QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS
SUBJECT TO THE 1934 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, 2000
[ ] 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 issuer's
classes of common equity, as of the latest practicable date: -
1800-
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 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 March 31, 2000,
decreased $36,304, or 8.4%, below the same period in 1999.
Resort Income for the six months ended March 31, 2000, increased
$27,146, or 3.1%, from the same period ended March 31, 1999. This
decrease in the three-month period is due to inclement weather
during February 2000, and all of Spring Break occurred following
the second quarter compared to five days within the second quarter
the previous year. Spring Break, a traditionally high occupancy
period, encompasses two weeks and fluctuates between the months of
March and April on an annual basis.
Income from Retail Operations for the three-month period ended
March 31, 2000, decreased $13,082, or 13.5%, below the same period
in 1999. Income from Retail Operations for the six month period
ending March 31, 2000, decreased by $11,034, or 5.5%, below the
same period ended March 31, 1999. This decrease is a result of
occupancy impacted by weather, Spring Break, and staff reductions
in the Resort's RV Service operation. The Company anticipates
moderate growth in both income from resort operations and retail
operations through the remainder of Fiscal Year 2000.
Operating expenses for the three-month period ending March 31,
2000, increased $43,752, or 10.4%, above the same period ended
March 31, 1999, and for the six month period ending March 31,
2000, operating expenses increased by $72,645, or 8.2%, above the
same period in 1999. These increases in expenses reflect
maintenance projects, interest, wage adjustments, and advertising.
Due to the age of the Resort, the Company is undertaking
maintenance activity which is considered necessary in order to
continue providing quality facilities and services. Some of these
projects include road repair, restroom upgrades, irrigation, and
building repair.
Cost of Goods Sold expenses for the three months ended March 31,
2000, are 56.2% compared to 52.9% for the same period in 1999.
Year-to-date Cost of Goods Sold expenses were 58.1% compared to
55.5% year to date 1999. 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, 2000, was
$8,270 compared to $8,656 for the same period in 1999. This
reflects the December 1998 purchase of property which was
developed and opened in October 1999 as RV storage. The Company
has also renewed and increased its $150,000 line of credit to
$500,000 in anticipation of large capital expenditures or
emergencies.
Loss before provisions for taxes on income for the three-month
period ended March 31, 2000, increased by $82,585, or 284%, and
the loss for the six months ended March 31, 1999, increased by
$54,198, or 58.6%. The increase in loss is a reflection of this
period's decrease in income and increase in 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 five 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's plan for capital expenditures of $332,000 in Fiscal
2000 is currently on schedule. Road, building, irrigation, and
restroom repairs were completed during the second quarter and an
upgrade of the resort telephone system and storage lot grading 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 Company's current cash position as
of March 31, 1999, is $818,649, which is 6.9% less than the same
position in 1999. This decrease in cash is a direct result of
management's decision to move cash into a long term investment
account. The present level of cash is being maintained in
anticipation for this and next year's large capital expenditures.
These projects include the construction of an additional restroom
and the upgrade of the existing restrooms. Management has begun
the process of planning long term renovations to the Resort
property which includes redesigning sites and utilities to
accommodate the needs of modern recreational vehicles. The
Company has also renewed and increased its $150,000 line of credit
to $500,000 to insure additional funds will be available, if
required.
Accounts payable and accrued liabilities decreased $32,493 from
the same period last year. This reflects the decreased financial
activity during this period compared to last year relative to 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.
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:
Sequential
Exhibit Number Item Description Page Number
27 Financial Data Schedule **
99 Accountant's Review Report
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
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, 2000 and 1999, and the related
statements of operations and retained earnings for the three and
six month periods ended March 31, 2000 and 1999, and the
statements of cash flows for the six month periods ended March 31,
2000 and 1999, 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, 1999,
(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 20, 1999, we
expressed an unqualified opinion on those financial statements.
Glenn, Burdette, Phillips & Bryson
Certified Public Accountants
A Professional Corporation
April 17, 2000
PISMO COAST VILLAGE, INC.
BALANCE SHEETS
MARCH 31, 2000 AND 1999 AND SEPTEMBER 30, 1999
<TABLE>
<S> <C> <C> <C>
March 31, 2000 Sept 30, 1999 March 31, 1999
(Unaudited) (Audited) (Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $818,649 $826,763 $879,667
Investments 184,978 180,665
Accounts receivable 6,859 15,232 7,580
Inventory 70,697 66,678 73,406
Current deferred taxes 42,000 30,000 57,000
Prepaid income taxes 77,500 30,580
Prepaid expenses 30,604 48,976 35,676
Total current assets 1,231,287 1,168,314 1,083,909
Fixed Assets-
Net of accum deprec 5,849,130 5,903,215 5,791,553
Other Assets 1,982 2,211 1,616
Total Assets $7,082,399 $7,073,740 $6,877,078
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable
and accrued liabilities $51,670 $98,426 $84,163
Accrued salaries
& vacation 38,069 61,966 35,878
Rental deposits 494,200 243,156 462,860
Income taxes payable 88,000
Current portion of
long-term debt 1,666
Total current liabilities 585,605 491,548 582,901
Long-Term Liabilities
Long-term deferred taxes 104,000 91,000 72,000
Long-term debt,
net of current portion 383,334 395,000 395,000
Total liabilities 1,072,939 977,548 1,049,901
Stockholders' Equity
Common stock-no par value,
issued and outstanding
1,800 shares 5,647,708 5,647,708 5,647,708
Retained earnings 361,752 448,484 179,469
Total stockholders'
equity 6,009,460 6,096,192 5,827,177
Total Liabilities and
Stockholders' Equity $7,082,399 $7,073,740 $6,877,078
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
PISMO COAST VILLAGE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
THREE AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999
<TABLE>
For the Three Months For the Six Months
Ended March 31, Ended March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Income
Resort operations $395,203 $431,606 $889,492 $862,346
Retail operations 83,999 97,081 187,491 198,525
Interest income 8,358 4,876 14,778 10,904
Total income 487,560 533,563 1,091,761 1,071,775
Cost and Expenses
Operating expenses 465,878 422,126 959,345 886,700
Cost of goods sold 47,205 51,398 108,900 110,198
Depreciation 78,000 76,725 153,269 155,025
Interest 8,270 8,656 17,114 8,656
Gain / (loss) on sale
of fixed assets (135) 3,730 (135)
Loss Before Provision
for Taxes (111,658) (29,072) (146,732) (92,534)
Income Tax Expense
(Benefit) (47,000) (19,000) (60,000) (37,000)
Net Loss $(64,658) $(10,072) (86,732) (55,534)
Retained Earnings
Beginning of period 448,484 235,003
End of period $361,752 $179,469
Net Loss Per Share $(35.92) $(5.60) $(48.18) $(30.85)
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
PISMO COAST VILLAGE, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
<TABLE>
2000 1999
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net loss $(86,732) $(55,534)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation $153,269 $155,025
(Gain)/loss on sale
of fixed assets (135) 3,730
Increase in investments (4,313)
Decrease in accts rec 8,373 2,915
Increase in inventory (4,019) (6,683)
Increase in deferred taxes(12,000) (37,000)
Increase in prepd inc tax (77,500) (30,580)
Decrease in prepd expenses 18,372 12,510
Decrease in other assets 229 67,008
Decrease in accts payable
and accrued expenses (46,756) (39,252)
Decrease in accrued
salaries and accrued
vacation (23,897) (9,662)
Increase in rental
deposits 251,044 248,155
Decrease in income
tax payable (88,000) (45,000)
Increase in long-term
deferred taxes 13,000
Total adjustments 187,667 321,166
Net cash provided by
operating activities 100,935 265,632
Cash Flows From Investing Activities
Capital expenditures (99,184) (220,971)
Proceeds on sale of fixed asset 135 3,250
Net cash used in
investing activities (99,049) (217,721)
Cash Flows From Financing Activities
Principal repayments
on long-term debt (10,000)
Net cash used in
financing activities (10,000)
Net increase (decrease)
in cash and cash
equivalents (8,114) 47,911
Cash and Cash Equivalents at
Beginning of Period 826,763 831,756
Cash and Cash Equivalents at
End of Period $818,649 $879,667
Schedule of Payments of Interest and Taxes
Payments for interest $14,772 $5,888
Payments for income tax $77,500 $30,580
</TABLE>
See accountants' review report.
The accompanying notes are an integral part of these financial statements.
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2000 AND 1999 AND SEPTEMBER 30, 1999
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.
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.
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000 AND 1999 AND SEPTEMBER 30, 1999
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, 2000, September 30, 1999 and March 31,
1999, property and equipment included the following:
<TABLE>
March 31, September 30, March 31,
2000 1999 1999
<S> <C> <C> <C>
Land $3,208,618 $3,208,618 $3,233,417
Building and resort
improvements 5,696,575 5,764,775 5,586,273
Furniture, fixtures,
equipment and
leasehold improvement 805,434 649,620 748,140
Transportation
equipment 202,016 228,338 164,092
Construction
in progress 171,458 144,387 77,428
10,084,101 9,995,738 9,809,350
Less: accumulated
depreciation (4,234,971) (4,092,523) (4,017,797)
$5,849,130 $5,903,215 $5,791,553
</TABLE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000 AND 1999 AND SEPTEMBER 30, 1999
PAGE 3
Note 3 - Long-Term Debt
Long-term debt at March 31, 2000, is as follows:
8.25% Construction loan payable allowing for a two year
draw down period not to exceed $900,000 with an interest rate of
8.25%. Payments are interest only for two years until December
2000, then principal and interest payments of $3,198 with a
balloon payment of $312,505 due 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.
Year Ended March 31,
2001 $1,666
2002 7,016
2003 7,617
2004 8,270
2005 8,979
Thereafter 351,452
$385,000
Total interest cost incurred was $17,114 for the six months ended
March 31, 2000.
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 January 1, 1997 for five years with an option to
extend for an additional five years. Monthly lease payments are
currently $2,272 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:
Year Ended March 31,
2001 $28,294
2002 27,264
2003 6,816
$62,374
Rent expense under these agreements was $33,308 and $32,484 for
the six months ended March 31, 2000 and 1999, respectively.
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000 AND 1999 AND SEPTEMBER 30, 1999
PAGE 4
Note 5 - Line of Credit
The Company renewed its revolving line of credit and increased it
to $500,000. The interest rate is variable at one percent over
prime, with an initial rate of 8.75 percent expiring March 24,
2001.
The purpose of the loan is to augment operating cash needs in off-
season months. There were no outstanding amounts as of March 31,
2000 and 1999 and September 30, 1999.
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:
March 31, 2000 March 31, 1999
Income tax expense (benefit) $(60,000) $(37,000)
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 - 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 was $5,865 and
$2,810 for the six months ended March 31, 2000 and 1999,
respectively and $9,095 for the year ended September 30, 1999.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 1003627
<SECURITIES> 0
<RECEIVABLES> 6859
<ALLOWANCES> 0
<INVENTORY> 70697
<CURRENT-ASSETS> 1231287
<PP&E> 10084101
<DEPRECIATION> 4234971
<TOTAL-ASSETS> 7082399
<CURRENT-LIABILITIES> 585605
<BONDS> 0
0
0
<COMMON> 5647708
<OTHER-SE> 361752
<TOTAL-LIABILITY-AND-EQUITY> 7082399
<SALES> 187491
<TOTAL-REVENUES> 1091761
<CGS> 108900
<TOTAL-COSTS> 1238493
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17114
<INCOME-PRETAX> (146732)
<INCOME-TAX> (60000)
<INCOME-CONTINUING> (86732)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (86732)
<EPS-BASIC> (48.18)
<EPS-DILUTED> (48.18)
</TABLE>
