<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 December 31, 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 ___
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 1 of 17
<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. Accountants 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 RESULT
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
Page 3 of 17
<PAGE>
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.
Income from Resort Operations for the three-month period ended December 31,
1998, increased $17,166, or 4.2%, from the same period in 1997. This increase
is a result of favorable weather conditions and a 10.4% increase in paid site
occupancy. RV storage income grew to a 1.5% increase above the same
three-month period last year ending on December 31, 1997, primarily due to
obtaining full occupancy of the storage operation. Income from retail
operations increased by $ 10,128, for the three-month period ended December
31, 1998, 11.1% above the same period in 1997. This increase is primarily a
result of continuing growth in the RV repair and parts store. Interest income
increased 79.8% for the three-month period ended December 31, 1998, over the
same period in 1997 due to increased cash reserves in anticipation of major
capital expenditures. The Company anticipates continued moderate growth in
both income from resort operations and in retail operations.
On December 31, 1998, the Company closed escrow on a property previously
reported as placed in escrow on April 20, 1998. This property will be
developed to provide additional RV storage capacity. The Company has acquired
new financing for the purpose of purchasing and developing this property.
On October 26, 1998, a mutual agreement was reached to terminate the existing
restaurant lease with the current operator. Based on historical information,
local competition, limited visibility, and insufficient parking, the
restaurant does not appear to be cost effective. With support of the Board of
Directors, management has decided to utilize the restaurant facility for
other activities. These activities may include group meetings, catered
functions, seasonal snack bar, or Company sponsored special events.
Operating expenses for the three-month period ending December 31, 1998,
decreased $20,560, or 4.2%, below the same period ended December 31, 1997.
This decrease is primarily due to lower resort maintenance expenditures,
primarily vehicles and equipment costs, labor, and advertising. 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,
1998, are 58.0% compared to 56.2% for the same period in 1997, which is well
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, 1998, was at
zero, down from $100 for the same period in 1997. This reduction is the
result of the Board's decision to eliminate all outstanding debt in September
1997. The Company has renewed its $150,000 line of credit.
Loss before provisions for taxes on income for the three-month period ended
December 31, 1998, decreased by $48,820 below the same period in 1997. This
decrease of loss is a result of increased resort income and managed operating
expenses. Losses during this period are directly
<PAGE> 4 of 17
attributed to and are consistent with seasonal occupancy of a
tourist-oriented business.
Published occupancy rates for 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. Management has introduced
various marketing promotions with reduced rates to increase revenues during
low occupancy periods. The Company, during these three years, 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 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.
LIQUIDITY
The Company plans capital expenditures of $920,000 in Fiscal Year 1999 to
continue its enhancement of resort facilities by renovation of the
reservation/accounting building, maintenance area improvements, and the
purchase and development of additional RV storage property. During the first
quarter of Fiscal Year 1999, a county use permit for RV storage was obtained
for a property purchased by the company on December 31, 1998. The Company
acquired new financing for the purchase and development of the storage
property. The construction of the new maintenance building began during the
first quarter and completion is expected in the second quarter. The
reservation/accounting building renovation is expected to begin during the
second quarter. Funding for these projects is expected to be from revenue
generated from the normal course of business. The Company's current cash
position as of December 31, 1998, is $657,410 which is 96% more than the same
position in 1997. This increase in cash is the direct result of retirement of
all long term debt during Fiscal Year 1997 and in anticipation for this
year's large capital expenditures. The Company has taken steps to renew a
$150,000 line of credit to insure funds will be available, if required.
Accounts payable and accrued liabilities decreased $33,581 from the same
period last year. The previous year reflected the purchase of the emergency
generator and substantial equipment repair costs. All undisputed payables
have been paid in full accordingly to the Company's policy.
Expenditures are consistent with prior years' operations and are expected to
provide adequate resources to support the amounts committed to complete the
authorized capital projects during the fiscal year. Fourth 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. Capital projects not completed
prior to our busy season will be completed after Labor Day.
YEAR 2000 COMPLIANCE
Year 2000 compliance within the Company's computerized systems, and the
readiness of
Page 5 of 17
<PAGE>
associated vendors has required ongoing assessment. The Company has retained
the services of a consultant to identify any and all hardware and software
systems which may need to be upgraded or replaced. All of the Company's
integral systems, such as reservations and accounting, have been upgraded
within the past year. The Company presently believes that by modifying
existing software, the Company's computer systems will not experience
material operational problems as a result of the year 2000 issue. However, if
such modifications are not made, or are not timely completed, the year 2000
issue could have a material adverse impact on the operations of the Company.
The most significant disruption would impact customer billings and
collections and resort reservations.
Vendors, financial institutions, service providers, and the stock transfer
agency are providing statements regarding their level of readiness or
compliance. Some Company functions could be disrupted if these businesses do
not become year 2000 compliant within the required time frame.
The Company anticipates completing the year 2000 project by June 1, 1999,
with an estimated cost of less than $25,000. The Company does not presently
have a formal contingency plan, because it believes the necessary
modifications will be completed in the required time frame. However, should
it become evident that the year 2000 modifications will not be completed on a
timely basis, the Company will explore alternatives to achieve compliance.
The costs of the project and the date on which the Company believes it will
complete the year 2000 modifications are based on management's best estimates
which were derived utilizing numerous assumptions of future events. However,
there can be no assurance that these estimates and timetable will be
achieved, and actual results could differ materially from those anticipated.
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
Page 6 of 17
<PAGE>
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting for the shareholders of Pismo Coast
Village, Inc., was held Saturday, January 16, 1999, at 9:00
a.m. at the South County Regional Center, 800 West Branch
Street, Arroyo Grande, California 93420. At that meeting the
following Directors were elected to serve until the annual
meeting in January 2000, or until successors are elected and
have qualified. Following each elected Director's name is the
total number of votes cast for that Director:
Allard, Howard 930
Barton, Emily 914
Bianchi, Donald 919
Brittain, Kurt 931
Brown, Albert 1,089
Buchaklian, Harry 901
Drake, Frank 860
Gould, Norman 919
Hinds, Jr., Edward 851
Hughes, Terris 844
Keller, Larry 931
Nunlist, Ronald 951
Pettibone, Jerald 912
Proschold, Richard 843
Rourke, Thomas 854
Valentia, Henry 869
Williams, Jack 863
Zahka, Charles 872
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 matter is set forth below:
(a) A proposal to approve the selection of Glenn, Burdette, Phillips
and Bryson to serve as independent certified public accountants for the
Company for the Fiscal Year 1998-1999.
AFFIRMATIVE VOTES NEGATIVE VOTES
880 8
ITEM 5 - OTHER INFORMATION
The annual meeting of the stockholders of Pismo Coast Village, Inc., was held
Saturday, January 16, 1999, at 9:00 a.m. at the South County Regional Center,
800 West Branch Street, Arroyo Grande, California 93420. Following that
meeting, the newly elected Board held a reorganizational meeting at which the
following officers were elected to serve until the next Annual Stockholders
Meeting:
<TABLE>
<CAPTION>
<S> <C> <C>
President Jerald Pettibone
Executive Vice President Frank Drake
Page 8 of 17
<PAGE>
V.P. - Finance/Chief Financial Officer Jack Williams
V.P. - Policy Thomas Rourke
V.P. - Secretary Edward Hinds, Jr.
Assistant Corporate Secretary Jay Jamison
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index:
SEQUENTIAL
EXHIBIT NUMBER ITEM DESCRIPTION PAGE NUMBER
27 Financial Data Schedule **
99 Accountant's Review Report
</TABLE>
--------------------------------------------------------------
Page 9 of 17
<PAGE>
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, Controller / Principal Accounting Officer
Page 10 of 17
<PAGE>
PISMO COAST VILLAGE, INC.
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997 AND SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
1998 1998 1997
------------ ------------- ------------
(Unaudited) (Audited) (Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 657,410 $ 831,756 $ 335,302
Accounts receivable 13,109 10,495 11,486
Inventory 69,061 66,723 68,915
Current deferred taxes 33,000 22,000 56,000
Prepaid income taxes 24,551
Prepaid expenses 33,885 48,186 38,831
------------- ------------ -------------
Total current assets 806,465 979,160 535,085
PISMO COAST VILLAGE RECREATIONAL
VEHICLE RESORT AND RELATED ASSETS -
Net of accumulated depreciation 5,787,116 5,337,587 5,532,012
OTHER ASSETS 10,624 68,624 4,770
------------ ---------- ---------
Total Assets $6,604,205 $6,385,371 $6,071,867
------------ ---------- ----------
------------ ---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 84,745 $ 123,415 $ 118,326
Accrued salaries and vacation 38,000 45,540 37,416
Rental deposits 176,211 214,705 143,434
Income tax payable 45,000
------------ ---------- ----------
Total current liabilities 298,956 428,660 299,176
LONG-TERM LIABILITIES
Long-term deferred taxes 73,000 74,000 76,000
Long-term debt 395,000
------------ ---------- ----------
Total liabilities 766,956 502,660 375,176
------------ ---------- ----------
STOCKHOLDERS' EQUITY
Common stock - no par value, issued
and outstanding 1,800 shares 5,647,708 5,647,708 5,647,708
Retained earnings 189,541 235,003 48,983
------------ ---------- ----------
Total stockholders' equity 5,837,249 5,882,711 5,696,691
------------ ---------- ----------
Total Liabilities and Stockholders' Equity $6,604,205 $6,385,371 $6,071,867
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 12 of 17
<PAGE>
PISMO COAST VILLAGE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
INCOME
Resort operations $ 430,740 $ 413,574
Retail operations 101,444 91,316
Interest income 6,028 3,350
---------- ----------
Total income 538,212 508,240
---------- ----------
COSTS AND EXPENSES
Operating expenses 464,574 485,134
Cost of goods sold 58,800 51,288
Depreciation 78,300 84,000
Interest expense 100
-- -------------
Total costs and expenses 601,674 620,522
---------- ----------
LOSS BEFORE PROVISION FOR TAXES ON INCOME 63,462) (112,282)
Income tax benefit (18,000) (35,000)
---------- ----------
NET LOSS (45,462) (77,282)
Retained Earnings
BEGINNING OF PERIOD 235,003 126,265
---------- ----------
END OF PERIOD $ 189,541 $ 48,983
---------- ----------
---------- ----------
EARNINGS (LOSS) PER SHARE $ (25.26) $ (42.93)
---------- -----------
---------- -----------
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 13 of 17
<PAGE>
PISMO COAST VILLAGE, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------------------------ ----------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(45,462) $ (77,282)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation $ 78,300 $ 84,000
Deferred income tax (12,000) (35,000)
Gain on sale of assets (1,193)
Increase in accounts receivable (2,614) (3,019)
(Increase) decrease in inventory (2,338) 682
Decrease in prepaid expenses 14,301 10,069
Decrease in other assets 1,849
Increase (decrease) in accounts payable and
accrued liabilities (38,670) 31,847
Increase (decrease) in accrued salaries and
vacation (7,540) 22
Decrease in rental deposits (38,494) (40,945)
Decrease in income taxes payable (45,000)
---------- --------
Total adjustments (55,248) 49,505
------------ ----------
Net cash used by operating activities (100,710) (27,777)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (75,436) (46,983)
Proceeds from sale of assets 1,800
--------- --------
Net cash used in investing activities (73,636) (46,983)
----------- -----------
Net increase (decrease) in cash and cash equivalents (174,346) (74,760)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 831,756 410,062
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 657,410 $335,302
----------- -----------
SCHEDULE OF PAYMENTS OF INTEREST AND TAXES ----------- -----------
Payments for interest $ - $ 100
Payments for income tax $ 38,800 $ -
</TABLE>
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the three months ended December 31, 1998, the Company purchased land with
a note payable of $395,000 and the release of escrow funds held in other assets
of $58,000.
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 14 of 17
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1998 AND 1997 AND SEPTEMBER 30, 1998
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:
<TABLE>
<S> <C>
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
</TABLE>
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.
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.
Page 15 of 17
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AS OF DECEMBER 31, 1998 AND 1997 AND SEPTEMBER 30, 1998
PAGE 2
NOTE 2 - PISMO COAST VILLAGE RECREATIONAL VEHICLE RESORT AND RELATED ASSETS
At December 31, 1998, September 30, 1998 and December 31, 1997, property and
equipment included the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 SEPTEMBER 30, 1998 DECEMBER 31, 1997
----------------- ------------------ -----------------
<S> <C> <C> <C>
Land $3,208,618 $2,680,850 $2,680,850
Building and resort improvements 5,585,444 5,578,110 5,564,088
Furniture, fixtures, equipment
and leasehold improvements 1,218,080 1,220,944 1,265,675
Transportation equipment 200,400 200,400 200,400
Construction in progress 25,893 32,559 11,629
--------- ------------- ------------
10,238,435 9,712,863 9,722,642
Less accumulated depreciation 4,451,319 4,375,276 4,190,630
----------- ------------ -----------
$5,787,116 $5,337,587 $5,532,012
----------- ------------ -----------
----------- ------------ -----------
</TABLE>
NOTE 3 - LONG-TERM DEBT
Long-term debt at December 31, 1998 is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
<S> <C>
8.25% Construction loan payable allowing for a two year draw
down period not to exceed $900,000. Payments are
interest only for two years. Then principal and interest
of $3,198 for eight years with a balloon of $331,942 on
February 5, 2009. Secured by deed of trust on the
storage lot at 300 South Dolliver, land and improvements
at 180 South Dolliver and a storage lot known as parcel
061,171,006 and 061,671,007. $ 395,000
---------
$ 395,000
---------
---------
Maturities of long-term debt are as follows:
<CAPTION>
YEAR ENDED DECEMBER 31 AMOUNT
---------------------- ----------
2001 $ 5,496
2002 6,487
2003 7,043
Thereafter 375,974
---------
$395,000
---------
---------
</TABLE>
Page 16 of 17
Total interest cost incurred was $100 for the three months ended December 31,
1997.
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AS OF DECEMBER 31, 1998 AND 1997 AND SEPTEMBER 30, 1998
PAGE 3
NOTE 4 - 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 December 31,
1998 and 1997 and September 30, 1998.
NOTE 5 - COMMON STOCK
Each share of stock is intended to provide the shareholder with a maximum 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 6 - INCOME TAXES
The provision for income taxes is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------- -----------
<S> <C> <C>
Income tax expense (benefit) $(18,000) $(35,000)
</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.
Page 16 of 17
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AS OF DECEMBER 31, 1998 AND 1997 AND SEPTEMBER 30, 1998
PAGE 4
NOTE 7 - 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 DECEMBER 31,
-----------------------
<S> <C>
1999 $ 29,244
2000 28,476
2001 26,940
2002 13,470
---------
Total $ 98,130
---------
---------
</TABLE>
Rent expense under these agreements was $16,081, $15,505 for the three month
period ended December 31, 1998 and 1997, respectively and $29,076 for the year
ended September 30, 1998.
Page 17 of 17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 657,410
<SECURITIES> 0
<RECEIVABLES> 13,109
<ALLOWANCES> 0
<INVENTORY> 69,061
<CURRENT-ASSETS> 806,465
<PP&E> 10,238,435
<DEPRECIATION> 4,451,319
<TOTAL-ASSETS> 6,604,205
<CURRENT-LIABILITIES> 298,956
<BONDS> 0
0
0
<COMMON> 5,647,408
<OTHER-SE> 189,541
<TOTAL-LIABILITY-AND-EQUITY> 6,604,205
<SALES> 101,444
<TOTAL-REVENUES> 538,212
<CGS> 58,800
<TOTAL-COSTS> 601,674
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (63,462)
<INCOME-TAX> (18,000)
<INCOME-CONTINUING> (45,462)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,462)
<EPS-PRIMARY> (25.26)
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99.1
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 December 31, 1998 and 1997, and the related statements of operations and
retained earnings and cash flows for the three month periods ended December
31, 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, 1998, (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, 1998, we expressed an unqualified opinion on those financial
statements.
Glenn, Burdette, Phillips & Bryson
Certified Public Accountants
A Professional Corporation
San Luis Obispo, California
January 21, 1999
