UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For
the quarterly period ended
COMMISSION
FILE NUMBER
(Exact Name of small business issuer as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices) (Zip Code)
Issuer’s
telephone Number: (
Indicate
by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer ☐ | Accelerated filer | ☐ | |
| (Do not check if a smaller reporting company) | Smaller reporting company | ||
| Emerging growth company |
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 ☐
As of August 10, 2022, the issuer had outstanding shares of Common Stock.
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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Table of Contents
PARKS! AMERICA, INC and SUBSIDIARIES
INDEX
| 2 |
PARKS! AMERICA, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of July 3, 2022 and October 3, 2021
| July 3, 2022 | October 3, 2021 | |||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use asset, net | ||||||||
| Intangible assets, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Other current liabilities | ||||||||
| Current portion of finance lease obligation | ||||||||
| Current portion of long-term debt, net | ||||||||
| Total current liabilities | ||||||||
| Long-term portion of finance lease obligation | ||||||||
| Long-term debt, net | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity | ||||||||
| Common stock; shares authorized, at $ par value; and shares issued and outstanding, respectively | ||||||||
| Capital in excess of par | ||||||||
| Treasury stock | ( | ) | ||||||
| Retained earnings | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
PARKS! AMERICA, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months and Nine Months Ended July 3, 2022 and July 4, 2021
| For the three months ended | For the nine months ended | |||||||||||||||
| July 3, 2022 | July 4, 2021 | July 3, 2022 | July 4, 2021 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Sale of animals | ||||||||||||||||
| Total net sales | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Legal settlement | ||||||||||||||||
| (Gain) loss on disposal of operating assets | ( | ) | ( | ) | ||||||||||||
| Income from operations | ||||||||||||||||
| Other income, net | ||||||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income before income taxes | ||||||||||||||||
| Income tax provision | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Income per share - basic and diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding (in 000’s) - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
PARKS! AMERICA, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
For the Three, Six and Nine Months Ended July 3, 2022 and July 4, 2021
| Capital in | Treasury | Retained | ||||||||||||||||||||||
| Shares | Amount | Excess of Par | Stock | Earnings | Total | |||||||||||||||||||
| Balance at October 3, 2021 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Net loss for the three months ended January 2, 2022 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at January 2, 2022 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Issuance of common stock to Directors | ||||||||||||||||||||||||
| Directors and Officer | ||||||||||||||||||||||||
| Retirement of Treasury Stock | - | ( | ) | |||||||||||||||||||||
| Net loss for the three months ended April 3, 2022 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at April 3, 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income for the three months ended July 3, 2022 | - | |||||||||||||||||||||||
| Balance at July 3, 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Capital in | Treasury | Retained | ||||||||||||||||||||||
| Shares | Amount | Excess of Par | Stock | Earnings | Total | |||||||||||||||||||
| Balance at September 27, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Net income for the three months ended January 3, 2021 | - | |||||||||||||||||||||||
| Balance at January 3, 2021 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Issuance of common stock to Directors | ||||||||||||||||||||||||
| Net income for the three months ended April 4, 2021 | - | |||||||||||||||||||||||
| Balance at April 4, 2021 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Net income for the three months ended July 4, 2021 | - | |||||||||||||||||||||||
| Balance at July 4, 2021 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
PARKS! AMERICA, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended July 3, 2022 and July 4, 2021
| For the nine months ended | ||||||||
| July 3, 2022 | July 4, 2021 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | $ | ||||||
| Reconciliation of net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Amortization of right of use asset | ||||||||
| Interest expense - debt financing cost amortization | ||||||||
| Interest expense - financing lease | ||||||||
| Interest expense - loan discount amortization | ||||||||
| Stock-based compensation | ||||||||
| (Gain) loss on disposal of assets | ( | ) | ||||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Changes in assets and liabilities | ||||||||
| (Increase) decrease in accounts receivable | ( | ) | ||||||
| (Increase) decrease in inventory | ( | ) | ( | ) | ||||
| (Increase) decrease in prepaid expenses | ( | ) | ||||||
| Increase (decrease) in accounts payable | ||||||||
| Increase (decrease) in other current liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| INVESTING ACTIVITIES: | ||||||||
| Acquisition of property and equipment | ( | ) | ( | ) | ||||
| Tradename registrations | ( | ) | ||||||
| Proceeds from the disposition of property and equipment | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Payments on 2020 Term Loan | ( | ) | ( | ) | ||||
| Payments on 2021 Term Loan | ( | ) | ||||||
| Principal payments on finance lease obligation | ( | ) | ||||||
| Payments on 2018 Term Loan | ( | ) | ||||||
| Payment of Note to Seller of Aggieland Safari | ( | ) | ||||||
| Proceeds from 2021 Term Loan | ||||||||
| Debt financing costs | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net (decrease) increase in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental Disclosure of Noncash Investing and Financing Activities: | ||||||||
| Right of use asset obtained in exchange for lease liability | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 1. ORGANIZATION
Parks!
America, Inc. (“Parks!” or the “Company”) was originally incorporated on
On December 19, 2003, Royal Pacific Resources, Inc. acquired the assets of Great Western Parks LLC pursuant to a Share Exchange Agreement that resulted in the Company assuming control and changing the corporate name to Great American Family Parks, Inc. The acquisition was accounted for as a reverse acquisition in which Great Western Parks was considered to be the acquirer of Royal Pacific Resources for reporting purposes. On June 11, 2008, the Company changed its name from Great American Family Parks, Inc. to Parks! America, Inc.
The Company owns and operates through wholly owned subsidiaries three regional theme parks and is in the business of acquiring, developing and operating local and regional theme parks and attractions in the United States. The Company’s wholly owned subsidiaries are Wild Animal Safari, Inc. a Georgia corporation (“Wild Animal – Georgia”), Wild Animal, Inc., a Missouri corporation (“Wild Animal – Missouri”), and Aggieland-Parks, Inc., a Texas corporation (“Aggieland Wild Animal – Texas”). Wild Animal – Georgia owns and operates the Wild Animal Safari theme park in Pine Mountain, Georgia (the “Georgia Park”). Wild Animal – Missouri owns and operates the Wild Animal Safari theme park located in Strafford, Missouri (the “Missouri Park”). Aggieland Wild Animal – Texas owns and operates the Aggieland Wild Animal Safari theme park near Bryan/College Station, Texas (the “Texas Park”). The Company acquired the Georgia Park on June 13, 2005, the Missouri Park on March 5, 2008, and the Texas Park on April 27, 2020.
The Company’s Parks are open year round, but experience increased seasonal attendance, typically beginning in the latter half of March through early September. As a result, combined third and fourth quarter net sales have historically ranged from 68% to 72% of annual attendance based net sales. For the Company’s 2021 fiscal year, the first full fiscal year including the Texas Park, combined third and fourth quarter net sales were approximately 60% of annual attendance based net sales.
COVID-19
In March 2020, the World Health Organization characterized COVID-19, a disease caused by a novel strain of a coronavirus, as a pandemic. The rapid spread of COVID-19 resulted in governmental authorities throughout the United States implementing a variety of containment measures with the objective of slowing the spread of the virus, including travel restrictions, shelter-in-place orders and business shutdowns. The COVID-19 pandemic and these containment measures have had, and could continue to have, a material impact on the Company’s business.
The rapid acceleration of the COVID-19 pandemic in the United States occurred at the beginning of the Company’s 2020 fiscal year annual high season. Effective April 3, 2020, the Company’s Georgia and Missouri Parks were closed as a result of shelter-in-place mandates. Additionally, prior to the Company’s acquisition of the Texas Park, its operations were suspended for the majority of April 2020 due to a shelter-in-place mandate. In compliance with respective state issued guidelines, the Georgia Park and the Texas Park each reopened on May 1, 2020, and the Missouri Park reopened on May 4, 2020. Subsequent to reopening, attendance levels increased significantly at each of the Company’s three Parks for the balance of its 2020 fiscal year, which continued throughout its 2021 fiscal year in comparison to comparable pre-COVID-19 periods. While attendance based net sales remain higher compared to comparable pre-COVID-19 periods, the Company experienced a decline in aggregate comparable year-over-year attendance based net sales and attendance for the last 22 weeks of its 2021 fiscal year and for the first 44 weeks of its 2022 fiscal year, respectively.
While the Company has experienced attendance gains and strong cash flow since the beginning of the COVID-19 pandemic, there may be longer-term negative impacts to the Company’s business, results of operations and cash flows, and financial condition as a result of the COVID-19 pandemic. These negative impacts may include changes in customer behavior and preferences causing significant volatility or reductions in attendance at one or more of our Parks, increases in operating expenses, limitations in the Company’s ability to recruit and maintain staffing, limitations on the Company’s employees ability to work and travel, and significant changes in the economic or political conditions in the areas the Company’s Parks are located. Despite the Company’s efforts to manage these potential impacts, the ultimate impact may be material, and may depend on a number factors beyond its control, including the duration and severity of the COVID-19 pandemic and actions by governmental authorities taken to contain its spread and mitigate its public health effects. There is also the potential for attendance levels at the Company’s Parks to moderate or decline as alternative entertainment venues reopen to full capacity once the COVID-19 pandemic has run its course or vaccines are widely adopted and proven effective.
| 7 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The Company’s unaudited consolidated financial statements for the three months and nine months ended July 3, 2022 and July 4, 2021 are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with instructions to Form 10-Q and Article 10 of Regulation S-X. The Company believes that the disclosures made are adequate to make the information presented not misleading. The information reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods set forth herein. Interim results are not necessarily indicative of the results for a full fiscal year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2021.
Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries (Wild Animal – Georgia, Wild Animal – Missouri and Aggieland Wild Animal – Texas). All material inter-company accounts and transactions have been eliminated in consolidation.
Accounting Method: The Company recognizes income and expenses based on the accrual method of accounting.
Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Fiscal Year End: The Company’s fiscal year-end is the Sunday closest to September 30, and its quarterly close dates are also determined by the Sunday closest to the end of each quarterly reporting period. For the 2022 fiscal year, October 2 will be the closest Sunday, and for the 2021 fiscal year, October 3 was the closest Sunday. The 2022 fiscal year will be comprised of 52-weeks, while the 2021 fiscal year was comprised of 53-weeks. This fiscal calendar aligns the Company’s fiscal periods closely with the seasonality of its business. The high season typically ends after the Labor Day holiday weekend. The period from October through early March is geared towards maintenance and preparation for the next busy season, which typically begins at Spring Break and runs through Labor Day.
Financial and Concentrations Risk: The Company does not have any significant concentration or related financial credit risks. The Company maintains its cash in bank deposit accounts, which at times may exceed federally insured limits.
Trade
Accounts Receivable: The theme parks are a payment upfront business; therefore, the Company typically carries little or no accounts
receivable. The Company had $
Inventory:
Inventory consists of gift shop items, animal food, and concession and park supplies, and is stated at the lower of cost or net
realizable value. Cost is determined on the first-in, first-out method. The gross profit method is used to determine the change in gift
shop inventory for interim periods. Inventories are reviewed and reconciled annually because inventory levels turn over rapidly. The
Company had inventory of $
| 8 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment: Property and equipment are stated at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the assets, which range from three to thirty-nine years. A summary is included below.
| As of | ||||||||||
| July 3, 2022 | October 3, 2021 | Depreciable Lives | ||||||||
| Land | $ | $ | ||||||||
| Mineral rights | ||||||||||
| Ground improvements | ||||||||||
| Buildings and structures | ||||||||||
| Animal shelters and habitats | ||||||||||
| Park animals | ||||||||||
| Equipment - concession and related | ||||||||||
| Equipment and vehicles - yard and field | ||||||||||
| Vehicles - buses and rental | ||||||||||
| Rides and entertainment | ||||||||||
| Furniture and fixtures | ||||||||||
| Projects in process | ||||||||||
| Property and equipment, cost | ||||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||||
| Property and equipment, net | $ | $ | ||||||||
Depreciation
expense for the three months ended July 3, 2022 and July 4, 2021 totaled $
Intangible
Assets: Intangible assets consist of tradename registrations, which are reported at cost and are being amortized over a period
of
Impairment of Long-Lived Assets: The Company reviews its major assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is considered impaired, then impairment will be recognized in an amount determined by the excess of the carrying amount of the asset over its fair value.
Other Current Liabilities: The following is a breakdown of other current liabilities:
| As of | ||||||||
| July 3, 2022 | October 3, 2021 | |||||||
| Deferred revenue | $ | $ | ||||||
| Accrued legal settlement | ||||||||
| Accrued sales taxes | ||||||||
| Accrued wages and payroll taxes | ||||||||
| Accrued property taxes | ||||||||
| Other accrued liabilities | ||||||||
| Other current liabilities | $ | $ | ||||||
Financial Instruments: The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short-term maturities or due to the fact they were entered into during the Company’s 2021 and 2020 fiscal years. Securities that are publicly traded are valued at their fair market value as of the balance sheet date presented.
| 9 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition: The Company recognizes revenues in accordance with ASC 606, Revenues from Contracts with Customers. Under ASC 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocation the transaction price to the performance obligation in the contract; and (5) recognize revenue when (or as) the Company satisfies the performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.
Revenues from park admission fees are recognized at the point in time control transfers to the customer, which is generally when the customer accepts access to the park and the Company is entitled to payment. Park admission fee revenues from advance online ticket purchases are deferred until the customers’ visit to the parks. Revenues from retail and concession sales are generally recognized upon the concurrent receipt of payment and delivery of goods to the customer. Sales taxes billed and collected are not included in revenue.
The Company periodically sells surplus animals created from the natural breeding process that occurs within the parks. All animal sales are reported as a separate revenue line item. Animal sales are recognized at a point in time when control transfer to the customer, which is generally determined when title, ownership and risk of loss pass to the customer, all of which generally occurs upon delivery of the animal. Based on the Company’s assessment of control indicators, sales are recognized when animals are delivered to the customer.
The Company provides disaggregation of revenue based on geography in “Note 10: Business Segments”, as it believes this best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
Deferred
revenues from advance online admission tickets and related advance sales were $
Advertising
and Marketing Costs: The Company expenses advertising and marketing costs as incurred. Advertising and marketing expense for
the three months ended July 3, 2022 and July 4, 2021 totaled $
Leases: The Company determines if an arrangement contains a lease at inception and accounts for all leases in accordance with ASC 842, Leases. If an arrangement contains a lease, the Company performs a classification test to determine if the lease is an operating lease or a financing lease. Right of use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Right of use assets are valued at the initial measurement of the lease liability, plus any indirect costs or rent prepayments, and reduced by any lease incentives and any deferred lease payments. Right of use assets are amortized over the lease term. Lease liabilities are recognized on the commencement date of the lease based on the present value of the future lease payments over the lease term. The discount rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate, unless the rate implicit in the lease is readily determinable. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the life of the lease, unless management believes there is an alternative systematic basis which better represents the pattern which the Company will consume the economic benefits thereof and is included within general and administrative expenses. As a practical expedient, the Company does not recognize right-of-use assets and lease liabilities for leases with an original term of one year or less. Any non-lease components are not included within the lease right-of-use asset and lease liability, are reflected as an expense in the period incurred.
Paycheck Protection Program Loan Accounting Policy: Currently, there is no authoritative guidance under GAAP that addresses accounting and reporting by a for-profit business entity that receives forgivable debt from a government entity. Accordingly, management has elected to recognize forgivable debt received from a government entity as debt until debt extinguishment occurs when the Company is legally released from being the obligor. Upon legal release as obligor, the Company will recognize the forgiven amount as income.
| 10 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A Stock Option and Award Plan (the “Plan”) providing for incentive stock options and performance bonus awards for executives, employees, and directors was approved by the Company’s Board of Directors on February 1, 2005, however, the Plan has not been submitted to the stockholders for approval. The Plan sets aside five million () shares for award of stock options, including qualified incentive stock options and performance stock bonuses. To date, grants or awards have been made pursuant to the Plan and the Company did not submit the Plan for consideration to the Company’s stockholders at its last meeting of stockholders.
Income Taxes: The Company utilizes the asset and liability method of accounting for income taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using the enacted tax rates and laws. Management periodically reviews the Company’s deferred tax assets to determine whether their value can be realized based on available evidence. A valuation allowance is established when management believes it is more likely than not, that such tax benefits will not be realized. Changes in valuation allowances from period to period are included in the Company’s income tax provision in the period of change.
The
Company follows the guidance in FASB ASC 740 with respect to accounting for uncertainty in income taxes. A tax position is recognized
as a benefit only if it is “more-likely-than-not” that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than fifty percent likely
of being realized on examination. For tax positions not meeting the “more-likely-than-not” test, no tax benefit is recorded.
The Company has no unrecognized tax benefits under guidance related to tax uncertainties. The Company does not anticipate the unrecognized
tax benefits will significantly change in the next twelve months. Any tax penalties or interest expense will be recognized in income
tax expense.
Basic and diluted net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the applicable weighted average number of common shares outstanding in each period.
Dividend Policy: The Company has not yet adopted a policy regarding payment of dividends.
Recent Accounting Pronouncements:
Credit Losses – Financial Instruments
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326), which changes the impairment model for most financial assets to require measurement and recognition of expected credit losses for financial assets held, replacing the existing incurred loss model. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2022, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures, however, it is not anticipated to be material.
Except as noted, the Company does not expect recently issued accounting standards or interpretations to have a material impact on the Company’s financial position, results of operations, cash flows or financial statement disclosures.
| 11 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 3. LONG-TERM DEBT
On
On
On
The
Aggieland Seller Note represented a deferred portion of the Aggieland Wild Animal – Texas purchase price, had a face value of $
As
a result of the initial negative economic impacts and uncertainties caused by the COVID-19 pandemic, Wild Animal – Georgia and
Wild Animal – Missouri each applied for Paycheck Protection Program (“PPP”) loans. On April 14, 2020 and April 16,
2020, the Company received two unsecured PPP loans totaling $
| 12 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 3. LONG-TERM DEBT (CONTINUED)
Interest
expense of $
The following table represents the aggregate of the Company’s outstanding long-term debt:
| As of | ||||||||
| July 3, 2022 | October 3, 2021 | |||||||
| Loan principal outstanding | $ | $ | ||||||
| Less: unamortized debt financing costs | ( | ) | ( | ) | ||||
| Gross long-term debt | ||||||||
| Less current portion of long-term debt, net of unamortized costs and discount | ( | ) | ( | ) | ||||
| Long-term debt | $ | $ | ||||||
As of July 3, 2022, the scheduled future principal maturities of the Company’s long-term debt by fiscal year are as follows:
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| thereafter | ||||
| Total | $ |
NOTE 4. LINE OF CREDIT
NOTE 5. FINANCE LEASE
In October 2021, the Company entered into a financing lease for certain property related to a Christmas Lights drive through display at its Missouri Park. Future minimum lease payments, by fiscal year, with the present value of such payments as of July 3, 2022, are shown in the following table:
| 2023 | $ | |||
| 2024 | ||||
| Total minimum lease payments | ||||
| Less amount representing interest | ( | ) | ||
| Present value of minimum lease payments | ||||
| Less current portion | ( | ) | ||
| Long-term portion of finance lease obligation | $ | |||
| 13 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 5. FINANCE LEASE (CONTINUED)
The property under the finance lease at July 3, 2022 is included in the accompanying balance as follows:
| Christmas Light Display | ||||
| Less accumulated amortization | ( | ) | ||
| Right of use asset, net | $ |
The
right of use asset for this equipment is being amortized over the three-year term of the lease, on a systematic basis which management
believes best represents the pattern in which the Company will consume the economic benefits thereof. As such, the full annual amortization
expense has been and will be recognized during the first three months of the Company’s fiscal year. The weighted-average remaining
lease term is
The Company has the right to purchase the right of use asset during and at the end of the lease period, as follows:
| Current | $ | |||
| After 2023 display | ||||
| After 2024 display |
NOTE 6. STOCKHOLDERS’ EQUITY
Shares of common stock issued for service to the Company are valued based on market price on the date of the award.
On
December 13, 2021, the Company awarded a non-Director officer $
Officers,
Directors and their controlled entities own approximately
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PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Effective
as of
Effective
as of
Effective
as of
As
of July 3, 2022, the Company has not adopted any deferred compensation plans. Two of the foregoing employment agreements contains provisions
for severance compensation in the event an agreement is (i) terminated early by the Company without cause ($
NOTE 8. INCOME TAXES
For
the nine month period ended July 3, 2022, the Company reported pre-tax income of $
NOTE 9. COMMITMENTS AND CONTINGENCIES
On
February 17, 2021, two children of James Meikle, the Company’s former President and Chief Operating Officer, filed a complaint
(the “Complaint”) in the Eighth Judicial District Court, Clark County, Nevada (case no. A-21-829563-C), alleging the
Company was obligated under Mr. Meikle’s Employment Agreement to purchase at least $
Except as noted above, the Company is not a party to any pending legal proceeding, nor is its property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of its business. None of the Company’s directors, officers or affiliates is involved in a proceeding adverse to its business or has a material interest adverse to its business.
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PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2022
NOTE 10. BUSINESS SEGMENTS
The Company manages its operations on an individual location basis. Discrete financial information is maintained for each Park and provided to management for review and as a basis for decision-making. The primary performance measures used to allocate resources are Park earnings before interest and tax expense, and free cash flow.
The following tables present financial information regarding each of the Company’s reportable segments:
| For the three months ended | For the nine months ended | |||||||||||||||
| July 3, 2022 | July 4, 2021 | July 3, 2022 | July 4, 2021 | |||||||||||||
| Total net sales: | ||||||||||||||||
| Georgia | $ | $ | $ | $ | ||||||||||||
| Missouri | ||||||||||||||||
| Texas | ||||||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||
| Income (loss) before income taxes: | ||||||||||||||||
| Georgia | $ | $ | $ | $ | ||||||||||||
| Missouri | ( | ) | ( | ) | ||||||||||||
| Texas | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Segment total | ||||||||||||||||
| Corporate | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Legal settlement | ( | ) | ( | ) | ||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||
| As of | ||||||||
| July 3, 2022 | October 3, 2021 | |||||||
| Total assets: | ||||||||
| Georgia | $ | $ | ||||||
| Missouri | ||||||||
| Texas | ||||||||
| Corporate | ||||||||
| Consolidated | $ | $ | ||||||
NOTE 11. SUBSEQUENT EVENTS
The
Company has analyzed its operations subsequent to July 3, 2022 to the date these financial statements were issued and has determined
that no material subsequent events have occurred from the date of these unaudited consolidated financial statements, except as follows:
on August 5, 2022, the Company agreed to pay $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Management’s discussion and analysis of results of operations and financial condition (“MD&A”) is a supplement to the accompanying unaudited consolidated financial statements and provides additional information on the Company’s businesses, current developments, financial condition, cash flows and results of operations. The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with our Annual Report on Form 10-K for the fiscal year ended October 3, 2021.
Forward-Looking Statements
Except for the historical information contained herein, this Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve risks and uncertainties, including, among other things, statements concerning: our business strategy; liquidity and capital expenditures; future sources of revenues and anticipated costs and expenses; and trends in industry activity generally. Such forward-looking statements include, among others, those statements including the words such as “may,” “will,” “should,” “expect,” “plan,” “could,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “goal,” or “continue” or similar language or by discussions of our outlook, plans, goals, strategy or intentions.
Our actual results may differ significantly from those projected in the forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including, but not limited to, the risks outlined under “Risk Factors” in this Quarterly Report, that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to: competition from other parks, weather conditions during our primary tourist season, the price of animal feed and the price of gasoline. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, we cannot guarantee future results, levels of activity, performance or achievements. Additional risks have been added to our business by the near-term and long-term impacts of the COVID-19 pandemic on the operations of our Parks, including customers perceptions of engaging in the activities involved in visiting our Parks, our ability to hire and retain employees in light of the issues posed by the COVID-19 pandemic, and our ability to maintain sufficient cash to fund operations due to the possible negative impact on our Park revenues associated with potential future disruptions in demand as a result of the pandemic.
The forward-looking statements we make in this Quarterly Report are based on management’s current views and assumptions regarding future events and speak only as of the date of this report. We assume no obligation to update any of these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements, except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission.
Overview
Through our wholly owned subsidiaries, we own and operate three regional theme parks and are in the business of acquiring, developing and operating local and regional theme parks and attractions in the United States. Our wholly owned subsidiaries are Wild Animal Safari, Inc., a Georgia corporation (“Wild Animal – Georgia”), Wild Animal, Inc., a Missouri corporation (“Wild Animal – Missouri”), and Aggieland-Parks, Inc., a Texas corporation (“Aggieland Wild Animal – Texas”). Wild Animal – Georgia owns and operates the Wild Animal Safari theme park in Pine Mountain, Georgia (the “Georgia Park”). Wild Animal – Missouri owns and operates the Wild Animal Safari theme park located in Strafford, Missouri (the “Missouri Park”). Aggieland Wild Animal – Texas owns and operates the Aggieland Wild Animal Safari theme park near Bryan/College Station, Texas (the “Texas Park”).
Our Parks are open year round, but experience increased seasonal attendance, typically beginning in the latter half of March through early September. As a result, our combined third and fourth quarter net sales have historically ranged from 68% to 72% of our annual attendance based net sales. For our 2021 fiscal year, the first full fiscal year including our Texas Park, combined third and fourth quarter net sales were approximately 60% of our annual attendance based net sales
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Through our fiscal year ended October 3, 2021, our annual net sales, adjusted income before income taxes and net cash provided by operating activities have improved significantly over the past nine fiscal years. These improvements are primarily attributable to a combination of increased attendance based revenues and operating cost controls. Our Georgia Park in particular has benefitted from several positive factors including strong management, the addition of online ticket sales in June 2015, growth and positive economic conditions in the greater Atlanta area, as well as positive guest perceptions of this Park. Strong results through our 2019 fiscal year and the resulting improvements in our financial position provided us with the resources to pursue and ultimately close the acquisition of our Texas Park during our 2020 fiscal year.
The rapid acceleration of the COVID-19 pandemic in the United States occurred at the beginning of our 2020 fiscal year annual high season. Effective April 3, 2020, both our Georgia and Missouri Parks were closed as a result of shelter-in-place mandates. Additionally, prior to our acquisition of the Texas Park, its operations were suspended for the majority of April 2020 due to a shelter-in-place mandate. In compliance with respective state issued guidelines, our Georgia Park and our Texas Park each reopened on May 1, 2020, and our Missouri Park reopened on May 4, 2020. Subsequent to reopening, attendance levels increased significantly at each of our three Parks for the balance of our 2020 fiscal year, which continued throughout our 2021 fiscal year in comparison to comparable pre-COVID-19 periods. While attendance based net sales remain higher in comparison to comparable pre-COVID-19 periods, we experienced a decline in aggregate attendance based net sales and attendance for the last 22 weeks of our 2021 fiscal year and for the first 44 weeks of our 2022 fiscal year, respectively.
We believe the increased attendance levels, relative to comparable pre-covid-19 periods, each of our Parks has experienced since reopening in early May 2020 reflects the principally outdoor nature of the family-friendly, wild animal education and entertainment experience provided at each of our Parks. The experience offered at each of our Parks was particularly attractive during the height COVID-19 pandemic as potential guests are seeking outdoor entertainment options. While we have seen many repeat customers since reopening in early May 2020, we also experienced an increase in first time visitors seeking an outdoor entertainment alternative. We believe this has increased the local and regional awareness for each of our Parks, which we believe will have positive longer-term ramifications for our business.
While we have experienced attendance gains and strong cash flow since the beginning of the COVID-19 pandemic, there remains the possibility of longer-term negative impacts to our business, results of operations and cash flows, and financial condition, as a result of the COVID-19 pandemic. These negative impacts may include changes in customer behavior and preferences causing significant volatility or reductions in attendance at one or more of our Parks, increases in operating expenses, limitations in our ability to recruit and maintain staffing, limitations on our employees ability to work and travel, and significant changes in the economic or political conditions in the areas our Parks are located. Despite our efforts to manage these potential impacts, the ultimate impact may be material, and may depend on a number of factors beyond our control, including the duration and severity of the COVID-19 pandemic, the outbreak of new variants of the COVID-19 virus, and actions by governmental authorities taken to contain its spread and mitigate its public health effects. There is also the potential for attendance levels at our Parks to moderate or decline as alternative entertainment venues reopen to full capacity once the COVID-19 pandemic has run its course or vaccines are widely adopted and proven effective.
We are committed to leveraging the strong operating model we have established at our Georgia Park, with a focus on increasing attendance, as well as increasing the average revenue generated per guest visit via concession and gift shop revenues. Among our highest priorities over the next several years is continuing the integration of our Texas Park. As our Texas Park first opened to the public in May 2019, we believe there remains tremendous potential to increase attendance by increasing the local and regional awareness of this facility via advertising and promotion. We are pleased with the expanded attendance at our Missouri Park since it reopened in May 2020 and plan on leveraging the increased exposure of this facility to continue to build on this recent success.
During our 2021 fiscal year, we engaged an experienced amusement industry consulting firm to assist us in developing a master plan for our Georgia Park. In aggregate, our initial 2022 fiscal year capital investment plan involved nearly $3.0 million of improvements across all three of our Parks. Our 2022 fiscal year capital plan included the first major project within our master plan, an impressive giraffe exhibit at our Georgia Park. However, due to several issues, we currently project this project will not be completed until at least the spring of 2023. Our current projections indicate our fiscal 2022 capital spending will now total approximately $1.75 million.
Our long-term business plan includes expansion via the acquisition of additional local or regional theme parks and attractions, if attractive opportunities arise. We believe acquisitions, if any, should not unnecessarily encumber the Company with additional debt that cannot be justified by current operations. We may also pursue contract management opportunities for themed attractions owned by third parties. By using a combination of equity, debt and other financing options, we intend to carefully monitor stockholder value in conjunction with the pursuit of growth.
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Strong growth in our annual operating cash flow over the past nine fiscal years has provided us with incremental cash flow, and provided us with the financial strength to complete the acquisition of our Texas Park and to significantly increase our planned capital investment spending during our 2022 fiscal year. However, our current size and operating model leave us little room for error. Any future capital raised by us is likely to result in dilution to existing stockholders. It is possible that cash generated by, or available to, us may not be sufficient to fund our capital and liquidity needs for the near-term.
We manage our operations on an individual location basis. Discrete financial information is maintained for each Park and provided to our corporate management for review and as a basis for decision-making. The primary performance measures used to allocate resources are Park earnings before interest and tax expense, and free cash flow. We use this measure of operating profit to gauge segment performance because we believe this measure is the most indicative of performance trends and the overall earnings potential of each reportable segment.
Results of Operations for the Three Month Period Ended July 3, 2022 as Compared to Three Month Period Ended July 4, 2021
The following table shows our consolidated and segment operating results for the three month periods ended July 3, 2022 and July 4, 2021:
| Georgia Park | Missouri Park | Texas Park | Consolidated | |||||||||||||||||||||||||||||
| Fiscal 2022 | Fiscal 2021 | Fiscal 2022 | Fiscal 2021 | Fiscal 2022 | Fiscal 2021 | Fiscal 2022 | Fiscal 2021 | |||||||||||||||||||||||||
| Total net sales | $ | 2,517,848 | $ | 2,724,847 | $ | 537,189 | $ | 618,185 | $ | 589,288 | $ | 531,068 | $ | 3,644,325 | $ | 3,874,100 | ||||||||||||||||
| Segment income (loss) from operations | 1,286,953 | 1,721,101 | 76,589 | 158,419 | (48,695 | ) | (31,482 | ) | 1,314,847 | 1,848,038 | ||||||||||||||||||||||
| Segment operating margin % | 51.1 | % | 63.2 | % | 14.3 | % | 25.6 | % | -8.3 | % | -5.9 | % | 36.1 | % | 47.7 | % | ||||||||||||||||
| Corporate expenses | (193,461 | ) | (178,560 | ) | ||||||||||||||||||||||||||||
| Legal settlement | (100,000 | ) | - | |||||||||||||||||||||||||||||
| Other income, net | 22,030 | 16,996 | ||||||||||||||||||||||||||||||
| Gain on extinguishment of debt | - | 64,617 | ||||||||||||||||||||||||||||||
| Interest expense | (65,804 | ) | (91,958 | ) | ||||||||||||||||||||||||||||
| Income before income taxes | $ | 977,612 | $ | 1,659,133 | ||||||||||||||||||||||||||||
Total Net Sales
Our total net sales for the three month period ended July 3, 2022 were $3.64 million, a decrease of $229,775, compared to the three month period ended July 4, 2021. Our Parks’ combined attendance based net sales decreased by $204,622 or 5.4%, and animal sales decreased by $25,153.
Our Georgia Park’s attendance based net sales decreased by $204,484 or 7.5%, to $2.51 million, while animal sales decreased by $2,515. Our Missouri Park’s attendance based net sales decreased by $100,596 or 16.3%, to $517,589, while animal sales increased by $19,600. Our Texas Park’s attendance based net sales increased by $100,458 or 20.6%, to $589,289, while animal sales decreased by $42,238.
For the three month period ended July 3, 2022, paid attendance at our Georgia and Missouri Parks decreased by approximately 12.4% and 26.0%, respectively, while attendance at our Texas Park increased 31.9%. We believe our attendance levels for the three month period ended July 3, 2022 were unfavorably impacted by various factors including the full reopening of other family entertainment venues, general economic conditions impacting family budgets, and hotter than normal weather conditions, partially offset by higher levels of group attendance.
Segment Operating Margin
Our consolidated segment income from operations was $1.31 million for the three month period ended July 3, 2022, a decrease of $533,191, compared to $1.85 million for the three month period ended July 4, 2021. Our Georgia Park generated segment operating income of $1.29 million, a decrease of $434,148, primarily attributable to lower attendance based net sales, as well as higher compensation and benefits, advertising, insurance and general operating expenses. Our Missouri Park generated segment operating income of $76,589, a decrease of $81,830, primarily attributable to lower attendance based net sales, as well as higher advertising, compensation and benefits, and general operating expenses, partially offset by higher animal sales and a gain on asset sales. Our Texas Park generated a segment operating loss of $48,695, an increase of $17,213, primarily attributable to lower animal sales, and higher advertising and general operating expenses, partially offset by higher attendance based net sales and a loss on animal dispositions during the three months ended July 4, 2021.
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Corporate Expenses
Corporate spending increased by $14,901 to $193,461 during the three month period ended July 3, 2022, primarily due to higher professional fees.
Legal Settlement Expense
Effective August 5, 2022, we agreed to pay $100,000 to two children of a former officer of the Company to settle a complaint alleging we were obligated to purchase life insurance of at least $540,000 for said officer. The Company recorded the cost of this settlement during the three month period ended July 3, 2022 and anticipates full payment by October 2, 2022. For additional information, see “NOTE 9. COMMITMENTS AND CONTINGENCIES” of the Notes to the Consolidated Financial Statements (Unaudited) included in this Quarterly Report.
Other Income, Net
Other income, net increased by $5,034, to $22,030, primarily attributable to higher mineral rights royalty income for our Texas Park.
Gain on Extinguishment of Debt
On May 25, 2021, we received notification the SBA approved our Wild Animal – Missouri Paycheck Protection Program (“PPP”) loan forgiveness application, resulting in a gain on extinguishment of debt totaling $64,617 for the three month period ended July 4, 2021.
Interest Expense
Interest expense for the three month period ended July 3, 2022 decreased by $26,154, to $65,804, primarily as a result of the lower interest rate associated with the June 2021 refinancing of our Synovus Bank (“Synovus”) term loan and scheduled principal payments on our term loans over the trailing 12 month period, as well as the retirement of the Aggieland Seller Note in June 2021, partially offset by imputed interest on a right of use asset.
Income Taxes
For the three month period ended July 3, 2022, we reported pre-tax income of $1.08 million. For the fiscal year ending October 2, 2022 we expect to generate pre-tax income and to record a tax provision at a blended effective federal and state income tax rate of approximately 29.4%. Based on a year-to-date blend of federal and State of Georgia pre-tax income, we recorded an income tax provision of $284,600 for the three month period ended July 3, 2022.
Net Income and Income Per Share
For the three month period ended July 3, 2022, we reported net income of $718,712 or $0.01 per basic share and per fully diluted share, compared to a net income of $1.27 million or $0.02 per basic share and per fully diluted share, for the three month period ended July 4, 2021, resulting in a decrease of $548,121. This decrease in our net income is attributable to a $434,148 decrease in segment income for our Georgia Park, a $81,830 decrease in the segment income for our Missouri Park, a $17,213 increase in the segment loss for our Texas Park, a $14,901 increase in Corporate spending, a legal settlement expense of $100,000, and a $64,617 gain on extinguishment of debt in the three month period ended July 4, 2021, partially offset by an increase of $5,034 in other income, a $26,154 decrease in interest expense, as well as a $133,400 decrease in our income tax provision.
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Results of Operations for the Nine Month Period Ended July 3, 2022 as Compared to Nine Month Period Ended July 4, 2021
Our 2022 fiscal year will be comprised of 52-weeks, compared to our 2021 fiscal year which was comprised of 53-weeks. The extra week in our 2021 fiscal year occurred during our first fiscal quarter. As such, attendance based sales analyses for the nine months ended July 3, 2022 will include comparable 39-week sales comparisons, in addition to reported sales comparisons.
The following table shows our consolidated and segment operating results for the nine month periods ended July 3, 2022 and July 4, 2021:
| Georgia Park | Missouri Park | Texas Park | Consolidated | |||||||||||||||||||||||||||||
| Fiscal 2022 | Fiscal 2021 | Fiscal 2022 | Fiscal 2021 | Fiscal 2022 | Fiscal 2021 | Fiscal 2022 | Fiscal 2021 | |||||||||||||||||||||||||
| Total net sales | $ | 5,166,869 | $ | 5,903,635 | $ | 1,040,003 | $ | 1,157,862 | $ | 1,468,785 | $ | 1,515,985 | $ | 7,675,657 | $ | 8,577,482 | ||||||||||||||||
| Segment income (loss) from operations | 2,068,758 | 3,401,355 | (498,443 | ) | (1,768 | ) | (210,087 | ) | (26,948 | ) | 1,360,228 | 3,372,639 | ||||||||||||||||||||
| Segment operating margin % | 40.0 | % | 57.6 | % | -47.9 | % | -0.2 | % | -14.3 | % | -1.8 | % | 17.7 | % | 39.3 | % | ||||||||||||||||
| Corporate expenses | (734,493 | ) | (677,848 | ) | ||||||||||||||||||||||||||||
| Legal settlement | (100,000 | ) | - | |||||||||||||||||||||||||||||
| Other income, net | 68,322 | 44,315 | ||||||||||||||||||||||||||||||
| Gain on extinguishment of debt | - | 189,988 | ||||||||||||||||||||||||||||||
| Interest expense | (202,475 | ) | (267,578 | ) | ||||||||||||||||||||||||||||
| Income before income taxes | $ | 391,582 | $ | 2,661,516 | ||||||||||||||||||||||||||||
Total Net Sales
Our total net sales for the nine month period ended July 3, 2022 were $7.68 million, a decrease of $901,825, compared to the nine month period ended July 4, 2021. Our Parks’ combined attendance based net sales decreased by $805,327 or 9.5%, and animal sales decreased by $96,498. On a comparable 39-week basis, our attendance based net sales decreased by $608,721 or 7.4%.
Our Georgia Park’s reported attendance based net sales decreased by $687,489 or 11.8%, to $5.16 million, while animal sales decreased by $49,278. Our Missouri Park’s reported attendance based net sales decreased by $133,316 or 11.6%, to $1.02 million while animal sales increased by $15,457. Our Texas Park’s attendance based net sales increased by $15,478 or 1.1%, to $1.47 million, while animal sales decreased by $62,677.
On a comparable 39-week basis, our Georgia Park’s attendance based net sales decreased by $554,937 or 9.7%, our Missouri Park’s attendance based net sales decreased by $108,197 or 9.6%, while our Texas Park’s attendance based net sales increased by $54,413 or 3.8%.
For the nine month period ended July 3, 2022, paid attendance at our Georgia and Missouri Parks decreased by approximately 20.3% and 22.6%, respectively, while paid attendance at our Texas Park increased 6.9%. On a comparable 39-week basis, paid attendance at our Georgia and Missouri Parks decreased by approximately 18.1% and 20.7%, respectively, while paid attendance at our Texas Park increased 9.6%. We believe our attendance levels for the nine month period ended July 3, 2022 were unfavorably impacted by various factors including the full reopening of other family entertainment venues, general economic conditions impacting family budgets, and weather conditions during the late spring and early summer, partially offset by higher levels of group attendance.
Segment Operating Margin
Our consolidated segment income from operations was $1.36 million for the nine month period ended July 3, 2022, a decrease of $2.01 million, compared to consolidated segment income from operations of $3.37 million for the nine month period ended July 4, 2021. Our Georgia Park generated segment operating income of $2.07 million, a decrease of $1.33 million, primarily attributable to lower attendance based net sales, as well as higher compensation and benefits, advertising, insurance and general operating expenses. Our Missouri Park generated a segment operating loss of $498,443, an increase of $496,675, primarily attributable to higher special event spending and lower attendance based net sales, as well as higher compensation and advertising expenses, partially offset by higher animal sales and gains on asset sales. Our Texas Park generated a segment operating loss of $210,087, an increase of $183,139, primarily attributable lower animal sales, as well as higher advertising, general operating, and depreciation expenses, and higher cost of sales, partially offset higher attendance based sales and losses on animal dispositions in the nine months ended July 4, 2021.
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Corporate Expenses
Corporate spending increased by $56,645 to $734,493 during the nine month period ended July 3, 2022, primarily due to higher compensation, professional fee, travel and insurance expenses.
Legal Settlement Expense
Effective August 5, 2022, we agreed to pay $100,000 to two children of a former officer of the Company to settle a complaint alleging we were obligated to purchase life insurance of at least $540,000 for said officer. The Company recorded the cost of this settlement during the nine month period ended July 3, 2022 and anticipates full payment by October 2, 2022. For additional information, see “NOTE 9. COMMITMENTS AND CONTINGENCIES” of the Notes to the Consolidated Financial Statements (Unaudited) included in this Quarterly Report.
Other Income, Net
Other income, net increased by $24,007, to $68,322, primarily attributable to higher mineral rights royalty income for our Texas Park.
Gain on Extinguishment of Debt
During the nine months ended July 4, 2021, we received notification the SBA approved both our Wild Animal – Georgia and Wild Animal – Missouri Paycheck Protection Program (“PPP”) loan forgiveness applications, resulting in a gain on extinguishment of debt totaling $189,988.
Interest Expense
Interest expense for the nine month period ended July 3, 2022 decreased by $65,103, to $202,475, primarily as a result of the lower interest rate associated with the June 2021 refinancing of our Synovus term loan and scheduled principal payments on our term loans over the trailing 12 month period, as well as the retirement of the Aggieland Seller Note in June 2021, partially offset by imputed interest on a right of use asset.
Income Taxes
For the nine month period ended July 3, 2022, we reported a pre-tax income of $491,582. For the fiscal year ending October 2, 2022 we expect to generate pre-tax income and to record a tax provision at a blended effective federal and state income tax rate of approximately 29.4%. Based on a year-to-date blend of federal and State of Georgia pre-tax income, we recorded an income tax provision of $172,200 for the nine month period ended July 3, 2022.
Net Income and Income Per Share
For the nine month period ended July 3, 2022, we reported a net income of $245,082 or $0.00 per basic share and per fully diluted share, compared to a net income of $2.03 million or $0.03 per basic share and per fully diluted share, for the nine month period ended July 4, 2021, resulting in a decrease of $1.79 million. The decrease in our net income is attributable to a $1.33 million decrease in segment income for our Georgia Park, a $496,675 increase in the segment loss for our Missouri Park, a $183,139 increase in the segment loss for our Texas Park, a $56,645 increase in Corporate spending, a legal settlement expense of $100,000, and a $189,988 gain on extinguishment of debt in the nine month period ended July 4, 2021, partially offset by an increase of $24,007 in other income, a $65,103 decrease in interest expense, as well as a $482,200 net decrease in our income tax provision.
Financial Condition, Liquidity and Capital Resources
Financial Condition and Liquidity
Our primary sources of liquidity are cash generated by operations and borrowings under our loan agreements. Historically, our slow season starts after Labor Day in September and runs until Spring Break, which typically begins toward the middle to end of March. The first and second quarters of our fiscal year have historically generated negative cash flow, requiring us to use cash generated from prior fiscal years, as well as borrowing on a seasonal basis, to fund operations and prepare our Parks for the busy season during the third and fourth quarters of our fiscal year. As a result of our improved cash position, during our 2021 fiscal year we did not utilize any seasonal borrowing, nor do we anticipate using any seasonal borrowing during our 2022 fiscal year.
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On June 18, 2021, we entered a new $1.95 million, seven-year term loan (the “2021 Term Loan”) with Synovus, at an annual interest rate of 3.75%. The 2021 Term Loan replaced our 2018 borrowing facility with Synovus, which included a term loan in the original principal amount of $1.60 million at 5.0% per annum and a $350,000 line of credit at 4.75% per annum. After paying off the balance outstanding on the 2018 Term Loan, the net additional borrowings on the 2021 Term Loan were $930,222 and the line of credit was not renewed. Combined with available cash, we used the incremental proceeds from the 2021 Term Loan to paydown $1.0 million of the 2020 Term Loan used to finance our Texas Park acquisition, which has a 5.0% annual interest rate. Overall, we estimate this refinancing will generate approximately $24,375 in annual interest savings.
Our working capital was $4.38 million as of July 3, 2022, compared to $5.70 million as of October 3, 2021. This decrease in working capital primarily relates to cash used for capital investments and financing activities, partially offset by cash provided by operating activities, during the nine month period ended July 3, 2022.
Total loan debt, including current maturities, as of July 3, 2022 was $5.45 million compared to $5.66 million as of October 3, 2021. The decrease in total loan debt during the nine month period ended July 3, 2022 is attributable to scheduled term loan payments, partially offset by a financing lease obligation.
As of July 3, 2022, we had equity of $14.87 million and total loan debt of $5.45 million, resulting in a debt to equity ratio of 0.37 to 1.0 compared to 0.39 to 1.0 as of October 3, 2021.
Operating Activities
Net cash provided by operating activities was $792,656 for the nine month period ended July 3, 2022, compared $2.34 million for the nine month period ended July 4, 2021, resulting in a net decrease of $1.55 million, primarily due to lower net income.
Investing Activities
Net cash used in investing activities was $1.46 million for the nine month period ended July 3, 2022, compared to $860,473 for the nine month period ended July 4, 2021. Our capital spending for the nine month period ended July 3, 2022 was $1.49 million, compared to $887,473 for the nine month period ended July 4, 2021.
Financing Activities
Net cash used in financing activities was $687,296 for the nine month period ended July 3, 2022, compared to $1.03 million for the nine month period ended July 4, 2021, resulting in an increase of $342,174.
During the nine months ended July 3, 2022, scheduled payments against our combined term loans totaled $526,433 and we made $160,863 of payments on a financing lease obligation.
In June 2021, we entered into the 2021 Term Loan for $1.95 million, using those proceeds to pay off the $930,222 outstanding balance of our 2018 Term Loan, as well as prepay $1.00 million against our 2020 Term Loan. In addition, on June 29, 2021, we paid off the $750,000. Aggieland Safari Seller Note. For the nine months ended July 4, 2021, scheduled payments against our combined term loans totaled $277,956.
Subsequent Events
On August 5, 2022, we agreed to pay $100,000 to settle a Complaint filed against us by two children of a former officer of the Company, seeking payment and damages related to an alleged Employment Agreement obligation. For more information regarding this matter, see “NOTE 9. COMMITMENTS AND CONTINGENCIES” herein.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity or capital expenditures.
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Critical Accounting Policies and Estimates
The preceding discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements included elsewhere in this Quarterly Report. Our significant accounting policies are set forth in “NOTE 2. SIGNIFICANT ACCOUNTING POLICIES” of the Notes to the Consolidated Financial Statements (Unaudited) included in this Quarterly Report, which should be reviewed as they are integral to understanding results of operations and financial position. The Parks! America, Inc. Annual Report on Form 10-K for the fiscal year ended October 3, 2021 includes additional information about us, and our operations, financial condition, critical accounting policies and accounting estimates, and should be read in conjunction with this Quarterly Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
Parks! America, Inc. (the “Registrant”) maintains “controls and procedures,” as such term is defined under the Securities Exchange Act of 1934, as amended (“the Exchange Act”) in Rule 13a-15(e) promulgated thereunder, that are designed to ensure that information required to be disclosed in the Registrant’s Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the Registrant’s management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, the Registrant’s management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
With the participation of its principal executive officer and principal financial officer of the Registrant, the Registrant’s management has evaluated the effectiveness of the Registrant’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Exchange Act) as of the end of the fiscal quarter covered by this Quarterly Report. Based upon the evaluation, the Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures were effective at a reasonable assurance level.
In addition, there were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 13a-15(e) promulgated under the Exchange Act) that occurred during the Registrant’s fiscal quarter ended July 3, 2022 that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
On February 17, 2021, two children of James Meikle, our former President and Chief Operating Officer, filed a complaint (the “Complaint”) in the Eighth Judicial District Court, Clark County, Nevada (case no. A-21-829563-C), alleging we were obligated under Mr. Meikle’s Employment Agreement to purchase at least $540,000 of life insurance for Mr. Meikle, who passed away on November 28, 2018. The Complaint was seeking damages of $540,000, as well as interest and expenses. The trial date was set for August 15, 2022. Effective August 5, 2022, we agreed to pay the plaintiffs $100,000 to settle this Complaint and obtain a full release for any related complaints, causes of action or similar matters.
Except as noted above, we are not a party to any pending legal proceeding, nor are any of our properties the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of its business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.
ITEM 1A. RISK FACTORS
You should read the MD&A together with our unaudited consolidated financial statements and related notes, each included elsewhere in this Quarterly Report, in conjunction with the Parks! America, Inc. Annual Report on Form 10-K for the fiscal year ended October 3, 2021. Some of the information contained in the MD&A or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategies for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” below for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this report. If any of the following risks actually occur, our business, financial condition and results of operations could be adversely affected.
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Risk Factors Relating to Our Business:
The COVID-19 pandemic and measures taken in response thereto may have a material negative impact on our business, results of operations and cash flows, and financial condition. The extent of the impact is dependent upon future developments, which are highly uncertain and difficult to predict.
In March 2020, the World Health Organization characterized COVID-19, a disease caused by a novel strain of a coronavirus, as a pandemic. The rapid spread of COVID-19 resulted in governmental authorities throughout the United States implementing a variety of containment measures with the objective of slowing the spread of the virus, including travel restrictions, shelter-in-place orders and business shutdowns. The COVID-19 pandemic and these containment measures have had, and could continue to have a material impact on the Company’s business.
The rapid acceleration of the COVID-19 pandemic in the United States occurred at the beginning of the Company’s 2020 fiscal year high season. Effective April 3, 2020, both Parks were closed to the public as a result of shelter-in-place mandates in Georgia and Missouri. Additionally, prior to the Company’s acquisition of the Texas Park, its operations were also closed to the public for the majority of April 2020 due to a shelter-in-place mandate in Texas. In compliance with respective state issued guidelines, our Georgia Park reopened on May 1, 2020 and our Missouri Park reopened on May 4, 2020, with the drive-through portion of our Texas Park reopening on May 1, 2020 and the park was fully reopened on May 15, 2020. Since we reopened each of our Parks, attendance levels at each facility increased significantly for the balance of our 2020 fiscal year, which continued throughout our 2021 fiscal year, in comparison to pre-COVID 19 comparable periods. Attendance levels for the first 31 weeks of our 2022 fiscal year remain higher than comparable pre-COVID 19 periods but have declined versus the comparable 2021 period.
While our business has experienced a rebound subsequent to the reopening of our Parks, there may be longer-term negative impacts to our business, results of operations and cash flows, and financial condition as a result of the COVID-19 pandemic. These negative impacts include changes in customer behavior and preferences causing significant volatility or reductions in Park attendance, increases in operating expenses to comply with additional hygiene-related protocols, limitations in our ability to recruit and maintain staffing, limitations on our employees ability to work and travel, and significant changes in the economic or political conditions in the areas our Parks are located. Despite our efforts to manage these impacts, the ultimate impact may be material, and may depend on a number of factors beyond our control, including the duration and severity of the COVID-19 pandemic, the emergence of variants of the COVID-19 virus, and actions by governmental authorities taken to contain its spread and mitigate its public health effects. There is also the potential for our attendance levels to moderate or decline as alternative entertainment venues reopen to full capacity once the COVID-19 pandemic has run its course or vaccines are widely adopted and proven effective.
The extent and duration of longer-term impacts of the COVID-19 pandemic on customer perceptions of our Parks are largely uncertain and dependent upon future developments that cannot be accurately predicted. There is no recent historical precedent that provides insights into the longer-term impacts that the COVID-19 pandemic will have on consumer behavior. As a result, the ultimate impact is highly uncertain and subject to change. We do not yet know the full extent COVID-19 will have on our overall business, results of operations and cash flows, and financial position. COVID-19 and the resulting economic disruptions have also led to significant volatility in the capital markets. As a smaller public company, our ability to access cash is already difficult and the impacts of COVID-19 on capital markets has likely had negatively impacted our ability to raise additional capital at a reasonable cost.
General economic conditions may have an adverse impact on our business, financial condition or results of operations.
Our business and operating results can be impacted by a number of macroeconomic factors, including but not limited to consumer confidence and spending levels, tax rates, unemployment, consumer credit availability, raw materials costs, pandemics (such as the ongoing COVID-19 pandemic) and natural disasters, fuel and energy costs (including oil prices), and credit market conditions. The COVID-19 pandemic has severely impacted and will likely continue to impact many of these factors. A general economic slowdown or recession resulting in a decrease in discretionary spending could adversely affect the frequency with which guests choose to visit our parks and the amount that our guests spend when they visit. Our ability to source supplies, materials and services at reasonable costs and in a timely manner could be impacted by adverse economic conditions in the U.S. and abroad. For example, our ability to obtain gift shop merchandise had been adversely impacted by recent supply chain distributions at least in part attributed to collateral impacts from COVID-19.
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Conditions beyond our control could damage our properties and could adversely impact attendance at our parks and result in decreased revenues.
Natural disasters, public heath crises, epidemics, pandemics (such as the outbreak of COVID-19), terrorist activities, power outages or other events outside our control could disrupt our operations, impair critical systems, damage our properties or reduce attendance at our parks or require temporary park closures. Damage to our properties could take a long time to repair and there is no guarantee that we would have adequate insurance to cover the costs of repair or the expense of the interruption to our business. Furthermore, natural disasters such as fires, earthquakes or hurricanes may interrupt or impede access to our affected properties or require evacuations and may cause attendance at our affected properties to decrease for an indefinite period. For example, our Texas Park was closed for several weeks, experienced power outages and sustained property damage associated with winter storms in February 2021. The occurrence of such events could have a material adverse effect on our business, financial condition and results of operations.
We cannot predict the frequency, duration or severity of these activities and the effect that they may have on our business, financial condition or results of operations.
The Theme Park Industry is highly competitive and we may be unable to compete effectively.
The theme park industry is highly competitive, highly fragmented, rapidly evolving, and subject to technological change and intense marketing by providers with similar products. One of our competitors for attracting general recreation dollars, Callaway Gardens, is located within five miles of our Georgia Park. In May 2018, Great Wolf Resorts opened an expansive lodge and indoor waterpark within 10 miles of our Georgia Park. In September 2017, the founder of Bass Pro Shops opened “Johnny Morris’ Wonders of Wildlife National Museum and Aquarium”, approximately 12 miles from our Missouri Park in Springfield, Missouri. Branson, Missouri is located just 45 minutes from our Missouri Park. There are a variety of animal attractions throughout southeastern Texas; the nearest is Franklin Drive Thru Safari, within a 35-40 minute drive of our Texas Park. Many of our current competitors are significantly larger and have substantially greater market presence as well as greater financial, technical, operational, marketing and other resources and experience than we have. In the event that such a competitor expends significant sales and marketing resources in one or several markets we may not be able to compete successfully in such markets. We believe that competition will continue to increase, potentially placing downward pressure on prices. Such pressure could adversely affect our gross margins if we are not able to reduce costs commensurate with such price reductions. In addition, the pace of technological change makes it impossible for us to predict whether we will face new competitors using different technologies to provide the same or similar products offered or proposed to be offered by us. If our competitors were to provide better and more cost effective products, our business could be materially and adversely affected.
We face strong competition from numerous entertainment alternatives.
In addition to competing with other themed and amusement parks, our venues compete with other types of recreational venues and entertainment alternatives, including but not limited to movies, sports attractions, vacation travel and video games. There can be no assurance that we will successfully differentiate ourselves from these entertainment alternatives or that consumers will consider our entertainment offerings to be more appealing than those of our competitors. The increasing availability and quality of technology-based entertainment has provided families with a wider selection of entertainment alternatives in their homes, including home entertainment units, in-home and online gaming, as well as on-demand streaming video and related access to various forms of entertainment. In addition, traditional theme parks have been able to reduce the cost and increase the variety of their attractions by implementing technologies that cannot be readily incorporated by wild animal attractions such as our Parks.
The suspension or termination of any of our business licenses may have a negative impact on our business.
We maintain a variety of business licenses issued by federal, state and local government agencies that are required to be renewed periodically. We cannot guarantee that we will be successful in renewing all of our licenses on a periodic basis. The suspension, termination or expiration of one or more of these licenses could have a significant adverse effect on our revenues and profits. In addition, any changes to the licensing requirements for any of our licenses could affect our ability to maintain the licenses.
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Our insurance coverage may not be adequate to cover all possible losses that we could suffer, and our insurance costs may increase.
Companies engaged in the theme park business may be sued for substantial damages in the event of an actual or alleged accident. An accident occurring at our Parks or at competing parks may reduce attendance, increase insurance premiums, and negatively impact our operating results. Our properties contain drive-through, safari style animal parks, and there are inherent risks associated with allowing the public to interact with animals. Although we carry liability insurance to cover this risk, there can be no assurance that our coverage will be adequate to cover liabilities, or that we will be able to afford or obtain adequate coverage should a catastrophic incident occur.
We currently have $6.0 million of liability insurance per occurrence, which is capped at $10.0 million in aggregate. We will continue to use reasonable commercial efforts to maintain policies of liability, fire and casualty insurance sufficient to provide reasonable coverage for risks arising from accidents, fire, weather, other acts of God, and other potential casualties. There can be no assurance that we will be able to obtain adequate levels of insurance to protect against suits and judgments in connection with accidents or other disasters that may occur in our Parks.
We may not identify or complete acquisitions in a timely, cost-effective manner, if at all.
Our business plan includes expansion via the acquisition of additional local or regional theme parks and attractions, if attractive opportunities arise. There can be no assurance that we will be successful in acquiring and operating additional local or regional theme parks and attractions. Competition for acquisition opportunities in the theme park industry is intense as there are a limited number of parks within the United States that could reasonably qualify as acquisition targets for us. Our acquisition strategy is dependent upon, among other things, our ability to: identify acquisition opportunities; obtain debt and equity financing; and obtain necessary regulatory approvals. Our ability to pursue our acquisition strategy may be hindered if we are not able to successfully identify acquisition targets or obtain the necessary financing or regulatory approvals, including but not limited to those arising under federal and state antitrust and environmental laws.
Significant amounts of additional financing may be necessary for the implementation of our Business Plan.
The Company may require additional debt and equity financing to pursue its business plan. There can be no assurance that we will be successful in obtaining additional financing. Lack of additional funding could force us to substantially curtail our expansion plans. Furthermore, the issuance by the Company of any additional securities would dilute the ownership of existing stockholders and may affect the price of our common stock.
Our ownership of real property subjects us to environmental regulation, which creates uncertainty regarding future environmental expenditures and liabilities.
We may be required to incur costs to comply with environmental requirements, such as those relating to discharges to air, water and land; the handling and disposal of solid and hazardous waste; and the cleanup of properties affected by hazardous substances. Under these and other environmental requirements we may be required to investigate and clean up hazardous or toxic substances or chemical releases at one of our properties. As an owner or operator, we could also be held responsible to a governmental entity or third party for property damage, personal injury and investigation and cleanup costs incurred by them in connection with any contamination. Environmental laws typically impose cleanup responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. The liability under environmental laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of the responsibility. The costs of investigation, remediation or removal of those substances may be substantial, and the presence of those substances, or the failure to remediate a property properly, may impair our ability to use our property. We are not currently aware of any material environmental risks regarding our properties. However, we may be required to incur costs to remediate potential environmental hazards or to mitigate environmental risks in the future.
We are dependent upon the services of our Executive Officers, key personnel and consultants.
Our success is heavily dependent on the continued active participation of our executive officers. Loss of the services of one or more of these officers could have a material adverse effect upon our business, financial condition or results of operations.
Further, our success and achievement of our growth plans depend on our ability to recruit, hire, train and retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in the theme park industry is intense, and the loss of any such persons, or an inability to attract, retain and motivate any additional highly skilled employees required for the expansion of the Company’s activities, could have a materially adverse effect on the Company. The inability of the Company to attract and retain the necessary personnel, and consultants and advisors could have a material adverse effect on the Company’s business, financial condition or results of operations.
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Increased labor and employee benefit costs may reduce our results of operations. We also depend on a seasonal workforce, many of whom are paid at minimum wage.
Labor is a primary component in the cost of operating our business. Our ability to control labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates, unemployment levels, and health and other insurance costs, as well as the impact of legislation or regulations governing labor relations, minimum wage, and healthcare benefits. Furthermore, our operations are dependent in part on a seasonal workforce, many of whom are paid at or near minimum wage. We seek to manage seasonal wages and the timing of the hiring process to ensure the appropriate workforce is in place for peak and low seasons; however, we may be unable to recruit and hire sufficient personnel to meet our business needs. In addition, we cannot guarantee that material increases in the cost of securing our workforce will not occur in the future. Increased state or federal minimum wage requirements, general wages or an inadequate workforce could have an adverse impact on our results of operations. We anticipate that the recent upward pressures on general wage rates will increase our salary, wage and benefit expenses in our 2022 fiscal year and beyond, and further legislative changes or competitive wage rates could continue to increase these expenses in the future.
Risk Factors Relating to Our Common Stock:
Our Common Stock is subject to the “penny stock” rules of the SEC and the trading market in our Common Stock is limited, which makes transactions in our Common Stock cumbersome and may reduce the value of an investment in our Common Stock.
Our common stock is considered a “penny stock” and the sale of our stock by you will be subject to the “penny stock rules” of the SEC. The penny stock rules require broker-dealers to take steps before making any penny stock trades in customer accounts. As a result, the market for our shares could be illiquid and there could be delays in the trading of our stock, which would negatively affect your ability to sell your shares and could negatively affect the trading price of your shares.
We do not expect to pay dividends for some time, if at all.
As of the date of this report, no cash dividends have been paid on our common stock. We expect that any income from operations will be devoted to our future operations and growth, as well as to service our debt. We do not expect to pay cash dividends in the near future. Any future determination as to the payment of dividends on our common stock will be at the discretion of our Board of Directors and will depend on our earnings, operating and financial condition, capital requirements and other factors deemed relevant by our Board of Directors. The provisions of credit agreements, which we may enter into from time to time, may also restrict the declaration of dividends on our common stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. OTHER INFORMATION
None
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ITEM 6. EXHIBITS
| 29 |
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.
| PARKS! AMERICA, INC. | ||
| August 15, 2022 | By: | /s/ Dale Van Voorhis |
| Dale Van Voorhis | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| 30 |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULES 13a-14(a)/15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Dale Van Voorhis, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Parks! America, Inc. (the “registrant”) for the quarter ended July 3, 2022; | ||
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | ||
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | ||
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | ||
| Date: August 15, 2022 | |
| /s/ Dale Van Voorhis | |
| Dale Van Voorhis | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| Parks! America, Inc. |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULES 13a-14(a)/15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Todd R. White, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Parks! America, Inc. (the “registrant”) for the quarter ended July 3, 2022; | ||
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | ||
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | ||
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | ||
| Date: August 15, 2022 | |
| /s/ Todd R. White | |
| Todd R. White | |
| Chief Financial Officer | |
| (Principal Financial Officer) | |
| Parks! America, Inc. |
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Parks! America, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:
The Quarterly Report on Form 10-Q for the quarter ended July 3, 2022 (the “Form 10-Q”) of the Company fully complies with the requirement of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: August 15, 2022 | |
| /s/ Dale Van Voorhis | |
| Dale Van Voorhis | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| Parks! America, Inc. | |
| Dated: August 15, 2022 | |
| /s/ Todd R. White | |
| Todd R. White | |
| Chief Financial Officer | |
| (Principal Financial Officer) | |
| Parks! America, Inc. |
A signed original of this written statement required by Section 906 has been provided to Parks! America, Inc. and will be retained by Parks! America, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jul. 03, 2022 |
Oct. 03, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, shares authorized | 300,000,000 | 300,000,000 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares issued | 75,227,058 | 75,124,087 |
| Common stock, shares outstanding | 75,227,058 | 75,124,087 |
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jul. 03, 2022 |
Jul. 04, 2021 |
Jul. 03, 2022 |
Jul. 04, 2021 |
|
| Income Statement [Abstract] | ||||
| Net sales | $ 3,619,240 | $ 3,823,862 | $ 7,645,743 | $ 8,451,070 |
| Sale of animals | 25,085 | 50,238 | 29,914 | 126,412 |
| Total net sales | 3,644,325 | 3,874,100 | 7,675,657 | 8,577,482 |
| Cost of sales | 461,086 | 496,406 | 1,086,763 | 1,066,253 |
| Selling, general and administrative | 1,880,438 | 1,514,013 | 5,414,094 | 4,251,507 |
| Depreciation and amortization | 192,575 | 183,883 | 578,225 | 523,890 |
| Legal settlement | 100,000 | 100,000 | ||
| (Gain) loss on disposal of operating assets | (11,160) | 10,320 | (29,160) | 41,041 |
| Income from operations | 1,021,386 | 1,669,478 | 525,735 | 2,694,791 |
| Other income, net | 22,030 | 16,996 | 68,322 | 44,315 |
| Gain on extinguishment of debt | 64,617 | 189,988 | ||
| Interest expense | (65,804) | (91,958) | (202,475) | (267,578) |
| Income before income taxes | 977,612 | 1,659,133 | 391,582 | 2,661,516 |
| Income tax provision | 258,900 | 392,300 | 146,500 | 628,700 |
| Net income | $ 718,712 | $ 1,266,833 | $ 245,082 | $ 2,032,816 |
| Income per share - basic and diluted | $ 0.01 | $ 0.02 | $ 0.00 | $ 0.03 |
| Weighted average shares outstanding (in 000’s) - basic and diluted | 75,227 | 75,124 | 75,173 | 75,084 |
ORGANIZATION |
9 Months Ended |
|---|---|
Jul. 03, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| ORGANIZATION | NOTE 1. ORGANIZATION
Parks! America, Inc. (“Parks!” or the “Company”) was originally incorporated on July 30, 1954 as Painted Desert Uranium & Oil Co., Inc. in Washington State. On October 1, 2002, Painted Desert Uranium & Oil Co., Inc. changed its name to Royal Pacific Resources, Inc. and its corporate domicile to the State of Nevada.
On December 19, 2003, Royal Pacific Resources, Inc. acquired the assets of Great Western Parks LLC pursuant to a Share Exchange Agreement that resulted in the Company assuming control and changing the corporate name to Great American Family Parks, Inc. The acquisition was accounted for as a reverse acquisition in which Great Western Parks was considered to be the acquirer of Royal Pacific Resources for reporting purposes. On June 11, 2008, the Company changed its name from Great American Family Parks, Inc. to Parks! America, Inc.
The Company owns and operates through wholly owned subsidiaries three regional theme parks and is in the business of acquiring, developing and operating local and regional theme parks and attractions in the United States. The Company’s wholly owned subsidiaries are Wild Animal Safari, Inc. a Georgia corporation (“Wild Animal – Georgia”), Wild Animal, Inc., a Missouri corporation (“Wild Animal – Missouri”), and Aggieland-Parks, Inc., a Texas corporation (“Aggieland Wild Animal – Texas”). Wild Animal – Georgia owns and operates the Wild Animal Safari theme park in Pine Mountain, Georgia (the “Georgia Park”). Wild Animal – Missouri owns and operates the Wild Animal Safari theme park located in Strafford, Missouri (the “Missouri Park”). Aggieland Wild Animal – Texas owns and operates the Aggieland Wild Animal Safari theme park near Bryan/College Station, Texas (the “Texas Park”). The Company acquired the Georgia Park on June 13, 2005, the Missouri Park on March 5, 2008, and the Texas Park on April 27, 2020.
The Company’s Parks are open year round, but experience increased seasonal attendance, typically beginning in the latter half of March through early September. As a result, combined third and fourth quarter net sales have historically ranged from 68% to 72% of annual attendance based net sales. For the Company’s 2021 fiscal year, the first full fiscal year including the Texas Park, combined third and fourth quarter net sales were approximately 60% of annual attendance based net sales.
COVID-19
In March 2020, the World Health Organization characterized COVID-19, a disease caused by a novel strain of a coronavirus, as a pandemic. The rapid spread of COVID-19 resulted in governmental authorities throughout the United States implementing a variety of containment measures with the objective of slowing the spread of the virus, including travel restrictions, shelter-in-place orders and business shutdowns. The COVID-19 pandemic and these containment measures have had, and could continue to have, a material impact on the Company’s business.
The rapid acceleration of the COVID-19 pandemic in the United States occurred at the beginning of the Company’s 2020 fiscal year annual high season. Effective April 3, 2020, the Company’s Georgia and Missouri Parks were closed as a result of shelter-in-place mandates. Additionally, prior to the Company’s acquisition of the Texas Park, its operations were suspended for the majority of April 2020 due to a shelter-in-place mandate. In compliance with respective state issued guidelines, the Georgia Park and the Texas Park each reopened on May 1, 2020, and the Missouri Park reopened on May 4, 2020. Subsequent to reopening, attendance levels increased significantly at each of the Company’s three Parks for the balance of its 2020 fiscal year, which continued throughout its 2021 fiscal year in comparison to comparable pre-COVID-19 periods. While attendance based net sales remain higher compared to comparable pre-COVID-19 periods, the Company experienced a decline in aggregate comparable year-over-year attendance based net sales and attendance for the last 22 weeks of its 2021 fiscal year and for the first 44 weeks of its 2022 fiscal year, respectively.
While the Company has experienced attendance gains and strong cash flow since the beginning of the COVID-19 pandemic, there may be longer-term negative impacts to the Company’s business, results of operations and cash flows, and financial condition as a result of the COVID-19 pandemic. These negative impacts may include changes in customer behavior and preferences causing significant volatility or reductions in attendance at one or more of our Parks, increases in operating expenses, limitations in the Company’s ability to recruit and maintain staffing, limitations on the Company’s employees ability to work and travel, and significant changes in the economic or political conditions in the areas the Company’s Parks are located. Despite the Company’s efforts to manage these potential impacts, the ultimate impact may be material, and may depend on a number factors beyond its control, including the duration and severity of the COVID-19 pandemic and actions by governmental authorities taken to contain its spread and mitigate its public health effects. There is also the potential for attendance levels at the Company’s Parks to moderate or decline as alternative entertainment venues reopen to full capacity once the COVID-19 pandemic has run its course or vaccines are widely adopted and proven effective.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
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SIGNIFICANT ACCOUNTING POLICIES |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The Company’s unaudited consolidated financial statements for the three months and nine months ended July 3, 2022 and July 4, 2021 are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with instructions to Form 10-Q and Article 10 of Regulation S-X. The Company believes that the disclosures made are adequate to make the information presented not misleading. The information reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods set forth herein. Interim results are not necessarily indicative of the results for a full fiscal year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2021.
Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries (Wild Animal – Georgia, Wild Animal – Missouri and Aggieland Wild Animal – Texas). All material inter-company accounts and transactions have been eliminated in consolidation.
Accounting Method: The Company recognizes income and expenses based on the accrual method of accounting.
Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Fiscal Year End: The Company’s fiscal year-end is the Sunday closest to September 30, and its quarterly close dates are also determined by the Sunday closest to the end of each quarterly reporting period. For the 2022 fiscal year, October 2 will be the closest Sunday, and for the 2021 fiscal year, October 3 was the closest Sunday. The 2022 fiscal year will be comprised of 52-weeks, while the 2021 fiscal year was comprised of 53-weeks. This fiscal calendar aligns the Company’s fiscal periods closely with the seasonality of its business. The high season typically ends after the Labor Day holiday weekend. The period from October through early March is geared towards maintenance and preparation for the next busy season, which typically begins at Spring Break and runs through Labor Day.
Financial and Concentrations Risk: The Company does not have any significant concentration or related financial credit risks. The Company maintains its cash in bank deposit accounts, which at times may exceed federally insured limits.
Trade Accounts Receivable: The theme parks are a payment upfront business; therefore, the Company typically carries little or no accounts receivable. The Company had $3,877 and $4,469 of accounts receivable as of July 3, 2022 and October 3, 2021, respectively.
Inventory: Inventory consists of gift shop items, animal food, and concession and park supplies, and is stated at the lower of cost or net realizable value. Cost is determined on the first-in, first-out method. The gross profit method is used to determine the change in gift shop inventory for interim periods. Inventories are reviewed and reconciled annually because inventory levels turn over rapidly. The Company had inventory of $587,674 and $314,103 as of July 3, 2022 and October 3, 2021, respectively.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment: Property and equipment are stated at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the assets, which range from three to thirty-nine years. A summary is included below.
Depreciation expense for the three months ended July 3, 2022 and July 4, 2021 totaled $192,575 and $183,883, respectively, and depreciation expense for the nine months ended July 3, 2022 and July 4, 2021 totaled $578,225 and $523,890, respectively.
Intangible Assets: Intangible assets consist of tradename registrations, which are reported at cost and are being amortized over a period of 15 years.
Impairment of Long-Lived Assets: The Company reviews its major assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is considered impaired, then impairment will be recognized in an amount determined by the excess of the carrying amount of the asset over its fair value.
Other Current Liabilities: The following is a breakdown of other current liabilities:
Financial Instruments: The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short-term maturities or due to the fact they were entered into during the Company’s 2021 and 2020 fiscal years. Securities that are publicly traded are valued at their fair market value as of the balance sheet date presented.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition: The Company recognizes revenues in accordance with ASC 606, Revenues from Contracts with Customers. Under ASC 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocation the transaction price to the performance obligation in the contract; and (5) recognize revenue when (or as) the Company satisfies the performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.
Revenues from park admission fees are recognized at the point in time control transfers to the customer, which is generally when the customer accepts access to the park and the Company is entitled to payment. Park admission fee revenues from advance online ticket purchases are deferred until the customers’ visit to the parks. Revenues from retail and concession sales are generally recognized upon the concurrent receipt of payment and delivery of goods to the customer. Sales taxes billed and collected are not included in revenue.
The Company periodically sells surplus animals created from the natural breeding process that occurs within the parks. All animal sales are reported as a separate revenue line item. Animal sales are recognized at a point in time when control transfer to the customer, which is generally determined when title, ownership and risk of loss pass to the customer, all of which generally occurs upon delivery of the animal. Based on the Company’s assessment of control indicators, sales are recognized when animals are delivered to the customer.
The Company provides disaggregation of revenue based on geography in “Note 10: Business Segments”, as it believes this best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
Deferred revenues from advance online admission tickets and related advance sales were $221,755 and $242,318 as of July 3, 2022 and October 3, 2021, respectively, and are included within Other Current Liabilities in the accompanying consolidated balance sheets.
Advertising and Marketing Costs: The Company expenses advertising and marketing costs as incurred. Advertising and marketing expense for the three months ended July 3, 2022 and July 4, 2021 totaled $384,025 and $258,394, respectively and advertising and marketing expense for the nine months ended July 3, 2022 and July 4, 2021 totaled $959,145 and $702,410, respectively.
Leases: The Company determines if an arrangement contains a lease at inception and accounts for all leases in accordance with ASC 842, Leases. If an arrangement contains a lease, the Company performs a classification test to determine if the lease is an operating lease or a financing lease. Right of use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Right of use assets are valued at the initial measurement of the lease liability, plus any indirect costs or rent prepayments, and reduced by any lease incentives and any deferred lease payments. Right of use assets are amortized over the lease term. Lease liabilities are recognized on the commencement date of the lease based on the present value of the future lease payments over the lease term. The discount rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate, unless the rate implicit in the lease is readily determinable. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the life of the lease, unless management believes there is an alternative systematic basis which better represents the pattern which the Company will consume the economic benefits thereof and is included within general and administrative expenses. As a practical expedient, the Company does not recognize right-of-use assets and lease liabilities for leases with an original term of one year or less. Any non-lease components are not included within the lease right-of-use asset and lease liability, are reflected as an expense in the period incurred.
Paycheck Protection Program Loan Accounting Policy: Currently, there is no authoritative guidance under GAAP that addresses accounting and reporting by a for-profit business entity that receives forgivable debt from a government entity. Accordingly, management has elected to recognize forgivable debt received from a government entity as debt until debt extinguishment occurs when the Company is legally released from being the obligor. Upon legal release as obligor, the Company will recognize the forgiven amount as income.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A Stock Option and Award Plan (the “Plan”) providing for incentive stock options and performance bonus awards for executives, employees, and directors was approved by the Company’s Board of Directors on February 1, 2005, however, the Plan has not been submitted to the stockholders for approval. The Plan sets aside five million () shares for award of stock options, including qualified incentive stock options and performance stock bonuses. To date, grants or awards have been made pursuant to the Plan and the Company did not submit the Plan for consideration to the Company’s stockholders at its last meeting of stockholders.
Income Taxes: The Company utilizes the asset and liability method of accounting for income taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using the enacted tax rates and laws. Management periodically reviews the Company’s deferred tax assets to determine whether their value can be realized based on available evidence. A valuation allowance is established when management believes it is more likely than not, that such tax benefits will not be realized. Changes in valuation allowances from period to period are included in the Company’s income tax provision in the period of change.
The Company follows the guidance in FASB ASC 740 with respect to accounting for uncertainty in income taxes. A tax position is recognized as a benefit only if it is “more-likely-than-not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than fifty percent likely of being realized on examination. For tax positions not meeting the “more-likely-than-not” test, no tax benefit is recorded. The Company has no unrecognized tax benefits under guidance related to tax uncertainties. The Company does not anticipate the unrecognized tax benefits will significantly change in the next twelve months. Any tax penalties or interest expense will be recognized in income tax expense. No interest and penalties related to unrecognized tax benefits were accrued as of July 3, 2022 or October 3, 2021.
Basic and diluted net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the applicable weighted average number of common shares outstanding in each period.
Dividend Policy: The Company has not yet adopted a policy regarding payment of dividends.
Recent Accounting Pronouncements:
Credit Losses – Financial Instruments
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326), which changes the impairment model for most financial assets to require measurement and recognition of expected credit losses for financial assets held, replacing the existing incurred loss model. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2022, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures, however, it is not anticipated to be material.
Except as noted, the Company does not expect recently issued accounting standards or interpretations to have a material impact on the Company’s financial position, results of operations, cash flows or financial statement disclosures.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
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LONG-TERM DEBT |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LONG-TERM DEBT | NOTE 3. LONG-TERM DEBT
On June 18, 2021, the Company, through its wholly owned subsidiary Wild Animal – Georgia, completed a refinancing transaction (the “2021 Refinancing”) with Synovus Bank (“Synovus”). The 2021 Refinancing included a term loan in the original principal amount of $1.95 million (the “2021 Term Loan”). The 2021 Term Loan bears interest at a rate of 3.75% per annum and is payable in monthly installments of approximately $26,480, based on a seven-year amortization period. The 2021 Term Loan has a maturity date of June 18, 2028. The 2021 Term Loan is secured by a security deed on the assets of Wild Animal – Georgia. The Company paid a total of approximately $1,514 in fees and expenses in connection with the 2021 Refinancing. The outstanding balance of the 2021 Term Loan was $1.70 million as of July 3, 2022.
On July 11, 2018, the Company, through its wholly owned subsidiary Wild Animal – Georgia, completed a refinancing transaction (the “2018 Refinancing”) with Synovus. The 2018 Refinancing included a term loan in the original principal amount of $1.6 million (the “2018 Term Loan”). The 2018 Term Loan had an interest rate of 5.0% per annum and was payable in monthly payments of approximately $22,672, based on a seven-year amortization period. The 2018 Term Loan had a maturity date of June 11, 2021, with an option to renew at 5.0% per annum for an additional 49-month term. The 2018 Term Loan was secured by a security deed on the assets of Wild Animal – Georgia. The Company paid a total of approximately $15,680 in fees and expenses in connection with the 2018 Refinancing. The 2021 Term Loan replaced the Company’s 2018 Term Loan with Synovus, which had an outstanding balance of $1.02 million, which was paid off with the proceeds of the 2021 Term Loan.
On April 27, 2020, the Company, through its wholly owned subsidiary Aggieland-Parks, Inc., acquired Aggieland Wild Animal – Texas. The purchase price of $7.10 million was financed with a $5.0 million loan (the “2020 Term Loan”) from First Financial Bank, N.A. (“First Financial”), a seller note with a face value of $750,000 (the “Aggieland Seller Note”), and cash totaling $1.38 million. The 2020 Term Loan is secured by substantially all the Aggieland Wild Animal – Texas assets, as well as guarantees from the Company and its subsidiaries. The 2020 Term Loan bears interest at a rate of 5.0% per annum, has a maturity date of April 27, 2031, and required interest only monthly payments through April 2021. The 2020 Term Loan requires monthly payments of $53,213 beginning in May 2021. The Company paid a total of approximately $62,375 in fees and expenses in connection with the 2020 Term Loan. On June 30, 2021, the Company used the incremental proceeds of the 2021 Term Loan, combined with additional funds, to paydown $1.0 million against the 2020 Term Loan, which had an outstanding balance of $3.49 million as of July 3, 2022. The Company is in compliance with the liquidity and annual debt coverage ratio financial covenants of the 2020 Term Loan.
The Aggieland Seller Note represented a deferred portion of the Aggieland Wild Animal – Texas purchase price, had a face value of $750,000, bore no interest, matured on June 30, 2021, and was secured by a second priority subordinated lien and security interest in the acquired mineral rights and the animal inventory. The Company applied a 2.5% discount rate to determine a fair value of $728,500 for the Aggieland Seller Note as of April 27, 2020, with the resulting $21,500 discount amortized as interest expense over the period of the Aggieland Seller Note. On June 29, 2021, the Company paid off the Aggieland Seller Note.
As a result of the initial negative economic impacts and uncertainties caused by the COVID-19 pandemic, Wild Animal – Georgia and Wild Animal – Missouri each applied for Paycheck Protection Program (“PPP”) loans. On April 14, 2020 and April 16, 2020, the Company received two unsecured PPP loans totaling $188,087. The PPP was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020, and is administered by the U.S. Small Business Administration (the “SBA”). The term of the PPP loans was two years, with an interest rate of 1.0% per annum. All payments were deferred for the first twelve months of these PPP loans, with accrued interest being added to the principal during the payment deferral period. Under the terms of the CARES Act, some or all the PPP loan proceeds were eligible to be forgiven, based on use for specified purposes, subject to limitations and ongoing rulemaking by the SBA. The Company applied for forgiveness of the full amount of both the Wild Animal – Georgia and Wild Animal – Missouri PPP loans in March 2021. Effective March 29, 2021, the SBA approved the Forgiveness Application for Wild Animal – Georgia, resulting in a gain on extinguishment of debt totaling $125,371 during the three month period ended April 4, 2021. Effective May 25, 2021, the SBA approved the Forgiveness Application for Wild Animal – Missouri, resulting in a gain on extinguishment of debt totaling $64,617 during the three month period ended July 4, 2021.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
NOTE 3. LONG-TERM DEBT (CONTINUED)
Interest expense of $65,804 and $91,958 for the three month periods ended July 3, 2022 and July 4, 2021, respectively, includes $1,472 and $10,937, respectively, of debt closing costs amortization in each period. Interest expense of $202,475 and $267,578 for the nine month periods ended July 3, 2022 and July 4, 2021, respectively, includes $4,416 and $14,894, respectively, of debt closing costs amortization in each period. Interest expense for the three months and nine months ended July 3, 2022 also includes financial lease cost amortization of $3,016 and $8,043, respectively. Interest expense for the three month and nine month periods ended July 4, 2021 also includes loan discount amortization of $4,706 and $13,985, respectively.
The following table represents the aggregate of the Company’s outstanding long-term debt:
As of July 3, 2022, the scheduled future principal maturities of the Company’s long-term debt by fiscal year are as follows:
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LINE OF CREDIT |
9 Months Ended |
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Jul. 03, 2022 | |
| Debt Disclosure [Abstract] | |
| LINE OF CREDIT | NOTE 4. LINE OF CREDIT
July 11, 2018, the Company, through its wholly owned subsidiary Wild Animal – Georgia, completed the 2018 Refinancing with Synovus. The 2018 Refinancing included a line of credit of up to $350,000 (the “2018 LOC”). The 2018 LOC was scheduled to mature July 11, 2021, with an option to renew for an additional three-year term. On June 18, 2021, the Company, through its wholly owned subsidiary Wild Animal – Georgia, completed the 2021 Refinancing with Synovus, which in part replaced the 2018 LOC. The Company elected to not renew the 2018 LOC, which had never been utilized.
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FINANCE LEASE |
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| Finance Lease | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCE LEASE | NOTE 5. FINANCE LEASE
In October 2021, the Company entered into a financing lease for certain property related to a Christmas Lights drive through display at its Missouri Park. Future minimum lease payments, by fiscal year, with the present value of such payments as of July 3, 2022, are shown in the following table:
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
NOTE 5. FINANCE LEASE (CONTINUED)
The property under the finance lease at July 3, 2022 is included in the accompanying balance as follows:
The right of use asset for this equipment is being amortized over the three-year term of the lease, on a systematic basis which management believes best represents the pattern in which the Company will consume the economic benefits thereof. As such, the full annual amortization expense has been and will be recognized during the first three months of the Company’s fiscal year. The weighted-average remaining lease term is 18 months, and the weighted average discount rate is 3.75%. The lease also includes full-service installation, maintenance, removal and storage of the right of use asset, with an annual cost of $63,070, which is being treated as a period expense.
The Company has the right to purchase the right of use asset during and at the end of the lease period, as follows:
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STOCKHOLDERS’ EQUITY |
9 Months Ended |
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Jul. 03, 2022 | |
| Equity [Abstract] | |
| STOCKHOLDERS’ EQUITY | NOTE 6. STOCKHOLDERS’ EQUITY
Shares of common stock issued for service to the Company are valued based on market price on the date of the award.
On December 13, 2021, the Company awarded a non-Director officer $10,000 to be paid in shares of the Company’s common stock, totaling shares based on the closing stock price of $ per share on December 13, 2021, which were distributed on February 21, 2022, and $ of compensation expense was reported in the three month period ended January 2, 2022.
Officers, Directors and their controlled entities own approximately 53.3% of the outstanding shares of common stock of the Company as of July 3, 2022.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
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SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES |
9 Months Ended |
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Jul. 03, 2022 | |
| Related Party Transactions [Abstract] | |
| SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | NOTE 7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Effective as of June 1, 2022, the Company and Dale Van Voorhis, the Company’s Chairman of the Board, entered into an employment agreement (the “2022 Van Voorhis Employment Agreement”). Mr. Van Voorhis will serve as the Company’s Interim CEO while the Board undertakes the search for a new CEO. Once the new CEO is hired, Mr. Van Voorhis will serve as Special Advisor to the CEO through May 31, 2023. Pursuant to the 2022 Van Voorhis Employment Agreement, Mr. Van Voorhis receives annual compensation in the amount of $100,000 through May 31, 2023 and $50,000 from June 1, 2023 through May 31, 2024. In addition, Mr. Van Voorhis will serve as a member of the Company’s Strategic Growth and Audit Committees during the two year term of his employment with the Company.
Effective as of January 1, 2022, the Company and Todd R. White, the Company’s Chief Financial Officer, entered into an employment agreement (the “2022 White Employment Agreement”). Pursuant to the 2022 White Employment Agreement, Mr. White receives an initial base annual compensation in the amount of $90,000 per year, subject to annual review by the Board of Directors. The 2022 White Employment Agreement has a term of two years and entitles Mr. White to participate in any deferred compensation plan the Company may adopt during the term of his employment with the Company.
Effective as of May 1, 2018, the Company entered into an employment agreement with Michael D. Newman (the “Newman Employment Agreement”) to serve as the Company’s Vice President of Safari Operations. Mr. Newman had been the general manager of Wild Animal – Georgia since February 2011. Pursuant to the Newman Employment Agreement, Mr. Newman received an initial base annual compensation of $95,000 per year, subject to annual review by the Board of Directors. Mr. Newman also received a $5,000 signing bonus. Effective as of May 1, 2020, Mr. Newman’s annual compensation was changed to $108,000. The Newman Employment Agreement had a term of five years. Effective October 31, 2021, Mr. Newman resigned his employment with the Company.
As of July 3, 2022, the Company has not adopted any deferred compensation plans. Two of the foregoing employment agreements contains provisions for severance compensation in the event an agreement is (i) terminated early by the Company without cause ($191,667 in aggregate) or (ii) in the event of a change in control of the Company ($231,667 in aggregate), as well as disability and death payment provisions ($136,667 in aggregate).
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INCOME TAXES |
9 Months Ended |
|---|---|
Jul. 03, 2022 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | NOTE 8. INCOME TAXES
For the nine month period ended July 3, 2022, the Company reported pre-tax income of $391,582. For the fiscal year ending October 2, 2022, the Company expects to generate pre-tax income and to record a tax provision at a blended effective federal and state income tax rate of approximately 29.4%. Based on a year-to-date federal pre-tax loss and State of Georgia pre-tax income, the Company recorded an income tax provision of $146,500 for the nine month period ended July 3, 2022, comprised of a federal expense of $70,300 and a State of Georgia expense of $76,200. The Company’s net income tax provision of $628,700 for the nine month period ended July 4, 2021, comprised of a federal expense of $484,900 and a State of Georgia expense of $143,800.
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COMMITMENTS AND CONTINGENCIES |
9 Months Ended |
|---|---|
Jul. 03, 2022 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | NOTE 9. COMMITMENTS AND CONTINGENCIES
On February 17, 2021, two children of James Meikle, the Company’s former President and Chief Operating Officer, filed a complaint (the “Complaint”) in the Eighth Judicial District Court, Clark County, Nevada (case no. A-21-829563-C), alleging the Company was obligated under Mr. Meikle’s Employment Agreement to purchase at least $540,000 of life insurance for Mr. Meikle, who passed away on November 28, 2018. The Complaint was seeking damages of $540,000, as well as interest and expenses. The trial date was set for August 15, 2022. Effective August 5, 2022, the Company agreed to pay the plaintiffs $100,000 to settle this Complaint and obtain a full release for any related complaints, causes of action or similar matters. The Company recorded the cost of this settlement during the three month period ended July 3, 2022 and anticipates full payment by October 2, 2022.
Except as noted above, the Company is not a party to any pending legal proceeding, nor is its property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of its business. None of the Company’s directors, officers or affiliates is involved in a proceeding adverse to its business or has a material interest adverse to its business.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
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BUSINESS SEGMENTS |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS SEGMENTS | NOTE 10. BUSINESS SEGMENTS
The Company manages its operations on an individual location basis. Discrete financial information is maintained for each Park and provided to management for review and as a basis for decision-making. The primary performance measures used to allocate resources are Park earnings before interest and tax expense, and free cash flow.
The following tables present financial information regarding each of the Company’s reportable segments:
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SUBSEQUENT EVENTS |
9 Months Ended |
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Jul. 03, 2022 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 11. SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to July 3, 2022 to the date these financial statements were issued and has determined that no material subsequent events have occurred from the date of these unaudited consolidated financial statements, except as follows: on August 5, 2022, the Company agreed to pay $100,000 to settle a Complaint filed against it by two children of a former officer of the Company, seeking payment and damages related to an alleged Employment Agreement obligation. For more information regarding this matter, see “NOTE 9. COMMITMENTS AND CONTINGENCIES” herein. |
SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation: The Company’s unaudited consolidated financial statements for the three months and nine months ended July 3, 2022 and July 4, 2021 are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with instructions to Form 10-Q and Article 10 of Regulation S-X. The Company believes that the disclosures made are adequate to make the information presented not misleading. The information reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods set forth herein. Interim results are not necessarily indicative of the results for a full fiscal year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2021.
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| Principles of Consolidation | Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries (Wild Animal – Georgia, Wild Animal – Missouri and Aggieland Wild Animal – Texas). All material inter-company accounts and transactions have been eliminated in consolidation.
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| Accounting Method | Accounting Method: The Company recognizes income and expenses based on the accrual method of accounting.
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| Estimates and Assumptions | Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
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| Fiscal Year End | Fiscal Year End: The Company’s fiscal year-end is the Sunday closest to September 30, and its quarterly close dates are also determined by the Sunday closest to the end of each quarterly reporting period. For the 2022 fiscal year, October 2 will be the closest Sunday, and for the 2021 fiscal year, October 3 was the closest Sunday. The 2022 fiscal year will be comprised of 52-weeks, while the 2021 fiscal year was comprised of 53-weeks. This fiscal calendar aligns the Company’s fiscal periods closely with the seasonality of its business. The high season typically ends after the Labor Day holiday weekend. The period from October through early March is geared towards maintenance and preparation for the next busy season, which typically begins at Spring Break and runs through Labor Day.
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| Financial and Concentrations Risk | Financial and Concentrations Risk: The Company does not have any significant concentration or related financial credit risks. The Company maintains its cash in bank deposit accounts, which at times may exceed federally insured limits.
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| Trade Accounts Receivable | Trade Accounts Receivable: The theme parks are a payment upfront business; therefore, the Company typically carries little or no accounts receivable. The Company had $3,877 and $4,469 of accounts receivable as of July 3, 2022 and October 3, 2021, respectively.
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| Inventory | Inventory: Inventory consists of gift shop items, animal food, and concession and park supplies, and is stated at the lower of cost or net realizable value. Cost is determined on the first-in, first-out method. The gross profit method is used to determine the change in gift shop inventory for interim periods. Inventories are reviewed and reconciled annually because inventory levels turn over rapidly. The Company had inventory of $587,674 and $314,103 as of July 3, 2022 and October 3, 2021, respectively.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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| Property and Equipment | Property and Equipment: Property and equipment are stated at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the assets, which range from three to thirty-nine years. A summary is included below.
Depreciation expense for the three months ended July 3, 2022 and July 4, 2021 totaled $192,575 and $183,883, respectively, and depreciation expense for the nine months ended July 3, 2022 and July 4, 2021 totaled $578,225 and $523,890, respectively.
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| Intangible Assets | Intangible Assets: Intangible assets consist of tradename registrations, which are reported at cost and are being amortized over a period of 15 years.
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| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets: The Company reviews its major assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is considered impaired, then impairment will be recognized in an amount determined by the excess of the carrying amount of the asset over its fair value.
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| Other Current Liabilities | Other Current Liabilities: The following is a breakdown of other current liabilities:
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| Financial Instruments | Financial Instruments: The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short-term maturities or due to the fact they were entered into during the Company’s 2021 and 2020 fiscal years. Securities that are publicly traded are valued at their fair market value as of the balance sheet date presented.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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| Revenue Recognition | Revenue Recognition: The Company recognizes revenues in accordance with ASC 606, Revenues from Contracts with Customers. Under ASC 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocation the transaction price to the performance obligation in the contract; and (5) recognize revenue when (or as) the Company satisfies the performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.
Revenues from park admission fees are recognized at the point in time control transfers to the customer, which is generally when the customer accepts access to the park and the Company is entitled to payment. Park admission fee revenues from advance online ticket purchases are deferred until the customers’ visit to the parks. Revenues from retail and concession sales are generally recognized upon the concurrent receipt of payment and delivery of goods to the customer. Sales taxes billed and collected are not included in revenue.
The Company periodically sells surplus animals created from the natural breeding process that occurs within the parks. All animal sales are reported as a separate revenue line item. Animal sales are recognized at a point in time when control transfer to the customer, which is generally determined when title, ownership and risk of loss pass to the customer, all of which generally occurs upon delivery of the animal. Based on the Company’s assessment of control indicators, sales are recognized when animals are delivered to the customer.
The Company provides disaggregation of revenue based on geography in “Note 10: Business Segments”, as it believes this best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
Deferred revenues from advance online admission tickets and related advance sales were $221,755 and $242,318 as of July 3, 2022 and October 3, 2021, respectively, and are included within Other Current Liabilities in the accompanying consolidated balance sheets.
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| Advertising and Marketing Costs | Advertising and Marketing Costs: The Company expenses advertising and marketing costs as incurred. Advertising and marketing expense for the three months ended July 3, 2022 and July 4, 2021 totaled $384,025 and $258,394, respectively and advertising and marketing expense for the nine months ended July 3, 2022 and July 4, 2021 totaled $959,145 and $702,410, respectively.
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| Leases | Leases: The Company determines if an arrangement contains a lease at inception and accounts for all leases in accordance with ASC 842, Leases. If an arrangement contains a lease, the Company performs a classification test to determine if the lease is an operating lease or a financing lease. Right of use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Right of use assets are valued at the initial measurement of the lease liability, plus any indirect costs or rent prepayments, and reduced by any lease incentives and any deferred lease payments. Right of use assets are amortized over the lease term. Lease liabilities are recognized on the commencement date of the lease based on the present value of the future lease payments over the lease term. The discount rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate, unless the rate implicit in the lease is readily determinable. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the life of the lease, unless management believes there is an alternative systematic basis which better represents the pattern which the Company will consume the economic benefits thereof and is included within general and administrative expenses. As a practical expedient, the Company does not recognize right-of-use assets and lease liabilities for leases with an original term of one year or less. Any non-lease components are not included within the lease right-of-use asset and lease liability, are reflected as an expense in the period incurred.
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| Paycheck Protection Program Loan Accounting Policy | Paycheck Protection Program Loan Accounting Policy: Currently, there is no authoritative guidance under GAAP that addresses accounting and reporting by a for-profit business entity that receives forgivable debt from a government entity. Accordingly, management has elected to recognize forgivable debt received from a government entity as debt until debt extinguishment occurs when the Company is legally released from being the obligor. Upon legal release as obligor, the Company will recognize the forgiven amount as income.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) July 3, 2022
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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| Stock Based Compensation |
A Stock Option and Award Plan (the “Plan”) providing for incentive stock options and performance bonus awards for executives, employees, and directors was approved by the Company’s Board of Directors on February 1, 2005, however, the Plan has not been submitted to the stockholders for approval. The Plan sets aside five million () shares for award of stock options, including qualified incentive stock options and performance stock bonuses. To date, grants or awards have been made pursuant to the Plan and the Company did not submit the Plan for consideration to the Company’s stockholders at its last meeting of stockholders.
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| Income Taxes | Income Taxes: The Company utilizes the asset and liability method of accounting for income taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using the enacted tax rates and laws. Management periodically reviews the Company’s deferred tax assets to determine whether their value can be realized based on available evidence. A valuation allowance is established when management believes it is more likely than not, that such tax benefits will not be realized. Changes in valuation allowances from period to period are included in the Company’s income tax provision in the period of change.
The Company follows the guidance in FASB ASC 740 with respect to accounting for uncertainty in income taxes. A tax position is recognized as a benefit only if it is “more-likely-than-not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than fifty percent likely of being realized on examination. For tax positions not meeting the “more-likely-than-not” test, no tax benefit is recorded. The Company has no unrecognized tax benefits under guidance related to tax uncertainties. The Company does not anticipate the unrecognized tax benefits will significantly change in the next twelve months. Any tax penalties or interest expense will be recognized in income tax expense. No interest and penalties related to unrecognized tax benefits were accrued as of July 3, 2022 or October 3, 2021.
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| Basic and Diluted Net Income (Loss) Per Share |
Basic and diluted net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the applicable weighted average number of common shares outstanding in each period.
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| Dividend Policy | Dividend Policy: The Company has not yet adopted a policy regarding payment of dividends.
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements:
Credit Losses – Financial Instruments
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326), which changes the impairment model for most financial assets to require measurement and recognition of expected credit losses for financial assets held, replacing the existing incurred loss model. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2022, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures, however, it is not anticipated to be material.
Except as noted, the Company does not expect recently issued accounting standards or interpretations to have a material impact on the Company’s financial position, results of operations, cash flows or financial statement disclosures. |
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SIGNIFICANT ACCOUNTING POLICIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT |
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| SCHEDULE OF OTHER CURRENT LIABILITIES |
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LONG-TERM DEBT (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF DEBT | The following table represents the aggregate of the Company’s outstanding long-term debt:
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| SCHEDULE OF MATURITIES OF LONG-TERM DEBT | As of July 3, 2022, the scheduled future principal maturities of the Company’s long-term debt by fiscal year are as follows:
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FINANCE LEASE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2022 | |||||||||||||||||||||||||||||||||||||||||
| Finance Lease | |||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FINANCE LEASE |
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| SCHEDULE OF FINANCE LEASE RIGHT OF USE ASSETS | The property under the finance lease at July 3, 2022 is included in the accompanying balance as follows:
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| SCHEDULE OF FINANCE PURCHASE LEASE PERIOD RIGHT OF USE ASSET | The Company has the right to purchase the right of use asset during and at the end of the lease period, as follows:
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BUSINESS SEGMENTS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF REVENUE BY REPORTING SEGMENTS | The following tables present financial information regarding each of the Company’s reportable segments:
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ORGANIZATION (Details Narrative) |
9 Months Ended |
|---|---|
Jul. 03, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Entity, date of iIncorporation | Jul. 30, 1954 |
| Entity, state or country code | NV |
SCHEDULE OF OTHER CURRENT LIABILITIES (Details) - USD ($) |
Jul. 03, 2022 |
Oct. 03, 2021 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Deferred revenue | $ 221,755 | $ 242,318 |
| Accrued legal settlement | 100,000 | |
| Accrued sales taxes | 79,470 | 64,396 |
| Accrued wages and payroll taxes | 75,470 | 81,160 |
| Accrued property taxes | 32,167 | 47,517 |
| Other accrued liabilities | 80,265 | 95,956 |
| Other current liabilities | $ 589,127 | $ 531,347 |
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Jul. 03, 2022 |
Jul. 04, 2021 |
Jul. 03, 2022 |
Jul. 04, 2021 |
Oct. 03, 2021 |
Feb. 01, 2005 |
|
| Accounting Policies [Abstract] | ||||||
| Accounts receivable | $ 3,877 | $ 3,877 | $ 4,469 | |||
| Inventory | 587,674 | 587,674 | 314,103 | |||
| Depreciation expenses | 192,575 | $ 183,883 | $ 578,225 | $ 523,890 | ||
| Intangible assets amortization period | 15 years | |||||
| Deferred revenue | 221,755 | $ 221,755 | 242,318 | |||
| Advertising and marketing expense | $ 384,025 | $ 258,394 | $ 959,145 | $ 702,410 | ||
| Stock options, number of shares authorized | 5,000,000 | |||||
| Stock options, number of shares grants | 0 | 0 | ||||
| Unrecognized tax benefits, penalties and interest accrued | $ 0 | $ 0 | $ 0 | |||
SCHEDULE OF DEBT (Details) - USD ($) |
Jul. 03, 2022 |
Oct. 03, 2021 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Loan principal outstanding | $ 5,189,032 | $ 5,715,466 |
| Less: unamortized debt financing costs | (51,387) | (55,803) |
| Gross long-term debt | 5,137,645 | 5,659,663 |
| Less current portion of long-term debt, net of unamortized costs and discount | (724,239) | (699,483) |
| Long-term debt | $ 4,413,406 | $ 4,960,180 |
SCHEDULE OF MATURITIES OF LONG-TERM DEBT (Details) |
Jul. 03, 2022
USD ($)
|
|---|---|
| Debt Disclosure [Abstract] | |
| 2022 | $ 178,913 |
| 2023 | 738,666 |
| 2024 | 773,564 |
| 2025 | 810,140 |
| 2026 | 848,476 |
| thereafter | 1,839,273 |
| Total | $ 5,189,032 |
LINE OF CREDIT (Details Narrative) - 2018 Refinancing With Synovus [Member] |
Jul. 11, 2018
USD ($)
|
|---|---|
| Short-Term Debt [Line Items] | |
| Debt instrument, issuance date | Jul. 11, 2018 |
| Debt instrument, description | 2018 Refinancing with Synovus. |
| Line of credit, maximum borrowing capacity | $ 350,000 |
| Maturity date | Jul. 11, 2021 |
| Debt instrument option to renew term, description | three-year term |
SCHEDULE OF FINANCE LEASE (Details) - USD ($) |
Jul. 03, 2022 |
Oct. 03, 2021 |
|---|---|---|
| Finance Lease | ||
| 2023 | $ 160,863 | |
| 2024 | 160,863 | |
| Total minimum lease payments | 321,726 | |
| Less amount representing interest | (10,054) | |
| Present value of minimum lease payments | 311,672 | |
| Less current portion | (158,852) | |
| Long-term portion of finance lease obligation | $ 152,820 |
SCHEDULE OF FINANCE LEASE RIGHT OF USE ASSETS (Details) - USD ($) |
Jul. 03, 2022 |
Oct. 03, 2021 |
|---|---|---|
| Finance Lease | ||
| Christmas Light Display | $ 464,492 | |
| Less accumulated amortization | (154,831) | |
| Right of use asset, net | $ 309,661 |
SCHEDULE OF FINANCE PURCHASE LEASE PERIOD RIGHT OF USE ASSET (Details) |
Jul. 03, 2022
USD ($)
|
|---|---|
| Finance Lease | |
| Current | $ 357,228 |
| After 2023 display | 196,365 |
| After 2024 display | $ 35,502 |
FINANCE LEASE (Details Narrative) |
9 Months Ended |
|---|---|
|
Jul. 03, 2022
USD ($)
| |
| Finance Lease | |
| Weighted Average Remaining Lease Term | 18 months |
| Weighted Average Discount Rate | 3.75% |
| Operating Lease, Cost | $ 63,070 |
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) |
3 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Feb. 21, 2022 |
Dec. 13, 2021 |
Jan. 11, 2021 |
Dec. 18, 2020 |
Jan. 02, 2022 |
Jan. 03, 2021 |
Jul. 03, 2022 |
|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
| Annual Compensation award description | On December 13, 2021, the Company declared its annual compensation award to seven Directors for their service on the Board of Directors. Five Directors were awarded $10,000 each, two new Directors were awarded $2,222 each, and two Directors received a total of $7,500 for serving as committee chairpersons and as a non-employee officer, with such compensation to be paid all in shares of the Company’s common stock, all in cash or a combination thereof, at each Director’s election. Five Directors elected to receive all shares, one Director elected to receive 60% in shares and 40% in cash, and one Director elected all cash. Based on the closing stock price of $0.553 per share on December 13, 2021, a total of 84,888 shares were distributed on February 21, 2022. The total compensation award cost of $61,944 was reported as an expense in the three month period ended January 2, 2022. | On December 18, 2020, the Company declared its annual compensation award to six Directors for their service on the Board of Directors. Each Director was awarded $10,000, with such compensation to be paid all in shares of the Company’s common stock, all in cash or a combination thereof, at each Director’s election. Four Directors elected to receive all shares, one Director elected to receive 50% in shares and 50% in cash, and one Director elected all cash. Based on the closing stock price of $0.4388 per share on December 18, 2020, a total of 102,550 shares were distributed on January 11, 2021. The total compensation award cost of $60,000 was reported as an expense in the three month period ended January 3, 2021. | |||||
| Stock price | $ 0.4388 | ||||||
| Shares issued for annual compensation award | 102,550 | ||||||
| Compensation expense | $ 60,000 | ||||||
| Officers Directors And Controlled Entities [Member] | |||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
| Percentage of outstanding common stock owned | 53.30% | ||||||
| Five Directors [Member] | |||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
| Annual compensation award to each director | $ 10,000 | ||||||
| Two Directors [Member] | |||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
| Annual compensation award to each director | 2,222 | ||||||
| Chairperson And Non Employees Officer [Member] | |||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
| Additional aggregate compensation | $ 7,500 | ||||||
| Seven Director [Member] | |||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
| Stock price | $ 0.553 | ||||||
| Shares issued for annual compensation award | 84,888 | ||||||
| Director [Member] | |||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
| Compensation expense | $ 61,944 | ||||||
| Non Director Officer [Member] | |||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
| Annual compensation award to each director | $ 10,000 | ||||||
| Stock price | $ 0.553 | ||||||
| Shares issued for annual compensation award | 18,083 | ||||||
| Compensation expense | $ 10,000 | ||||||
| Director Six [Member] | |||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
| Annual compensation award to each director | $ 10,000 | ||||||
INCOME TAXES (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jul. 03, 2022 |
Jul. 04, 2021 |
Jul. 03, 2022 |
Jul. 04, 2021 |
|
| IncomeTaxLineItems [Line Items] | ||||
| Pre-tax income | $ 977,612 | $ 1,659,133 | $ 391,582 | $ 2,661,516 |
| Effective federal and state income tax rate | 29.40% | |||
| Income tax expense (benefit) | $ 258,900 | $ 392,300 | $ 146,500 | 628,700 |
| Domestic Tax Authority [Member] | ||||
| IncomeTaxLineItems [Line Items] | ||||
| Income tax expense (benefit) | 70,300 | 484,900 | ||
| State of Georgia [Member] | ||||
| IncomeTaxLineItems [Line Items] | ||||
| Income tax expense (benefit) | $ 76,200 | $ 143,800 | ||
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) |
Aug. 05, 2022 |
Feb. 17, 2021 |
|---|---|---|
| Loss Contingencies [Line Items] | ||
| Payment to plaintiffs | $ 100,000 | |
| Insurance Claims [Member] | ||
| Loss Contingencies [Line Items] | ||
| Purchase at least | $ 540,000 | |
| Damages sought, value | $ 540,000 |
SCHEDULE OF REVENUE BY REPORTING SEGMENTS (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Jul. 03, 2022 |
Jul. 04, 2021 |
Jul. 03, 2022 |
Jul. 04, 2021 |
Oct. 03, 2021 |
|
| Segment Reporting Information [Line Items] | |||||
| Total net sales | $ 3,644,325 | $ 3,874,100 | $ 7,675,657 | $ 8,577,482 | |
| Income (loss) before income taxes | 977,612 | 1,659,133 | 391,582 | 2,661,516 | |
| Other income, net | 22,030 | 16,996 | 68,322 | 44,315 | |
| Legal settlement | (100,000) | (100,000) | |||
| Gain on extinguishment of debt | 64,617 | 189,988 | |||
| Interest expense | (65,804) | (91,958) | (202,475) | (267,578) | |
| Total assets | 21,220,721 | 21,220,721 | $ 20,981,976 | ||
| Georgia [Member] | |||||
| Segment Reporting Information [Line Items] | |||||
| Total net sales | 2,517,848 | 2,724,847 | 5,166,869 | 5,903,635 | |
| Income (loss) before income taxes | 1,286,953 | 1,721,101 | 2,068,758 | 3,401,355 | |
| Total assets | 9,734,752 | 9,734,752 | 9,785,396 | ||
| Missouri [Member] | |||||
| Segment Reporting Information [Line Items] | |||||
| Total net sales | 537,189 | 618,185 | 1,040,003 | 1,157,862 | |
| Income (loss) before income taxes | 76,589 | 158,419 | (498,443) | (1,768) | |
| Total assets | 3,532,895 | 3,532,895 | 3,388,808 | ||
| Texas [Member] | |||||
| Segment Reporting Information [Line Items] | |||||
| Total net sales | 589,288 | 531,068 | 1,468,785 | 1,515,985 | |
| Income (loss) before income taxes | (48,695) | (31,482) | (210,087) | (26,948) | |
| Total assets | 7,669,359 | 7,669,359 | 7,554,842 | ||
| Segment Total [Member] | |||||
| Segment Reporting Information [Line Items] | |||||
| Income (loss) before income taxes | 1,314,847 | 1,848,038 | 1,360,228 | 3,372,639 | |
| Corporate Segment [Member] | |||||
| Segment Reporting Information [Line Items] | |||||
| Income (loss) before income taxes | (193,461) | $ (178,560) | (734,493) | $ (677,848) | |
| Total assets | $ 283,715 | $ 283,715 | $ 252,930 | ||
SUBSEQUENT EVENTS (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Aug. 05, 2022 |
Jul. 03, 2022 |
Jul. 04, 2021 |
Jul. 03, 2022 |
Jul. 04, 2021 |
|
| Subsequent Event [Line Items] | |||||
| Legal settlement | $ 100,000 | $ 100,000 | |||
| Subsequent Event [Member] | Officer [Member] | |||||
| Subsequent Event [Line Items] | |||||
| Legal settlement | $ 100,000 | ||||
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