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 incorporation or organization) |
(I.R.S.
Employer 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 ☐ No
As of May 10, 2024, 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 | ||
| OTCPink |
Table of Contents
PARKS! AMERICA, INC and SUBSIDIARIES
INDEX
| 2 |
PARKS! AMERICA, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, 2024 (UNAUDITED) and October 1, 2023
| March 31, 2024 | October 1, 2023 | |||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Short-term investments | ||||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Other current liabilities | ||||||||
| Current portion of long-term debt, net | ||||||||
| Total current liabilities | ||||||||
| Long-term debt, net | ||||||||
| Deferred tax liability, net | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity | ||||||||
Common stock; shares authorized, at $ par value; and shares issued and outstanding, respectively | ||||||||
| Capital in excess of par | ||||||||
| 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 Six Months Ended March 31, 2024 and April 2, 2023
| For the three months ended | For the six months ended | |||||||||||||||
| March 31, 2024 | April 2, 2023 | March 31, 2024 | April 2, 2023 | |||||||||||||
| Park revenues | $ | $ | $ | $ | ||||||||||||
| Sale of animals | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Contested proxy and related matters | ||||||||||||||||
| Tornado expenses and write-offs, net | ||||||||||||||||
| Loss on asset disposals, net | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss 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 Months and Six Months Ended March 31, 2024 and April 2, 2023
| Shares | Amount | Capital in Excess of Par | Retained Earnings | Total | ||||||||||||||||
| Balance at October 1, 2023 | $ | $ | $ | $ | ||||||||||||||||
| Issuance of common stock to Directors | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Net loss for the three months ended December 31, 2023 | - | ( | ) | ( | ) | |||||||||||||||
| Balance at December 31, 2023 | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Net loss for the three months ended March 31, 2024 | - | ( | ) | ( | ) | |||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | ||||||||||||||||
| Shares | Amount | Capital in Excess of Par | Retained Earnings | Total | ||||||||||||||||
| Balance at October 2, 2022 | $ | $ | $ | |||||||||||||||||
| Net loss for the three months ended January 1, 2023 | - | ( | ) | ( | ) | |||||||||||||||
| Balance at January 1, 2023 | ||||||||||||||||||||
| Issuance of common stock to Directors | ||||||||||||||||||||
| Net loss for the three months ended April 2, 2023 | - | ( | ) | ( | ) | |||||||||||||||
| Balance at April 2, 2023 | $ | $ | $ | $ | ||||||||||||||||
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 Six Months Ended March 31, 2024 and April 2, 2023
| For the six months ended | ||||||||
| March 31, 2024 | April 2, 2023 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Reconciliation of net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Interest expense - debt financing cost amortization | ||||||||
| Stock-based compensation | ||||||||
| Accrued interest on certificates of deposit | ( | ) | ||||||
| Tornado asset write-offs | ||||||||
| Loss on asset disposals | ||||||||
| 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 used in operating activities | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Investments in certificates of deposit | ( | ) | ||||||
| Acquisition of property and equipment | ( | ) | ( | ) | ||||
| Investment in intangible assets | ( | ) | ||||||
| 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 | ( | ) | ( | ) | ||||
| Line-of-credit fees | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net decrease 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 | $ | $ | ||||||
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)
March 31, 2024
NOTE 1. ORGANIZATION
Parks! America, Inc. (“Parks!” or the “Company”) owns and operates through wholly owned subsidiaries three regional safari parks and is in the business of acquiring, developing and operating local and regional entertainment assets 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 was originally incorporated on
The Company’s Parks are open year-round, but experience increased seasonal attendance, typically beginning in the latter half of March through early September. Combined third and fourth quarter park revenues were 60.4% and 62.1% of annual park revenues for the Company’s 2023 and 2022 fiscal years, respectively.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The accompanying unaudited condensed consolidated financial statements 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 1, 2023.
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 2024 fiscal year, September 29 will be the closest Sunday, and for the 2023 fiscal year, October 1 was the closest Sunday. 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 in the latter half of March through early September.
| 7 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial and Concentrations Risk: The Company does not have any significant concentrations.
Fair Value: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, or an exit price. Inputs to valuation techniques used to measure fair value may be observable or unobservable, and valuation techniques used to measure fair value should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The fair value hierarchy consists of three broad levels based on the ranks of the quality and reliability of inputs used to determine the fair values. Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities. Level 2 inputs consist of quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities recognized or disclosed at fair value on a recurring basis include our term debt.
As
of March 31, 2024 and October 1, 2023, the fair value of our long-term debt was $
Cash and Cash Equivalents: The Company maintains its cash and cash equivalents with high credit quality financial institutions. The Company considers all highly liquid financial instruments with maturities of three months or less to be cash equivalents. The Company maintains cash and cash equivalent in deposit accounts which may at times exceed federally insured limits. As of March 31, 2024 and October 1, 2023, cash and cash equivalents consisted of cash on deposit and a money market account.
Short-term
Investments: The Company periodically invests in certificates of deposit and classifies its certificates of deposit as cash and
cash equivalents or short-term investments and reassesses the appropriateness of the classification of its investments at the end of
each reporting period. Certificates of deposit held for investment with an original maturity date greater than three months are carried
at amortized cost and reported as short-term investments on the consolidated balance sheets. As of March 31, 2024, the Company had $
Accounts
Receivable: The Company’s safari parks are principally a payment upfront business; therefore, the Company generally carries
limited 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 based 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 $
Prepaid Expenses: The Company prepays certain expenses primarily due to legal or contractual requirements. The following is a breakdown of prepaid expenses:
| March 31, 2024 | October 1, 2023 | |||||||
| Prepaid income taxes | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Prepaid advertising | ||||||||
| Other prepaid expenses | ||||||||
| Total prepaid expenses | $ | $ | ||||||
| 8 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
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 to years. A summary is included below.
| March 31, 2024 | October 1, 2023 | 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 March 31, 2024 and April 2, 2023 totaled $
Intangible
Assets: Intangible assets consist primarily of a site master plan, website domains and tradename registrations, which are reported
at cost and are being amortized over a period of to
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:
| March 31, 2024 | October 1, 2023 | |||||||
| Deferred revenue | $ | $ | ||||||
| Accrued compensation | ||||||||
| Accrued sales taxes | ||||||||
| Accrued professional fees | ||||||||
| Accrued property taxes | ||||||||
| Other accrued liabilities | ||||||||
| Other current liabilities | $ | $ | ||||||
| 9 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
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 revenues for annual passes and memberships are deferred and recognized as revenue on a pro-rata basis over the term of the pass or membership. Park admission fee revenues from advance online ticket purchases are deferred until the customers’ visit to the parks. Advance online tickets can generally be used anytime during the one year period from the date of purchase. 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.
Deferred
revenues from advance online admission tickets, and season passes and memberships were $
The Company periodically sells surplus animals created from the natural breeding process that occurs within the parks. Animal sales are reported as a separate revenue line item. Animal sales are recognized at a point in time when control transfers 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.
Advertising
and Marketing Costs: The Company expenses advertising and marketing costs as incurred. Advertising and marketing expense for
the three months ended March 31, 2024 and April 2, 2023 totaled $
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 the 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.
| 10 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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
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”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), which significantly changes how entities measure credit losses for most financial assets, including accounts receivable and held-to-maturity marketable securities, replacing the “incurred loss” model with an “expected loss” model under which allowances are based on expected rather than incurred losses. ASU No. 2016-13 became for the Company in the three months ended March 31, 2024. The adoption of ASU No. 2016-13 had an immaterial impact on the Company.
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.
NOTE 3. TORNADO EXPENSES AND ASSET WRITE-OFFS
During
March 26-27, 2023, the Company’s Georgia Park experienced extensive damage, caused by an EF-3 tornado and over nine inches of rain,
resulting in more than 4,500 fallen trees and damage to many of the Park’s animal enclosures, fencing and other infrastructure.
The Walkabout Adventure Zoo (“Walkabout”) portion of the property was particularly hard hit. The Georgia Park was closed
for 20 days, including for most of its traditionally busy spring break period, which has historically comprised approximately
| 11 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
NOTE 3. TORNADO EXPENSES AND ASSET WRITE-OFFS (CONTINUED)
For
the three months and six months ended April 2, 2023, the Company recorded $
The
Company has also made capital investments of $
The
Company has been working with its insurance providers regarding tornado damage related coverage and insurance proceeds totaling $
NOTE 4. LONG-TERM DEBT
On
On
Interest
expense of $
| 12 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
NOTE 4. LONG-TERM DEBT (CONTINUED)
The following table represents the aggregate of the Company’s outstanding long-term debt:
| As of | ||||||||
| March 31, 2024 | October 1, 2023 | |||||||
| Loan principal outstanding | $ | $ | ||||||
| Less: unamortized debt financing costs | ( | ) | ( | ) | ||||
| Gross long-term debt | ||||||||
| Less current portion of long-term debt, net of unamortized costs | ( | ) | ( | ) | ||||
| Long-term debt | $ | $ | ||||||
As of March 31, 2024, the scheduled future principal maturities of the Company’s long-term debt by fiscal year are as follows:
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| thereafter | ||||
| Total | $ |
NOTE 5. LINES OF CREDIT
On
October 19, 2023, the Company, through its wholly owned subsidiary Aggieland Wild Animal – Texas, entered a line of credit of up
to $
On
October 24, 2023, the Company, through its wholly owned subsidiary Wild Animal – Georgia, entered a line of credit of up to $
As of March 31, 2024, the Company had not made any borrowings against either of these lines of credit.
Interest
expense for the three months ended March 31, 2024 and April 2, 2023, includes $
| 13 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
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 4, 2023, the Company declared its annual compensation award to seven directors for their service on the Board of Directors.
Seven directors were awarded $
On
February 2, 2023, the Company declared its annual compensation award to seven directors for their service on the Board of Directors.
Seven directors were awarded $
Effective
February 14, 2023, Lisa Brady the Company’s President and Chief Executive Officer vested in shares of the Company’s
common stock, in accordance with the terms of her employment agreement. The Company recorded compensation award cost of $
Officers,
directors and their controlled entities own approximately
NOTE 7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Employment Agreements:
Effective
| 14 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
NOTE 7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
Effective
Effective
as of
Each
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 six months ended March 31, 2024, the Company reported a pre-tax loss of $
NOTE 9. COMMITMENTS AND CONTINGENCIES
On December 16, 2022, the Company received notice that on August 10, 2022 a former employee of Aggieland Wild Animal – Texas, filed a Complaint in the 361st District Court of Brazos County, Texas (case no. 22-001839-CV-361), alleging the Company and Aggieland-Parks, Inc. committed several instances of employment discrimination. The Complaint seeks unspecified economic, compensatory and punitive damages, as well as attorney’s fees and costs. The Company is defending this claim.
On March 1, 2024, Focused Compounding Fund, LP (“Focused Compounding”) filed a Complaint in the Eighth Judicial District Court of Clark County, Nevada (case no. A-24-888295-B) against the Company and each of the members of its Board of Directors, alleging that the defendants were contemplating efforts to entrench themselves as members of the Board of Directors. Simultaneously with filing its Complaint, Focused Compounding sought a Preliminary Injunction that would require the Company and its Directors to take various actions. On March 15, 2024, the Court denied Focused Compounding’s motion for a Preliminary Injunction. On April 30, 2024, the Company and the named defendants filed a motion asking the court to dismiss the Complaint with prejudice. The motion is pending before the Court. The Company intends to vigorously defend against Focused Compounding’s claims.
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.
| 15 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
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 measure used to allocate resources are Park earnings before interest, taxes, depreciation and amortization expenses.
The following tables present financial information regarding each of the Company’s reportable segments:
| For the three months ended | For the six months ended | |||||||||||||||
| March 31, 2024 | April 2, 2023 | March 31, 2024 | April 2, 2023 | |||||||||||||
| Total revenues: | ||||||||||||||||
| Georgia | $ | $ | $ | $ | ||||||||||||
| Missouri | ||||||||||||||||
| Texas | ||||||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||
| Income (loss) before income taxes: | ||||||||||||||||
| Georgia | $ | $ | $ | $ | ||||||||||||
| Missouri | ( | ) | ( | ) | ( | ) | ||||||||||
| Texas | ( | ) | ( | ) | ||||||||||||
| Segment income | ||||||||||||||||
| Corporate | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Depreciation and amortization | ||||||||||||||||
| Loss on asset disposals, net | ||||||||||||||||
| Contested proxy and related matters | ||||||||||||||||
| Tornado expenses and write-offs, net | ||||||||||||||||
| Other income, net | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consolidated | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| As of | ||||||||
| March 31, 2024 | October 1, 2023 | |||||||
| Total assets: | ||||||||
| Georgia | $ | $ | ||||||
| Missouri | ||||||||
| Texas | ||||||||
| Corporate | ||||||||
| Consolidated | $ | $ | ||||||
| 16 |
PARKS! AMERICA, INC. and SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2024
On December 22, 2023, Focused Compounding Fund, LP (together with the participants in its solicitation, “Focused Compounding”) submitted documents to the Company purporting to provide qualifying notice as to a demand that the Company hold a special meeting of stockholders (the “Special Meeting”). The Special Meeting was held for the purpose of asking stockholders to consider and vote upon five proposals, including a proposal for the removal of all directors currently serving on the Board of Directors and a proposal for the election of a new Board of Directors comprised entirely of Focused Compounding’s slate of three candidates. The Special Meeting was held on February 26, 2024 and each of Focused Compounding’s proposals failed, including its proposals to reconstitute the Board of Directors.
The Board of Directors scheduled the annual meeting of stockholders to be held on June 6, 2024 (the “2024 Annual Meeting”). On January 26, 2024, Focused Compounding submitted documents to the Company purporting to provide qualifying notice to the Company of its intent to nominate four nominees at the 2024 Annual Meeting, seeking effective control of the Company. Subsequently, on April 5, 2024, Focused Compounding submitted documents to the Company purporting to provide qualifying notice to the Company of its intent to submit a business proposal at the 2024 Annual Meeting. On April 23, 2024, the Company filed its definitive proxy statement with respect to the 2024 Annual Meeting. Stockholders are strongly encouraged to read such proxy statement, the accompanying WHITE proxy card and all other documents filed with the Securities and Exchange Commission carefully as they contain important information relating to the 2024 Annual Meeting. The Board of Directors remains open to ongoing engagement with Focused Compounding. However, if the Company and Focused Compounding cannot reach an agreement in connection with Focused Compounding’s nominations and business proposal, and Focused Compounding complies with applicable rules and requirements, there will be a contested election at the Company’s 2024 Annual Meeting.
On March 1, 2024, Focused Compounding filed a Complaint in the Eighth Judicial District Court of Clark County against the Company and each of the members of its Board of Directors, alleging that the defendants were contemplating efforts to entrench themselves as members of the Board. See “NOTE 9. COMMITMENTS AND CONTINGENCIES” for additional information.
NOTE 12. SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to March 31, 2024 to the date these financial statements were issued and has determined, no material subsequent events have occurred from the date of these unaudited consolidated financial statements.
| 17 |
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 our 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 1, 2023.
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, inclement 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.
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.
Contested Proxy and Related Matters
On December 22, 2023, Focused Compounding Fund, LP (together with the participants in its solicitation, “Focused Compounding”) submitted documents to the Company purporting to provide qualifying notice as to a demand that the Company hold a special meeting of stockholders (the “Special Meeting”). The Special Meeting was held for the purpose of asking stockholders to consider and vote upon five proposals, including a proposal for the removal of all directors currently serving on the Board of Directors and a proposal for the election of a new Board of Directors comprised entirely of Focused Compounding’s slate of three candidates. The Special Meeting was held on February 26, 2024, and each of Focused Compounding’s proposals failed, including its proposals to reconstitute the Company’s Board of Directors.
The Board of Directors scheduled the annual meeting of stockholders to be held on June 6, 2024 (the “2024 Annual Meeting”). On January 26, 2024, Focused Compounding submitted documents to the Company purporting to provide qualifying notice to the Company of its intent to nominate four nominees at the 2024 Annual Meeting, seeking effective control of the Company. Subsequently, on April 5, 2024, Focused Compounding submitted documents to the Company purporting to provide qualifying notice to the Company of its intent to submit a business proposal at the 2024 Annual Meeting. On April 23, 2024, the Company filed its definitive proxy statement with respect to the 2024 Annual Meeting. Stockholders are strongly encouraged to read such proxy statement, the accompanying WHITE proxy card and all other documents filed with the Securities and Exchange Commission carefully as they contain important information relating to the 2024 Annual Meeting. We remain open to ongoing engagement with Focused Compounding. However, if the Company and Focused Compounding cannot reach an agreement in connection with Focused Compounding’s nominations and business proposal, and Focused Compounding complies with applicable rules and requirements, there will be a contested election at the Company’s 2024 Annual Meeting. We do not believe that the candidates proposed by Focused Compounding for consideration by stockholders at the 2024 Annual Meeting are qualified to oversee our business, and we do not believe that their appointment would be in the best interests of the Company or its stockholders.
| 18 |
On March 1, 2024, Focused Compounding filed a Complaint in the Eighth Judicial District Court of Clark County against the Company and each of the members of our Board of Directors, alleging that the defendants were contemplating efforts to entrench themselves of members of the Board of Directors. See “NOTE 9. COMMITMENTS AND CONTINGENCIES” of the Notes to the Consolidated Financial Statements (Unaudited) included in this Quarterly Report for additional information.
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. Combined third and fourth quarter park revenues were 60.4% and 62.1% of annual park revenues for our 2023 and 2022 fiscal years, respectively. Since the acquisition of our Texas Park, the combined third and fourth quarter concentration of our park revenues has been reduced.
During March 26-27, 2023, our Georgia Park experienced extensive damage, caused by an EF-3 tornado and over nine inches of rain, resulting in more than 4,500 fallen trees and damage to many of the Park’s animal enclosures, fencing and other infrastructure. The Walkabout Adventure Zoo (“Walkabout”) portion of the property was particularly hard hit. Our Georgia Park was closed for 20 days, including for most of its traditionally busy spring break period, which has historically comprised approximately 10%-15% of its annual revenue. The drive-through safari section of the Georgia Park reopened on April 15th. The Walkabout portion of the Park reopened in phases, with the first phase on May 6th and the second phase on July 2nd. Approximately one-quarter of the Walkabout remains closed.
As a result of the near-term needs associated with the tornado recovery effort at our Georgia Park, we revised our 2023 fiscal year capital investment plan. Two significant new marketable attractions in our Georgia Park Walkabout, an enhanced ring-tailed lemur exhibit and new aviary, featuring macaws and a budgie parrot feeding experience, were not significantly impacted by the tornado event and opened on May 6, 2023. In addition, a new marquee otter exhibit opened in May 2023 at our Missouri Park Walkabout and a fourth drive-through pasture at our Texas Park opened in early March 2023, allowing guests to feed zebras and camels directly from their vehicles.
Our 2024 fiscal year capital plan reflects the further strategic rebuild of our Georgia Park following the March 2023 severe weather event and continues to set the stage for longer-term master planning and optimization at each of our parks. The centerpiece of our 2024 capital plan is a new restroom building and main entry plaza at our Georgia Park. The existing restroom building was near the end of its useful life, and the tornado damage rendered it beyond repair. We believe this investment is paramount in improving the overall guest experience and will pave the way for a new standard. The new main entry plaza will provide an improved arrival experience and a place for our guests to dwell, which we believe will positively impact our Georgia Park for decades to come.
Also in Georgia, our carnivore night house will be rebuilt, a capybara encounter area will be added, roadway infrastructure improved, and additional fencing and sidewalks repaired. We continue to take a strategic and measured approach to the rebuild at our Georgia Park, ensuring we put in place a product that will withstand the test of time and improve the guest, animal and staff experience, ultimately delivering higher revenue and profitability. At our Missouri Park, the 2024 capital plan is focused on activation of a guest-facing pond within the Walkabout featuring a nature trail and pond access for a fish feeding experience, the expansion of shade structures, additional rental vehicles, and equipment capital. Capital spending planned for 2024 at our Texas Park will be focused on key infrastructure needs, including electrical build out at the Park to right-size the service within the facility, hay storage, the completion of the keeper facility and general safety related improvements. We remain committed to our long-term vision for our parks, and we believe our 2024 capital plan balances additional needs from the Georgia Park tornado and deferred maintenance, along with the addition of guest facing improvements and amenities. Our 2024 fiscal year capital plan anticipates spending approximately $1.4 million, which will again be fully funded from our existing cash and continues to demonstrate our commitment to building for long-term, sustainable growth.
| 19 |
We are committed to leveraging the strong operating model we have established at our Georgia Park at all three of our properties, with a focus on increasing attendance through enhanced marketing efforts and focused capital investments, as well as continuing to prudently increase the average revenue generated per guest visit via concession and gift shop revenues. In addition to rebuilding and improving our Georgia Park Walkabout, among our highest priorities over the next several years are the enhancement of the overall guest experience, streamlining and optimizing our systems, operating standards and practices, and increasing per capita revenue, through the introduction of new programming and more targeted marketing efforts. Our Texas Park opened to the public in May 2019 and we believe there remains long-term potential to increase attendance by increasing the local and regional awareness of this facility via advertising and promotion. We remain encouraged by the higher levels of attendance at our Missouri Park which began in the spring of 2020 and plan on prudently leveraging the increased exposure of this facility to continue to build on this success.
Our long-term business plan also includes adjacent expansion and expansion via the acquisition of additional local or regional entertainment assets and attractions. We believe adjacent development and 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 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.
Strong annual operating cash flow over the past several fiscal years has provided us with incremental operating margin, funded significant increases in capital investment, allowed us to paydown debt following the Aggieland Safari acquisition in 2020, and quickly reopen after the significant damage and business interruption caused by the March 2023 severe weather event at our Georgia Park. However, our current size and operating model leaves us little room for error. Any future capital raised by us may result in dilution to existing stockholders. It is possible that the 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 measure used to allocate resources are Park earnings before interest, taxes, depreciation and amortization expenses (commonly referred to as “EBITDA”). We use EBITDA as a 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 segment.
Results of Operations for the Three Months Ended March 31, 2024 as Compared to Three Months Ended April 2, 2023
The following table shows our consolidated and segment operating results for the three month periods ended March 31, 2024 and April 2, 2023:
| Georgia Park | Missouri Park | Texas Park | Consolidated | |||||||||||||||||||||||||||||
| Fiscal 2024 | Fiscal 2023 | Fiscal 2024 | Fiscal 2023 | Fiscal 2024 | Fiscal 2023 | Fiscal 2024 | Fiscal 2023 | |||||||||||||||||||||||||
| Total revenues | $ | 1,048,944 | $ | 1,050,455 | $ | 400,733 | $ | 270,827 | $ | 508,523 | $ | 554,183 | $ | 1,958,200 | $ | 1,875,465 | ||||||||||||||||
| Segment income (loss) | 185,645 | 187,533 | 50,940 | (45,936 | ) | 31,076 | 27,182 | 267,661 | 168,779 | |||||||||||||||||||||||
| Segment income (loss) margin % | 17.7 | % | 17.9 | % | 12.7 | % | -17.0 | % | 6.1 | % | 4.9 | % | 13.7 | % | 9.0 | % | ||||||||||||||||
| Corporate expenses | (192,722 | ) | (397,490 | ) | ||||||||||||||||||||||||||||
| Depreciation and amortization | 218,593 | 209,449 | ||||||||||||||||||||||||||||||
| Loss on asset disposals, net | 21,337 | 30,584 | ||||||||||||||||||||||||||||||
| Contested proxy and related matters | 1,164,612 | - | ||||||||||||||||||||||||||||||
| Tornado expenses and write-offs, net | - | 632,372 | ||||||||||||||||||||||||||||||
| Other income, net | 34,026 | 31,666 | ||||||||||||||||||||||||||||||
| Interest expense | (49,147 | ) | (56,489 | ) | ||||||||||||||||||||||||||||
| Loss before income taxes | $ | (1,344,724 | ) | $ | (1,125,939 | ) | ||||||||||||||||||||||||||
| 20 |
Total Revenues
| For the three months ended | ||||||||||||
| April 2, 2023 | ||||||||||||
| March 31, 2024 | Actual | Pro Forma | ||||||||||
| Georgia Park | $ | 1,036,469 | $ | 1,050,455 | $ | 1,326,055 | ||||||
| Missouri Park | 400,733 | 270,827 | 262,627 | |||||||||
| Texas Park | 487,038 | 536,283 | 523,133 | |||||||||
| Total park revenues | $ | 1,924,240 | $ | 1,857,565 | $ | 2,111,815 | ||||||
Our total revenues for the three months ended March 31, 2024 totaled $1.96 million, an increase of $82,735, compared to the three months ended April 2, 2023. Our combined park revenues were $1.92 million, an increase of $66,675 or 3.6%, while animal sales were $33,960, an increase of $16,060. In mid-January 2024 we completed the strategic switch to a new ticketing platform, which we believe improves the guest experience, while also providing improved functionality for our park customer services teams. While this change had a net neutral impact on our profitability, we no longer directly up-charge customer transaction fees. On a pro forma basis, adjusting for the tornado damage closure of our Georgia Park for the final eight days during the three months ended April 2, 2023, as well as the change in accounting for customer transaction processing fees, our park revenues for the three months ended March 31, 2024 decreased by approximately 8.9%.
Georgia park revenues were $1.04 million, a decrease of $13,986 or 1.3%, while animal sales were $12,475 compared to $0. On a pro forma basis, adjusting for the tornado damage closure and change in accounting for transaction processing fees, Georgia park revenue decreased by approximately $289,600 or 21.8%. Missouri park revenues were $400,733, an increase of $129,906 or 48.0%. Texas park revenues were $487,038, a decrease of $49,245 or 9.2%, while animal sales increased by $3,585 to $21,485.
For the three months ended March 31, 2024, paid attendance at our Missouri and Georgia Parks increased by approximately 46.2% and 8.7%, while attendance at our Texas Park decreased by approximately 8.8%. Each park was negatively impacted by unfavorable comparable weather in January, which had the most significant impact on attendance at our Georgia and Texas Parks. We believe our Georgia Park continues to be impacted by an increased competition in the greater Atlanta market, as well as a continuing overhang from the March 2023 tornado as we work to fully rebuild. We continue to believe that all three of our parks have benefitted from the transition to a new ad agency, with a focus on digital marketing.
Segment Income (Loss)
Our segment income was 267,661 for the three months ended March 31, 2024, an increase of $98,882, compared to a segment income of $168,779 for the three month period ended April 2, 2023. Our Georgia Park generated segment income of $185,645, a decrease of $1,888, primarily attributable lower park revenues, lower food service margins, and higher staffing related costs, partially offset by higher animal sales and lower advertising expense. Our Missouri Park generated segment income of $50,940, a net improvement of $96,876, primarily attributable to higher park revenues, partially offset by higher staffing related costs. Our Texas Park generated segment income of $31,076, an increase of $3,894, primarily attributable to lower advertising and general operating expenses, as well as higher animal sales, were partially offset by lower park revenues, as well as higher animal feed and staffing related costs.
Corporate Expenses
Corporate expenses decreased by $204,768 to $192,722 during the three months ended March 31, 2024, primarily due to lower compensation related expenses and travel costs, as well as the timing of Directors fees, which were declared during the three months ended December 31, 2023 in the current fiscal year and during in the three months ended April 2, 2023 during the prior fiscal year.
Depreciation and Amortization Expense
Depreciation and amortization expense for the three months ended March 31, 2024 increased by $9,144, to $218,593, primarily attributable to higher depreciation expense for our Georgia Park, partially offset by lower depreciation expense for our Missouri and Texas Parks.
Loss on Asset Disposals, Net
Our net loss on asset disposals for the three months ended March 31, 2024 totaled $21,337, a decrease of $9,247, primarily attributable to animal deaths prior to the end of their estimated life expectancy as well as the disposal of certain assets no longer useful to the business or deemed too costly to maintain or repair.
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Contested Proxy and Related Matters
During the three months ended March 31, 2024, we recorded $1.16 million of expenses associated with a contested proxy contest and related matters. This includes costs associated with preparation for and conducting a Special Meeting of Stockholders held on February 26, 2024, at the request of Focused Compounding Fund, LLC (“FC”), as well as legal costs associated with a lawsuit filed in the State of Nevada by FC on March 1, 2024. See “NOTE 11. CONTESTED PROXY AND RELATED MATTERS” of the Notes to the Consolidated Financial Statements (Unaudited) included in this Quarterly Report for additional information.
Tornado Expenses and Write-offs, Net
As a result of the tornado and severe weather damage at our Georgia Park during March 26-27, 2023, for the three months ended April 2, 2023, we recorded $381,676 of tornado related expenses, primarily due to tree and other debris removal, repairing and replacing underground water pipes throughout the property, as well as general clean-up and reopening efforts. In addition, we recorded tornado and severe weather related asset write-offs of $250,696, primarily associated with damage to various animal exhibits, several buildings, fencing and other infrastructure.
Other Income, Net
Other income, net for the three months ended March 31, 2024 increased by $2,360, to $34,026, attributable to higher interest income and higher mineral rights royalty income from our Texas Park property.
Interest Expense
Interest expense for the three months ended March 31, 2024 decreased by $7,342, to $49,147, attributable to a reduction in term loan interest.
Income Taxes
For the three months ended March 31, 2024, we reported a pre-tax loss of $1.34 million. Based on a year-to-date blend of federal and State of Georgia pre-tax losses, we recorded an income tax benefit of $344,400 for the three months ended March 31, 2024.
Net Income (Loss) and Income (Loss) Per Share
For the three months ended March 31, 2024, we reported a net loss of $1.0 million or $0.01 per basic share and per fully diluted share, compared to a net loss of $846,139 or $0.01 per basic share and per fully diluted share, for the three months ended April 2, 2023, resulting in an increase of $154,185.
| For the three months ended | ||||||||
| March 31, 2024 | April 2, 2023 | |||||||
| Net loss | $ | (1,000,324 | ) | $ | (846,139 | ) | ||
| Contested proxy and related matters | 1,164,612 | - | ||||||
Tax impact – contest proxy and related matters | (314,450 | ) | - | |||||
| Tornado expenses and write-offs, net | - | 632,372 | ||||||
| Tax impact - tornado expenses and write-offs | - | (170,740 | ) | |||||
| Adjusted net loss | $ | (150,162 | ) | $ | (384,507 | ) | ||
As shown in the table above, several items impacted our year-over-year reported net income comparison for the three months ended March 31, 2024. Our reported net income for the three months ended March 31, 2024 included $1.16 million of expenses associated with a contested proxy and related matters. Our reported net income for the three months ended April 2, 2023 included $632,372 of severe weather and tornado related expenses and asset write-offs. Management believes that adjusted net loss, excluding one-time items, should be considered in evaluating the ongoing operating performance of our business. Excluding the after-tax impacts of the contested proxy and related matters for the three months ended March 31, 2024 and the tornado expenses and write-offs for the three months ended April 2, 2023, our adjusted net loss was $150,162 and $384,507, respectively, resulting in a decrease of $234,345. The lower adjusted net loss for the three months ended March 31, 2024 is primarily attributable to a $204,768 decrease in Corporate expenses, a $96,876 increase in segment income for our Missouri Park, a $3,894 increase in segment income for our Texas Park, a $9,247 decrease in losses on asset disposals, a $2,360 increase in other income, a $7,342 decrease in interest expense, partially offset by a $1,888 decline in segment income for our Georgia Park, a $9,144 increase in depreciation and amortization expense, and a $79,110 decrease in our seasonal income tax benefit.
| 22 |
Results of Operations for the Six Months Ended March 31, 2024 as Compared to Six Months Ended April 2, 2023
The following table shows our consolidated and segment operating results for the six month periods ended March 31, 2024 and April 2, 2023:
| Georgia Park | Missouri Park | Texas Park | Consolidated | |||||||||||||||||||||||||||||
| Fiscal 2024 | Fiscal 2023 | Fiscal 2024 | Fiscal 2023 | Fiscal 2024 | Fiscal 2023 | Fiscal 2024 | Fiscal 2023 | |||||||||||||||||||||||||
| Total revenues | $ | 2,288,954 | $ | 2,389,596 | $ | 642,454 | $ | 490,592 | $ | 924,417 | $ | 856,656 | $ | 3,855,825 | $ | 3,736,844 | ||||||||||||||||
| Segment income (loss) | 551,487 | 655,140 | (55,828 | ) | (137,405 | ) | (4,949 | ) | (62,782 | ) | 490,710 | 454,953 | ||||||||||||||||||||
| Segment income (loss) margin % | 24.1 | % | 27.4 | % | -8.7 | % | -28.0 | % | -0.5 | % | -7.3 | % | 12.7 | % | 12.2 | % | ||||||||||||||||
| Corporate expenses | (510,408 | ) | (620,917 | ) | ||||||||||||||||||||||||||||
| Depreciation and amortization | 441,796 | 426,633 | ||||||||||||||||||||||||||||||
| Loss on asset disposals, net | 35,754 | 30,584 | ||||||||||||||||||||||||||||||
| Contested proxy and related matters | 1,291,252 | - | ||||||||||||||||||||||||||||||
| Tornado expenses and write-offs, net | - | 632,372 | ||||||||||||||||||||||||||||||
| Other income, net | 69,913 | 61,279 | ||||||||||||||||||||||||||||||
| Interest expense | (100,592 | ) | (115,225 | ) | ||||||||||||||||||||||||||||
| Loss before income taxes | $ | (1,819,179 | ) | $ | (1,309,499 | ) | ||||||||||||||||||||||||||
Total Revenues
| For the six months ended | ||||||||||||
| April 2, 2023 | ||||||||||||
| March 31, 2024 | Actual | Pro Forma | ||||||||||
| Georgia Park | $ | 2,252,640 | $ | 2,345,797 | $ | 2,621,397 | ||||||
| Missouri Park | 625,004 | 490,592 | 482,389 | |||||||||
| Texas Park | 855,830 | 838,755 | 825,591 | |||||||||
| Total park revenues | $ | 3,733,474 | $ | 3,675,144 | $ | 3,929,377 | ||||||
Our total revenues for the six months ended March 31, 2024 totaled $3.86 million, an increase of $118,981, compared to the six months ended April 2, 2023. Our combined park revenues were $3.73 million, an increase of $58,330 or 1.6%, while animal sales were $122,351, an increase of $60,651. In mid-January 2024 we completed the strategic switch to a new ticketing platform, which we believe improves the guest experience, while also providing improved functionality for our park customer services teams. While this change had a net neutral impact on our profitability, we no longer directly up-charge customer transaction fees. On a pro forma basis, adjusting for the tornado damage closure of our Georgia Park for the final eight days during the six months ended April 2, 2023, as well as the change in accounting for customer transaction processing fees, our park revenues for the six months ended March 31, 2024 decreased by approximately 5.0%.
Georgia park revenues were $2.25 million, a decrease of $93,157 or 4.0%, while animal sales were $36,314, a decrease of $7,485. On a pro forma basis, adjusting for the tornado damage closure, Georgia park revenue decreased by approximately $368,800 or 14.1%. Missouri park revenues were $625,004, an increase of $134,412 or 27.4%, while animal sales totaled $17,450. Texas park revenues were $855,830, an increase of $17,075 or 2.0%, while animal sales increased by $50,686 to $68,587.
For the six months ended March 31, 2024, paid attendance at our Georgia, Missouri and Texas Parks increased by approximately 3.7%, 34.5% and 4.4%, respectively. We believe favorable weather in the three months ended December 31, 2023, benefited our Texas and Missouri Parks, however, our Georgia Park was negatively impacted by unfavorable weather during several key weekends and holidays. Each park was negatively impacted by unfavorable comparable weather in January, which had the most significant impact on attendance at our Georgia and Texas Parks. We believe our Georgia Park continues to be impacted by an increased competition in the greater Atlanta market, as well as a continuing overhang from the March 2023 tornado as we work to fully rebuild. We continue to believe that all three of our parks have benefitted from the transition to a new ad agency.
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Segment Income (Loss)
Our segment income was 490,710 for the six months ended March 31, 2024, an increase of $35,757, compared to a segment income of $454,953 for the six months ended April 2, 2023. Our Georgia Park generated segment income of $551,487, a decrease of $103,653, primarily attributable lower park revenues and lower food service margins, partially offset by lower advertising expense. Our Missouri Park generated a segment loss of $55,828, a decrease of $81,577, primarily attributable to higher park revenues and animal sales, partially offset by higher staffing related costs, as well as higher animal food and advertising expenses. Our Texas Park generated a segment loss of $4,949, a decrease of $57,833, primarily attributable to higher animal sales and park revenues, as well as lower operating and advertising expenses, partially offset by higher animal feed and staffing related costs.
Corporate Expenses
Corporate expenses decreased by $110,509 to $510,408 during the six months ended March 31, 2024, primarily due to lower compensation related expenses and travel costs, partially offset by higher professional fees.
Depreciation and Amortization Expense
Depreciation and amortization expense for the six months ended March 31, 2024 increased by $15,163, to $441,796, primarily attributable to higher depreciation expense for our Georgia Park, partially offset by lower depreciation expense for our Missouri Park.
Loss on Asset Disposals, Net
Our net loss on asset disposals for the six months ended March 31, 2024 totaled $35,754, an increase of $5,170, primarily attributable to animal deaths prior to the end of their estimated life expectancy as well as the disposal of certain assets no longer useful to the business or deemed too costly to maintain or repair.
Contested Proxy and Related Matters
During the six months ended March 31, 2024, we recorded $1.29 million of expenses associated with a contested proxy contest and related matters. This includes costs associated with preparation for and conducting a Special Meeting of Stockholders held on February 26, 2024, at the request of Focused Compounding Fund, LLC (“FC”), as well as legal costs associated with a lawsuit filed in the State of Nevada by FC on March 1, 2024. See “NOTE 11. CONTESTED PROXY AND RELATED MATTERS” of the Notes to the Consolidated Financial Statements (Unaudited) included in this Quarterly Report for additional information.
Tornado Expenses and Write-offs, Net
As a result of the tornado and severe weather damage at our Georgia Park during March 26-27, 2023, for the six months ended April 2, 2023, we recorded $381,676 of tornado related expenses, primarily due to tree and other debris removal, repairing and replacing underground water pipes throughout the property, as well as general clean-up and reopening efforts. In addition, we recorded tornado and severe weather related asset write-offs of $250,696, primarily associated with damage to various animal exhibits, several buildings, fencing and other infrastructure.
Other Income, Net
Other income, net for the six months ended March 31, 2024 increased by $8,634, to $69,913, attributable to higher interest income, partially offset by lower mineral rights royalty income from our Texas Park property.
Interest Expense
Interest expense for the six months ended March 31, 2024 decreased by $14,633, to $100,592, attributable to a reduction in term loan interest.
Income Taxes
For the six months ended March 31, 2024, we reported a pre-tax loss of $1.82 million. Based on a year-to-date blend of federal and State of Georgia pre-tax losses, we recorded an income tax benefit of $449,600 for the six months ended March 31, 2024.
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Net Income (Loss) and Income (Loss) Per Share
For the six months ended March 31, 2024, we reported a net loss of $1.37 million or $0.02 per basic share and per fully diluted share, compared to a net loss of $999,099 or $0.01 per basic share and per fully diluted share, for the six months ended April 2, 2023, resulting in an increase of $370,480.
| For the six months ended | ||||||||
| March 31, 2024 | April 2, 2023 | |||||||
| Net loss | $ | (1,369,579 | ) | $ | (999,099 | ) | ||
| Contested proxy and related matters | 1,291,252 | - | ||||||
Tax impact – contested proxy and related matters | (348,640 | ) | - | |||||
| Tornado expenses and write-offs, net | - | 632,372 | ||||||
| Tax impact - tornado expenses and write-offs | - | (170,740 | ) | |||||
| Adjusted net loss | $ | (426,967 | ) | $ | (537,467 | ) | ||
As shown in the table above, several items impacted our year-over-year reported net income comparison for the six months ended March 31, 2024. Our reported net income for the six months ended March 31, 2024 included $1.29 million of expenses associated with a contested proxy and related matters. Our reported net income for the six months ended April 2, 2023 included $632,372 of severe weather and tornado related expenses and asset write-offs. Management believes that adjusted net loss, excluding one-time items, should be considered in evaluating the ongoing operating performance of our business. Excluding the after-tax impacts of the contested proxy and related matters for the six months ended March 31, 2024 and the tornado expenses and write-offs for the six months ended April 2, 2023, our adjusted net loss was $426,967 and $537,467, respectively, resulting in a decrease of $110,500. The lower adjusted net loss for the six months ended March 31, 2024, is primarily attributable to a $110,509 decrease in Corporate expenses, a $81,577 decrease in the segment loss for our Missouri Park, a $57,833 decrease in the segment loss for our Texas Park, a $8,634 increase in other income, a $14,633 decrease in interest expense, partially offset by a $103,653 decline in segment income for our Georgia Park, a $15,163 increase in depreciation and amortization expense, a $5,170 increase in losses on asset disposals, and a $38,700 decrease in our seasonal income tax benefit.
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.
In October 2023, we established two 12-month lines of credit totaling $800,000, primarily to provide seasonal borrowing capacity for our 2024 fiscal year, each secured by a certificate of deposit. As a result of our improved cash position, during our 2023 fiscal year we did not utilize any seasonal borrowing, nor have we used any seasonal borrowing during our 2024 fiscal year through the date of this report.
Our working capital was $2.04 million as of March 31, 2024, compared to $3.69 million as of October 1, 2023. The decrease in working capital primarily reflects cash used for capital investments, scheduled term loan payments, as well as expenses associated with the contested proxy and related matters during the six months ended March 31, 2024.
Total loan debt, including current maturities, as of March 31, 2024 was $3.85 million compared to $4.23 million as of October 1, 2023. The decrease in total loan debt is the result of scheduled term loan payments during the six months ended March 31, 2024.
As of March 31, 2024, we had equity of $13.69 million and total loan debt of $3.85 million, resulting in a debt to equity ratio of 0.28 to 1.0, compared to 0.28 to 1.0 as of October 1, 2023.
Operating Activities
Net cash used in operating activities was $255,259 for the six months ended March 31, 2024, compared to $286,377 for the six months ended April 2, 2023, resulting in a decrease of $31,118, as our higher net loss was more than offset by lower cash used for working capital.
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Investing Activities
Net cash used in investing activities was $1.44 million for the six months ended March 31, 2024, compared to $958,106 for the six months ended April 2, 2023, resulting in an increase of $485,891. Our investing activity for the six months ended March 31, 2024 included $1.0 million related to investments in certificates of deposit. Our capital spending for the six months ended March 31, 2024 was $484,872, resulting in a decrease of $467,768 compared to the six months ended April 2, 2023.
Financing Activities
Net cash used in financing activities was $387,511 for the six months ended March 31, 2024, compared to $365,921 for the six months ended April 2, 2023, resulting in an increase of $21,590.
Subsequent Events
None
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.
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 1, 2023 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 March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
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PART II
ITEM 1. LEGAL PROCEEDINGS
On December 16, 2022, we received notice that on August 10, 2022 a former employee of Aggieland Wild Animal – Texas, filed a Complaint in the 361st District Court of Brazos County, Texas (case no. 22-001839-CV-361), alleging the Company and Aggieland-Parks, Inc. committed several instances of employment discrimination. The Complaint seeks unspecified economic, compensatory and punitive damages, as well as attorney’s fees and costs. We are defending this claim.
On March 1, 2024, Focused Compounding Fund, LP (“Focused Compounding”) filed a Complaint in the Eighth Judicial District Court of Clark County, Nevada (case no. A-24-888295-B) against the Company and each of our Board of Directors, alleging that the defendants were contemplating efforts to entrench themselves as members of the Board of Directors. Simultaneously with filing its Complaint, Focused Compounding sought a Preliminary Injunction that would require the Company and our Directors to take various actions. On March 15, 2024, the Court denied Focused Compounding’s motion for a Preliminary Injunction. On April 30, 2024, the Company and the named defendants filed a motion asking the court to dismiss the Complaint with prejudice. This motion is pending before the Court. The Company intends to is vigorously defend against Focused Compounding’s claims.
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 1, 2023. 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.
Risk Factors Relating to Our Business:
Conditions beyond our control, including natural disasters or extreme weather, 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, power outages, terrorist activities 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 tornados, fires, hurricanes, earthquakes, or extreme weather events linked to climate change, 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, during March 26-27, 2023, our Georgia Park experienced extensive damage, caused by an EF-3 tornado and over nine inches of rain, resulting in more than 4,500 fallen trees and damage to many of the Park’s animal enclosures, fencing and other infrastructure. Our Georgia park was subsequently closed for 20 days, including for most of its traditionally busy spring break period, which has historically comprised approximately 10%-15% of its annual revenue. Also, during February 2021 our Texas Park was closed for several weeks, experienced power outages and sustained property damage associated with several severe winter storms.
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.
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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 several 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 COVID-19 pandemic) and natural disasters, fuel and energy costs (including oil prices), and credit market conditions. 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 was adversely impacted by supply chain distributions at least in part attributed to collateral impacts from COVID-19. Similarly, our plans to open a new giraffe exhibit at out Georgia Park during our 2022 fiscal year experienced delays and have been suspended, in large part due to building material price increases and labor shortages in the construction industry.
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. Within approximately 90 minutes east of Atlanta, one new safari-themed attraction opened in the Spring of 2023, and another has announced plans to open in 2024. 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 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 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 requirements for any of our licenses could affect our ability to maintain the licenses.
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.
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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. 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 negatively impact our results of operations. We also depend on a seasonal workforce, many of whom are paid at or near 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, workers compensation 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 may increase our salary, wage and benefit expenses in our 2023 fiscal year and beyond, and further legislative changes or competitive wage rates could continue to increase these expenses in the future.
Data privacy regulation and our ability to comply could harm our business.
We (or third parties on our behalf) collect, store and use personal information and other customer data we receive through online ticket sales, marketing, mailing lists, and guest reservations. There are multiple federal, state and local laws regarding privacy and protection of personal information and data, and these laws and regulations continue to evolve. For example, many states have passed laws requiring notification to customers when there is a security breach involving their personal data and multiple jurisdictions are considering legislation that may impose liability if a business fails to properly safeguard personal information of its customers. Maintaining compliance with applicable security and privacy regulations may increase our operating costs. While we believe our cybersecurity measures are adequate, if we were to experience a data breach, we could be subject to fines, penalties and/or costly litigation.
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 from time to time, may also restrict the declaration of dividends on our common stock.
Actions of activist stockholders, including the actions currently being taken by Focused Compounding, could materially and adversely affect our business, results of operations and share price.
Activist stockholders may from time to time engage in proxy solicitations, advance stockholder proposals or otherwise attempt to effect changes or acquire control over us. While we value constructive input from investors and regularly engage in dialogue with our stockholders, and we welcome their views and opinions, we may be subject to actions or proposals from activist stockholders that may not align with our business strategy or with the interests of our stockholders. Because our Board and management team are committed to acting in the best interests of all of our stockholders, there is no assurance that the actions taken by the Board and management in seeking to maintain constructive engagement with certain stockholders will be successful in preventing the occurrence of stockholder activist campaigns.
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Campaigns by activist stockholders to effect changes at publicly traded companies often demand that companies undertake or pursue financial restructuring, increase debt, issue special dividends, repurchase shares, or undertake sales of assets or other transactions, including strategic transactions. Campaigns may also be initiated by activist stockholders advocating for particular social causes. Activist stockholders who disagree with the composition of a publicly traded company’s board of directors, or with its strategy or management team often seek to involve themselves in the governance and strategic direction of a company through various activities that range from private engagement to publicity campaigns, proxy contests, efforts to force transactions not supported by the company’s board, and in some instances, litigation.
We have been and may in the future be subject to activities initiated by activist stockholders. On December 22, 2023, Focused Compounding Fund, LP (together with the participants in its solicitation, “Focused Compounding”) submitted documents to the Company purporting to provide qualifying notice as to a demand that the Company hold a special meeting of stockholders (the “Special Meeting”). The Special Meeting was held for the purpose of asking stockholders to consider and vote upon five proposals, including a proposal for the removal of all directors currently serving on the Board and a proposal for the election of a new Board comprised entirely of Focused Compounding’s slate of three candidates. The Special Meeting was held on February 26, 2024 and each of Focused Compounding’s proposals failed, including its proposals to reconstitute the Company’s Board of Directors.
On March 1, 2024, Focused Compounding filed a Complaint in the Eighth Judicial District Court of Clark County against the Company and each of the members of its Board of Directors, alleging that the defendants were contemplating efforts to entrench themselves as members of the Board. See “NOTE 9. COMMITMENTS AND CONTINGENCIES” of the Notes to the Consolidated Financial Statements (Unaudited) included in this Quarterly Report for additional information.
The Board scheduled the annual meeting of stockholders to be held on June 6, 2024 (the “2024 Annual Meeting”). On January 26, 2024, Focused Compounding submitted documents to the Company purporting to provide qualifying notice to the Company of its intent to nominate four nominees at the 2024 Annual Meeting, seeking effective control of the Company. Subsequently, on April 5, 2024, Focused Compounding submitted documents to the Company purporting to provide qualifying notice to the Company of its intent to submit a business proposal at the 2024 Annual Meeting. The Company’s Board of Directors values input from all of the Company’s stockholders and remains open to ongoing engagement with Focused Compounding. However, if the Company and Focused Compounding cannot reach an agreement in connection with Focused Compounding’s nominations and business proposal, and Focused Compounding complies with applicable rules and requirements, there will be a contested election at the Company’s 2024 Annual Meeting. The Board of Directors does not believe that the candidates proposed by Focused Compounding for consideration by stockholders at the 2024 Annual Meeting are qualified to oversee our business and does not believe that their appointment would be in the best interests of the Company or its stockholders.
Responding to these potential proxy contests, and any other actions by activist stockholders, will be costly and time-consuming and will divert the attention of our Board, management team and employees from the management of our operations and the pursuit of our business strategies. Further, actions of activist stockholders may cause fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business. Perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities and make it more difficult to attract and retain investors, customers, employees, qualified directors and officers and business partners. Also, we will be required to incur significant expenses related to any activist stockholder matters (including legal fees, fees for financial advisors, fees for public relation advisors and proxy solicitation expenses). If individuals with a specific agenda are elected or appointed to our Board, it may adversely affect our ability to effectively and timely implement our strategic plan and maximize value for our stockholders. Furthermore, if individuals are elected or appointed to our Board who do not agree with our strategic plan, the ability of our Board to function effectively could be adversely affected. As a result, activist stockholder campaigns could adversely affect our business, results of operations, financial condition and share price.
In connection with any activist campaign, we may choose to initiate, or may become subject to, litigation, which would serve as a further distraction to our Board, management and employees and would require us to incur significant additional costs.
We cannot predict, and no assurances can be given, as to the outcome or timing of any matters relating to the foregoing actions by stockholders and our responses thereto or the ultimate impact on our business, liquidity, financial condition or results of operations.
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Our rights plan may discourage potential acquirers of the Company.
On January 19, 2024, we adopted a rights plan (the “Rights Plan”), which provides, among other things, that when specified events occur, our stockholders will be entitled to purchase additional shares of our common stock. The Rights Plan will expire on January 18, 2025, unless earlier redeemed, exchanged or extended. The preferred stock purchase rights are triggered ten days after the date of a public announcement that a person or group has acquired, or obtained the right to acquire, beneficial ownership of 10% or more of our outstanding shares of common stock. The rights would cause significant dilution to a person or group that attempts to acquire the Company on terms that are not approved by the Board. These provisions, either alone or in combination with each other, give the Board an ability to influence the outcome of a proposed acquisition of the Company and could have the effect of discouraging, delaying or preventing a change in control over us. These provisions would apply even if an acquisition or other significant corporate transaction was considered beneficial by some, but not all, of our stockholders. The Rights Plan is similar to plans adopted by other public companies and is designed to ensure that all of the Company’s stockholders have the opportunity to realize the long-term value of their investment in the Company. The Rights Plan is intended to position the Board to fulfill its duties by ensuring the Board has sufficient time to make informed judgments that are in the best interests of the Company and its stockholders.
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
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PARKS! AMERICA, INC. | ||
| May 14, 2024 | By: | /s/ Lisa Brady |
| Lisa Brady | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
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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, Lisa Brady, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Parks! America, Inc. (the “registrant”) for the quarter ended March 31, 2024; | |
| 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: May 14, 2024 | |
| /s/ Lisa Brady | |
| Lisa Brady | |
| 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 March 31, 2024; | |
| 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: May 14, 2024 | |
| /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 March 31, 2024 (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: May 14, 2024 | |
| /s/ Lisa Brady | |
| Lisa Brady | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| Parks! America, Inc. | |
| Dated: May 14, 2024 | |
| /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 (Parenthetical) - $ / shares |
Mar. 31, 2024 |
Oct. 01, 2023 |
|---|---|---|
| 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 | 75,726,851 | 75,517,763 |
| Common stock, shares outstanding | 75,726,851 | 75,517,763 |
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2024 |
Apr. 02, 2023 |
Mar. 31, 2024 |
Apr. 02, 2023 |
|
| Total revenues | $ 1,958,200 | $ 1,875,465 | $ 3,855,825 | $ 3,736,844 |
| Cost of sales | 314,985 | 282,881 | 610,919 | 555,501 |
| Selling, general and administrative | 1,568,276 | 1,821,295 | 3,264,604 | 3,347,307 |
| Depreciation and amortization | 218,593 | 209,449 | 441,796 | 426,633 |
| Contested proxy and related matters | 1,164,612 | 1,291,252 | ||
| Tornado expenses and write-offs, net | 632,372 | 632,372 | ||
| Loss on asset disposals, net | 21,337 | 30,584 | 35,754 | 30,584 |
| Loss from operations | (1,329,603) | (1,101,116) | (1,788,500) | (1,255,553) |
| Other income, net | 34,026 | 31,666 | 69,913 | 61,279 |
| Interest expense | (49,147) | (56,489) | (100,592) | (115,225) |
| Loss before income taxes | (1,344,724) | (1,125,939) | (1,819,179) | (1,309,499) |
| Income tax benefit | (344,400) | (279,800) | (449,600) | (310,400) |
| Net loss | $ (1,000,324) | $ (846,139) | $ (1,369,579) | $ (999,099) |
| Loss per share - basic | $ (0.01) | $ (0.01) | $ (0.02) | $ (0.01) |
| Loss per share - diluted | $ (0.01) | $ (0.01) | $ (0.02) | $ (0.01) |
| Weighted average shares outstanding (in 000's) - basic | 75,727 | 75,270 | 75,653 | 75,248 |
| Weighted average shares outstanding (in 000's) - diluted | 75,727 | 75,270 | 75,653 | 75,248 |
| Park [Member] | ||||
| Total revenues | $ 1,924,240 | $ 1,857,565 | $ 3,733,474 | $ 3,675,144 |
| Animals [Member] | ||||
| Total revenues | $ 33,960 | $ 17,900 | $ 122,351 | $ 61,700 |
ORGANIZATION |
6 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| ORGANIZATION | NOTE 1. ORGANIZATION
Parks! America, Inc. (“Parks!” or the “Company”) owns and operates through wholly owned subsidiaries three regional safari parks and is in the business of acquiring, developing and operating local and regional entertainment assets 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 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 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’s Parks are open year-round, but experience increased seasonal attendance, typically beginning in the latter half of March through early September. Combined third and fourth quarter park revenues were 60.4% and 62.1% of annual park revenues for the Company’s 2023 and 2022 fiscal years, respectively.
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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 accompanying unaudited condensed consolidated financial statements 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 1, 2023.
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 2024 fiscal year, September 29 will be the closest Sunday, and for the 2023 fiscal year, October 1 was the closest Sunday. 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 in the latter half of March through early September.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial and Concentrations Risk: The Company does not have any significant concentrations.
Fair Value: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, or an exit price. Inputs to valuation techniques used to measure fair value may be observable or unobservable, and valuation techniques used to measure fair value should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The fair value hierarchy consists of three broad levels based on the ranks of the quality and reliability of inputs used to determine the fair values. Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities. Level 2 inputs consist of quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities recognized or disclosed at fair value on a recurring basis include our term debt.
As of March 31, 2024 and October 1, 2023, the fair value of our long-term debt was $3.53 million and $3.83 million, respectively. The measurement of the fair value of long-term debt is based upon inquiries of the financial institutions holding the respective loans and is considered a Level 2 fair value measurement. The respective carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short maturity of these instruments.
Cash and Cash Equivalents: The Company maintains its cash and cash equivalents with high credit quality financial institutions. The Company considers all highly liquid financial instruments with maturities of three months or less to be cash equivalents. The Company maintains cash and cash equivalent in deposit accounts which may at times exceed federally insured limits. As of March 31, 2024 and October 1, 2023, cash and cash equivalents consisted of cash on deposit and a money market account.
Short-term Investments: The Company periodically invests in certificates of deposit and classifies its certificates of deposit as cash and cash equivalents or short-term investments and reassesses the appropriateness of the classification of its investments at the end of each reporting period. Certificates of deposit held for investment with an original maturity date greater than three months are carried at amortized cost and reported as short-term investments on the consolidated balance sheets. As of March 31, 2024, the Company had $1.02 million in three certificates of deposit, including accrued interest, all classified as short-term investments. Two of these certificates of deposit secured lines of credit, as detailed in “Note 5: LINES OF CREDIT”. The Company did not have any certificates of deposit as of October 1, 2023.
Accounts Receivable: The Company’s safari parks are principally a payment upfront business; therefore, the Company generally carries limited accounts receivable. The Company had $6,239 and $36,172 of accounts receivable as of March 31, 2024 and October 1, 2023, 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 based 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 $444,446 and $419,149 as of March 31, 2024 and October 1, 2023, respectively.
Prepaid Expenses: The Company prepays certain expenses primarily due to legal or contractual requirements. The following is a breakdown of prepaid expenses:
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
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 to years. A summary is included below.
Depreciation expense for the three months ended March 31, 2024 and April 2, 2023 totaled $215,590 and $204,965, respectively, and depreciation expense for the six months ended March 31, 2024 and April 2, 2023 totaled $435,790 and $417,665, respectively.
Intangible Assets: Intangible assets consist primarily of a site master plan, website domains and tradename registrations, which are reported at cost and are being amortized over a period of to ten years. Amortization expense for the three months ended March 31, 2024 and April 2, 2023 totaled $3,003 and $4,484, respectively, and amortization expense for the six months ended March 31, 2024 and April 2, 2023 totaled $6,006 and $8,968, respectively.
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:
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
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 revenues for annual passes and memberships are deferred and recognized as revenue on a pro-rata basis over the term of the pass or membership. Park admission fee revenues from advance online ticket purchases are deferred until the customers’ visit to the parks. Advance online tickets can generally be used anytime during the one year period from the date of purchase. 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.
Deferred revenues from advance online admission tickets, and season passes and memberships were $188,102 and $143,511 as of March 31, 2024 and October 1, 2023, respectively, and is included within Other Current Liabilities in the accompanying consolidated balance sheets.
The Company periodically sells surplus animals created from the natural breeding process that occurs within the parks. Animal sales are reported as a separate revenue line item. Animal sales are recognized at a point in time when control transfers 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.
Advertising and Marketing Costs: The Company expenses advertising and marketing costs as incurred. Advertising and marketing expense for the three months ended March 31, 2024 and April 2, 2023 totaled $213,114 and $283,307, respectively, and advertising and marketing expense for the six months ended March 31, 2024 and April 2, 2023 totaled $454,940 and $488,743, respectively.
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 the 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.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 March 31, 2024 or October 1, 2023.
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”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), which significantly changes how entities measure credit losses for most financial assets, including accounts receivable and held-to-maturity marketable securities, replacing the “incurred loss” model with an “expected loss” model under which allowances are based on expected rather than incurred losses. ASU No. 2016-13 became for the Company in the three months ended March 31, 2024. The adoption of ASU No. 2016-13 had an immaterial impact on the Company.
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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TORNADO EXPENSES AND ASSET WRITE-OFFS |
6 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Tornado Expenses And Asset Write-offs | |
| TORNADO EXPENSES AND ASSET WRITE-OFFS | NOTE 3. TORNADO EXPENSES AND ASSET WRITE-OFFS
During March 26-27, 2023, the Company’s Georgia Park experienced extensive damage, caused by an EF-3 tornado and over nine inches of rain, resulting in more than 4,500 fallen trees and damage to many of the Park’s animal enclosures, fencing and other infrastructure. The Walkabout Adventure Zoo (“Walkabout”) portion of the property was particularly hard hit. The Georgia Park was closed for 20 days, including for most of its traditionally busy spring break period, which has historically comprised approximately 10%-15% of its annual revenue. The drive-through safari section of the Georgia Park reopened on April 15th. The Walkabout portion of the park reopened in phases, with the first phase on May 6th and the second phase on July 2nd. Approximately one-quarter of the Walkabout remains closed.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
NOTE 3. TORNADO EXPENSES AND ASSET WRITE-OFFS (CONTINUED)
For the three months and six months ended April 2, 2023, the Company recorded $381,676 of tornado related expenses, primarily due to tree and other debris removal, repairing and replacing underground water pipes throughout the property, as well as general clean-up efforts. In addition, the Company recorded related asset write-offs of $250,696, primarily associated with damage to various animal exhibits, several buildings, fencing and other infrastructure. For the year ended October 1, 2023, the Company incurred $780,941 of severe weather and tornado related expenses, and related asset write-offs of $275,297. No severe weather and tornado related expenses or asset write-offs were recorded during the three months and six months ended March 31, 2024.
The Company has also made capital investments of $615,000 through October 1, 2023 related to severe weather and tornado damage rebuilding projects, of which $110,642 were recorded through April 2, 2023. Approximately $60,000 of capital investments during the six months ended March 31, 2024 are associated with ongoing severe weather and tornado damage rebuilding projects.
The Company has been working with its insurance providers regarding tornado damage related coverage and insurance proceeds totaling $687,283 were received through October 1, 2023, factoring in deductibles and co-insurance. The Company expects to receive additional insurance proceeds of approximately $50,000.
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LONG-TERM DEBT |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LONG-TERM DEBT | NOTE 4. 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 $1.25 million as of March 31, 2024.
On April 27, 2020, the Company, through its wholly owned subsidiary Aggieland-Parks, Inc., acquired Aggieland Wild Animal – Texas. The purchase price of $7.1 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 $903,222 of 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 $2.64 million as of March 31, 2024. The Company was in compliance with the liquidity covenant of the 2020 Term Loan as of October 1, 2023. For the year ended October 1, 2023, the Company was not in compliance with the annual debt service coverage ratio covenant of the 2020 Term Loan, due to the lost revenues, as well as net expenses and write-offs driven by the March 2023 severe weather and tornado damage at its Georgia Park. The Company requested and First Financial granted a waiver of this violation for the year ended October 1, 2023.
Interest expense of $49,147 and $56,489 for the three months ended March 31, 2024 and April 2, 2023, respectively, includes $1,472 and $1,472 of debt closing costs amortization, respectively. Interest expense of $100,592 and $115,225 for the six months ended March 31, 2024 and April 2, 2023, respectively, includes $2,944 and $2,944 of debt closing costs amortization, respectively.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
NOTE 4. LONG-TERM DEBT (CONTINUED)
The following table represents the aggregate of the Company’s outstanding long-term debt:
As of March 31, 2024, the scheduled future principal maturities of the Company’s long-term debt by fiscal year are as follows:
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LINES OF CREDIT |
6 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Debt Disclosure [Abstract] | |
| LINES OF CREDIT | NOTE 5. LINES OF CREDIT
On October 19, 2023, the Company, through its wholly owned subsidiary Aggieland Wild Animal – Texas, entered a line of credit of up to $350,000 with First Financial (the “2023 First Financial LOC”). The 2023 First Financial LOC is scheduled to mature on October 11, 2024 and carries an interest rate of 5.6% on any portion utilized. The 2023 First Financial LOC is secured by a $350,000 certificate of deposit issued by First Financial, which also matures on October 11, 2024 and pays the Company an effective interest rate of 3.6%. The Company paid a $500 origination fee for the 2023 First Financial LOC.
On October 24, 2023, the Company, through its wholly owned subsidiary Wild Animal – Georgia, entered a line of credit of up to $450,000 with Synovus (the “2023 Synovus LOC”). The 2023 Synovus LOC is scheduled to mature on October 24, 2024 and carries an interest rate of 7.75% on any portion utilized. The 2023 Synovus LOC is secured by a $450,000 certificate of deposit issued by Synovus, which matures on November 13, 2024 and pays the Company an effective interest rate of 5.25%. The Company paid a $4,500 origination fee for the 2023 First Financial LOC.
As of March 31, 2024, the Company had not made any borrowings against either of these lines of credit.
Interest expense for the three months ended March 31, 2024 and April 2, 2023, includes $1,250 and $0 of line of credit fee amortization, respectively, and interest expense for the six months ended March 31, 2024 and April 2, 2023, includes $2,500 and $0 of line of credit fee amortization, respectively.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
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STOCKHOLDERS’ EQUITY |
6 Months Ended |
|---|---|
Mar. 31, 2024 | |
| 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 4, 2023, the Company declared its annual compensation award to seven directors for their service on the Board of Directors. Seven directors were awarded $10,000 each and three directors received a total of $10,000 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 and two directors elected all cash. Based on the closing stock price of $ per share on December 4, 2023, a total of shares were issued on February 2, 2024. The total compensation award cost of $ was reported as an expense in the three month period ended December 31, 2023, comprised of $ in stock-based compensation and $22,500 of cash payments.
On February 2, 2023, the Company declared its annual compensation award to seven directors for their service on the Board of Directors. Seven directors were awarded $10,000 each and three directors received a total of $10,000 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 $ per share on February 2, 2023, a total of shares were issued on March 9, 2023. The total compensation award cost of $ was reported as an expense in the three month period ended April 2, 2023, comprised of $ in stock-based compensation and $15,000 of cash payments.
Effective February 14, 2023, Lisa Brady the Company’s President and Chief Executive Officer vested in shares of the Company’s common stock, in accordance with the terms of her employment agreement. The Company recorded compensation award cost of $50,000 in the three month period ended April 2, 2023 and the shares were issued on May 23, 2023.
Officers, directors and their controlled entities own approximately 33.4% of the outstanding common stock of the Company as of March 31, 2024.
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SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES |
6 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | NOTE 7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Employment Agreements:
Effective November 14, 2022, the Company and Ms. Brady, entered into an employment agreement (the “Brady Employment Agreement”). Pursuant to the Brady Employment Agreement, Ms. Brady receives an initial base annual compensation in the amount of $175,000 per year, subject to annual review by the Board of Directors. Ms. Brady is entitled to receive an annual Performance Incentive of up to 25% of her base annual compensation, subject to performance milestones. Ms. Brady received a $50,000 award of shares of Company stock, which vested on February 14, 2023, after her first ninety days of employment. The number of shares of this award totaled based on the $ closing price of the Company’s stock on November 14, 2022. Ms. Brady is also scheduled to receive share awards of the Company’s common stock with a total value of $50,000, $60,000, $70,000 and $75,000 as of the last day of the Company’s fiscal year from its 2023 fiscal year through its 2026 fiscal year, respectively. The number of shares awarded is to be based on the average price of the Company’s stock on the date of the award. Each award will vest in one-third increments, with the first third vesting on the date of the award, the second third vesting on the first anniversary of the award and the final third vesting on the second anniversary of the award. The number of shares of the 2023 fiscal year award totaled based on the $ closing price of the Company’s stock on September 29, 2023, of which vested as of that date. Ms. Brady also received a $5,000 sign-on bonus. The Brady Employment Agreement has a term of five years and entitles Ms. Brady to participate in any deferred compensation plan the Company may adopt during the term of her employment with the Company. Related to the Brady Employment Agreement, the Company recorded stock-based compensation of $ and $ for the three months ended March 31, 2024 and April 2, 2023, respectively, and $ and $ for the six months ended March 31, 2024 and April 2, 2023, respectively.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
NOTE 7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
Effective 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 has been part of the Company’s executive management since 2009, and served as the Company’s Interim CEO from June 1, 2022 until Ms. Brady was hired in November 2022. Mr. Van Voorhis served as Special Advisor to the CEO from November 2022 through May 31, 2023. Pursuant to the 2022 Van Voorhis Employment Agreement, Mr. Van Voorhis received annual compensation in the amount of $100,000 from June 1, 2022 through May 31, 2023 and annual compensation of $50,000 from June 1, 2023 until May 31, 2024. Effective February 7, 2024, the Company’s Board of Directors terminated the 2022 Van Voorhis Employment Agreement pursuant to its terms and removed Mr. Van Voorhis as the Company’s Chairman of the Board, Additionally, Mr. Van Voorhis was removed from the Company’s Strategic Growth and Audit Committees. Mr. Van Voorhis will continue to serve as a member of the Company’s Board of Directors.
Effective as of January 1, 2024, the Company and Todd R. White, the Company’s Chief Financial Officer, entered into an employment agreement (the “2024 White Employment Agreement”). Pursuant to the 2024 White Employment Agreement, Mr. White received an initial base annual compensation in the amount of $90,000 per year, which increased to $95,000 effective March 1, 2024, subject to annual review by the Board of Directors. The 2024 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.
Each of the foregoing employment agreements contains provisions for severance compensation in the event an agreement is (i) terminated early by the Company without cause ($225,000 in aggregate) or (ii) in the event of a change in control of the Company ($315,000 in aggregate), as well as disability and death payment provisions ($132,500 in aggregate). As of March 31, 2024, the Company has not adopted any deferred compensation plans.
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INCOME TAXES |
6 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | NOTE 8. INCOME TAXES
For the six months ended March 31, 2024, the Company reported a pre-tax loss of $1.82 million and recorded an income tax benefit of $449,600, comprised of a federal benefit of $363,900 and a net state benefit of $85,700. For the six months ended April 2, 2023, the Company reported income pre-tax loss of $1.31 million, and recorded a tax benefit of $310,400, comprised of a federal benefit of $265,300 and a state expense of $45,100.
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COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | NOTE 9. COMMITMENTS AND CONTINGENCIES
On December 16, 2022, the Company received notice that on August 10, 2022 a former employee of Aggieland Wild Animal – Texas, filed a Complaint in the 361st District Court of Brazos County, Texas (case no. 22-001839-CV-361), alleging the Company and Aggieland-Parks, Inc. committed several instances of employment discrimination. The Complaint seeks unspecified economic, compensatory and punitive damages, as well as attorney’s fees and costs. The Company is defending this claim.
On March 1, 2024, Focused Compounding Fund, LP (“Focused Compounding”) filed a Complaint in the Eighth Judicial District Court of Clark County, Nevada (case no. A-24-888295-B) against the Company and each of the members of its Board of Directors, alleging that the defendants were contemplating efforts to entrench themselves as members of the Board of Directors. Simultaneously with filing its Complaint, Focused Compounding sought a Preliminary Injunction that would require the Company and its Directors to take various actions. On March 15, 2024, the Court denied Focused Compounding’s motion for a Preliminary Injunction. On April 30, 2024, the Company and the named defendants filed a motion asking the court to dismiss the Complaint with prejudice. The motion is pending before the Court. The Company intends to vigorously defend against Focused Compounding’s claims.
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) March 31, 2024
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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 measure used to allocate resources are Park earnings before interest, taxes, depreciation and amortization expenses.
The following tables present financial information regarding each of the Company’s reportable segments:
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
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CONTESTED PROXY AND RELATED MATTERS |
6 Months Ended |
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Mar. 31, 2024 | |
| Contested Proxy And Related Matters | |
| CONTESTED PROXY AND RELATED MATTERS |
On December 22, 2023, Focused Compounding Fund, LP (together with the participants in its solicitation, “Focused Compounding”) submitted documents to the Company purporting to provide qualifying notice as to a demand that the Company hold a special meeting of stockholders (the “Special Meeting”). The Special Meeting was held for the purpose of asking stockholders to consider and vote upon five proposals, including a proposal for the removal of all directors currently serving on the Board of Directors and a proposal for the election of a new Board of Directors comprised entirely of Focused Compounding’s slate of three candidates. The Special Meeting was held on February 26, 2024 and each of Focused Compounding’s proposals failed, including its proposals to reconstitute the Board of Directors.
The Board of Directors scheduled the annual meeting of stockholders to be held on June 6, 2024 (the “2024 Annual Meeting”). On January 26, 2024, Focused Compounding submitted documents to the Company purporting to provide qualifying notice to the Company of its intent to nominate four nominees at the 2024 Annual Meeting, seeking effective control of the Company. Subsequently, on April 5, 2024, Focused Compounding submitted documents to the Company purporting to provide qualifying notice to the Company of its intent to submit a business proposal at the 2024 Annual Meeting. On April 23, 2024, the Company filed its definitive proxy statement with respect to the 2024 Annual Meeting. Stockholders are strongly encouraged to read such proxy statement, the accompanying WHITE proxy card and all other documents filed with the Securities and Exchange Commission carefully as they contain important information relating to the 2024 Annual Meeting. The Board of Directors remains open to ongoing engagement with Focused Compounding. However, if the Company and Focused Compounding cannot reach an agreement in connection with Focused Compounding’s nominations and business proposal, and Focused Compounding complies with applicable rules and requirements, there will be a contested election at the Company’s 2024 Annual Meeting.
On March 1, 2024, Focused Compounding filed a Complaint in the Eighth Judicial District Court of Clark County against the Company and each of the members of its Board of Directors, alleging that the defendants were contemplating efforts to entrench themselves as members of the Board. See “NOTE 9. COMMITMENTS AND CONTINGENCIES” for additional information.
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SUBSEQUENT EVENTS |
6 Months Ended |
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Mar. 31, 2024 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 12. SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to March 31, 2024 to the date these financial statements were issued and has determined, no material subsequent events have occurred from the date of these unaudited consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Basis of Presentation | Basis of Presentation: The accompanying unaudited condensed consolidated financial statements 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 1, 2023.
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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 2024 fiscal year, September 29 will be the closest Sunday, and for the 2023 fiscal year, October 1 was the closest Sunday. 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 in the latter half of March through early September.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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| Financial and Concentrations Risk | Financial and Concentrations Risk: The Company does not have any significant concentrations.
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| Fair Value | Fair Value: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, or an exit price. Inputs to valuation techniques used to measure fair value may be observable or unobservable, and valuation techniques used to measure fair value should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The fair value hierarchy consists of three broad levels based on the ranks of the quality and reliability of inputs used to determine the fair values. Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities. Level 2 inputs consist of quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities recognized or disclosed at fair value on a recurring basis include our term debt.
As of March 31, 2024 and October 1, 2023, the fair value of our long-term debt was $3.53 million and $3.83 million, respectively. The measurement of the fair value of long-term debt is based upon inquiries of the financial institutions holding the respective loans and is considered a Level 2 fair value measurement. The respective carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short maturity of these instruments.
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| Cash and Cash Equivalents | Cash and Cash Equivalents: The Company maintains its cash and cash equivalents with high credit quality financial institutions. The Company considers all highly liquid financial instruments with maturities of three months or less to be cash equivalents. The Company maintains cash and cash equivalent in deposit accounts which may at times exceed federally insured limits. As of March 31, 2024 and October 1, 2023, cash and cash equivalents consisted of cash on deposit and a money market account.
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| Short-term Investments | Short-term Investments: The Company periodically invests in certificates of deposit and classifies its certificates of deposit as cash and cash equivalents or short-term investments and reassesses the appropriateness of the classification of its investments at the end of each reporting period. Certificates of deposit held for investment with an original maturity date greater than three months are carried at amortized cost and reported as short-term investments on the consolidated balance sheets. As of March 31, 2024, the Company had $1.02 million in three certificates of deposit, including accrued interest, all classified as short-term investments. Two of these certificates of deposit secured lines of credit, as detailed in “Note 5: LINES OF CREDIT”. The Company did not have any certificates of deposit as of October 1, 2023.
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| Accounts Receivable | Accounts Receivable: The Company’s safari parks are principally a payment upfront business; therefore, the Company generally carries limited accounts receivable. The Company had $6,239 and $36,172 of accounts receivable as of March 31, 2024 and October 1, 2023, 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 based 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 $444,446 and $419,149 as of March 31, 2024 and October 1, 2023, respectively.
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| Prepaid Expenses | Prepaid Expenses: The Company prepays certain expenses primarily due to legal or contractual requirements. The following is a breakdown of prepaid expenses:
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
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 to years. A summary is included below.
Depreciation expense for the three months ended March 31, 2024 and April 2, 2023 totaled $215,590 and $204,965, respectively, and depreciation expense for the six months ended March 31, 2024 and April 2, 2023 totaled $435,790 and $417,665, respectively.
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| Intangible Assets | Intangible Assets: Intangible assets consist primarily of a site master plan, website domains and tradename registrations, which are reported at cost and are being amortized over a period of to ten years. Amortization expense for the three months ended March 31, 2024 and April 2, 2023 totaled $3,003 and $4,484, respectively, and amortization expense for the six months ended March 31, 2024 and April 2, 2023 totaled $6,006 and $8,968, respectively.
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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:
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
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 revenues for annual passes and memberships are deferred and recognized as revenue on a pro-rata basis over the term of the pass or membership. Park admission fee revenues from advance online ticket purchases are deferred until the customers’ visit to the parks. Advance online tickets can generally be used anytime during the one year period from the date of purchase. 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.
Deferred revenues from advance online admission tickets, and season passes and memberships were $188,102 and $143,511 as of March 31, 2024 and October 1, 2023, respectively, and is included within Other Current Liabilities in the accompanying consolidated balance sheets.
The Company periodically sells surplus animals created from the natural breeding process that occurs within the parks. Animal sales are reported as a separate revenue line item. Animal sales are recognized at a point in time when control transfers 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.
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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 March 31, 2024 and April 2, 2023 totaled $213,114 and $283,307, respectively, and advertising and marketing expense for the six months ended March 31, 2024 and April 2, 2023 totaled $454,940 and $488,743, respectively.
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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 the 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.
PARKS! AMERICA, INC. and SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 2024
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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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 March 31, 2024 or October 1, 2023.
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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”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), which significantly changes how entities measure credit losses for most financial assets, including accounts receivable and held-to-maturity marketable securities, replacing the “incurred loss” model with an “expected loss” model under which allowances are based on expected rather than incurred losses. ASU No. 2016-13 became for the Company in the three months ended March 31, 2024. The adoption of ASU No. 2016-13 had an immaterial impact on the Company.
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) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF BREAKDOWN OF PREPAID EXPENSES |
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| SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT |
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| SCHEDULE OF BREAKDOWN OF OTHER CURRENT LIABILITIES |
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LONG-TERM DEBT (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF OUTSTANDING LONG TERM 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 March 31, 2024, the scheduled future principal maturities of the Company’s long-term debt by fiscal year are as follows:
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BUSINESS SEGMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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) |
6 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Date of incorporation | Jul. 30, 1954 |
| Incorporation state code | NV |
SCHEDULE OF BREAKDOWN OF PREPAID EXPENSES (Details) - USD ($) |
Mar. 31, 2024 |
Oct. 01, 2023 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Prepaid income taxes | $ 723,546 | $ 459,957 |
| Prepaid insurance | 168,528 | 86,921 |
| Prepaid advertising | 85,048 | |
| Other prepaid expenses | 3,616 | 11,800 |
| Total prepaid expenses | $ 980,738 | $ 558,678 |
SCHEDULE OF BREAKDOWN OF OTHER CURRENT LIABILITIES (Details) - USD ($) |
Mar. 31, 2024 |
Oct. 01, 2023 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Deferred revenue | $ 188,102 | $ 143,511 |
| Accrued compensation | 128,580 | 177,868 |
| Accrued sales taxes | 64,231 | 46,718 |
| Accrued professional fees | 22,040 | 59,638 |
| Accrued property taxes | 20,905 | 49,183 |
| Other accrued liabilities | 70,199 | 94,425 |
| Other current liabilities | $ 494,057 | $ 571,343 |
TORNADO EXPENSES AND ASSET WRITE-OFFS (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|---|
Apr. 02, 2023 |
Mar. 31, 2024 |
Apr. 02, 2023 |
Oct. 01, 2023 |
Mar. 27, 2023 |
Mar. 26, 2023 |
|
| Tornado Expenses And Asset Write-offs | ||||||
| Annual revenue, percentage | 15.00% | 10.00% | ||||
| Tornado related expenses | $ 381,676 | $ 381,676 | $ 780,941 | |||
| Tornado asset writeoffs | 250,696 | 275,297 | ||||
| Investments | $ 110,642 | 60,000 | $ 110,642 | 615,000 | ||
| Portion of anticipated damage proceeds received | $ 687,283 | |||||
| Additional insurance proceeds expected | $ 50,000 | |||||
SCHEDULE OF OUTSTANDING LONG TERM DEBT (Details) - USD ($) |
Mar. 31, 2024 |
Oct. 01, 2023 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Loan principal outstanding | $ 3,889,008 | $ 4,271,521 |
| Less: unamortized debt financing costs | (43,210) | (44,030) |
| Gross long-term debt | 3,845,798 | 4,227,491 |
| Less current portion of long-term debt, net of unamortized costs | (783,447) | (767,675) |
| Long-term debt | $ 3,062,351 | $ 3,459,816 |
SCHEDULE OF MATURITIES OF LONG-TERM DEBT (Details) - USD ($) |
Mar. 31, 2024 |
Oct. 01, 2023 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| 2024 | $ 390,511 | |
| 2025 | 810,111 | |
| 2026 | 848,444 | |
| 2027 | 888,624 | |
| 2028 | 851,093 | |
| thereafter | 100,225 | |
| Total | $ 3,889,008 | $ 4,271,521 |
INCOME TAXES (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2024 |
Apr. 02, 2023 |
Mar. 31, 2024 |
Apr. 02, 2023 |
|
| Effective Income Tax Rate Reconciliation [Line Items] | ||||
| Pre-tax income (loss) | $ 1,344,724 | $ 1,125,939 | $ 1,819,179 | $ 1,309,499 |
| Income tax expense (benefit) | $ (344,400) | $ (279,800) | (449,600) | (310,400) |
| Domestic Tax Jurisdiction [Member] | ||||
| Effective Income Tax Rate Reconciliation [Line Items] | ||||
| Income tax expense (benefit) | (363,900) | (265,300) | ||
| State and Local Jurisdiction [Member] | ||||
| Effective Income Tax Rate Reconciliation [Line Items] | ||||
| Income tax expense (benefit) | $ (85,700) | $ (45,100) | ||