UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
[
For the quarterly period ended
OR
For the transition period from __________ to ___________
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer ID No.) |
| incorporation or organization) | |
| (Address of Principal Executive Offices) | (Zip Code) |
(
Registrant's telephone number, including area code.
____________________________________________________________________________________
(Former name, former address, and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 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. [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Subsection 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [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.
| [ ] Large accelerated filer | [ ] Accelerated filer |
| [X] |
[ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES [X ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
2
TABLE OF CONTENTS
3
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Pismo Coast Village, Inc.
Balance Sheets
as of December 31, 2024 (unaudited) and September 30, 2024
| December 31, | September 30, | ||||||||
| 2024 | 2024 | ||||||||
| (unaudited) | |||||||||
| Assets | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | $ | |||||||
| Cash reserved for capital improvements and deferred maintenance | |||||||||
| Investments | |||||||||
| Accounts receivable, net of allowance for credit losses of $ |
|||||||||
| Inventories, net | |||||||||
| 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 wages and related | |||||||||
| Customer deposits | |||||||||
| Notes payable | |||||||||
| Current portion of operating lease obligation | |||||||||
| Current portion of finance lease obligations | |||||||||
| Total current liabilities | |||||||||
| Long-term liabilities | |||||||||
| Deferred income taxes | |||||||||
| Building security deposits | |||||||||
| Operating lease obligation, net of current portion | |||||||||
| Finance lease obligations, net of current portion | |||||||||
| Total liabilities | |||||||||
| Stockholders' equity | |||||||||
| Common stock - |
|||||||||
| Retained earnings | |||||||||
| Accumulated other comprehensive income | |||||||||
| Total stockholders' equity | |||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||
The accompanying notes are an integral part of these (unaudited) financial statements.
4
Pismo Coast Village, Inc.
Statements of Comprehensive Income (Loss)
for the Three Months Ended December 31, 2024 and 2023
(unaudited)
| Three months ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue | ||||||||
| Resort operations | $ | $ | ||||||
| Retail operations | ||||||||
| Property lease income | ||||||||
| Total revenue | ||||||||
| Cost and expenses | ||||||||
| Operating expenses | ||||||||
| Cost of goods sold | ||||||||
| Depreciation and amortization | ||||||||
| Total cost and expenses | ||||||||
| Loss from operations | ( |
) | ( |
) | ||||
| Other income and expense, net | ||||||||
| Income (loss) before provision for income tax | ( |
) | ||||||
| Income tax provision (benefit) | ( |
) | ||||||
| Net income (loss) | $ | ( |
) | $ | ||||
| Weighted average shares (basic and diluted) | ||||||||
| Net income (loss) per share (basic and diluted) | $ | ( |
) | $ | ||||
| Net income (loss) | $ | ( |
) | $ | ||||
| Other comprehensive income (loss) | ||||||||
| Change in unearned gain on investments | ( |
) | ||||||
| Comprehensive income (loss) | $ | ( |
) | $ | ||||
| Total comprehensive income (loss) per share | $ | ( |
) | $ | ||||
The accompanying notes are an integral part of these (unaudited) financial statements.
5
Pismo Coast Village, Inc.
Statements of Changes in Stockholders' Equity & Accumulated Other Comprehensive Income
for the Three Months Ended December 31, 2024 and 2023
(unaudited)
| Accumulated | |||||||||||||||
| Other | |||||||||||||||
| Common Stock | Retained | Comprehensive | |||||||||||||
| Shares | Amount | Earnings | Income | Total | |||||||||||
| Balance - September 30, 2023 | $ | $ | $ | $ | |||||||||||
| Net income | - | - | - | ||||||||||||
| Other comprehensive income | - | - | - | ||||||||||||
| Balance - December 31, 2023 | $ | $ | $ | $ | |||||||||||
| Balance - September 30, 2024 | $ | $ | $ | $ | |||||||||||
| Net loss | - | - | ( |
) | - | ( |
) | ||||||||
| Other comprehensive loss | - | - | - | ( |
) | ( |
) | ||||||||
| Balance - December 31, 2024 | $ | $ | $ | $ | |||||||||||
The accompanying notes are an integral part of these (unaudited) financial statements.
6
Pismo Coast Village, Inc.
Statements of Cash Flows
for the Three Months Ended December 31, 2024 and 2023
(unaudited)
| Three months ended December 31, | ||||||||||||
| 2024 | 2023 | |||||||||||
| Cash flows from operating activities | ||||||||||||
| Net income (loss) | $ | ( |
) | $ | ||||||||
| Adjustments to reconcile net income (loss) to net cash | ||||||||||||
| provided by operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Amortization of operating lease right-of-use asset | ||||||||||||
| Other non-cash expenses | ( |
) | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ||||||||||||
| Inventories | ( |
) | ( |
) | ||||||||
| Prepaid income taxes | ( |
) | ||||||||||
| Prepaid expenses | ( |
) | ||||||||||
| Accounts payable and accrued liabilities | ( |
) | ||||||||||
| Accrued wages and related | ( |
) | ( |
) | ||||||||
| Customer deposits | ||||||||||||
| Operating lease liability | ( |
) | ||||||||||
| Net cash provided by operating activities | ||||||||||||
| Cash flows from investing activities | ||||||||||||
| Capital expenditures | ( |
) | ( |
) | ||||||||
| Redemption (purchase) of investments, net | ( |
) | ||||||||||
| Net cash provided by (used in) investing activities | ( |
) | ||||||||||
| Cash flows from financing activities | ||||||||||||
| Principal payments on finance lease obligations | ( |
) | ( |
) | ||||||||
| Principal payments on notes payable | ( |
) | ||||||||||
| Net cash used in financing activities | ( |
) | ( |
) | ||||||||
| Net increase in cash and cash equivalents | ||||||||||||
| Cash and cash equivalents - beginning of period | ||||||||||||
| Cash and cash equivalents - end of period | $ | $ | ||||||||||
| Schedule of payments of interest and taxes | ||||||||||||
| Cash paid for interest | $ | $ | ||||||||||
The accompanying notes are an integral part of these (unaudited) financial statements.
7
Pismo Coast Village, Inc.
Notes to Unaudited Financial Statements
December 31, 2024
Note 1: Nature of Business and Basis of Presentation
Description of Business
Pismo Coast Village, Inc. (the "Company" or "we" or "our" or "Resort") owns and manages a recreational vehicle ("RV") camping resort. Its revenue streams originate primarily from camping site rentals, recreational vehicle storage, tow services, and retail sales through a general store.
The Company operates in one operating segment, as an RV resort. We determine our operating segment considering our overall management structure, how forecasts are approved, and how executive compensation is determined, as well as how our board of directors, who represent our chief operating decision maker, regularly review our operating results, assess performance, allocate resources, and make decisions regarding the Company's operations.
Basis of Presentation
The accompanying unaudited Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("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 financial statements. The Company qualifies as a "smaller reporting company" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, and, as such, may take advantage of specified reduced reporting requirements and deferred accounting standards adoption dates, and is relieved of other requirements that are otherwise generally applicable to other public companies.
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. The results of operations for the three months ended December 31, 2024 are not necessarily indicative of the results expected for the entire fiscal year.
Certain prior period amounts have been reclassified to conform to current year presentation. Namely, revenue from property leases are presented as a separate revenue line on the Statements of Comprehensive Income (Loss).
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, 2024.
Notes to Unaudited Financial Statements
December 31, 2024
Seasonality
The Company's business is seasonal in nature with the three months ending September 30, the summer, being its busiest quarter, as can be seen by the following table which depicts quarterly revenue and income (loss) from operations for the past eight quarters:
| 2024 | 2023 | ||||||
| Revenue for the three months ended | |||||||
| December 31 | $ | $ | |||||
| September 30 | $ | $ | |||||
| June 30 | $ | $ | |||||
| March 31 | $ | $ | |||||
| Income (loss) from operations for the three months ended | |||||||
| December 31 | $ | ( |
) | $ | ( |
) | |
| September 30 | $ | $ | |||||
| June 30 | $ | $ | |||||
| March 31 | $ | ( |
) | $ | ( |
) | |
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect certain reported amounts and disclosures. We base our estimates on both positive and negative evidence, historical experience and information available at the time these estimates are made. Examples of such estimates include estimates of the useful life of long-lived assets, assessments of long-lived asset impairments and allowances for credit losses. Actual results could differ materially from these estimates.
Note 2: Significant Accounting Policies
During the three months ended December 31, 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, 2024.
Disaggregation of Revenue
The following table summarizes disaggregated revenue totals and percentages of revenue for the three months ended December 31, 2024 and 2023 (unaudited):
| Three months ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| RV camping site rentals | $ | $ | |||||||||
| RV storage and towing fees | |||||||||||
| Retail store sales | |||||||||||
| Property lease income | |||||||||||
| Other ancillary services | |||||||||||
| $ | $ | ||||||||||
Notes to Unaudited Financial Statements
December 31, 2024
Tourism Taxes
As of December 31, 2024 and September 30, 2024, the Company had $
Concentration of Credit Risk
The Company maintains its cash at several commercial banks in the United States and has significantly more cash and cash equivalents than would be covered by Federal Deposit Insurance Corporate ("FDIC") insurance with one bank. To ensure that cash remains protected by FDIC insurance, the Company has placed its Cash Reserved for Capital Improvements and Deferred Maintenance in a Certificate of Deposit Account Registry Service ("CDARS") account. By using a CDARS account, the Company's large deposits are divided into smaller amounts and placed with multiple FDIC insured banks that are members of the CDARS network. Each member bank issues CDs in amounts under $
The Company keeps day-to-day operating cash with a single bank in a non-CDARS account. Due to large fluctuations in operating cash, there may be times when the amount of operating cash is above the $
Fair Value Measurements
Our financial assets and liabilities consist principally of cash, cash equivalents, investments, accounts receivable, accounts payable, and rental deposits, and are reported at fair value.
The Company had no US Treasury instruments with an original maturity longer than three months as of December 31, 2024. The fair value of US Treasury instruments with an original maturity longer than three months as of December 31, 2023 was $
During the three months ended December 31, 2024, there was no material change in the items we measure and record at fair value on a recurring basis. Additionally, there were no transfers between levels of the fair value hierarchy for the three months ended December 31, 2024.
Advertising
Advertising expense was $
Notes to Unaudited Financial Statements
December 31, 2024
Recent Accounting Pronouncements Issued But Not Yet Adopted
In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2024-03, Income Statement -Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). ASU 2024-03 requires additional disclosures about the nature of expenses included in the income statement, such as purchases of inventory, employee compensation and depreciation. ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026 and interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2024-03 on its financial statements and related disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 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. The Company is currently evaluating the impact of ASU 2023-09 on its financial statements and related disclosures.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 expands segment disclosures for public companies. ASU 2023-07 is effective for public business entities for annual periods beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its financial statements and related disclosures.
Note 3: Balance Sheet Components
Property and Equipment
At December 31, 2024 and September 30, 2024, property and equipment include the following:
| December 31, | September 30, | |||||
| 2024 | 2024 | |||||
| (unaudited) | ||||||
| Land | $ | $ | ||||
| Building and resort improvements | ||||||
| Furniture, fixtures and equipment | ||||||
| Transportation equipment | ||||||
| Operating lease right-of-use asset | ||||||
| Construction in progress | ||||||
| Less accumulated depreciation and amortization | ( |
) | ( |
) | ||
| $ | $ |
Transportation equipment includes assets under finance leases. Refer to Note 5 for additional information.
Notes to Unaudited Financial Statements
December 31, 2024
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities include trade payables, tourism taxes payable, property taxes payable, and other liabilities. The following table summarizes accounts payable and accrued liabilities as of December 31, 2024 and September 30, 2024:
| December 31, | September 30, | |||||
| 2024 | 2024 | |||||
| (unaudited) | ||||||
| Trade accounts payable | $ | $ | ||||
| Accrued expenses | ||||||
| Tourism taxes payable | ||||||
| Property taxes payable | ||||||
| Other | ||||||
| $ | $ |
Accrued expenses in the table above relate primarily to accrued utilities and other accrued operating expenses. Other accrued liabilities in the table above relate primarily to unclaimed property and gift certificates.
Accrued Wages and Related
Accrued wages and related are primarily related to the Company's annual bonus and employee vacation liabilities. The Company's annual bonus for the prior fiscal year is typically paid during November of the following year.
Note 4: Financing Transactions
Insurance Financing
During July 2024, the Company entered into an agreement to finance a portion of its commercial insurance premiums. The amount financed totaled $
Line of Credit
The Company has a revolving line of credit with Pacific Premier Bank for $
Notes to Unaudited Financial Statements
December 31, 2024
Note 5: Leases
The Company has both finance and operating leases. Finance leases are primarily for transportation equipment and are generally 60-84 months in duration with maturities through September 2031. The Company's one operating lease is for a storage lot and has a maturity date in 2026.
The following table summarizes the future minimum payments under lease liabilities as of December 31, 2024:
| For the Fiscal Year Ending Sept. 30, | Finance Leases | Operating Lease | ||||
| 2025 (9 months) | $ | $ | ||||
| 2026 | ||||||
| 2027 | ||||||
| 2028 | ||||||
| 2029 | ||||||
| Thereafter | ||||||
| Total future minimum payments | ||||||
| Less amount representing interest | ( |
) | ( |
) | ||
| Total lease obligations | ||||||
| Less current portion of lease obligations | ( |
) | ( |
) | ||
| Lease obligations, net of current portion | $ | $ |
The following table summarizes the components of the lease cost for the three months ended December 31, 2024 and 2023 (unaudited):
| Three months ended December 31, | ||||||
| 2024 | 2023 | |||||
| Finance lease cost: | ||||||
| Amortization of right-of-use assets | $ | $ | ||||
| Interest on lease liabilities | ||||||
| Total finance lease cost | $ | $ | ||||
| Operating lease cost | $ | $ | ||||
Supplemental balance sheet information related to leases as of December 31, 2024 and September 30, 2024 is as follows:
| December 31, | September 30, | |||||
| 2024 | 2024 | |||||
| (unaudited) | ||||||
| Right-of-use assets, gross | $ | $ | ||||
| Accumulated amortization | ( |
) | ( |
) | ||
| Net asset value included in property and equipment, net | $ | $ |
Notes to Unaudited Financial Statements
December 31, 2024
The following table summarizes the weighted-average remaining lease term and weighted-average discount rate as of December 31, 2024 and September 30, 2024:
| December 31, | September 30, | |||
| 2024 | 2024 | |||
| (unaudited) | ||||
| Weighted-average remaining lease term | ||||
| Finance leases | ||||
| Operating lease | ||||
| Weighted-average discount rate | ||||
| Finance leases | ||||
| Operating lease | ||||
Note 6: Property Leases - Lessor
The Company is the lessor on various property leases, which currently represent approximately $
| For the Fiscal Year Ending Sept. 30, | |||
| 2025 (9 months) | $ | ||
| 2026 | |||
| 2027 | |||
| 2028 | |||
| 2029 | |||
| 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 that provide each shareholder rights to certain benefits as described above 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.
Notes to Unaudited Financial Statements
December 31, 2024
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 $
Note 10: Subsequent Events
Events subsequent to December 31, 2024 have been evaluated through February 14, 2025, which is the date the financial statements were issued, and management did not identify any subsequent events that require adjustment or disclosure in the financial statements.
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 December 31, 2024, compared with December 31, 2023. The discussion should be read in conjunction with the unaudited financial statements and the related notes to the financial statements 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.
Management's Discussion and Analysis of Financial Condition and Results of Operations
This section is organized as follows:
16
Overview
Pismo Coast Village, Inc. operates as a 400-space recreational vehicle resort located along the coast of Central California. The resort offers a full range of services, such as a general 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 per year. However, if the Company is unable to generate sufficient funds from the 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 site sales to general public guests by allocating a minimum of 175 sites for general public use and allocating a maximum of 225 sites for shareholder free use. The other service centers are expected to generate sufficient revenue to support themselves and/or produce a profit.
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 camping annually. Additional revenues come from RV storage and spotting, an on-site convenience store, property leases and other ancillary activities such as a restaurant, laundromat, arcade, and recreational activities.
The Central Coast remains a highly sought-after destination for RV enthusiasts actively seeking quality accommodations. RVing continues to provide an affordable and immersive outdoor experience, and the Company is proud to deliver top-tier facilities and services in this popular location.
According to the 2024 KOA Camping & Outdoor Hospitality Report, the outlook for the industry remains strong, with eight out of ten campers indicating plans to either maintain or increase their camping trips in 2024.
Private campgrounds are ranked as the top choice for outdoor hospitality providers. Key elements of the outdoor hospitality experience include spending the majority of time outdoors (50%), access to classic camping amenities such as fire pits and outdoor seating (48%), and accommodations that reflect traditional camping environments, whether in RVs or tents (43%).
Despite the robust demand for advance bookings, economic challenges are influencing travelers' decisions. A recent quarterly survey highlights that many campers report a decline in their personal financial situation since early 2024, with inflation and economic concerns reducing overall disposable income. These factors are shaping travelers' spending patterns and choices for accommodations.
17
RV storage remains in demand and a primary revenue source for the Company. As of January 2025, the waitlist for new storage clients exceeds 500. To meet this demand, the Company is progressing with plans to develop an estimated 150-unit storage facility on a new 4.42 acre property in Nipomo. RV storage offers customers several advantages, including eliminating the stress of towing, reducing the need to own a tow vehicle, enabling shared use among family members, and providing added convenience.
Continued investment in resort enhancements remains a top priority to ensure a premier experience for both guests and shareholders. The resort is recognized as a leader in the industry, with accolades from reputable organizations such as Good Sam for its exceptional facilities and high standards. The Company's dedication to quality, value, and customer satisfaction is reflected in its success, driven by repeat business, positive word of mouth, and guest referrals.
The Company's marketing strategy focuses on digital platforms, social media content, advertising in national directories, and placements in leading trade magazines. These initiatives are designed to strengthen the Company's visibility and ensure sustained growth in the highly competitive outdoor hospitality market.
Liquidity and Capital Resources
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 has continued to maintain sufficient cash so as to not require the use of a short-term line of credit during the off-season period, and the Company expects to be able to do so (although no assurance of continued cash flow can be given).
Net cash provided by operating activities was approximately $183,000 in the three months ended December 31, 2024, compared to $114,000 in the same period of 2023. The increase in net cash provided by operating activities is due to the timing of vendor payments.
Working capital was $9.4 million at the end of both December 31, 2024 and September 30, 2024.
The Company plans approximately $1.4 million of capital expenditures in fiscal year 2025 to further enhance the Resort facilities and services. The most significant capital project is development of the 4.42 acre property in Nipomo for RV Storage. In addition, the Company plans to re-gravel some campsites, slurry and stripe the resort roads, and renovate the mini golf course as part of its ongoing facility maintenance programs. Funding for these projects is expected to come from normal operating cash flows and cash reserves. These capital expenditures are expected to increase the Resort's value to its shareholders and the general public.
With the possibility of requiring additional funds for planned capital improvements and the winter season, the Company maintains a $500,000 Line of Credit to ensure funds will be available if required. In anticipation of future large projects, the Board of Directors has instructed management to build operational cash balances. The Company has no other liabilities to creditors other than current accounts payable arising from its normal day-to-day operations, financing associated with the company's annual corporate insurance policy and advance Resort rental reservation deposits, none of which are in arrears.
18
The Board of Directors continues its previously established policy of adopting a stringent conservative budget for fiscal year 2025, which projects a positive cash flow of approximately $1.0 million from operations. This projection is based on paid site occupancy reflecting similar occupancy as experienced in fiscal year 2024. While the Company projects a positive cash flow, this cannot be assured for fiscal year 2025.
Results of Operations
The Company's revenue streams originate primarily from three sources: (a) RV camping site rentals, (b) RV storage & towing fees, and (c) retail sales through a general store. In addition, the Company generates revenue from leases of real property, such as our RV retail storefront, RV repair facility and cell towers on our real property and from other ancillary services, such as our restaurant, arcade and laundromat.
Three months ended December 31, 2024 compared to the three months ended December 31, 2023
| Three months ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| RV camping site rentals | $ | 1,340,000 | 65% | $ | 1,334,000 | 64% | |||||
| RV storage and towing fees | 464,000 | 23% | 504,000 | 24% | |||||||
| Retail store sales | 150,000 | 7% | 151,000 | 7% | |||||||
| Property lease income | 57,000 | 3% | 59,000 | 3% | |||||||
| Other ancillary services | 42,000 | 2% | 37,000 | 2% | |||||||
| $ | 2,053,000 | 100% | $ | 2,085,000 | 100% | ||||||
Overall, total revenue was relatively flat in the three months ended December 31, 2024 compared to the same period of 2023 (a $32,000 or 2% decrease).
RV camping site rental revenues increased $6,000 to $1,340,000 in the three months ended December 31, 2024 compared to $1,334,000 in the same period of 2023 primarily because the increase related to a $5 per night rate increase (7%) was offset by the impact of 6% lower occupancy during 2024 than 2023. Occupancy was lower in 2024 than 2023 because of the timing of weekends and holidays during the calendar quarter.
| Three months ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Paid RV camping site nights | 15,921 | 63% | 17,889 | 67% | |||||||
| Unpaid shareholder nights | 9,169 | 37% | 8,914 | 33% | |||||||
| Total Occupancy | 25,090 | 100% | 26,803 | 100% | |||||||
| Occupancy % | 68% | 73% | |||||||||
RV storage & towing fees decreased $40,000 to $464,000 in the three months ended December 31, 2024 compared to $504,000 in the same period of 2023, consistent with our storage lots being at full capacity and fluctuations in occupancy that impact towing fees.
19
Retail store revenues decreased $1,000 to $150,000 in the three months ended December 31, 2024 compared to $151,000 in the same period of 2023 due to the offsetting impact of occupancy and product mix. The company strives to maintain consistent pricing, which leads to moderate margins for staples such as groceries, ice, wood, and RV parts. Demand for logo-based merchandise drove up revenue as guests purchased newly offered premium apparel items.
Property lease income, which is primarily associated with rental of the RV repair facilities, decreased $2,000 to $57,000 in the three months ended December 31, 2024 compared to $59,000 in same period of 2023.
Operating expenses increased $50,000 to $2,001,000 in the three months ended December 31, 2024 compared to $1,951,000 in same period of 2023. The increase is primarily due a $200,000 increase in professional fees associated with the audit and compliance. These additional expenses were partially offset by a decrease in facility related costs due to fewer maintenance projects.
Cost of goods sold decreased $11,000 to $76,000 in the three months ended December 31, 2024 compared to $87,000 in the same period of 2023 primarily due to the mix of products sold in the store. During 2024 we sold an increased proportion of higher margin apparel as our guests are enjoying new logo apparel.
Depreciation and amortization expense increased $30,000 to $137,000 in the three months ended December 31, 2024 compared to $107,000 in the same period of 2023 due primarily to depreciation on three new tow vehicles that were put in service in late 2024.
Other income and expense, net increased $23,000 to $102,000 in the three months ended December 31, 2024, compared to $79,000 in the same period of 2023, primarily because of additional interest on increased cash reserves, as well as increased interest rates in 2024 compared to 2023.
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.
20
Seasonality
The business of the Company is seasonal and is concentrated on prime days of the year which are defined as follows: President's Day weekend, Easter week, Memorial Day weekend, summer vacation months, Labor Day weekend, Thanksgiving week, and Christmas/New Year's week.
Occupancy is impacted by weather patterns, as demand decreases during the rainy season and also in years with more rain. Additionally, occupancy within any particular quarter is impacted by the timing of weekends and holidays within that calendar quarter.
Due the seasonal impact, fall and winter months derive less revenue and profit than the rest of the year. Revenue, paid occupancy and income (loss) from operations for the past eight quarters were as follows:aaa
| 2024 | 2023 | ||||||
| Revenue for the three months ended | |||||||
| December 31 | $ | 2,053,000 | $ | 2,085,000 | |||
| September 30 | $ | 3,027,000 | $ | 2,875,000 | |||
| June 30 | $ | 2,680,000 | $ | 2,701,000 | |||
| March 31 | $ | 1,935,000 | $ | 2,013,000 | |||
| Paid Occupancy for the three months ended | |||||||
| December 31 | 15,921 | 17,889 | |||||
| September 30 | 22,914 | 22,961 | |||||
| June 30 | 20,339 | 22,665 | |||||
| March 31 | 14,958 | 15,833 | |||||
| Income (loss) from operations for the three months ended | |||||||
| December 31 | $ | (161,000 | ) | $ | (60,000 | ) | |
| September 30 | $ | 481,000 | $ | 537,000 | |||
| June 30 | $ | 832,000 | $ | 653,000 | |||
| March 31 | $ | (13,000 | ) | $ | (33,000 | ) | |
Occupancy during the three months ended December 31, 2024 was less than the comparable three months of the prior year due primarily to the timing of weekends and holidays. Revenue for the three months ended December 31, 2024 dropped less than occupancy for the comparable three months of the prior year due to the $5 per night rate increase established during 2024. Loss from operations for the three months ended December 31, 2024 increased compared to the comparable three months of the prior year due primarily to increased professional advisor fees associated with the annual independent audit.
Occupancy during the quarter ending March 31, 2025 is expected to be seasonally lower, because it is winter, resulting in lower revenue and increased losses than the quarter ended December 31, 2024.
21
Critical Accounting Estimates
The Company's consolidated financial statements are prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosure of contingent assets and liabilities. In some cases, management could reasonably have used different accounting policies and estimates. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, the Company's financial condition or results of operations will be affected.
Management bases estimates upon past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates. Our critical accounting policies are described in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of our 2024 Annual Report on Form 10-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Financial Statements, which have been prepared in accordance with U.S. GAAP. Our significant accounting policies are more fully described in Note 2, Significant Accounting Policies, in the Notes to Financial Statements of our 2024 Annual Report on Form 10-K. There were no changes to our significant accounting policies during the three months ended December 31, 2024.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing internal control over financial reporting ("ICFR") as defined in Rules 13a-I5(f) and 15(d)-15(f) under the 1934 Act. Our ICFR is intended to be designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our ICFR is expected to include policies and procedures that management believes are necessary that:
1. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company
2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and our directors; and
3. provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
22
Inherent Limitations on Effectiveness of Controls
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect of financial statement preparation and may not prevent or detect misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.
Controls Assessment
As of September 30, 2024, management with the participation of our CEO, General Manager and CFO, assessed the effectiveness of the Company's internal control over financial reporting (ICFR) based on the criteria for effective ICFR established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and SEC guidance on conducting such assessments by smaller reporting companies and non-accelerated filers. Based on that assessment, management concluded that our disclosure controls and procedures were effective during periods covered by this report (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).
In connection with our management's assessment of controls over financial reporting during the years ended September 30, 2023 and 2024, 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 related to internal controls over financial reporting. To address this material weakness, during the first quarter of 2024 we 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. During the quarter ended September 30, 2024, management further supplemented the company's internal accounting resources with an experienced temporary controller consultant who was responsible for reviewing our internal control processes and performing second level reviews of financial reporting under the oversight of the recently appointed Chief Financial Officer. As of December 31, 2024, we conclude that we have not sufficiently remediated this control deficiency because the additional controls have not 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.
23
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
24
ITEM 6. Exhibits
25
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: February 14, 2025
Signature: /s/ GEORGE PAPPI, JR.
George Pappi, Jr., President, and Chairman of the Board
(Chief Executive Officer/Principal executive officer)
Date: February 14, 2025
Signature: /s/ SUZANNE M COLVIN
Suzanne M Colvin, V.P. - Finance/Chief Financial Officer
(Principal financial officer and principal accounting officer)
26