NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April
2, 2023
NOTE
1. ORGANIZATION
Parks!
America, Inc. (“Parks!” or the “Company”) owns and operates through wholly owned subsidiaries three regional
theme parks and is in the business of acquiring, developing and operating local and regional theme parks and attractions in the United
States. The Company’s wholly owned subsidiaries are Wild Animal Safari, Inc. a Georgia corporation (“Wild Animal –
Georgia”), Wild Animal, Inc., a Missouri corporation (“Wild Animal – Missouri”), and Aggieland-Parks, Inc., a
Texas corporation (“Aggieland Wild Animal – Texas”). Wild Animal – Georgia owns and operates the Wild Animal
Safari theme park in Pine Mountain, Georgia (the “Georgia Park”). Wild Animal – Missouri owns and operates the Wild
Animal Safari theme park located in Strafford, Missouri (the “Missouri Park”). Aggieland Wild Animal – Texas owns and
operates the Aggieland Wild Animal Safari theme park near Bryan/College Station, Texas (the “Texas Park”). The Company acquired
the Georgia Park on June 13, 2005, the Missouri Park on March 5, 2008, and the Texas Park on April 27, 2020.
The
Company 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 attendance based net sales were 62.1% and 60.3% of annual attendance based
net sales for the Company’s 2022 and 2021 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 2, 2022.
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 2023 fiscal year, October 1 will be the closest Sunday,
and for the 2022 fiscal year, October 2 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 at Spring Break and runs through
Labor Day.
Financial
and Concentrations Risk: The Company does not have any significant concentrations. The Company maintains its cash in bank deposit
accounts, which at times may exceed federally insured limits.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April
2, 2023
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
Accounts
Receivable: The theme parks are a payment upfront business; therefore, the Company typically carries little or no accounts receivable.
The Company had $3,335 and $4,405 of accounts receivable as of April 2, 2023 and October 2, 2022, 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 $532,143 and $541,986 as of April 2, 2023 and October 2, 2022, respectively.
Property
and Equipment: Property and equipment are stated at cost. Depreciation is computed on the straight-line method over the estimated
useful lives of the assets, which range from three to thirty-nine years. A summary is included below.
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT
| |
April 2, 2023 | | |
October 2, 2022 | |
|
Depreciable Lives |
Land | |
$ | 6,389,470 | | |
$ | 6,389,470 | |
|
not applicable |
Mineral rights | |
| 276,000 | | |
| 276,000 | |
|
25 years |
Ground improvements | |
| 2,893,046 | | |
| 2,797,694 | |
|
7-25 years |
Buildings and structures | |
| 3,670,659 | | |
| 3,922,106 | |
|
10-39 years |
Animal shelters and habitats | |
| 2,828,970 | | |
| 2,479,832 | |
|
10-39 years |
Park animals | |
| 1,305,793 | | |
| 1,247,777 | |
|
5-25 years |
Equipment - concession and related | |
| 470,135 | | |
| 464,988 | |
|
3-15 years |
Equipment and vehicles - yard and field | |
| 795,599 | | |
| 766,149 | |
|
3-15 years |
Vehicles - buses and rental | |
| 304,992 | | |
| 267,483 | |
|
3-5 years |
Rides and entertainment | |
| 177,154 | | |
| 106,247 | |
|
5-7 years |
Furniture and fixtures | |
| 27,159 | | |
| 28,694 | |
|
5-10 years |
Projects in process | |
| 766,175 | | |
| 808,526 | |
|
|
Property and equipment, cost | |
| 19,905,152 | | |
| 19,554,966 | |
|
|
Less accumulated depreciation | |
| (4,837,679 | ) | |
| (4,743,224 | ) |
|
|
Property and equipment, net | |
$ | 15,067,473 | | |
$ | 14,811,742 | |
|
|
Depreciation
expense for the three months ended April 2, 2023 and April 3, 2022 totaled $204,965 and $192,300, respectively, and depreciation expense
for the six months ended April 2, 2023 and April 3, 2022 totaled $417,665 and $385,100, respectively.
Intangible
Assets: Intangible assets consist primarily of software implementation costs, website domains and tradename registrations, which
are reported at cost and are being amortized over a period of three to fifteen years. Amortization expense for the three months ended
April 2, 2023 and April 3, 2022 totaled $4,484 and $275, respectively, and amortization expense for the six months ended April 2, 2023
and April 3, 2022 totaled $8,968 and $550, respectively.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April
2, 2023
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
During
the three months and six months period ended April 2, 2023 the Company recorded long-lived asset impairment charges of $250,696 related
to tornado and severe weather damage at its Georgia Park on March 26-27, 2023. See “NOTE 3. TORNADO EXPENSES AND ASSET WRITE-OFFS” for
further details.
Other
Current Liabilities: The following is a breakdown of other current liabilities:
SCHEDULE OF OTHER CURRENT LIABILITIES
| |
April 2, 2023 | | |
October 2, 2022 | |
Deferred revenue | |
$ | 193,356 | | |
$ | 193,912 | |
Accrued wages and payroll taxes | |
| 169,046 | | |
| 122,265 | |
Accrued sales taxes | |
| 45,624 | | |
| 49,123 | |
Accrued property taxes | |
| 17,291 | | |
| 46,814 | |
Other accrued liabilities | |
| 68,949 | | |
| 109,758 | |
Other current liabilities | |
$ | 494,266 | | |
$ | 521,872 | |
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 $193,356 and $193,912 as of April 2, 2023 and
October 2, 2022, 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. All 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 9: 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 April 2, 2023 and April 3, 2022 totaled $283,307 and $267,247, respectively, and advertising and marketing expense
for the six months ended April 2, 2023 and April 3, 2022 totaled $488,743 and $575,120, respectively.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April
2, 2023
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Leases:
The Company determines if an arrangement contains a lease at inception and accounts for all leases in accordance with ASC 842,
Leases. If an arrangement contains a lease, the Company performs a classification test to determine if the lease is an operating
lease or a financing lease. Right of use assets represent the right to use an underlying asset for the lease term and lease liabilities
represent the obligation to make lease payments arising from the lease. Right of use assets are valued at the initial measurement of
the lease liability, plus any indirect costs or rent prepayments, and reduced by any lease incentives and any deferred lease payments.
Right of use assets are amortized over the lease term. Lease liabilities are recognized on the commencement date of the lease based on
the present value of the future lease payments over the lease term. The discount rate used to determine the present value of the future
lease payments is the Company’s incremental borrowing rate, unless the rate implicit in the lease is readily determinable. Lease
terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Lease expense is recognized on a straight-line basis over the life of the lease, unless management believes there is an alternative systematic
basis which better represents the pattern which the Company will consume the economic benefits thereof and is included within general
and administrative expenses. As a practical expedient, the Company does not recognize right-of-use assets and lease liabilities for leases
with an original term of one year or less. Any non-lease components are not included within the lease right-of-use asset and lease liability,
are reflected as an expense in the period incurred.
In
October 2021, the Company entered into a financing lease for certain property related to a Christmas Lights drive through display at
its Missouri Park. Effective September 27, 2022, the Company terminated this financing lease, acquiring the leased property related to
the Christmas Lights display for $85,000 in exchange for a mutual release of obligations under the lease agreement and recognized a lease
termination gain of $2,011. During the three months ended April 3, 2022 the Company recognized interest expense of $3,016. For the six
months ended April 3, 2022 the Company recognized right of use asset amortization and interest expense related to this lease of $154,831
and $5,027, respectively.
Stock
Based Compensation: The Company recognizes stock based compensation costs on a straight-line basis over the requisite service
period associated with the grant. The Company awards shares to its Board of Directors for service on the Board. The shares issued to
the Board are “restricted” and are not to be re-sold unless an exemption is available, such as the exemption afforded by
Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The Company recognizes the expense
based on the fair market value at the time of the grant. The Company typically awards its annual Director compensation around the end
of each calendar year.
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 (5,000,000) shares for the award of stock options, including qualified
incentive stock options and performance stock bonuses. To date, no grants or awards have been made pursuant to the Plan and the Company
did not submit the Plan for consideration to the Company’s stockholders at its last meeting of stockholders.
Income
Taxes: The Company utilizes the asset and liability method of accounting for income taxes, which requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis
and the tax basis of the assets and liabilities, and are measured using the enacted tax rates and laws. Management periodically reviews
the Company’s deferred tax assets to determine whether their value can be realized based on available evidence. A valuation allowance
is established when management believes it is more likely than not, that such tax benefits will not be realized. Changes in valuation
allowances from period to period are included in the Company’s income tax provision in the period of change.
The
Company follows the guidance in FASB ASC 740 with respect to accounting for uncertainty in income taxes. A tax position is recognized
as a benefit only if it is “more-likely-than-not” that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than fifty percent likely
of being realized on examination. For tax positions not meeting the “more-likely-than-not” test, no tax benefit is recorded.
The Company has no unrecognized tax benefits under guidance related to tax uncertainties. The Company does not anticipate the unrecognized
tax benefits will significantly change in the next twelve months. Any tax penalties or interest expense will be recognized in income
tax expense. No interest and penalties related to unrecognized tax benefits were accrued as of April 2, 2023 or October 2, 2022.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April
2, 2023
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basic
and Diluted Net Income (Loss) Per Share: Basic net income (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of
common shares and common equivalent shares outstanding as if shares had been issued on the exercise any common share rights unless the
exercise becomes anti-dilutive.
Basic
and diluted net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the applicable
weighted average number of common shares outstanding in each period.
Dividend
Policy: The Company has not yet adopted a policy regarding payment of dividends.
Recent
Accounting Pronouncements:
Credit
Losses – Financial Instruments
In
June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic
326), which changes the impairment model for most financial assets to require measurement and recognition of expected credit losses
for financial assets held, replacing the existing incurred loss model. ASU 2016-13 is effective for annual reporting periods beginning
after December 15, 2022, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The
Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures; however,
it is not anticipated to be material.
Except
as noted, the Company does not expect recently issued accounting standards or interpretations to have a material impact on the Company’s
financial position, results of operations, cash flows or financial statement disclosures.
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 15 and a portion of the Walkabout section
reopened on May 6.
For
the three month and six month periods 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 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. Subsequent to
April 2, 2023, approximately $490,000 of
additional tornado related clean-up, repair and reopening expenses have been incurred or are expected to be incurred in the
2023 fiscal year.
The
Company also recorded initial capital investments of $110,642
through April 2, 2023 related to tornado damage rebuilding
projects and approximately $500,000
of additional tornado related capital spending is anticipated through October 1, 2023. Management is working
with its insurance providers regarding tornado damage related coverage and anticipated proceeds are not expected to exceed $700,000,
factoring in deductibles and co-insurance. The Company is also working with local, state, and federal agencies to explore options to
assist with offsetting tornado related clean-up, repair and rebuilding costs.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April
2, 2023
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 $1.51 million as of April 2, 2023.
On
April 27, 2020, the Company, through its wholly owned subsidiary Aggieland-Parks, Inc., acquired Aggieland Wild Animal – Texas,
financed in part with a $5.0 million loan (the “2020 Term Loan”) from First Financial Bank, N.A. (“First Financial”).
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 $3.13 million as of April 2, 2023. The Company is in compliance with the liquidity
and annual debt coverage ratio financial covenants of the 2020 Term Loan.
Interest
expense of $56,489 and
$67,775 for
the three month periods ended April 2, 2023 and April 3, 2022, respectively, includes $1,472
of debt closing costs amortization in each period.
Interest expense of $115,225 and
$136,671 for
the six month periods ended April 2, 2023 and April 3, 2022, respectively, includes $2,944
of debt closing costs amortization in each period.
Interest expense for the three month period and six month period ended April 3, 2022 also includes financial lease cost amortization
of $3,016 and
$5,027,
respectively.
The
following table represents the aggregate of the Company’s outstanding long-term debt:
SCHEDULE
OF OUTSTANDING LONG-TERM DEBT
| |
April 2, 2023 | | |
October 2, 2022 | |
| |
As of | |
| |
April 2, 2023 | | |
October 2, 2022 | |
Loan principal outstanding | |
$ | 4,644,216 | | |
$ | 5,010,136 | |
Less: unamortized debt financing costs | |
| (46,973 | ) | |
| (49,915 | ) |
Gross long-term debt | |
| 4,597,243 | | |
| 4,960,221 | |
Less current portion of long-term debt, net of unamortized costs and
discount | |
| (749,879 | ) | |
| (732,779 | ) |
Long-term debt | |
$ | 3,847,364 | | |
$ | 4,227,442 | |
As
of April 2, 2023, the scheduled future principal maturities of the Company’s long-term debt by fiscal year are as follows:
SCHEDULE OF MATURITIES OF LONG-TERM DEBT
| |
| | |
2023 | |
$ | 372,728 | |
2024 | |
| 773,562 | |
2025 | |
| 810,139 | |
2026 | |
| 848,474 | |
2027 | |
| 888,655 | |
thereafter | |
| 950,658 | |
Total | |
$ | 4,644,216 | |
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April
2, 2023
NOTE
5. 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
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 $0.40 per share on February 2, 2023, a total
of 162,500 shares were issued on March 9, 2023. The total compensation award cost of $80,000 was reported as an expense in the three
month period ended April 2, 2023.
Effective
February 14, 2023, Lisa Brady the Company’s President and Chief Executive Officer vested in 128,205 shares of the Company’s
common stock, in accordance with the terms of her employment agreement. Those shares are expected to be issued by May 31, 2023. The Company
recorded $50,000 of compensation award cost expense in the three month period ended April 2, 2023.
On
December 13, 2021, the Company declared its annual compensation award to seven directors for their service on the Board of Directors.
Five directors were awarded $10,000 each, two new directors were awarded $2,222 each, and two directors received a total of $7,500 for
serving as committee chairpersons and as a non-employee officer, with such compensation to be paid all in shares of the Company’s
common stock, all in cash or a combination thereof, at each director’s election. Five directors elected to receive all shares,
one director elected to receive 60% in shares and 40% in cash, and one director elected all cash. Based on the closing stock price of
$0.553 per share on December 13, 2021, a total of 84,888 shares were issued on February 21, 2022. The total compensation award cost of
$61,944 was reported as an expense in the three month period ended January 2, 2022.
On
December 13, 2021, the Company awarded a non-director officer $10,000 to be paid in shares of the Company’s common stock, totaling
18,083 shares based on the closing stock price of $0.553 per share on December 13, 2021, which were distributed on February 21, 2022,
and $10,000 of compensation expense was reported in the three month period ended January 2, 2022.
Officers,
directors and their controlled entities own approximately 53.7% of the outstanding common stock of the Company as of April 2, 2023.
NOTE
6. 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 128,205 based on the $0.39 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. 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.
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 most recently served as the Company’s Interim CEO until Ms. Brady was hired. Mr. Van Voorhis will serve as Special Advisor
to the CEO through May 31, 2023. Pursuant to the 2022 Van Voorhis Employment Agreement, Mr. Van Voorhis receives annual compensation
in the amount of $100,000 through May 31, 2023 and $50,000 from June 1, 2023 through May 31, 2024. In addition, Mr. Van Voorhis will
serve as a member of the Company’s Strategic Growth and Audit Committees during the two year term of his employment with the Company.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April
2, 2023
NOTE
6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
Employment
Agreements:
Effective
as of January 1, 2022, the Company and Todd R. White, the Company’s Chief Financial Officer, entered into an employment agreement
(the “2022 White Employment Agreement”). Pursuant to the 2022 White Employment Agreement, Mr. White receives an initial base
annual compensation in the amount of $90,000 per year, subject to annual review by the Board of Directors. The 2022 White Employment
Agreement has a term of two years and entitles Mr. White to participate in any deferred compensation plan the Company may adopt during
the term of his employment with the Company.
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 ($291,667 in aggregate) or (ii) in the event of a change in control of the Company ($381,667 in aggregate),
as well as disability and death payment provisions ($174,167 in aggregate). As of April 2, 2023, the Company has not adopted any deferred
compensation plans.
NOTE
7. INCOME TAXES
For
the six month period ended April 2, 2023, the Company reported a pre-tax loss of $million.
The Company recorded an income tax benefit of $310,400
for the six month period ended April 2, 2023, comprised of a federal benefit of $265,300 and
a State of Georgia benefit of $45,100.
For the six month period ended April 3, 2022, the Company reported a pre-tax loss of $.
The Company’s net income tax benefit of $112,400
for the six month period ended April 3, 2022 was comprised of a federal benefit of $125,800
and a State of Georgia expense of $13,400.
NOTE
8. 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 vigorously defending this claim.
On
February 17, 2021, two children of James Meikle, the Company’s former President and Chief Operating Officer, filed a Complaint
in the Eighth Judicial District Court, Clark County, Nevada (case no. A-21-829563-C), alleging the Company was obligated under Mr. Meikle’s
Employment Agreement to purchase at least $540,000 of life insurance for Mr. Meikle, who passed away on November 28, 2018. The Complaint
was seeking damages of $540,000, as well as interest and expenses. The trial date was set for February 14, 2023. Effective August 5,
2022, the Company agreed to pay the plaintiffs $100,000 to settle this Complaint and obtain a full release for any related complaints.
The release was completed on August 26, 2022, the Company issued payment for the settlement amount on August 31, 2022, and an order of
dismissal was filed on September 19, 2022.
Except
as noted above, the Company is not a party to any pending legal proceeding, nor is its property the subject of a pending legal proceeding,
that is not in the ordinary course of business or otherwise material to the financial condition of its business. None of the Company’s
directors, officers or affiliates is involved in a proceeding adverse to its business or has a material interest adverse to its business.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April
2, 2023
NOTE
9. BUSINESS SEGMENTS
The
Company manages its operations on an individual location basis. Discrete financial information is maintained for each Park and provided
to management for review and as a basis for decision-making. The primary performance measures used to allocate resources are Park earnings
before interest and tax expense, and free cash flow.
The
following tables present financial information regarding each of the Company’s reportable segments:
SCHEDULE OF REVENUE BY REPORTING SEGMENTS
| |
April 2, 2023 | | |
April 3, 2022 | | |
April 2, 2023 | | |
April 3, 2022 | |
| |
For the three months ended | | |
For the six months ended | |
| |
April 2, 2023 | | |
April 3, 2022 | | |
April 2, 2023 | | |
April 3, 2022 | |
Total revenues: | |
| | | |
| | | |
| | | |
| | |
Georgia | |
$ | 1,050,455 | | |
$ | 1,340,581 | | |
$ | 2,389,596 | | |
$ | 2,649,021 | |
Missouri | |
| 270,827 | | |
| 232,712 | | |
| 490,592 | | |
| 502,814 | |
Texas | |
| 554,183 | | |
| 513,281 | | |
| 856,656 | | |
| 879,497 | |
Consolidated | |
$ | 1,875,465 | | |
$ | 2,086,574 | | |
$ | 3,736,844 | | |
$ | 4,031,332 | |
Total revenues | |
$ | 1,875,465 | | |
$ | 2,086,574 | | |
$ | 3,736,844 | | |
$ | 4,031,332 | |
Income (loss) before income taxes: | |
| | | |
| | | |
| | | |
| | |
Tornado expenses and write-offs | |
| (632,372 | ) | |
| - | | |
| (632,372 | ) | |
| - | |
Other income, net | |
| 31,666 | | |
| 19,386 | | |
| 61,279 | | |
| 46,292 | |
Interest expense | |
| (56,489 | ) | |
| (67,775 | ) | |
| (115,225 | ) | |
| (136,671 | ) |
| |
April 2,
2023 | | |
October 2, 2022 | |
| |
As of | |
| |
April 2,
2023 | | |
October 2, 2022 | |
Total assets: | |
| | | |
| | |
Georgia | |
$ | 8,502,978 | | |
$ | 9,402,877 | |
Missouri | |
| 3,045,963 | | |
| 3,468,730 | |
Texas | |
| 8,050,138 | | |
| 8,074,421 | |
Corporate | |
| 535,511 | | |
| 157,578 | |
Consolidated | |
$ | 20,134,590 | | |
$ | 21,103,606 | |
Total assets | |
$ | 20,134,590 | | |
$ | 21,103,606 | |
NOTE
10. FAIR VALUE MEASUREMENTS
As
of April 2, 2023 and October 2, 2022, the fair value of our long-term debt was $4.29 million and $4.61 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, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of
the short maturity of these instruments.
NOTE
11. SUBSEQUENT EVENTS
The
Company has analyzed its operations subsequent to April 2, 2023 to the date these financial statements were issued and has
determined, except for the matters disclosed in “NOTE 3. TORNADO EXPENSES AND ASSET WRITE-OFFS,” no material subsequent events have
occurred from the date of these unaudited consolidated financial statements.