<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 MARCH 31, 1999
[ ] 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
---- ----
Page 1 of 18
<PAGE>
FORM 10-QSB
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: -1800-
Page 2 of 18
<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 from restaurant, laundry, and arcade operations by
third party lessees; and (b) Retail Operations,
Page 3 of 18
<PAGE>
consisting of revenues from general store operations and from RV parts and
service operations.
Income from Resort Operations for the three-month period ended March 31, 1999,
increased $152,722, or 54.8%, above the same period in 1998. Resort Income for
the six months ended March 31, 1999, increased $169,888, or 24.5%, from the same
period ended March 31, 1998. These increases are a result of five days of Spring
Break occurring in the second quarter of Fiscal Year 1999. Spring break, a
traditionally high occupancy period, occurred during the third quarter of Fiscal
Year 1998, or April 4-19, 1998. Another factor is that during the period January
March 1998, the El Nino weather phenomenon had a substantial impact on occupancy
due to 41 days of rain compared to a more typical 20 days of rain during the
same period in 1999.
Income from Retail Operations for the three-month period ended March 31, 1999,
increased $25,959, or 36.5%, above the same period in 1998. Income from Retail
Operations for the six month period ending March 31, 1999, increased by $36,087,
or 22.2%, above the same period ended March 31, 1998. This increase is a result
of increased occupancy and increased in-house advertising of the General Store
and the RV Repair Shop. The Company anticipates continued moderate growth in
both income from resort operations and retail operations.
Operating expenses for the three-month period ending March 31, 1999, were
managed to a reduction of $8,026, or 1.9%, below the same period ended March 31,
1998, and for the six month period ending March 31, 1999, operating expenses
decreased by $28,586, or 3.1%, below the same period in 1998. While some
expenses represent an increase due to higher occupancy during the second
quarter, vehicle and resort maintenance, labor and associated labor expenses
contributed to the reduction of operating expenses.
Cost of Goods Sold expenses for the three months ended March 31, 1999, are 52.9%
compared to 59.9% for the same period in 1998. Year-to-date Cost of Goods Sold
expenses were 55.5% compared to 57.8% year to date 1998. 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, 1999, was $8,656 compared
to $100 for the same period in 1998. This reflects the December 1998 purchase of
property to be developed into RV storage. The Company has also renewed its
$150,000 line of credit.
Loss before provisions for taxes on income for the three-month period ended
March 31, 1999, decreased by $169,563, or 85.4%, and the loss for the six months
ended March 31, 1999, decreased by $218,383, or 70.2%. The decrease in loss is a
reflection of this period's significant increase in income and managed operating
expenses. Losses during this period are directly 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 four 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.
Page 4 of 18
<PAGE>
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's plan for capital expenditures of $920,000 in Fiscal 1999 is
currently on schedule. Maintenance area improvements were completed during the
second quarter and renovation of the reservations/accounting building is
expected to be completed during the third quarter. Funding for these projects is
expected to be from revenue generated from the normal course of business. The
property purchased December 31, 1998, for the purpose of RV storage is expected
to be fully developed during the fourth quarter. The Company acquired new
financing to supplement the purchase and development of the RV storage property.
The Company's current cash position as of March 31, 1999, is $879,667, which is
131% more than the same position in 1998. This increase in cash is a direct
result of the retirement of all long term debt and in anticipation for this
year's large capital expenditures. The Company has renewed a $150,000 line of
credit to insure additional funds will be available, if required.
Accounts payable and accrued liabilities increased $20,971 from the same period
last year. This year reflects the financial activity concerning the completion
of the Company's capital projects. All undisputed payables have been paid in
full according to the Company's policy.
The Company has consistently demonstrated an ability to optimize revenues
developed from the resort and retail operations during the summer season.
Historically the Company, because of its seasonal market, has produced 60% to
65% of its revenue during the third and fourth quarters of the fiscal year, with
more than 40% being produced during the fourth quarter. The third and fourth
quarters' occupancy are expected to be consistent with that of past years.
YEAR 2000 COMPLIANCE
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 15 months. The Company presently believes that, as a
result of upgrading existing software, the Company's integral computer systems
will not experience material operational problems as a result of the year 2000
issue.
Several internal database programs will require conversion to updated year 2000
compatible
Page 5 of 18
<PAGE>
programs. In addition, several secondary work stations will require replacement.
These upgrades are being coordinated by company staff and are expected to be
completed by midsummer.
The Company anticipates completing the year 2000 obligation on time and at a
cost of less than the previously reported $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 timetables will be achieved,
and actual results could differ materially from those anticipated.
Page 6 of 18
<PAGE>
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
ITEM 6 - EXHIBITS AND REPORTS
(a) Exhibit Index:
<TABLE>
<CAPTION>
Sequential
Exhibit Number Item Description Page Number
-------------- ---------------- -----------
<S> <C> <C>
27 Financial Data Schedule
99 Accountant's Review
Report
-----------------------------------------------
</TABLE>
Page 7 of 18
<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, Chief Financial Officer
Date: _________________________________
Signature: ____________________________
Linda Davidson, Controller/Principal Accounting Officer
Page 8 of 18
<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
March 31, 1999 and 1998, and the related statements of operations and retained
earnings (deficit) for the three and six month periods ended March 31, 1999 and
1998, and the statements of cash flows for the six month periods ended March 31,
1999 and 1998, 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 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
April 26, 1999
Page 9 of 18
<PAGE>
PISMO COAST VILLAGE, INC.
BALANCE SHEETS
MARCH 31, 1999 AND 1998 AND SEPTEMBER 30, 1998
ASSETS
<TABLE>
<CAPTION>
March 31, 1999 September 30, 1998 March 31, 1998
(Unaudited) (Audited) (Unaudited)
-------------- ------------------ --------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 879,667 $ 831,756 $ 381,172
Accounts receivable 7,580 10,495 8,025
Inventory 73,406 66,723 70,518
Current deferred taxes 57,000 22,000 80,500
Prepaid income taxes 30,580 28,461
Prepaid expenses 35,676 48,186 42,666
---------- ---------- ----------
Total current assets 1,083,909 979,160 611,342
PISMO COAST VILLAGE RECREATIONAL
VEHICLE RESORT AND RELATED ASSETS
Net of accumulated depreciation 5,791,553 5,337,587 5,457,107
OTHER ASSETS 1,616 68,624 12,261
---------- ---------- ----------
Total Assets $6,877,078 $6,385,371 $6,080,710
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 10 of 18
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, 1999 September 30, 1998 March 31, 1998
(Unaudited) (Audited) (Unaudited)
-------------- ------------------ --------------
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 84,163 $ 123,415 $ 63,192
Accrued salaries and vacation 35,878 45,540 38,153
Rental deposits 462,860 214,705 380,809
Income taxes payable 45,000
---------- ---------- ----------
Total current liabilities 582,901 428,660 482,154
LONG-TERM LIABILITIES
Long-term deferred taxes 72,000 74,000 73,000
Long-term debt 395,000
---------- ---------- ----------
Total liabilities 1,049,901 502,660 555,154
---------- ---------- ----------
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) 179,469 235,003 (122,152)
---------- ---------- ----------
Total stockholders' equity 5,827,177 5,882,711 5,525,556
---------- ---------- ----------
Total Liabilities and Stockholders'
Equity $6,877,078 $6,385,371 $6,080,710
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Page 11 of 18
<PAGE>
PISMO COAST VILLAGE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(UNAUDITED)
THREE AND SIX MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended March 31, Ended March 31,
--------------------------------- ---------------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCOME
Resort operations $ 431,606 $ 278,884 $ 862,346 $ 692,458
Retail operations 97,081 71,122 198,525 162,438
Interest income 4,876 3,076 10,904 6,426
----------- ----------- ----------- -----------
Total income 533,563 353,082 1,071,775 861,322
----------- ----------- ----------- -----------
COST AND EXPENSES
Operating expenses 422,126 430,152 886,700 915,286
Cost of goods sold 51,398 42,610 110,198 93,898
Depreciation 76,725 78,855 155,025 162,855
Interest 8,656 100 8,656 200
Loss on sale of fixed assets 3,730 3,730
----------- ----------- ----------- -----------
Total cost and expenses 562,635 551,717 1,164,309 1,172,239
----------- ----------- ----------- -----------
LOSS BEFORE PROVISION FOR TAXES
ON INCOME (29,072) (198,635) (92,534) (310,917)
INCOME TAX EXPENSE (BENEFIT) (19,000) (27,500) (37,000) (62,500)
----------- ----------- ----------- -----------
NET LOSS $ (10,072) $ (171,135) (55,534) (248,417)
----------- -----------
----------- -----------
RETAINED EARNINGS (DEFICIT)
Beginning of period 235,003 126,265
----------- -----------
END OF PERIOD $ 179,469 $ (122,152)
----------- -----------
----------- -----------
NET LOSS PER SHARE $ (5.60) $ (95.08) $ (30.85) $ (138.01)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 12 of 18
<PAGE>
PISMO COAST VILLAGE, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------------------------------- ------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(55,534) $(248,417)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation $ 155,025 $162,855
Loss on sale of fixed assets 3,730
Decrease in accounts receivable 2,915 442
Decrease (increase) in inventory (6,683) (921)
Increase in deferred taxes (37,000) (62,500)
Increase in prepaid income taxes (30,580) (3,910)
Decrease in prepaid expenses 12,510 6,234
Decrease (increase) in other assets 67,008 (5,642)
Decrease in accounts payable and accrued
expenses (39,252) (23,287)
(Decrease) increase in accrued salaries and
vacation (9,662) 759
Increase in rental deposits 248,155 196,430
Decrease in income taxes payable (45,000)
----------- ---------
Total adjustments 321,166 270,460
------------ -----------
Net cash provided by operating activities 265,632 22,043
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (220,971) (50,933)
Proceeds on sale of fixed assets 3,250
----------- ---------
Net cash used in investing activities (217,721) (50,933)
------------- -----------
Net increase (decrease) in cash and cash
equivalents 47,911 (28,890)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 831,756 410,062
------------ -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 879,667 $ 381,172
------------ -----------
------------ -----------
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 13 of 18
<PAGE>
PISMO COAST VILLAGE, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED MARCH 31, 1999 AND 1998
PAGE 2
<TABLE>
<CAPTION>
1999 1998
------------------------------ -------------------------------
<S> <C> <C>
SCHEDULE OF PAYMENTS OF INTEREST AND TAXES
Payments for interest $ 5,888 $ 200
Payments for income tax $30,580 $5,750
</TABLE>
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
During 1999, the Company purchased real property with cash and a note payable of
$395,000.
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
Page 14 of 18
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999 AND 1998 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.
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.
DEFERRED INCOME TAX
Deferred income taxes resulted from a timing difference in recognizing
depreciation expense and net operating loss carryforward.
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 18
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999 AND 1998 AND SEPTEMBER 30, 1998
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.
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.
NOTE 2 - PISMO COAST VILLAGE RECREATIONAL VEHICLE RESORT AND RELATED ASSETS
At March 31, 1999, September 30, 1998 and March 31, 1998, property and equipment
included the following:
<TABLE>
<CAPTION>
March 31, 1999 September 30, 1998 March 31, 1998
-------------- ------------------ --------------
<S> <C> <C> <C>
Land $3,233,417 $2,680,850 $2,680,850
Building and resort improvements 5,586,273 5,578,110 5,564,088
Furniture, fixtures, equipment
and leasehold improvements 748,140 1,220,944 1,269,625
Transportation equipment 164,092 200,400 200,400
Construction in progress 77,428 32,559 11,629
---------- ---------- ----------
9,809,350 9,712,863 9,726,592
Less accumulated depreciation 4,017,797 4,375,276 4,269,485
---------- ---------- ----------
$5,791,553 $5,337,587 $5,457,107
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Page 16 of 18
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999 AND 1998 AND SEPTEMBER 30, 1997
PAGE 3
NOTE 3 - LONG-TERM DEBT
Long-term debt at March 31, 1999, is as follows:
<TABLE>
<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 $395,000
061,671,007. --------
$395,000
Maturities of long-term debt are as follows:
Year Ended March 31, Amount
-------------------- ------------
2001 $ 969
2002 6,099
2003 6,622
2004 7,189
Thereafter 374,121
--------
$395,000
--------
--------
</TABLE>
Total interest cost incurred was $8,656 for the six months ended March 31, 1999.
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 renewed effective January 1, 1997, for five years with an option
to extend 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 March 31, Amount
-------------------- -------
<S> <C>
2000 $29,244
2001 27,900
2002 6,735
--------
Total $63,879
--------
--------
</TABLE>
Rent expense under these agreements was $32,484 and $32,795 for the six months
ended March 31, 1999 and 1998, respectively.
Page 17 of 18
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999 AND 1998 AND SEPTEMBER 30, 1998
PAGE 4
NOTE 5 - LINE OF CREDIT
The Company has a revolving line of credit for $150,000. The interest rate is
variable at one percent over prime, with an initial rate of 8.75 percent
expiring March 15, 2000. The purpose of the loan is to augment operating cash
needs in off season months. There were no outstanding amounts as of March 31,
1999 and 1998 and September 30, 1998.
NOTE 6 - 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 7 - INCOME TAXES
The provision for income taxes is as follows:
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
---------- ----------
<S> <C> <C>
Income tax expense (benefit) $(37,000) $(62,500)
-------- --------
-------- --------
</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 11 - 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 contribution to the pension plan for
the six months ended March 31, 1999 was $2,810.
Page 18 of 18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 879,667
<SECURITIES> 0
<RECEIVABLES> 7,580
<ALLOWANCES> 0
<INVENTORY> 73,406
<CURRENT-ASSETS> 1,083,909
<PP&E> 9,809,350
<DEPRECIATION> 4,017,797
<TOTAL-ASSETS> 6,877,078
<CURRENT-LIABILITIES> 582,901
<BONDS> 0
0
0
<COMMON> 5,647,708
<OTHER-SE> 179,469
<TOTAL-LIABILITY-AND-EQUITY> 6,877,078
<SALES> 97,081
<TOTAL-REVENUES> 533,563
<CGS> 51,398
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<INCOME-PRETAX> (29,072)
<INCOME-TAX> (19,000)
<INCOME-CONTINUING> (10,072)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,072)
<EPS-PRIMARY> (5.60)
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</TABLE>
