC.
Date: _________________________________
Signature:______________________________
Jerald Pettibone, President
Date: _________________________________
Signature:______________________________
Jack Williams, V.P. Finance / Chief Financial Officer
Date: _________________________________
Signature:______________________________
Linda Davidson, Comptroller / (Principal Accounting Officer)
Page 7 of 16
<PAGE>
ACCOUNTANTS' REVIEW REPORT
Board of Directors
Pismo Coast Village, Inc.
165 South Dolliver Street
Pismo Beach, California 93449
We have made a review of the balance sheets of Pismo Coast Village, Inc. as of
June 30, 1998 and 1997, and the related statements of operations and retained
earnings (deficit) for the three month and nine month periods ended June 30,
1998 and 1997, and the statements of cash flows for the nine month periods ended
June 30, 1998 and 1997, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants. All information included in these financial statements is
the representation of the management of Pismo Coast Village, Inc.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an examination in accordance with generally
accepted auditing standards which will be performed for the full year with the
objective of expressing 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 referred to above for
them to be in conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing standards,
the balance sheet as of September 30, 1997, (presented herein) and the related
statements of operations and retained earnings (deficit) and cash flows for the
year then ended (not presented herein); and in our report dated October 23,
1997, we expressed an unqualified opinion on those financial statements.
Glenn, Burdette, Phillips & Bryson
Certified Public Accountants
A Professional Corporation
San Luis Obispo, California
Page 8 of 16
<PAGE>
PISMO COAST VILLAGE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30, JUNE 30,
1998 1997 1997
(UNAUDITED) (AUDITED) (UNAUDITED)
----------- ------------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 650,136 $ 410,062 $ 586,964
Accounts receivable 9,278 8,467 10,049
Inventory 72,157 69,597 59,803
Current deferred taxes 75,000 19,000 32,000
Prepaid income taxes 21,089 24,551 32,760
Prepaid expenses 27,671 48,900 8,506
----------- ------------- -----------
TOTAL CURRENT ASSETS 855,331 580,577 730,082
PISMO COAST VILLAGE RECREATIONAL VEHICLE
RESORT AND RELATED ASSETS - NET OF
ACCUMULATED DEPRECIATION 5,382,681 5,569,029 5,662,089
OTHER ASSETS 44,433 6,619 14,338
----------- ------------- -----------
Total Assets $6,282,445 $6,156,225 $6,406,509
----------- ------------- -----------
----------- ------------- -----------
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 9 of 16
<PAGE>
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30, JUNE 30,
1998 1997 1997
(UNAUDITED) (AUDITED) (UNAUDITED)
------------ ------------- -----------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 81,821 $ 86,479 $ 120,628
Accrued salaries and vacation 38,128 37,394 33,916
Rental deposits 498,116 184,379 449,490
Current portion of long-term debt 41,376
------------ ------------- -----------
Total current liabilities 618,065 308,252 645,410
LONG-TERM LIABILITIES
Long-term deferred taxes 56,000 74,000 63,000
Long-term debt 106,054
------------ ------------- -----------
Total liabilities 674,065 382,252 814,464
------------ ------------- -----------
STOCKHOLDERS' EQUITY
Common stock - no par value, issued and
outstanding 1,800 shares 5,647,708 5,647,708 5,647,708
Retained earnings (deficit) (39,328) 126,265 (55,663)
------------ ------------- -----------
Total stockholders' equity 5,608,380 5,773,973 5,592,045
------------ ------------- -----------
Total Liabilities and Stockholders' Equity $6,282,445 $6,156,225 $6,406,509
------------ ------------- -----------
------------ ------------- -----------
</TABLE>
Page 10 of 16
<PAGE>
PISMO COAST VILLAGE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(UNAUDITED)
THREE AND NINE MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME
Resort operations $553,213 $519,348 $1,245,671 $1,318,124
Retail operations 130,871 113,251 293,309 291,530
Interest income 3,902 3,956 10,328 11,265
-------- -------- ---------- ----------
Total income 687,986 636,555 1,549,308 1,620,919
-------- -------- ---------- ----------
COST AND EXPENSES
Operating expenses 448,081 464,496 1,363,367 1,316,956
Cost of goods sold 78,932 68,629 172,830 174,603
Depreciation 81,450 83,452 244,305 234,814
Amortization 332 995
Interest 4,371 200 14,659
Loss on sale of equipment 8,199 8,199
-------- -------- ---------- ----------
616,662 621,280 1,788,901 1,742,027
-------- -------- ---------- ----------
INCOME (LOSS) BEFORE PROVISION FOR TAXES
ON INCOME 71,324 15,275 (239,593) (121,108)
INCOME TAX EXPENSE (BENEFIT) (11,500) 12,000 (74,000) (23,000)
-------- -------- ---------- ----------
NET INCOME (LOSS) $ 82,824 $ 3,275 (165,593) (98,108)
-------- --------
-------- --------
RETAINED EARNINGS (DEFICIT)
Beginning of Period 126,265 42,445
---------- ----------
END OF PERIOD $ (39,338) $ (55,663)
---------- ----------
---------- ----------
NET INCOME (LOSS) PER SHARE $ 46.01 $ 1.82 $ (92.00) $ (54.50)
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 11 of 16
<PAGE>
PISMO COAST VILLAGE, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------------------- -----------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(165,593) $(98,108)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation $244,305 $234,814
Amortization 995
Loss on sale of equipment 8,199
Increase in accounts receivable (811) (3,927)
Increase in inventory (2,560) (711)
Increase in deferred taxes (74,000) (10,000)
Decrease (increase) in prepaid income
taxes 3,462 (32,760)
Decrease in prepaid expenses 21,229 52,358
Increase in other assets (37,814) (2,354)
Increase (decrease) in accounts payable
and accrued expenses (4,658) 53,505
Increase (decrease) in accrued salaries
and vacations 734 (1,199)
Decrease in income tax payable (45,000)
Increase in rental deposits 313,737 251,522
-------- --------
Total adjustments 471,823 497,243
--------- --------
Net cash provided by operating
activities 306,230 399,135
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment 1,250
Capital expenditures (67,406) (253,110)
-------- --------
Net cash used in investing activities (66,156) (253,110)
CASH FLOWS FROM FINANCING ACTIVITIES
Retirement debt (76,297)
---------
Net cash used in financing activities (76,297)
--------- --------
Net increase in cash and cash
equivalents 240,074 69,728
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 410,062 517,236
--------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $650,136 $586,964
--------- --------
--------- --------
SCHEDULE OF PAYMENTS OF INTEREST AND TAXES
Payments for interest $200 $14,659
Payments for income tax $11,550 $64,691
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 12 of 16
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 1998 AND 1997 AND SEPTEMBER 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
INVENTORY
Inventory has been valued at the lower of cost or market on a first-in,
first-out basis.
DEPRECIATION AND AMORTIZATION
Depreciation of property and equipment is computed using an accelerated 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 is based on the 1,800 shares issued and
outstanding.
RECLASSIFICATION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Reclassification of certain accounts reported in previously issued financial
statements have been made to enhance comparability with current financial
statements.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid investments including certificates of deposit with a maturity of three
months or less when purchased, to be cash equivalents.
Page 13 of 16
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 1998 AND 1997 AND SEPTEMBER 30, 1997
PAGE 2
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
REVENUE AND COST RECOGNITION
The Company's revenue is recognized on the accrual basis as earned based on the
date of stay. Expenditures are recorded on the accrual basis whereby expenses
are recorded when incurred, rather than when paid.
NOTE 2 - PISMO COAST VILLAGE RECREATIONAL VEHICLE RESORT AND RELATED ASSETS
At June 30, 1998, September 30, 1997 and June 30, 1997, property and equipment
included the following:
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997 JUNE 30, 1997
------------- ------------------ -------------
<S> <C> <C> <C>
Land $2,680,850 $2,680,850 $2,680,850
Building and resort improvements 5,564,088 5,564,088 5,746,117
Furniture, fixtures, equipment
and leasehold improvements 1,268,226 1,214,381 1,218,632
Transportation equipment 200,400 200,450 155,266
Construction in progress 16,002 15,890 8,717
---------- ---------- ----------
9,729,566 9,675,659 9,809,582
Less accumulated depreciation 4,346,885 4,106,630 4,147,493
---------- ---------- ----------
$5,382,681 $5,569,029 $5,662,089
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Page 14 of 16
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 1998 AND 1997 AND SEPTEMBER 30, 1997
PAGE 3
NOTE 3 - LONG-TERM DEBT
Long-term debt at June 30, 1998 and September 30, 1997, is zero, long-term debt
June 30, 1997, is summarized as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C>
8% Installment note payable, due in monthly installments of $125
through April 13, 2010, secured by deed of trust on the storage
lot at 2050 22nd Street, Oceano. $ 11,992
10.5% Installment note payable, due in monthly installments of $4,426
through August 1, 2000, unpaid balance due in full September 1,
2000. Interest is variable, secured by deed of trust on 300 South
Dolliver and 180 South Dolliver, Pismo Beach. 135,438
---------
147,430
Less current portion of long-term debt 41,376
---------
$106,054
---------
---------
</TABLE>
NOTE 4 - OPERATING LEASES
The Company leases two pieces of property to use as storage lots. One is leased
under a cancelable month-to-month lease. The other was entered into effective
January 1, 1997, for five years with an option to extend the lease for an
additional five years. Monthly lease payments are currently $2,245 and are
increased annually based on the Consumer Price Index. Future minimum lease
payments under the second lease and an obligation to lease equipment are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------
<S> <C>
1999 $29,412
2000 29,412
2001 27,352
2002 13,470
-------
Total $99,646
-------
-------
</TABLE>
Rent expense under these agreements was $21,723 and $20,678 for the nine months
ended June 30, 1998 and 1997.
Page 15 of 16
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 1998 AND 1997 AND SEPTEMBER 30, 1997
PAGE 4
NOTE 5 - LINE OF CREDIT
The Company has a revolving line of credit for $150,000. The interest rate is
variable at two percent over prime, with an initial rate of 10.50 percent
expiring March 31, 1999. The purpose of the loan is to augment operating cash
needs in off season months. There were no outstanding amounts as of June 30,
1998 and 1997 and September 30, 1997.
NOTE 6 - COMMON STOCK
Each share of stock is intended to provide the shareholder with a minimum free
use of the resort for 45 days per year. If the Company is unable to generate
sufficient funds from the public, the Company may be required to charge
shareholders for services.
A shareholder is entitled to a pro rata share of any dividends as well as a pro
rata share of the assets of the Company in the event of its liquidation or sale.
The shares are personal property and do not constitute an interest in real
property. The ownership of a share does not entitle the owner to any interest
in any particular site or camping period.
NOTE 7 - INCOME TAXES
The provision for income taxes is as follows:
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1998 1997
--------- ---------
<S> <C> <C>
Income tax expense (benefit) $(74,000) $(23,000)
</TABLE>
Effective September 30, 1993, the Company adopted Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109
requires, among other things, a change from the deferred to the asset-liability
method of computing deferred income taxes. SFAS 109 also requires 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.
The difference between the effective tax rate and the statutory tax rates is due
primarily to the effects of the graduated tax rates and state taxes net of the
federal tax benefit.
NOTE 8 - COMMITMENTS
On April 20, 1998, the Company entered into an agreement to purchase a six acre
parcel for $495,000 to store recreational vehicles. Several contingencies
remain including appraisal, arranging financing and assessment of environmental
impact. At June 30, 1998, the Company has deposited $33,000 into an escrow
account towards the purchase price. These amounts are shown in noncurrent other
assets.
Page 16 of 16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 650,136
<SECURITIES> 0
<RECEIVABLES> 9,278
<ALLOWANCES> 0
<INVENTORY> 72,157
<CURRENT-ASSETS> 855,331
<PP&E> 9,729,566
<DEPRECIATION> 4,346,885
<TOTAL-ASSETS> 6,282,445
<CURRENT-LIABILITIES> 618,065
<BONDS> 0
0
0
<COMMON> 5,647,708
<OTHER-SE> (39,328)
<TOTAL-LIABILITY-AND-EQUITY> 6,282,445
<SALES> 130,871
<TOTAL-REVENUES> 687,986
<CGS> 78,932
<TOTAL-COSTS> 616,662
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-TAX> (11,500)
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</TABLE>
