UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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[X] NO [ ]
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
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| 1 | Page |
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TABLE OF CONTENTS
| 3 | Page |
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Pismo Coast Village, Inc.
Balance Sheets
as of June 30, 2024 and September 30, 2023
| June 30, | September 30, | |||||
| 2024 | 2023 | |||||
| Assets |
(unaudited) |
|
||||
| Current assets | ||||||
| Cash and cash equivalents | $ | $ | ||||
| Cash Reserved for Capital Improvements and Deferred Maintenance | ||||||
| Accounts receivable | ||||||
| Inventories | ||||||
| Prepaid income taxes | ||||||
| Prepaid expenses | ||||||
| Total current assets | ||||||
| Property and equipment, net | ||||||
| Total assets | $ | $ | ||||
| Liabilities and Stockholders' Equity | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | $ | $ | ||||
| Accrued salaries and vacation | ||||||
| Rental deposits | ||||||
| Building security deposits | ||||||
| Current portion of finance lease obligations | ||||||
| Total current liabilities | ||||||
| Long-term liabilities | ||||||
| Deferred taxes | ||||||
| Finance lease obligations, net of current portion | ||||||
| Total liabilities | ||||||
| Stockholders' equity | ||||||
| Common stock - and outstanding |
||||||
| Retained earnings | ||||||
| Total stockholders' equity | ||||||
| Total liabilities and stockholders' equity | $ | $ |
The accompanying notes are an integral part of these financial statements.
| 4 | Page |
Pismo Coast Village, Inc.
Statements of Operations
for the Three and Nine Months Ended June 30, 2024 and 2023
(unaudited)
| Three Months | Nine Months | |||||||||||
| Ended June 30, | Ended June 30, | |||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Income | ||||||||||||
| Resort operations | $ | $ | $ | $ | ||||||||
| Retail operations | ||||||||||||
| Property lease income | ||||||||||||
| Total income | ||||||||||||
| Cost and expenses | ||||||||||||
| Operating expenses | ||||||||||||
| Cost of goods sold | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Total cost and expenses | ||||||||||||
| Income from operations | ||||||||||||
| Other income (expense), net | ||||||||||||
| Income before provision for income tax | ||||||||||||
| Income tax provision | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Net income | $ | $ | $ | $ | ||||||||
| Weighted average shares (basic & diluted) | ||||||||||||
| Net income per share (basic & diluted) | $ | $ | $ | $ | ||||||||
The accompanying notes are an integral part of these financial statements.
| 5 | Page |
Pismo Coast Village, Inc.
Statements of Changes in Stockholders’ Equity
for the period September 30, 2022 through June 30, 2024
(unaudited)
| Common Stock | Retained | |||||||||||
| Shares | Amount | Earnings | Total | |||||||||
|
Balance - September 30, 2022 |
|
$ |
|
$ |
|
$ |
|
|||||
|
Net Income |
- | - |
|
|
||||||||
|
Balance - December 31, 2022 |
|
|
|
|
||||||||
|
Net Income |
- | - |
|
|
||||||||
|
Balance - March 31, 2023 |
|
|
|
|
||||||||
|
Net Income |
- | - |
|
|
||||||||
| Balance - June 30, 2023 | ||||||||||||
| Net Income | - | - | ||||||||||
| Balance - September 30, 2023 | ||||||||||||
| Net Income | - | - | ||||||||||
| Balance - December 31, 2023 | ||||||||||||
| Net Income | - | - | ||||||||||
| Balance - March 31, 2024 | ||||||||||||
| Net Income | - | - | ||||||||||
| Balance - June 30, 2024 | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these financial statements.
| 6 | Page |
Pismo Coast Village, Inc.
Statements of Cash Flows
for the Nine Months Ended June 30, 2024 and 2023
(unaudited)
| Nine months ended June 30, | ||||||||||||
| 2024 | 2023 | |||||||||||
| Cash flows from operating activities | ||||||||||||
| Net income | $ | $ | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | $ | $ | ||||||||||
|
Other non-cash operating activities |
( |
) | ||||||||||
| Deferred income taxes | ( |
) | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( |
) | ( |
) | ||||||||
| Inventories | ( |
) | ||||||||||
| Prepaid income taxes | ( |
) | ||||||||||
| Prepaid expenses | ( |
) | ||||||||||
| Accounts payable and accrued liabilities | ( |
) | ||||||||||
| Accrued salaries and vacation | ( |
) | ( |
) | ||||||||
| Rental deposits | ||||||||||||
| Net cash provided by operating activities | ||||||||||||
| Cash flows from investing activities | ||||||||||||
| Capital expenditures | ( |
) | ( |
) | ||||||||
| Net cash used in investing activities | ( |
) | ( |
) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Principal payments on finance lease obligations | ( |
) | ( |
) | ||||||||
| Net cash used in financing activities | ( |
) | ( |
) | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( |
) | ||||||||||
| Cash and cash equivalents - beginning of period | ||||||||||||
| Cash and cash equivalents - end of period | $ | $ | ||||||||||
| Reconciliation of Cash and Cash Equivalents Per Balance Sheets: | ||||||||||||
| Cash and equivalents | ||||||||||||
| Cash reserved for capital improvements | ||||||||||||
| Cash and cash equivalents per statement of cash flows | $ | $ | ||||||||||
|
Schedule of tax payments: |
||||||||||||
| Cash paid for income tax |
$ |
|
$ |
|
||||||||
| Supplemental schedule of non-cash activities | ||||||||||||
| Assets acquired under finance leases | $ | |||||||||||
The accompanying notes are an integral part of these financial statements.
| 7 | Page |
Pismo Coast Village, Inc.
Notes to Financial Statements
June 30, 2024 and September 30, 2023
(unaudited)
Note 1: Nature of Business and Basis of Presentation
Pismo Coast Village, Inc. (the 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 quarter.
Basis of Presentation
The accompanying unaudited interim Financial Statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions on Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. In accordance with these rules and regulations, we have omitted certain information and notes normally provided in our annual consolidated financial statements. In addition, certain prior period amounts have been reclassified to conform to current year presentation. In the opinion of management, the unaudited Financial Statements contain all adjustments, consisting only of normal recurring items, necessary for the fair presentation of our financial position and results of operations for the interim periods.
These unaudited Financial Statements should be read in conjunction with the audited Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. The results of operations for the three and nine months ended June 30, 2024 are not necessarily indicative of the results expected for the entire fiscal year.
Note 2: Summary of Significant Accounting Policies
Significant Accounting Policies
During the nine months ended June 30, 2024, there have been no changes in our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
| 8 | Page |
| Pismo Coast Village, Inc. Notes to Financial Statements June 30, 2024 and September 30, 2023 |
Revenue from Contracts with Customers
Tourism Taxes
As of June 30, 2024 and September 30, 2023, the Company had $
Disaggregation of Revenue
For the three-month period ended June 30, 2024, revenue from RV site rentals, storage, spotting, and store and accessory sales accounts for approximately
For the nine-month period ended June 30, 2024, revenue from RV site rentals, storage, spotting, and store and accessory sales accounts for approximately
Rental Deposits
During the three months ended June 30, 2024, the company's rental deposits increased from $
During the nine months ended June 30, 2024, the company's rental deposits increased from $
Rental deposits are generally recognized as revenue within twelve months of receipt.
Cash and Cash Equivalents
The Company considers all highly liquid investments including certificates of deposit with an original maturity of three months or less when purchased or US treasury instruments to be cash equivalents. As of June 30, 2024 and September 30, 2023, the Company had $
Cash Reserved for Capital Improvements and Deferred Maintenance
The Company keeps separate funds reserved for capital improvements and deferred maintenance. Historically, the Company has not carried a high amount of debt; this separate reserve is kept in order to self-finance major improvement and have cash ready upon project permit approval.
Advertising
Advertising expense was $
Concentration of Credit Risk
Because the Company’s bank is a member of the Certificate of Deposit Account Registry Service (CDARS), the Company’s large deposits are divided into smaller amounts and placed with other FDIC insured banks which are also members of the CDARS network. Then, those member banks issue CDs in amounts under $
| 9 | Page |
| Pismo Coast Village, Inc. Notes to Financial Statements June 30, 2024 and September 30, 2023 |
Our financial assets and liabilities consist principally of cash, cash equivalents, accounts receivable, accounts payable, and rental deposits, and are reported at fair value. The estimated fair value of cash, cash equivalents, accounts receivable, accounts payable and rental deposits approximates their carrying value.
Accounting Pronouncements Issued But Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-07 expands income tax disclosures to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024, and can be applied on a prospective basis with an option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its financial statements and related disclosures.
In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 expands segment disclosures for public companies. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its financial statements and related disclosures. This amendment will go into effect for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of ASU 2023-07 on its financial statements and related disclosures.
Note 3: Property and Equipment
At June 30, 2024 and September 30, 2023, property and equipment included the following:
| June 30, | September 30, | |||||
| 2024 | 2023 | |||||
| Land | $ | $ | ||||
| Building and resort improvements | ||||||
| Furniture, fixtures, equipment and leasehold improvements | ||||||
| Transportation equipment | ||||||
| Construction in progress | ||||||
| Less accumulated depreciation and amortization | ( |
) | ( |
) | ||
| $ | $ |
Note 4: Line of Credit
The Company has a revolving line of credit with Pacific Premier Bank for $
| 10 | Page |
| Pismo Coast Village, Inc. Notes to Financial Statements June 30, 2024 and September 30, 2023 |
Note 5: Finance Leases - Lessee
The company has several finance leases, primarily for transportation equipment. These leases are generally 84 months in duration and have maturities through April 2031.
The following table summarizes the future minimum payments under finance lease liabilities as of June 30, 2024.
| For the Fiscal Year Ending Sept 30, | |||
|
2024 (remaining three months) |
$ | ||
| 2025 | |||
| 2026 | |||
| 2027 | |||
| 2028 | |||
| Thereafter | |||
| Total future minimum payments | |||
| Less amount representing interest | ( |
) | |
| Total finance lease obligations | |||
| Less current portion of finance lease obligations | ( |
) | |
| Total finance lease obligations, net of current portion | $ |
In addition, the company entered into a $
The following table summarizes the components of the finance lease cost for the three and nine months ended June 30, 2024 and 2023, respectively.
| Three months Ended June 30, |
Nine months ended June 30, |
|||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Finance lease cost: | ||||||||||||
| Amortization of ROU assets | $ | $ | $ | $ | ||||||||
| Interest on lease liabilities | ||||||||||||
| Total finance lease cost | $ | $ | $ | $ | ||||||||
Supplemental balance sheet information related to leases as of June 30, 2024 and September 30, 2023 are as follows.
| June 30, | September 30 | |||||
| 2024 | 2023 | |||||
| Property and equipment, gross | $ | $ | ||||
| Accumulated amortization | ( |
) | ( |
) | ||
| Property and equipment, net | $ | $ | ||||
| Weighted average remaining lease term | ||||||
| Finance leases | ||||||
| Weighted average discount rate | ||||||
| Finance leases |
| 11 | Page |
| Pismo Coast Village, Inc. Notes to Financial Statements June 30, 2024 and September 30, 2023 |
Note 6: Property Leases - Lessor
The Company is the lessor on various property leases, which currently represent approximately $
| For the Twelve Months Ending September 30, | |||
|
2024 (remaining three months) |
$ | ||
| 2025 | |||
| 2026 | |||
| 2027 | |||
| 2028 | |||
| Thereafter | |||
| $ |
Note 7: Common Stock
Each share of stock is intended to provide the shareholder with free use of the resort for a maximum of
A shareholder is entitled to a pro rata share of any dividends as well as a pro rata share of the assets of the Company in the event of its liquidation or sale. The shares are personal property and do not constitute an interest in real property. The ownership of a share does not entitle the owner to any interest in any particular site or camping period.
Note 8: Income Taxes
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. The majority of the balance is due to timing differences of depreciation expense, caused by the use of accelerated depreciation methods for tax calculations.
Note 9: Employee Retirement Plans
The Company is the sponsor of a 401(k) profit sharing pension plan, which covers substantially all full-time employees. Employer contributions are discretionary and are determined on an annual basis. The Company's matching portion of the 401(k) safe harbor plan was $
| 12 | Page |
| Pismo Coast Village, Inc. Notes to Financial Statements June 30, 2024 and September 30, 2023 |
Note 10: Subsequent Events
Events subsequent to June 30, 2024 have been evaluated through date the financial statements were issued. Management did not identify any subsequent events that required disclosure other than the new lease described in Note 5.
| 13 | Page |
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Statement on Forward Looking Information
The following analysis discusses the Company's financial condition as of June 30, 2024, compared with June 30, 2023. The discussion should be read in conjunction with the financial statements and the related notes to the financial statements and the other financial information included elsewhere in this Form 10-Q.
Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to anticipated expenses, capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to competitive industry conditions, California tourism and weather conditions, dependence on existing management, leverage and debt service, the regulation of the recreational vehicle industry, domestic or global economic conditions, and changes in federal or state tax laws or the administration of such laws.
Overview
Pismo Coast Village, Inc. operates as a 400-space recreational vehicle resort in Pismo Beach, California. The Company includes additional business operations to provide its users with the full range of services expected of a recreational resort. These services include a store, video arcade, laundromat, and an RV storage operation.
The Company is authorized to issue 1,800 shares of one class, all with equal voting rights and all being without par value. Transfers of shares are restricted by Company bylaws. One such restriction is that transferees must acquire shares with intent to hold the same for the purpose of enjoying camping rights and other benefits to which a shareholder is entitled.
Each share of stock is intended to provide the shareholder with the opportunity for 45 nights of free site use each calendar year, of which twenty-five (25) are during prime-time dates and twenty during non-prime time dates. To accomplish this, the bylaws specify that (a) a minimum of 175 sites will be held open for general public use each day and (b) if the Company is unable to generate sufficient funds from the general public, the Company may be required to charge shareholders for services.
Management is charged with the task of developing sufficient funds to operate the Resort through sales to general public guests, so that each shareholder can continue to receive the free site usage as described above.
| 14 | Page |
The Company continues to promote and depend upon recreational vehicle camping as the primary source of revenue. The rental of campsites to the general public provides income to cover expenses, complete capital improvements, and allow shareholders up to 45 free nights of camping annually. Additional revenues come from RV storage and spotting, an on-site convenience store and other ancillary services, such as a restaurant, laundromat, and arcade.
The RVing public actively seeks accommodations on the Central Coast despite volatile fuel prices and personal financial uncertainties. RVing offers an affordable outdoor recreational experience, and the Company provides quality facilities and services in a highly popular location. Industry reports, such as the 2024 KOA Camping Report published February 26, 2024, showcase a significant uptick in travel bookings for 2024 and projections show that road trips will continue to be more popular among campers, with a 10% higher likelihood of participation than camping (59% vs. 49%). Travel demand is higher than last year, with 64% of campers having already made reservations for some sort of trip, significantly outpacing the 29% of non-camping leisure travelers.
Among these bookings, camping trips are the most popular (54%), followed by hotel stays (46%). Family reunions, birthdays, and major holidays such as Memorial Day and the 4th of July are the highest trip reasons for bookings.
Despite the enthusiasm for advanced bookings, (16%) of campers plan to shorten their bookings. RVers are least likely to adjust their planning timeframe due to the logistical demands of RV camping, whereas 25% of those combining camping with other travel types are inclined to make last-minute plans. The increase in travel year-over-year reflects meaningful shared experiences in outdoor camping.
RV storage and towing continue to be a primary source of revenue for the Company. In April 2023, the company purchased 4.42 acres to develop a 150 storage lot due to having a 300+ waitlist for new clients. RV storage provides numerous benefits to the customer including: no stress of towing, no need to own a tow vehicle, use of RV by multiple family members, and convenience. RV storage continues to have a strong demand for both self and tow storage.
Ongoing investment in resort improvements has assured Resort guests and shareholders a top quality, up-to-date facility. This quality and pride of ownership was evident as the resort continues to maintain high standards and has been recognized with quality ratings by Good Sam. The Company's commitment to quality, value, and enjoyment is underscored by the business's success due to word of mouth and referrals from guests. In addition, investment for online marketing, social media content, ads in the leading national directory, and trade magazine advertising formulates most of the business-marketing plan.
Critical Accounting Estimates
The Company prepares our financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.
Results of Operations
The Company develops its income from three sources: (a) Resort Operations, consisting of revenues generated from RV site rentals, from RV storage space operations, and from lease revenues from laundry, restaurant, and arcade operations by third party lessees; (b) Retail Operations, consisting of revenues from General Store operations and (c) Property Lease Revenue.
| 15 | Page |
Income from Resort Operations were relatively flat year over year for the three and nine month periods ended June 30, 2024 compared to the same period in 2023. The very slight decreases are attributed to variations in general public occupancy due to the timing of weekends and holidays in 2024, which resulted in fewer prime days in 2024 than 2023, offset by the benefit of an increase in non-prime rates during 2024.
| Three Months | Year over | Nine Months | Year over | |||||||||||||||
| Ended June 30, | Year | Ended June 30, | Year | |||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||
| Resort Operations Revenue | ||||||||||||||||||
| RV site rentals | $ | 1,893,000 | $ | 1,910,000 | $ | (17,000 | ) | $ | 4,485,000 | $ | 4,478,000 | $ | 7,000 | |||||
| RV storage & spotting | 479,000 | 508,000 | (29,000 | ) | 1,426,000 | 1,449,000 | (23,000 | ) | ||||||||||
| Other | 43,000 | 53,000 | (10,000 | ) | 118,000 | 131,000 | (13,000 | ) | ||||||||||
| $ | 2,415,000 | $ | 2,471,000 | $ | (56,000 | ) | $ | 6,029,000 | $ | 6,058,000 | $ | (29,000 | ) | |||||
Income from Retail Store Operations were also relatively flat year over year, decreasing $13,000 for the three months ended June 30, 2024 and increasing $42,000 for the nine months ended June 30, 2024, compared to same periods in 2023. Store operations revenue depends upon occupancy, so fluctuations generally mirror fluctuations in RV site rental revenues.
Total RV Repair revenue was zero in 2024, compared to $256,000 in the 9 months ended June 30, 2023, because the company discontinued delivering RV repair services during April 2023. As of that date, the company transitioned its RV service business to Trailer Hitch RV, who have leased the Company’s service facilities and now provide RV services to shareholders, guests, and the general public from those sites. The arrangement with Trailer Hitch improves the company’s operating income and is also expected to improve the service experience for our guests and shareholders, since Trailer Hitch has a history of more timely repairs and has mobile service and other capabilities that the Company had previously been unable to profitably operate on its own.
Property Lease Revenue, which is primarily associated with rental of the RV repair facilities, totaled $60,000 and $179,000 for the three and nine month periods ended June 30, 2024, respectively, compared to $64,000 and $112,000 for the three and nine month periods ended June 30, 2024, respectively. This amount increased for the nine months ended June 30, 2024 because the lease of the RV repair facilities commenced in April 2023.
Gross margin on the general store has improved to 44% and 47% for the three and nine month periods ended June 30, 2024, compared to 41% and 44% for the respective prior periods, up approximately 3 points in each of those periods, primarily due to the mix of products sold. The company strives to maintain consistent pricing, which leads to moderate margins across staples such as groceries, ice, wood, and RV parts. Increased sales of logo-based merchandise drove higher gross margin in the store year over year as guests have been tending to purchase more of the premium apparel items.
The Company's business is highly seasonal with late fall and winter months deriving less revenue and profit than the rest of the year. Occupancy during the fourth quarter is expected to remain strong as it includes the prime travel periods. Property lease revenue is expected to remain steady throughout the year due to the fixed nature of the operating leases.
| 16 | Page |
Total expenses for the three and nine month periods ended June 30, 2024 decreased $200,000 and $258,000, respectively compared to the same periods of the prior year. The decrease in operating expenses is primarily associated with one-time costs incurred during the prior year that did not recur in fiscal year 2024, for things such as tree removal following the particularly wet winter, as well as one-time consultant expenses and training programs. Cost of goods sold decreased year over year primarily due to the transition of the RV service business to Trailer Hitch RV in April 2023. The decrease in depreciation and amortization expense is because some of our assets have reached the end of their financial amortization periods, so depreciation and amortization ended.
| Three Months | Year over | Nine Months | Year over | |||||||||||||||
| Ended June 30, | Year | Ended June 30, | Year | |||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||
| Expenses | ||||||||||||||||||
| Operating expenses | $ | 1,636,000 | $ | 1,782,000 | $ | (146,000 | ) | $ | 5,376,000 | $ | 5,446,000 | $ | (70,000 | ) | ||||
| Cost of goods sold | 108,000 | 136,000 | (28,000 | ) | 276,000 | 411,000 | (135,000 | ) | ||||||||||
| Depreciation and amortization | 104,000 | 130,000 | (26,000 | ) | 311,000 | 364,000 | (53,000 | ) | ||||||||||
| $ | 1,848,000 | $ | 2,048,000 | $ | (200,000 | ) | $ | 5,963,000 | $ | 6,221,000 | $ | (258,000 | ) | |||||
Other income (expense), net increased $40,000 and $169,000 for the three and nine month periods ended June 30, 2024, respectively, compared to the same periods of the prior year, primarily because the company is generating more interest due to increases in interest rates.
Although the supply-demand balance generally remains favorable, future-operating results could be impacted by changes in inflation and the economy that lead to increases or decreases in demand. Depending on the nature of business and economic cycles and trends, rates may be adjusted accordingly, if deemed necessary. Changes in demand could limit the Company's ability to pass through inflationary increases in operating costs as higher rates.
Additionally, increases in transportation and fuel costs or sustained recessionary periods could unfavorably impact future results. However, the Company believes that its financial strength and market presence will enable it to remain extremely competitive. The company intends to continue to market site usage at its highest value and believes that currently this will not negatively impact the Company's ability to capture an optimum market share.
Liquidity
The Company's policy is to use its ability to generate operating cash flow to meet its expected future needs for internal growth.
The Company’s cash and cash equivalents totaled $12.1 million as of June 30, 2024, compared to $10.3 million as of September 30, 2023. The $1.8 million increase is primarily due to the company’s continued strong profitability and slowed capital investments since February 2024. Cash and cash equivalents include $9.9 million of cash reserved for future capital improvements as of June 30, 2024.
The Company has also maintained a $500,000 line of credit to ensure funds will be available, if required. The Company has continued to maintain sufficient cash so as to not require the use of this short-term line of credit during the off-season period, and the Company expects to be able to operate without needing to access this line of credit (although there is no assurance of continued excess cash flow.)
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Account Payables and Accrued Liabilities totaled $288,000 as of June 30, 2024, compared to $558,000 as of the 2023 fiscal year end. The decrease is primarily because the accrued liabilities balance as of September 30, 2023, included an annual bonus based on fiscal year 2023 profitability that was paid to employees during November 2023. All undisputed payables have been paid in full according to the Company's policy.
Total Current Assets increased to $12.8 million at June 30, 2024, compared with $11.2 million at September 30, 2023, primarily due to the increased cash associated described above.
Capital Resources and Planned Expenditures
The Company spent $258,000 of cash on capital expenditures during the nine month period ended June 30, 2024. Approximately $145,000 of this amount was associated with resort improvements and preventative maintenance projects, including renovation of the square, new furnishings for the restaurant, replacement of restroom water heaters, and construction of a new shed alongside the store for wood and other inventory and upgrades to our transportation vehicles. Approximately $60,000 was spent on design services and environmental studies related to developing the 4.42-acre property that was purchased in April 2023.
The company expects to spend between $1.0 million to $2.0 million on capital projects during the remainder of fiscal year 2024 and 2025. These capital expenditures are primarily related to developing the 4.42-acre property that was purchased in 2023, so that it can be operational for additional RV Storage as soon as practical during 2025. Other capital projects for 2024 focus on safety and optimizing the use of our properties.
Funding for fiscal year 2024 capital expenditures is expected to come from normal operating cash flows. These projects are intended to not only optimize the marketability of the camping sites and enhance support facilities but are also expected to increase the Resort's value to its shareholders and the general public.
Disclosure Concerning Website Access to Company Reports
The Company makes available on its website, www.Visitpcv.com, access to its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC).
The public may read and copy any materials filed with the Securities and Exchange Commission, on official business days during the hours of 10:00 a.m. to 3:00 p.m., at the SEC's Public Reference Room located at 100 F Street, N. E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy statements, and other information that the Company files electronically with the SEC.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO, General Manager and CFO, has evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, and as discussed below, our CEO and CFO have concluded that as of September 30, 2023, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), were not effective at a reasonable assurance level due to the material weakness in our internal control over financial reporting described below. In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weakness in our internal control over financial reporting, the financial statements for the periods covered by and included in the Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.
Material Weakness
In connection with our management’s assessment of controls over financial reporting during the year ended September 30, 2023, we identified a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness that we identified is that we did not have sufficient qualified internal resources. To address this material weakness, we have evaluated our ongoing staffing requirements, appointed a new CFO and implemented additional review controls to ensure timely and accurate reconciliations, as well as proper financial reporting. We will not be able to sufficiently remediate this control deficiency until the additional controls have been operating effectively for a sufficient period of time.
Changes in Internal Control over Financial Reporting
Except for the remediation efforts described above, there were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
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PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings
There are no pending legal proceedings against the Company other than routine litigation incidental to the business.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not Applicable
ITEM 3. Defaults Upon Senior Securities
Not Applicable
ITEM 4. Mine Safety Disclosures
Not Applicable
ITEM 5. Other Information
Not Applicable
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ITEM 6. Exhibits
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PISMO COAST VILLAGE, INC.
(Registrant)
Date: August 14, 2024
Signature: /s/ GEORGE PAPPI, JR.
George Pappi, Jr., President, and Chairman of the Board
(Chief Executive Officer/Principal executive officer)
Date: August 14, 2024
Signature: /s/ SUZANNE M COLVIN
Suzanne M Colvin, V.P. - Finance/Chief Financial Officer
(Principal financial officer and principal accounting officer)
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