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Indicate by check mark whether the registrant has
filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report. ☐
PART
I
ITEM
1. BUSINESS
Overview
Parks!
America, Inc., through our wholly owned subsidiaries, owns and operates 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. 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”). We acquired our Georgia Park on June 13, 2005, our Missouri Park on March 5, 2008, and our Texas
Park on April 27, 2020.
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 net sales were 62.1% and 60.3% of annual attendance based net sales for our 2022
and 2021 fiscal years, respectively. Since the acquisition of our Texas Park, the combined third and fourth quarter concentration of
our sales has been reduced.
Our
business plan includes expansion via the acquisition of additional local or regional theme parks and attractions. We believe acquisitions, if any, should not unnecessarily encumber the Company with additional debt that cannot be justified by
current operations. We may also pursue contract management opportunities for themed attractions owned by third parties. By using a combination
of equity, debt and other financing options, we intend to carefully monitor stockholder value in conjunction with the pursuit of growth.
Shares
of our common stock trade on the OTC Markets Group OTCPink marketplace (“OTCPink”) under the symbol, “PRKA.”
For
an overview of our business operations, see MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
herein.
Corporate
History
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 set the stage for our current corporate structure and operating strategy. We changed the name of the Company 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. As of June 11, 2008, the Company changed its name from Great American Family
Parks, Inc. to its current name, Parks! America, Inc. In addition, effective June 25, 2008, the Company’s quotation symbol on the
OTCPink was changed from GFAM to PRKA.
Wild
Animal Safari, Inc. – Our Georgia Park
On
June 13, 2005, Wild Animal – Georgia acquired our Georgia Park in Pine Mountain, Georgia. Our Georgia Park is situated within a
200-acre portion of a 500-acre plot, which is owned by Wild Animal – Georgia, located approximately 75 miles southwest of Atlanta.
Our Georgia Park features a three-mile drive-through animal viewing area that opened in 1991. It is home to over 500 animals, birds and
reptiles, comprised of over 65 species. The majority of the animals roam wild in a natural habitat. Visitors can observe, photograph
and feed the animals along the paved road that runs through the drive-through section of our Georgia Park’s natural habitat area.
Some animals are contained in special fenced-in exhibit areas within the natural habitat, drive-through section of our Georgia Park,
while others are in a more traditional zoo-like walk through section of the park, the Walkabout Adventure Zoo, which also includes a
reptile house, featuring reptiles from several continents.
Wild
Animal, Inc. – Our Missouri Park
Wild
Animal – Missouri purchased our Missouri Park as of March 5, 2008. Our Missouri Park is situated in Strafford, Missouri on 255
acres of land located 12 miles east of Springfield and approximately 45 miles north of Branson. Our Missouri Park features a five-mile
drive-through wild animal viewing area that opened in 1971. It is home to approximately 350 animals, birds and reptiles, comprised of
over 65 species. Most of the animals roam wild throughout the natural habitat. Visitors can observe, photograph and feed the animals
along the paved road that runs throughout the drive-through section of our Missouri Park’s natural habitat area. Some animals are
contained in special fenced-in exhibit areas within the natural habitat, drive-through section of our Missouri Park and other animals
are in a more traditional zoo-like walk through section of the park, the Walkabout Adventure Zoo, which also contains a reptile house,
featuring reptiles from several continents.
Aggieland-Parks,
Inc. – Our Texas Park
Aggieland
Wild Animal – Texas acquired our Texas Park on April 27, 2020. Our Texas Park is situated on 250 acres of a 450-acre property,
located approximately 25 miles northeast of Bryan/College Station, Texas and 120 miles northwest of downtown Houston. Our Texas Park
features a two-and-a-half mile drive-through animal viewing area that opened in 2019. It is home to over 650 animals, birds and reptiles,
comprised of over 70 species. The majority of the animals roam wild in a natural habitat. Visitors can observe, photograph and feed the
animals along a crushed-gravel road that runs throughout the drive-through section of our Texas Park’s natural habitat area. Our
Texas Park also includes a 20-acre Walkabout Adventure Zoo, featuring outdoor and indoor animal exhibits, a reptile house, two aviaries,
extensive giraffe and tortoise encounter areas, an otter exhibit, and a large hippopotamus enclosure and pond.
Animal
Park Operations
Park
revenues are primarily derived from admission fees, food and beverage sales, gift shop and specialty item sales, and sales of animal
food. During our 2022 fiscal year, we introduced private and semi-private animal keeper guided animal encounters at each of our parks.
We also introduced vehicle rentals at our Missouri and Texas Parks, which have been a customer favorite at our Georgia Park for over
a decade. Management’s plans to grow revenues at each of our parks include ongoing improvements to existing facilities, making
each park more attractive to visitors and developing unused acreage. We also believe that increasing local and regional awareness of
each park via advertising and promotion is a critical element of our revenue growth plans, especially for our Texas and Missouri Parks.
In
addition to the animal environments, each of our parks contain a gift shop, a restaurant or concessions areas, and picnic areas. We sell
food and beverages in our restaurants or concession areas, and a variety of items in our gift shops, including shirts, hats, educational
books, toys and novelty items, many of which are animal themed. Our 2023 fiscal year plans include the continuing renovation of walk
about animal habitats and enclosures, especially at our Georgia Park, completion of a new otter exhibit at our Missouri Park, and the
completion of expanded food service capabilities and offerings at our Texas Park. Our plan to open a significant new giraffe exhibit
at our Georgia Park during our 2022 fiscal year experienced delays due to a highly inflationary period for building materials and a challenging
labor market. We remain committed to this showcase attraction and expect to make progress on this project during our 2023 fiscal year,
however the opening date is still unknown. Increasing attendance, as well as increasing the per capita income generated in our gift shops
and from concessions, continues to be a primary focus.
Most
of the animals at each of our parks have been born on-site or domestically acquired. We rarely import animals and have not imported any
animals in the past 10 years. Auctions and sales of animals across the United States occur often and we may acquire animals in these
auctions if we see an opportunity to enhance the animal population at our parks. As a result of natural breeding, animal populations
at our Parks tend to grow over time. Periodically, we sell surplus animals, and the proceeds are recorded as revenue. The periodic acquisition
and sale of animals is also part of our herd and genetic management program. From time-to-time, we may also relocate animals between
our parks as part of this program. Each park is subject to routine inspection by federal and state agencies. Each park maintains a high
standard of animal care and has passed all recent inspections.
Employees
Our
Georgia Park has approximately 25 full-time employees and engages a range of 20-35 additional part-time and seasonal employees. Our Missouri
Park has approximately 12 full-time employees and engages in the range of 10-20 additional part-time and seasonal employees. Our Texas
Park has approximately 14 full-time employees and engages in the range of 10-20 additional part-time and seasonal employees. We also
engage consultants from time to time. We have no collective bargaining agreements with our employees and believe our relations with our
employees are good. Parks! America has three officers and one manager who oversee the strategy of the Company, the operations and capital
investment activities of our Parks, as well as the overall financial activities, controls and reporting for the Company and each Park.
ITEM
1A. RISK FACTORS
You
should read the following discussion and analysis together with our consolidated financial statements and related notes included elsewhere
in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this
Annual Report on Form 10-K, 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:
The
COVID-19 pandemic or similar public health risks and measures taken in response thereto may have a material negative impact on our business,
results of operations and cash flows, and financial condition. The extent of the impact is dependent upon future developments, which
are highly uncertain and difficult to predict.
In
March 2020, the World Health Organization characterized COVID-19, a disease caused by a novel strain of a coronavirus, as a pandemic.
The rapid spread of COVID-19 has resulted in governmental authorities throughout the United States implementing a variety of containment
measures with the objective of slowing the spread of the virus, including travel restrictions, shelter-in-place orders and business shutdowns.
The COVID-19 pandemic and these containment measures have the potential to have a material impact on the Company’s business.
We
implemented several measures to mitigate the impacts of the pandemic on our business and financial position. During the initial shutdown
period, we reduced staffing, applied for and received Paycheck Protection Program loans and reduced discretionary spending. In addition,
we delayed closing the Texas Park acquisition to renegotiate various terms, primarily focused on reducing the cash requirements of the
acquisition in the subsequent year.
In
early April 2020, our Georgia and Missouri Parks closed to the public due to shelter-in-place mandates. In addition, our Texas Park
was closed to the public for the month prior to its acquisition, due to a shelter-in-place mandate. In compliance with respective
state issued guidelines, each of our parks reopened in early May 2020. After reopening, attendance levels increased significantly at
each of our parks for the balance of its 2020 fiscal year, which continued throughout our 2021 fiscal year in comparison to
comparable pre-COVID-19 periods. While attendance based net sales remain higher compared to pre-COVID-19 periods, we experienced a
decline in comparable year-over-year attendance based net sales and attendance for the last 22 weeks of our 2021 fiscal year and for
our entire 2022 fiscal year, respectively.
As
the COVID-19 pandemic illustrates, our future operations are dependent on factors outside of our knowledge or control, including the
duration and severity of this pandemic or similar public health risks. While we have experienced attendance gains and strong cash flow
in comparison to periods preceding the beginning of the COVID-19 pandemic, there may be longer-term negative impacts to our business,
results of operations and cash flows, and financial condition as a result of the COVID-19 pandemic. These negative impacts may include
changes in customer behavior and preferences, increases in operating expenses to meet consumer expectations and perceptions, limitations
in our ability to recruit and maintain staffing, as well as increasing wages required retain and recruit staff. There is also the potential
for attendance levels at our parks to moderate or decline as alternative entertainment venues are now open and consumers have broader
travel and entertainment options.
The
extent and duration of longer-term impacts of the COVID-19 pandemic or similar public health risks on customer perceptions of our parks
are largely uncertain and dependent upon future developments that cannot be accurately predicted. There is no recent historical precedent
that provides insights into the longer-term impacts that the COVID-19 pandemic will have on consumer behavior. As a result, the ultimate
impact is highly uncertain and subject to change. We do not yet know the full extent COVID-19 will have on our overall business, results
of operations and cash flows, and financial position. COVID-19 and the resulting economic disruptions have also led to significant volatility
in the capital markets. As a smaller public company, our ability to access cash is already difficult and the impacts of COVID-19 on capital
markets has likely negatively impacted our ability to raise additional capital at a reasonable cost.
General
economic conditions may have an adverse impact on our business, financial condition or results of operations.
Our
business and operating results can be impacted by a number of macroeconomic factors, including but not limited to consumer confidence
and spending levels, tax rates, unemployment, consumer credit availability, raw materials costs, pandemics (such as the COVID-19
pandemic) and natural disasters, fuel and energy costs (including oil prices), and credit market conditions. The COVID-19 pandemic has
severely impacted and will likely continue to impact many of these factors. A general economic slowdown or recession resulting in a decrease
in discretionary spending could adversely affect the frequency with which guests choose to visit our parks and the amount that our guests
spend when they visit. Our ability to source supplies, materials and services at reasonable costs and in a timely manner could be impacted
by adverse economic conditions in the U.S. and abroad. For example, our ability to obtain gift shop merchandise had been adversely impacted
by recent supply chain distributions at least in part attributed to collateral impacts from COVID-19. Similarly, our plans to open a new giraffe exhibit at out Georgia Park experienced delays during our 2022 fiscal
year, in large part due building material price increases and labor storages in the construction industry.
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, terrorist activities, power outages or other
events outside our control could disrupt our operations, impair critical systems, damage our properties or reduce attendance at our
parks or require temporary park closures. Damage to our properties could take a long time to repair and there is no guarantee that
we would have adequate insurance to cover the costs of repair or the expense of the interruption to our business. Furthermore,
natural disasters such as fires, earthquakes, hurricanes 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, our Texas Park was closed for several weeks, experienced power outages and sustained property damage
associated with winter storms in February 2021. The occurrence of such events could have a material adverse effect on our business,
financial condition and results of operations.
We
cannot predict the frequency, duration or severity of these activities and the effect that they may have on our business, financial condition
or results of operations.
The
Theme Park Industry is highly competitive, and we may be unable to compete effectively.
The
theme park industry is highly competitive, highly fragmented, rapidly evolving, and subject to technological change and intense marketing
by providers with similar products. One of our competitors for attracting general recreation dollars, Callaway Gardens, is located within
five miles of our Georgia Park. In May 2018, Great Wolf Resorts opened an expansive lodge and indoor waterpark within 10 miles of our
Georgia Park. In September 2017, the founder of Bass Pro Shops opened “Johnny Morris’ Wonders of Wildlife National Museum
and Aquarium”, approximately 12 miles from our Missouri Park in Springfield, Missouri. Branson, Missouri is located just 45 minutes
from our Missouri Park. There are a variety of animal attractions throughout southeastern Texas; the nearest is Franklin Drive Thru Safari,
within a 35-40 minute drive of our Texas Park. Many of our current competitors are significantly larger and have substantially greater
market presence as well as greater financial, technical, operational, marketing and other resources and experience than we have. In the
event that 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.
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.
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 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 into from time to time, may also restrict the declaration of dividends on our
common stock.
ITEM
1B. UNRESOLVED STAFF COMMENTS
None
ITEM
2. PROPERTIES
The
Company owns and operates the following wild animal theme parks:
Wild
Animal Safari, Inc. – Our Georgia Park
Our
Georgia Park is situated within a 200-acre portion of a 500-acre plot, which is owned by Wild Animal – Georgia, located approximately
75 miles southwest of Atlanta. Our Georgia Park features a three-mile drive-through animal viewing area that opened in 1991. It is home
to over 500 animals, birds and reptiles, comprised of over 65 species. The majority of the animals roam wild in a natural habitat. Visitors
can observe, photograph and feed the animals along the paved road that runs through the drive-through section of our Georgia Park’s
natural habitat area. Some animals are contained in special fenced-in exhibit areas within the natural habitat, drive-through section
of our Georgia Park, while others are in a more traditional zoo-like walk through section, the Walkabout Adventure Zoo, which also includes
a reptile house, featuring reptiles from several continents. In addition to the animal environments, our Georgia Park contains a gift
shop, a restaurant and picnic areas. During our 2022 fiscal year we implemented various animal exhibit and habitat improvements to the
Walkabout Adventure Zoo section of our Georgia Park, with plans to continue the transformation of this area of the park in 2023.
Wild
Animal, Inc. – Our Missouri Park
Our
Missouri Park is situated in Strafford, Missouri on 255 acres of land located 12 miles east of Springfield and approximately 45 miles
north of Branson. Our Missouri Park features a five-mile drive-through wild animal viewing area that opened in 1971. It is home to approximately
350 animals, birds and reptiles, comprised of over 65 species. Most of the animals roam wild throughout the natural habitat. Visitors
can observe, photograph and feed the animals along the paved road that runs throughout the drive-through section of our Missouri Park’s
natural habitat area. Some animals are contained in special fenced-in areas within the natural habitat, drive-through section of our
Missouri Park and other animals are in a more traditional zoo-like atmosphere, the Walkabout Adventure Zoo, which also contains a reptile
house, featuring reptiles from several continents. During our 2020 fiscal year we completed an expanded giraffe exhibit, which allows
our guests to view and feed our giraffes year round. A new otter exhibit is scheduled to open at our Missouri Park during the second
quarter of our 2023 fiscal year. Our Missouri Park also has a gift shop, a restaurant, and several party rooms for rental.
Aggieland-Parks,
Inc. – Our Texas Park
Our
Texas Park is situated on 250 acres of a 450-acre property, located approximately 25 miles northeast Bryan/College Station, Texas and
120 miles northwest of downtown Houston. Our Texas Park features a two-and-a-half mile drive-through animal viewing area that opened
in 2019. It is home to over 650 animals, birds and reptiles, comprised of over 70 species. The majority of the animals roam wild in a
natural habitat. Visitors can observe, photograph and feed the animals along a crushed-gravel road that runs throughout the drive-through
section of our Texas Park’s natural habitat area. Our Texas Park also includes a 20-acre Walkabout Adventure Zoo, featuring outdoor
and indoor animal exhibits, a reptile barn, two aviaries, extensive giraffe and tortoise encounter areas, an otter exhibit, and a large
hippopotamus enclosure and pond. In addition, our Texas Park offers a gift shop, a covered individual and group dining area, several
party rooms for rental, and a playground for young children and families. During our 2023 fiscal year, we anticipate the completion and
opening of a restaurant and significantly expanded food service operations at our Texas Park.
ITEM
3. LEGAL PROCEEDINGS
On
February 17, 2021, two children of James Meikle, our 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 we were obligated under Mr. Meikle’s Employment Agreement
to purchase at least $540,000 of life insurance for Mr. Meikle, who passed away on November 28, 2018. The Complaint was seeking damages
of $540,000, as well as interest and expenses. The trial date was set for August 15, 2022. Effective August 5, 2022, we agreed to pay
the plaintiffs $100,000 to settle this Compliant and obtain a full release for any related complaints. The release was completed August 26, 2022, we issued payment for the settlement
amount on August 31, 2022 and an order of dismissal was filed on September 19, 2022.
Other
Matters
Except
as noted above, we are not a party to any pending legal proceeding, nor are any of our properties the subject of a pending legal proceeding,
that is not in the ordinary course of business or otherwise material to the financial condition of its business. None of our directors,
officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.
ITEM
4. MINE SAFETY DISCLOSURES
Not
applicable
PART
II
ITEM
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our
common stock trades on the OTCPink under the symbol “PRKA”. The table below sets forth, for the periods indicated, the high
and low closing prices per share of our common stock as reported on the OTCPink. These quotations reflect prices between dealers, do
not include retail mark-ups, markdowns, and commissions and may not necessarily represent actual transactions. The prices are adjusted
to reflect all stock splits. As of October 2, 2022, there were 75,124,087 shares outstanding held by approximately 3,200 stockholders
of record. The number of stockholders of record does not reflect shares held beneficially or those shares held in “street”
name.
| | |
| |
High | | |
Low | |
2022 | | |
First Quarter | |
$ | 0.740 | | |
$ | 0.524 | |
| | |
Second Quarter | |
$ | 0.630 | | |
$ | 0.429 | |
| | |
Third Quarter | |
$ | 0.530 | | |
$ | 0.328 | |
| | |
Fourth Quarter | |
$ | 0.475 | | |
$ | 0.320 | |
2021 | | |
First Quarter | |
$ | 0.480 | | |
$ | 0.310 | |
| | |
Second Quarter | |
$ | 0.478 | | |
$ | 0.380 | |
| | |
Third Quarter | |
$ | 0.850 | | |
$ | 0.370 | |
| | |
Fourth Quarter | |
$ | 0.930 | | |
$ | 0.600 | |
We
do not currently pay any dividends on our common stock, and for the foreseeable future we intend to retain future earnings, if any, for
use in our business. 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 our credit agreements, which we may enter into from time to time, may also restrict the
declaration of dividends on our common stock.
ITEM
6. [RESERVED]
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s
discussion and analysis of results of operations and financial condition (“MD&A”) is a supplement to the
accompanying consolidated financial statements and provides additional information on our businesses, current developments,
financial condition, cash flows and results of operations. The following discussion should be read in conjunction with our
consolidated financial statements for the fiscal year ended October 2, 2022 provided in this Annual Report on Form 10-K. Certain
statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ
materially, as discussed more fully herein.
The
forward-looking information set forth in this Annual Report on Form 10-K is 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 SEC. More information about potential factors that could affect our business and financial results is included
in the section entitled “Risk Factors” in this Annual Report on Form 10-K.
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”). On April 27, 2020, we acquired substantially all the assets of Aggieland Safari LLC and related entities (“Aggieland
Safari”).
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 net sales were 62.1% and 60.3% of annual attendance based net sales for our 2022
and 2021 fiscal years, respectively. Since the acquisition of our Texas Park, the combined third and fourth quarter concentration of
our sales has been reduced.
The table below outlines our annual net sales, reported
and adjusted income before income taxes, earnings before interest, taxes, depreciation and amortization (“EBITDA”), and net
cash provided by operating activities for the last five fiscal years. For the past several years, our Georgia Park has benefitted from
a number of positive factors including strong and stable management, the addition of online ticket sales in June 2015, growth and positive
economic conditions in the greater Atlanta area, as well as positive guest perceptions of this park. Our strong results through fiscal
2019 and the resulting improvements in our financial position provided us with the resources to pursue and ultimately complete the Aggieland
Safari acquisition.
| |
Fiscal Year | |
| |
2022 | | |
2021 | | |
2020 | | |
2019 | | |
2018 | |
Total net sales | |
$ | 10,741,417 | | |
$ | 11,862,491 | | |
$ | 9,507,264 | | |
$ | 6,184,254 | | |
$ | 6,046,758 | |
% change | |
| -9.5 | % | |
| 24.8 | % | |
| 53.7 | % | |
| 2.3 | % | |
| -3.1 | % |
Reported income before income taxes | |
| 1,030,291 | | |
| 3,680,546 | | |
| 3,693,869 | | |
| 1,495,438 | | |
| 1,422,592 | |
% change | |
| -72.0 | % | |
| -0.4 | % | |
| 147.0 | % | |
| 5.1 | % | |
| -30.1 | % |
% of total net sales | |
| 9.6 | % | |
| 31.0 | % | |
| 38.9 | % | |
| 24.2 | % | |
| 23.5 | % |
Adjusted income before income taxes (*) | |
| 1,130,291 | | |
| 3,490,558 | | |
| 3,669,496 | | |
| 1,575,882 | | |
| 1,553,124 | |
% change | |
| -67.6 | % | |
| -4.9 | % | |
| 132.9 | % | |
| 1.5 | % | |
| -20.6 | % |
% of total net sales | |
| 10.5 | % | |
| 29.4 | % | |
| 38.6 | % | |
| 25.5 | % | |
| 25.7 | % |
EBITDA | |
| 2,168,161 | | |
| 4,620,623 | | |
| 4,457,682 | | |
| 2,138,546 | | |
| 2,188,851 | |
% change | |
| -53.1 | % | |
| 3.7 | % | |
| 108.4 | % | |
| -2.3 | % | |
| -17.1 | % |
% of total net sales | |
| 20.2 | % | |
| 39.0 | % | |
| 46.9 | % | |
| 34.6 | % | |
| 36.2 | % |
Net cash provided by operating activities | |
| 1,540,719 | | |
| 3,308,718 | | |
| 3,680,401 | | |
| 1,858,158 | | |
| 1,767,243 | |
% change | |
| -53.4 | % | |
| -10.1 | % | |
| 98.1 | % | |
| 5.1 | % | |
| -3.3 | % |
% of total net sales | |
| 14.3 | % | |
| 27.9 | % | |
| 38.7 | % | |
| 30.0 | % | |
| 29.2 | % |
*
- Excludes a $100,000 legal settlement charge in 2022, a $189,988 gain on extinguishment of debt in 2021, $24,373 of tornado related
insurance proceeds in 2020, $80,444 of tornado damage asset write-offs and costs in 2019, and $130,532 of deferred financing costs write-offs
in 2018.
EBITDA is not a measurement of operating performance
computed in accordance with generally accepted accounting principles (“GAAP”) and should not be considered as a substitute
for operating income, net income or cash flows from operating activities computed in accordance with GAAP. We believe that EBITDA is a
meaningful measure as it is widely used by analysts, investors and comparable companies in our industry to evaluate our operating performance
on a consistent basis, as well as more easily compare our results with those of other companies in our industry. We also believe EBITDA
is a meaningful measure of park-level operating profitability. EBITDA is a supplemental measure of our operating results and is not intended
to be a substitute for operating income, net income or cash flows from operating activities as defined under GAAP.
The
following table provides a reconciliation of our reported income before income taxes to our EBITDA for our five most recent fiscal years:
| |
Fiscal Year | |
| |
2022 | | |
2021 | | |
2020 | | |
2019 | | |
2018 | |
Reported income before income taxes | |
$ | 1,030,291 | | |
$ | 3,680,546 | | |
$ | 3,693,869 | | |
$ | 1,495,438 | | |
$ | 1,422,592 | |
Interest expense | |
| 261,621 | | |
| 335,944 | | |
| 182,926 | | |
| 76,003 | | |
| 177,828 | |
Depreciation and amortization | |
| 782,987 | | |
| 704,016 | | |
| 576,139 | | |
| 453,968 | | |
| 425,647 | |
(Gain) loss on disposal of operating assets, net | |
| (6,738 | ) | |
| 90,105 | | |
| 29,121 | | |
| 32,693 | | |
| 32,252 | |
Legal settlement | |
| 100,000 | | |
| - | | |
| - | | |
| - | | |
| - | |
Gain on extinguishment of debt | |
| - | | |
| (189,988 | ) | |
| - | | |
| - | | |
| - | |
Tornado damage and expenses, net | |
| - | | |
| - | | |
| (24,373 | ) | |
| 80,444 | | |
| - | |
Write-off of loan fees - prepayment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 130,532 | |
EBITDA | |
$ | 2,168,161 | | |
$ | 4,620,623 | | |
$ | 4,457,682 | | |
$ | 2,138,546 | | |
$ | 2,188,851 | |
In
response to the outbreak of the COVID-19 pandemic, governmental authorities throughout the United States implemented a variety of
containment measures with the objective of slowing the spread of the virus, including travel restrictions, shelter-in-place orders
and business shutdowns. We implemented several measures to mitigate the impacts of the pandemic on our business and financial
position. During the initial shutdown period, we reduced staffing, applied for and received Paycheck Protection Program
(“PPP”) loans and reduced discretionary spending. In addition, we delayed closing the Texas Park acquisition to
renegotiate various terms, primarily focused on reducing the cash requirements of the acquisition in the subsequent year.
In
early April 2020, our Georgia and Missouri Parks closed to the public due to shelter-in-place mandates. In addition, our Texas Park,
was closed to the public for the month prior to its acquisition, due to a shelter-in-place mandate. In compliance with respective state
issued guidelines, each of our parks reopened in early May 2020. After reopening, attendance levels increased significantly at each of
our parks for the balance of our 2020 fiscal year, which continued throughout our 2021 fiscal year in comparison to comparable pre-COVID-19
periods. We experienced a decline in comparable year-over-year attendance based net sales and attendance for the last 22 weeks of our
2021 fiscal year and for our entire 2022 fiscal year, respectively.
While
we experienced a comparable 52-week attendance-based sales decline for our 2022 fiscal year compared to the elevated pandemic levels,
our overall sales remain at significantly higher levels when compared to pre-COVID-19 periods. On a combined basis, attendance-based
sales of our Georgia and Missouri Parks for our 2022 fiscal year were up approximately 43.0% compared to the comparable pre-COVID-19
2019 fiscal year, which we believe illustrates a significant increase in local and regional awareness of each park, a critical development
with positive long-term ramifications for our business. (Note, our Texas Park, acquired on April 27, 2020, originally opened in May 2019;
therefore, a full year of sales is not available for pre-COVID-19 periods).
Although
we have experienced attendance gains and strong cash flows subsequent to the reopening our of parks after the initial closures at the
beginning of the pandemic, there may be longer-term negative impacts to the Company’s business, results of operations and cash
flows, and financial condition as a result of the COVID-19 pandemic. These negative impacts may include changes in customer behavior
and preferences, increases in operating expenses to meet consumer expectations and perceptions, limitations in our ability to recruit
and maintain staffing, as well as increasing wages required retain and recruit staff. There is also the potential for attendance levels
at our parks to moderate or decline as alternative entertainment venues are now open and consumers have broader travel and entertainment
options.
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. Among our highest priorities over the next
several years is continuing the integration of our Texas Park, continual enhancement of the overall guest experience at each of our parks,
as well as the introduction new programming and enhanced marketing efforts. As our Texas Park first opened to the public in May 2019,
we believe there remains tremendous potential to increase attendance by increasing the local and regional awareness of this facility
via advertising and promotion. We are pleased with the expanded attendance at our Missouri Park since it reopened in May 2020 and plan
on leveraging the increased exposure of this facility to continue to build on this recent success.
Our
2023 fiscal year capital investment plan remains elevated versus historical levels, however, is lower than the $1.84 million record level
of capital spending during our 2022 fiscal year. Our 2023 capital plan targets substantial guest-facing enhancements at all three of
our parks, delivering a marketable attraction at each property and setting the stage for longer-term master planning and optimization
at every park. Our plan to open a significant new giraffe exhibit at our Georgia Park during our 2022 fiscal year experienced delays
due to a highly inflationary period for building materials and a challenging labor market. We remain committed to this showcase attraction
and expect to make progress on this project during our 2023 fiscal year, however the opening date is still unknown. Our 2023 projected
capital investment spending will again be fully funded from our existing cash and continues to demonstrate our commitment to building
for long-term, sustainable growth.
Our
long-term business plan also includes expansion via the acquisition of additional local or regional theme parks and attractions. We believe
acquisitions, if any, should not unnecessarily encumber the Company with additional debt that cannot be justified by current operations.
We may also pursue contract management opportunities for themed attractions owned by third parties. By using a combination of equity,
debt and other financing options, we intend to carefully monitor stockholder value in conjunction with the pursuit of growth.
Strong
annual operating cash flow over the past several fiscal years has provided us with incremental cash flow, provided us with the financial
strength to complete the Aggieland Safari acquisition and has funded a significant increase in capital investment. However, our current
size and operating model leave us little room for error. Any future capital raised by us is likely to result in dilution to existing
stockholders. It is possible that cash generated by, or available to, us may not be sufficient to fund our capital and liquidity needs
for the near-term.
Consolidated
and Segment Results of Operations for the Year Ended October 2, 2022 as Compared to the Year Ended October 3, 2021
We
manage our operations on an individual location basis. Discrete financial information is maintained for each park and provided to our
corporate management for review and as a basis for decision-making. The primary performance measures used to allocate resources are Park
earnings before interest and tax expense, and free cash flow. We use this measure of operating profit to gauge segment performance because
we believe this measure is the most indicative of performance trends and the overall earnings potential of each segment.
Our
2022 fiscal year was comprised of 52-weeks, compared to our 2021 fiscal year which was comprised of 53-weeks. Therefore, in addition
to full year reported attendance based sales comparisons, attendance based sales analyses will include comparable 52-week sales comparisons.
The
following table shows our consolidated and segment operating results for the years ended October 2, 2022 and October 3, 2021:
| |
Georgia
Park | | |
Missouri
Park | | |
Texas
Park | | |
Consolidated | |
| |
Fiscal
2022 | | |
Fiscal
2021 | | |
Fiscal
2022 | | |
Fiscal
2021 | | |
Fiscal
2022 | | |
Fiscal
2021 | | |
Fiscal
2022 | | |
Fiscal
2021 | |
Total net sales | |
$ | 7,086,232 | | |
$ | 8,067,808 | | |
$ | 1,691,602 | | |
$ | 1,792,112 | | |
$ | 1,963,583 | | |
$ | 2,002,571 | | |
$ | 10,741,417 | | |
$ | 11,862,491 | |
Segment income (loss) from
operations | |
| 2,895,820 | | |
| 4,517,649 | | |
| (344,404 | ) | |
| 202,597 | | |
| (254,834 | ) | |
| (62,922 | ) | |
| 2,296,582 | | |
| 4,657,324 | |
Segment
operating margin % | |
| 40.9 | % | |
| 56.0 | % | |
| -20.4 | % | |
| 11.3 | % | |
| -13.0 | % | |
| -3.1 | % | |
| 21.4 | % | |
| 39.3 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Corporate expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (995,946 | ) | |
| (896,136 | ) |
Other income, net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 91,276 | | |
| 65,314 | |
Legal settlement | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (100,000 | ) | |
| - | |
Gain on extinguishment of debt | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| - | | |
| 189,988 | |
Interest
expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (261,621 | ) | |
| (335,944 | ) |
Income
before income taxes | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 1,030,291 | | |
$ | 3,680,546 | |
Total
Net Sales
The
Company’s total net sales for the year ended October 2, 2022 decreased by $1.12 million, to $10.74 million compared to
$11.86 million for the year ended October 3, 2021. Our Parks’ combined attendance based net sales decreased by $1.05 million or
9.0%, and animal sales decreased by $75,607. On a comparable 52-week basis, our attendance based net sales decreased by $848,862 or 7.4%.
On
a reported basis, our Georgia Park’s attendance based net sales decreased by $881,252 or 11.1%, to $7.07 million, our Missouri
Park’s attendance based net sales decreased by $101,592 or 5.7%, to $1.67 million, and our Texas Park’s attendance based
sales decreased by $62,623 or 3.2%, to $1.88 million.
On
a comparable 52-week basis, our Georgia Park’s attendance based net sales decreased by $748,701 or 9.6%, our Missouri Park’s
attendance based net sales decreased by $76,473 or 4.4%, and our Texas Park’s attendance based sales decreased by $23,688 or 1.2%.
On comparable 52-week basis, paid attendance at our Georgia Park decreased by approximately 17.9%, paid attendance our Missouri Park
decreased by approximately 15.7%, while paid attendance at our Texas Park increased by approximately 2.2%.
Segment
Operating Margin
Our
consolidated segment operating margin decreased $2.36 million, resulting in segment income from operations of $2.30 million for the year
ended October 2, 2022 compared to segment income from operations of $4.66 million for the year ended October 3, 2021. Our Georgia Park’s
segment income was $2.90 million, a decrease of $1.62 million, principally attributable to lower attendance based net sales and lower
animal sales, as well as higher compensation and benefits, advertising, insurance and general operating expenses, partially offset by
higher margins on gift shop and food service sales. Our Missouri Park generated a segment operating loss of $344,404, a net decrease
of $547,001, primarily attributable to lower attendance based net sales, as well as higher special event, advertising, compensation,
depreciation and general operating expenses, partially offset by gains on asset dispositions. Our Texas Park generated a segment loss
of $254,834, an increase of $191,912, primarily attributable lower attendance based net sales, as well as higher advertising, benefits,
insurance, depreciation and general operating expenses, partially offset by higher animal sales, higher margins on gift shop and food
service sales, and lower losses on asset dispositions.
Corporate
Expenses
Corporate
spending increased by $99,810 to $995,946 during the year ended October 2, 2022, primarily due to higher professional fees, compensation
and benefits, travel and insurance expenses.
Legal
Settlement Charge
Effective
August 5, 2022, we agreed to pay $100,000 to two children of a former officer of the Company to settle a complaint alleging we were obligated
to purchase life insurance of at least $540,000 for said officer. The release was obtained, and the full payment was made prior to October
2, 2022. For additional information, see “Note 8. COMMITMENTS
AND CONTINGENCIES” of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.
Other
Income, Net
Other
income, net, was $91,276 for the year ended October 2, 2022, an increase of $25,962, primarily attributable to higher mineral rights
royalty income for our Texas Park.
Gain
on Extinguishment of Debt
During
the year ended October 3, 2021, we received notification the SBA approved both of our PPP loan forgiveness
applications, resulting in a gain on extinguishment of debt totaling $189,988.
Interest
Expense
Interest
expense for the year ended October 2, 2022 was $261,621, a decrease of $74,323, primarily as a result of the lower interest rate associated
with the June 2021 refinancing of our Synovus term loan and scheduled principal payments on our term loans over the trailing 12 month
period, as well as the retirement of the Aggieland Seller Note in June 2021.
Income
Taxes
For
the year ended October 2, 2022, we generated income before income taxes of $1.03 million and recorded a tax provision of $302,800, for
an effective tax rate of approximately 29.4%, which was unfavorably impacted by state income taxes due to operating losses for our Missouri
and Texas Parks. For the year ended October 3, 2021, we generated income before income taxes of $3.68 million and recorded a tax provision
of $882,000, for an effective tax rate of approximately 24.0%, which was favorably impacted by the non-taxable PPP loan forgiveness.
For additional information, see “Note 7. Income
Taxes” of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.
Net
Income and Income Per Share
Our
reported net income for the year ended October 2, 2022 was $727,491 or $0.01 per basic share and per fully diluted share, a decrease
of $2.07 million or $0.03 per basic and fully diluted share, as compared with reported net income of $2.80 million or $0.04 per basic
share and per fully diluted share, for the year ended October 3, 2021.
| |
For the year ended | |
| |
October 2, 2022 | | |
October 3, 2021 | |
Net income | |
$ | 727,491 | | |
$ | 2,798,546 | |
Legal settlement | |
| 100,000 | | |
| - | |
Tax impact - legal settlement | |
| (27,000 | ) | |
| - | |
Gain on extinguishment of debt | |
| - | | |
| (189,988 | ) |
Adjusted net income | |
$ | 800,491 | | |
$ | 2,608,558 | |
As
shown in the table above, several one-time items impacted our year-over-year reported net income comparison. Our 2022 fiscal year
included a legal settlement charge of $100,000. Our 2021 fiscal year included a gain on extinguishment of debt totaling $189,988.
Management believes that adjusted net income, excluding one-time items, should be considered in evaluating the ongoing operating
performance of our business. Excluding the after-tax effect of these items, our 2022 and 2021 fiscal year adjusted net income would
have been $800,491 and $2.61 million, respectively, resulting in a decrease in adjusted net income of $1.81 million. The decrease in
our adjusted net income is attributable to a $1.62 million decrease in the segment income for our Georgia Park, a $547,001 net
decline in the segment income for our Missouri Park, a $191,912 increase in the segment loss for our Texas Park, a $99,810 increase
in Corporate expenses, partially offset by a $74,323 decrease in interest expense, a $25,962 increase in other income and a $552,200
decrease in our adjusted income tax provision.
Financial
Condition, Liquidity and Capital Resources
Financial
Condition and Liquidity
Our
primary sources of liquidity are cash generated by operations and borrowings under our loan agreements. Historically, our slow season
starts after Labor Day in September and runs until Spring Break, which typically begins toward the end of March. The first and second
quarters of our fiscal year have historically generated negative cash flow, requiring us to use cash generated from prior fiscal years,
as well as borrowing on a seasonal basis, to fund operations and prepare our Parks for the busy season during the third and fourth quarters
of our fiscal year. As a result of our improved cash position, during our 2022 and 2021 fiscal years we did not utilize any seasonal
borrowing.
On
June 18, 2021, we entered a new $1.95 million, seven-year term loan (the “2021 Term Loan”) with Synovus Bank (“Synovus”),
at an annual interest rate of 3.75%. The 2021 Term Loan replaced our 2018 borrowing facility with Synovus Bank, which included a term
loan in the original principal amount of $1.60 million at 5.00% per annum and a $350,000 line of credit at 4.75% per annum. After paying
off the balance outstanding on the 2018 Term Loan, the net additional borrowings on the 2021 Term Loan were $930,222 and the line of
credit was not renewed. Combined with available cash, we used the incremental proceeds from the 2021 Term Loan to paydown $1.0 million
of the 2020 Term Loan used to finance our Texas Park acquisition, which has a 5.00% annual interest rate. Overall, we estimate this refinancing
will generate approximately $24,375 in annual interest savings.
Our
working capital was $4.67 million as of October 2, 2022, compared to $5.70 million as of October 3, 2021. The year-over-year decrease
in working capital primarily reflects cash used for capital investments and scheduled term loan payments, partially offset by cash generated
by operating activities during our 2022 fiscal year.
Total
loan debt, including current maturities, as of October 2, 2022 was $4.96 million compared to $5.66 million as of October 3, 2021. The
year-over-year decrease in total loan debt the result scheduled term loan payments during our 2022 fiscal year.
As
of October 2, 2022, we had equity of $15.35 million and total loan debt of $4.96 million, resulting in a debt to equity ratio of 0.32
to 1.0, compared to 0.39 to 1.0 as of October 3, 2021.
Operating
Activities
Net
cash provided by operating activities was $1.54 million for our 2022 fiscal year, compared to $3.31 million, for our 2021 fiscal year,
resulting in a decrease of $1.77 million, principally due to lower net income.
Investing
Activities
Our
2022 fiscal year included $1.84 million of capital improvements, compared to $988,901 spent on capital improvements during our 2021 fiscal
year, representing an increase of $850,490.
During
our 2022 fiscal year, property and equipment investing at our Georgia Park included various animal acquisitions, additions to animal
shelters and exhibits, the addition of a guest party pavilion, enhancements to and expansion of our food service capabilities, improvements
to our gift shop, annual improvements to our drive-through roads, and spending on annual requirements for our rental vehicle fleet. For
our Missouri Park, 2022 fiscal year property and equipment investments included various animal acquisitions, the addition of a new otter
exhibit scheduled to open in our 2023 fiscal year, renovations of various animal shelters and exhibits, ground and electrical improvements
to support a new Christmas Lights display, enhancements to and expansion of our food service capabilities, the addition of playground
equipment in the walkabout section, and the acquisition of various equipment. For our Texas Park, 2022 fiscal year property and equipment
investments included various animal acquisitions, the addition of and enhancements to various animal shelters, the acquisition of several
vehicles for customer rental and related service equipment, other equipment additions, and various improvements focused on introducing
expanded food service operations, expected to fully launch in fiscal 2023.
During
our 2021 fiscal year, property and equipment investing at our Georgia Park included improvements to our drive-through road and other
infrastructure improvements, various improvements to our concession and food service capabilities, improvements and additions to animal
shelters and exhibits, spending on annual requirements for our rental vehicle fleet, and the acquisition of various animals. For our
Missouri Park, 2021 fiscal year property and equipment investments included improvements and additions to animal shelters and exhibits,
the acquisition of various animals, fencing improvements, improvements to our gift shop, and the acquisition of various equipment. For
our Texas Park, 2021 fiscal year property and equipment investments included improvements to animal shelters and exhibits, the acquisition
of various park equipment, drive through road improvements, and the acquisition of various animals.
Financing
Activities
Net
cash used in financing activities was $866,193 for the year ended October 2, 2022, compared to $1.20 million for the year ended October
3, 2021, resulting in a decrease of $333,969.
During
our 2022 fiscal year, cash used in financing activities was for scheduled payments on our term loans, as well as principal payments on
a financing lease obligation prior to its termination in September 2022.
In
June 2021, we entered into the 2021 Term Loan for $1.95 million, using those proceeds to pay off the $1.02 million outstanding balance
of our 2018 Term Loan. Combined with additional cash, we used the net remaining proceeds of the 2021 Term Loan to prepay $1.0 million
against our 2020 Term Loan. In addition, on June 29, 2021, we paid off the $750,000 Aggieland Safari Seller Note. Excluding the $1.0
million prepayment of the 2020 Term Loan, net principal payments against our combined term loans totaled $448,648 for the year ended
October 3, 2021.
Borrowing
Agreements
On
June 18, 2021, through our wholly owned subsidiary Wild Animal – Georgia, we completed a refinancing transaction (the “2021
Refinancing”) with Synovus Bank. The 2021 Refinancing included a term loan in the original principal amount of $1.95 million. 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. We 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$1.64 million as of October 2, 2022.
On
April 27, 2020, through our wholly owned subsidiary Aggieland-Parks Inc., we acquired Aggieland Wild Animal – Texas. This
acquisition was financed with the “2020 Term Loan” from First Financial Bank (“First Financial”) and the
“Aggieland Seller Note ” (as defined below). The 2020 Term Loan in the original principal amount of $5.0 million from
First Financial 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 approximately
$53,213 beginning in May 2021. We paid a total of approximately $62,375 in fees and expenses in connection with the 2020 Term Loan.
On June 30, 2021, the Company used the incremental proceeds of the 2021 Term Loan, combined with additional funds, to paydown $1.0
million against the 2020 Term Loan, which had an outstanding balance of $3.37 million as of October 2, 2022.
The
Aggieland Seller Note represented a deferred portion of the purchase price, had a face value of $750,000, bore no interest, had a maturity
date of June 30, 2021, and was secured by a second priority subordinated lien and security interest in the acquired mineral rights and
the animal inventory. We applied a 2.5% discount rate to determine a fair value of $728,500 for the Aggieland Seller Note as of April
27, 2020 and the resulting $21,500 discount was amortized as interest expense over the 14 month period of the note. On June 29, 2021,
the Company paid off the Aggieland Seller Note.
On
July 11, 2018, through our wholly owned subsidiary Wild Animal – Georgia, we completed a refinancing transaction (the “2018
Refinancing”) with Synovus. The 2018 Refinancing included a term loan in the original principal amount of $1.6 million (the “2018
Term Loan”). The 2018 Term Loan had an interest rate of 5.0% per annum and was payable in monthly payments of approximately $22,672,
based on a seven-year amortization period. The 2018 Term Loan had a maturity date of June 11, 2021, with an option to renew at 5.0% per
annum for an additional 49-month term. The 2018 Term Loan was secured by a security deed on the assets of Wild Animal – Georgia.
We paid a total of approximately $15,680 in fees and expenses in connection with the 2018 Refinancing. The 2021 Term Loan replaced our
2018 Term Loan with Synovus, which had an outstanding balance of $1.02 million, and was paid off with the proceeds of the 2021 Term Loan.
As
a result of the significant negative economic impacts and uncertainties caused by the COVID-19 pandemic, Wild Animal – Georgia
and Wild Animal – Missouri each applied for PPP loans. On April 14, 2020 and April 16, 2020, we received two unsecured PPP loans
totaling $188,087. The PPP was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into
law on March 27, 2020, and is administered by the U.S. Small Business Administration (the “SBA”). The term of the PPP loans
was two years, with an interest rate of 1.0% per annum. All payments were deferred for the first twelve months of these PPP loans, with
accrued interest being added to the principal during the payment deferral period. Under the terms of the CARES Act, some or all the PPP
loan proceeds were eligible to be forgiven, based on use for specified purposes, subject to limitations and ongoing rulemaking by the
SBA. We applied for forgiveness of the full amount of both the Wild Animal – Georgia and Wild Animal – Missouri PPP loans
in March 2021. Effective March 29, 2021 and May 25, 2021, the SBA approved the Forgiveness Applications for Wild Animal – Georgia
and Wild Animal – Missouri, respectively, including forgiveness of accrued interest, resulting in a gain on extinguishment of debt
totaling $189,988 during the year ended October 3, 2021.
Subsequent
Events
Effective
November 14, 2022, Lisa Brady was appointed as the Company’s President and CEO, replacing Dale Van Voorhis, who had been
serving as interim President and CEO since June 1, 2022. Among other duties, Ms. Brady is responsible for
leading the day-to-day operations of the Company, evaluating and recommending strategic initiatives, as well as working with the
management team to implement and execute approved strategic growth initiatives. Mr. Van Voorhis will continue as Chairman of the
Company’s Board of Directors and as a special advisor to Ms. Brady.
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,
revenues, results of operations, liquidity or capital expenditures.
Critical
Accounting Policies and Estimates
Our
discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the United States. Our significant accounting policies are
set forth in “NOTE 2. SIGNIFICANT ACCOUNTNG POLICIES” of the Notes to the Consolidated Financial Statements included in this
Annual Report on Form 10-K, which should be reviewed as they are integral to understanding our results of operations and financial position.
Our critical accounting policies are periodically reviewed with the Audit Committee of the Board of Directors of the Company.
The
preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of any contingent assets and liabilities. On an on-going basis, we evaluate our estimates,
including those related to long-lived assets, revenue recognition, income taxes, and contingencies and litigation. We base our estimates
on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.
Although actual results historically have not deviated significantly from those determined using our estimates, our results of operations
or financial condition could differ, perhaps materially, from these estimates under different assumptions or conditions.
Long-lived
Assets, including Property and Equipment
Property
and equipment are stated at cost. Improvements and replacements are capitalized when they extend the useful life, increase capacity or
improve the efficiency of the assets. Repairs and maintenance are charged to expense as incurred. Depreciation of property and equipment
is provided on the straight-line method and is based on the estimated useful economic lives of the respective assets. We make subjective
assessments as to these useful lives for purposes of determining the amount of depreciation to record annually with respect to our investments
in property and equipment. These assessments have a direct impact on our net income or loss, as a change in the estimated useful economic
lives of our investments in property and equipment would increase or decrease depreciation expense, thereby decreasing or increasing
net income or loss. We review long-lived assets whenever circumstances change such that the recorded value of an asset may not be recoverable
and therefore impaired.
Revenue
Recognition
We recognize revenues when a performance obligation
has been satisfied by transferring control of promised services or products to our guests/customers in an amount that reflects the amount
we have received or expect to receive in exchange for those services or products. 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.
Accounting
for Income Taxes
We
account for income taxes under the asset and liability method, under which deferred tax assets and liabilities are recognized for the
anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax bases using
enacted tax rates in effect for the year in which the differences are expected to reverse. We review our deferred tax assets to determine
whether their value can be realized based upon available evidence. A valuation allowance is established when we believe that it is more
likely than not that some portion of our deferred tax assets will not be realized.
Significant
judgment is required in determining our provision or benefit for income taxes, our deferred tax assets and liabilities, and any valuation
allowance recorded against our net deferred tax assets. We record deferred tax assets, primarily resulting from net operating loss carry-forwards
to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available
evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent
results of operations. In the event we determine it is more likely than not we will not realize our deferred tax assets we establish
a valuation allowance.
Contingencies
We
have various contingencies, as described in “NOTE 8. COMMITMENTS AND CONTINGENCIES” of the Notes to the Consolidated Financial
Statements included in this Annual Report on Form 10-K. We are not aware of any other legal matters involving the Company, however, there
can be no assurance that all proceedings that may currently be brought against us are known by us at this time.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our
financial statements and related notes are set forth at pages F-1 through F-18.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
ITEM
9A. CONTROLS AND PROCEDURES
(a)
Disclosure Controls and Procedures
With
the participation of the principal executive officer and principal financial officer of Parks! America (the “Registrant”),
the Registrant’s management has evaluated the effectiveness of the Registrant’s disclosure controls and procedures, as required
by Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the fiscal year
covered by this Annual Report on Form 10-K. Based upon that evaluation, the Registrant’s principal executive officer and principal
financial officer have concluded that the Registrant’s disclosure controls and procedures were effective as of the end of the fiscal
year covered by this Annual Report on Form 10-K.
(b)
Management’s Annual Report on Internal Control over Financial Reporting
Overview
Management
of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the
supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of
directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with accounting principles generally accepted in the United States and includes
those policies and procedures that:
|
1. |
Pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets
of the Company; |
|
|
|
|
2. |
Provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States and that receipts and expenditures of the Company are being made only
in accordance with authorizations of management and directors of the Company; and |
|
|
|
|
3. |
Provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the financial statements. |
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Even those systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis
by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process.
Therefore, it is possible to design into the process safeguards to reduce this risk.
Management
based its assessment of the Company’s internal control over financial reporting on criteria established in Internal Control
– Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its
assessment, management has concluded that the Company’s disclosure controls and procedures and internal control over financial
reporting are effective as of October 2, 2022.
(c)
Changes in Internal Control over Financial Reporting
There
has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during our most
recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting as of October 2, 2022.
ITEM
9B. OTHER INFORMATION
None
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS
Not applicable
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Our
executive officers and directors are as follows:
Name | |
Age | | |
Title |
Lisa Brady | |
36 | | |
Chief Executive Officer and Director |
Todd R. White | |
60 | | |
Chief Financial Officer and Director |
Mark Whitfield | |
61 | | |
Executive Vice President |
Dale Van Voorhis | |
81 | | |
Chairman of the Board of Directors |
John Gannon | |
65 | | |
Director |
Charles Kohnen | |
55 | | |
Director |
Jeffery Lococo | |
65 | | |
Secretary and Director |
Rick Ruffolo | |
54 | | |
Director |
Lisa
Brady
Lisa
Brady was appointed President and Chief Executive Officer of the Company effective November 14, 2022. Ms. Brady has served as a Director
of the Company since November 2021. Ms. Brady brings more than a decade of experience in the entertainment, leisure, and hospitality
industry with executive-level experience in strategic planning, mergers and acquisitions, investor relations, financial modeling, and
real estate development. For the decade proceeding her joining the Company, Ms. Brady served in a variety of leadership roles of increasing
responsibility with Cedar Fair Entertainment Company including investor relations, strategic planning, M&A activities, resort and
adjacent development and implementation of key growth initiatives. Prior to joining Cedar Fair Entertainment, Ms. Brady was a sell-side
analyst at KeyBank Capital markets, covering the fitness, leisure and hospitality sector. Ms. Brady graduated summa cum laude from Penn
State University and received the John Zahniser Female Scholar Athlete Award.
Todd
R. White
Todd
R. White was appointed the Chief Financial Officer of Parks! America in May 2013 and has served as a Director of the Company since January
2014. Prior to joining the Company, from 1992 through 2011, Mr. White was an executive with The Scotts Miracle-Gro Company in a variety
of roles, and served most recently as its Vice President, Global Controller from 2005 through 2011. Mr. White was with Price Waterhouse
in Cincinnati, Ohio from 1986 to 1992. He received a B.A. in business administration from The Ohio State University and an MBA from the
University of Wisconsin-Madison. He currently serves on the Board of Managers of Spring Brook Farm Cheese, LLC, which is wholly owned
by the Farms for City Kids Foundation.
Mark
Whitfield
Mark
Whitfield joined Parks! America, Inc. and was appointed Executive Vice President in September 2020. Mr. Whitfield’s 43 year amusement
park career began in 1979 at Six Flags Theme Parks, where he was Manager of Games & Attractions, and Merchandise and Director of
Revenue at six of the current and former Six Flags parks. Most recently, Mr. Whitfield was a Senior Director of Revenue at PARC Management
in Jacksonville, and for the last 10 years as General Manager at Palace Entertainment parks in San Dimas, California and in the Wisconsin
Dells. He is very active in the community and served with distinction as an elected Village Trustee in Lake Delton, Wisconsin, President
and Board Chair of the Sauk County, Economic Development Corporation, co-Commissioner of the Baraboo-Dells Airport, as well as serving
on the Board of Directors at the San Dimas Chamber of Commerce and the Wisconsin Dells Visitors & Convention Bureau. Mr. Whitfield
brings extensive experience and consistent positive results in financial/EBITDA growth, employee development, marketing, operations and
in-park revenue. Mr. Whitfield has BA in Communication and Political Science and a Master of Liberal Arts from Houston Baptist University.
Dale
Van Voorhis
Dale
Van Voorhis currently serves as Chairman of the Company’s Board of Directors and as a special advisor to the CEO. Mr. Van Voorhis
served as the Company’s interim President and CEO from June 1, 2022 until November 14, 2022. Mr. Van Voorhis served as the Company’s
CEO from January 2011 through May 2022. Mr. Van Voorhis was re-appointed to our Board of Directors in March 2009 and served as the Company’s
Chief Operating Officer from March 2009 until January 2011. Mr. Van Voorhis previously served the Company in various management and board
of director roles from December 2003 through December 2006. In addition, Mr. Van Voorhis has been the President of Amusement Business
Consultants, Inc., an amusement industry consulting company since its inception in 1994. Mr. Van Voorhis was President and CEO of Funtime
Parks Inc. (“Funtime”) from 1982 until 1994. Funtime consisted of three parks in New York and Ohio, and they generated total
attendance of 2.6 million visitors in 1993. Funtime sold the three parks for $60 million in 1994. Mr. Van Voorhis has over 55 years of
experience in the amusement/entertainment industry.
John
Gannon
John
Gannon has served as a Director of the Company since December 2019 and was appointed Chairman of the Audit Committee in June 2021. Mr.
Gannon has 33 years of experience in the amusement park, water park, and zoo industry. After 14 years of service, Mr. Gannon retired
from the Columbus Zoo and Aquarium in January 2020, most recently serving as its Senior Vice President responsible for managing all for
profit ventures, including its water park, its amusement park section and its golf course. Prior to joining the Columbus Zoo and Aquarium,
Mr. Gannon was with Six Flags, Premier Parks and Funtime Inc. for a combined total of 19 years. During his time with Six Flags, Mr. Gannon
served as Vice President of Finance, with responsibility over the eastern United States and Europe. Mr. Gannon started his career as
a CPA with Ernst & Young. Mr. Gannon is a member of the International Association of Amusement Parks and Attractions (“IAAPA”)
and the World Waterpark Association (WWA). In 2017, Governor John Kasich appointed Mr. Gannon to the Ohio Department of Agriculture Advisory
Board on Amusement Ride Safety. Mr. Gannon earned a Bachelor of Science degree in Accounting from the University of Akron.
Charles
Kohnen
Charles
Kohnen has served as a Director of the Company since October 2010. Mr. Kohnen has a diverse business background including experience
with planning and executing management strategies for turnaround companies. From 1998 to 2006 he was Managing Partner of Kohnen Realty
Co., a real estate and stock investment company that he co-founded, where he was responsible for all aspects of the business including
the coordination of all legal, accounting and buyout matters. Mr. Kohnen has also served as Chairman of a privately held restaurant located
in Cincinnati, Ohio. Mr. Kohnen also serves on the Board of one non-profit organization and earned a Bachelor of Science degree in General
Business from Miami University in Oxford, Ohio.
Jeffery
Lococo
Jeffery
Lococo has served as a Director of the Company since May 2006 and was appointed Secretary of the Company in January 2011. Mr. Lococo
is President of Lococo Company LLC, an industry-leading consulting firm in the amusement and resort industry segment. Mr. Lococo began
his career with the Marriott Corporation theme park division and progressed through middle management to General Manager level in 1990
with Funtime. From 1994 to 2000, Mr. Lococo held various executive vice president level positions with Six Flags Inc. Mr. Lococo joined
Great Wolf Resorts Inc. in March of 2000 as General Manager of Great Wolf Lodge Sandusky, Ohio, and in 2005, was promoted to Corporate
Vice President of Resort Operations for all Great Wolf Lodge Resorts. Mr. Lococo has over 35 years of experience in the theme/water park,
entertainment and hospitality industry.
Rick
Ruffolo
Rick
Ruffolo has served as a Director of the Company since November 2021 and was appointed Chairman of the Strategic Growth Committee in
May 2022. Mr. Ruffolo has over three decades of consumer goods, specialty retail, marketing, innovation, and executive leadership experience.
In his first twenty years, Mr. Ruffolo held brand management roles at P&G, SC Johnson, and Nestle Purina, as well as senior
executive roles leading the brand, marketing, and innovation departments at Yankee Candle and Bath & Body Works where he
received multiple patents including for the multi-billion dollar launch of the Wallflowers home fragrance business. Over the last
eleven years, as CEO & President, Mr. Ruffolo has led the successful turnaround and growth of several private equity-backed
portfolio companies including Sensible Organics, CR Brands, Enviroscent, and Phelps Pet Products. Mr. Ruffolo is a dual citizen of
the U.S. and Italy, was a NCAA Division I athlete and graduated summa cum laude in marketing and business administration from the
University of Dayton, and received his MBA with honors from Washington University in St. Louis.
Involvement
in Certain Legal Proceedings
During
the past ten years none of the following events have occurred with respect to any of our directors or executive officers or any of the
persons nominated by our board to become a director of the Company.
|
1. |
A
petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar
officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner
at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer
at or within two years before the time of such filing; |
|
|
|
|
2. |
Such
person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations
and other minor offenses); |
|
|
|
|
3. |
Such
person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: |
|
i.
|
Acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee
of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice
in connection with such activity; |
|
|
|
|
ii.
|
Engaging
in any type of business practice; or |
|
|
|
|
iii. |
Engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal
or State securities laws or Federal commodities laws; |
|
4. |
Such
person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State
authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described
in paragraph (3)(i) above, or to be associated with persons engaged in any such activity; |
|
|
|
|
5. |
Such
person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State
securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended,
or vacated; |
|
|
|
|
6. |
Such
person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not
been subsequently reversed, suspended or vacated; |
|
|
|
|
7. |
Such
person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged violation of: |
|
i.
|
Any
Federal or State securities or commodities law or regulation; or |
|
|
|
|
ii.
|
Any
law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal
or prohibition order; or |
|
|
|
|
iii. |
Any
law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
|
8. |
Such
person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity
Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or
persons associated with a member. |
Audit
Committee
Our
Audit Committee is responsible for: (1) overseeing the accounting and financial reporting processes of the Company, including the audits
of the Company’s consolidated financial statements; (2) appointing, compensating and overseeing the work of the independent registered
public accounting firm employed by the Company; (3) assisting the Board in its oversight of: (a) the integrity of the Company’s
consolidated financial statements and (b) the independent registered public accounting firm’s qualifications and independence;
and (4) undertaking the other matters required by applicable rules and regulations of the SEC. Our Audit Committee is comprised of three
directors, John Gannon (Chairman), Charles Kohnen, and Dale Van Voorhis. The Board has determined that John Gannon qualifies as an “audit
committee financial expert” as that term is defined in the applicable SEC Rules.
Our
Audit Committee met four times in the twelve-month period ended October 2, 2022.
Compensation
Committee
Our
Compensation Committee determines matters pertaining to the compensation and expense reporting of certain of our executive officers,
and administers our stock option, incentive compensation, and employee stock purchase plans. The Compensation Committee is composed of
three directors, John Gannon, Charles Kohnen, and Jeffery Lococo (Chairman).
Our
Compensation Committee met eight times during the twelve-month period ended October 2, 2022.
Strategic
Growth Committee
Our
Strategic Growth Committee was established effective May 31, 2022 and is responsible for: (1) working with the CEO to lead the development
of a strategic plan and associated periodic updates, and annual goal setting; and (2) leading or assisting in the process of recruitment
and hiring of key Company personnel. The Strategic Growth Committee is composed of three directors, Charles Kohnen, Rick Ruffolo (Chairman)
and Dale Van Voorhis, and Lisa Brady works closely with this Committee
Our
Strategic Growth Committee met eight times during the twelve-month period ended October 2, 2022.
Code
of Ethics
We
have not adopted a Code of Ethics.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than
10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes
in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively.
Executive officers, directors and greater than 10% stockholders are required by the SEC regulations to furnish our Company with copies
of all Section 16(a) reports they file. Based upon a review of those forms and any written representations regarding the need for filing
Forms 5, to the best of the Company’s knowledge, no required Section 16(a) reports were filed late.
ITEM
11. EXECUTIVE COMPENSATION
SUMMARY
COMPENSATION TABLE
The
following table sets forth information regarding compensation paid to our principal executive officer, principal financial officer, and
our other executive officers, for the years ended October 2, 2022, October 3, 2021 and September 27, 2020.
Name
& Principal | |
| | |
Salary | | |
Bonus | | |
Stock
Award | | |
Option
Awards | | |
Non-Equity
Incentive Plan Compensation | | |
Change
in Pension Value and Non-Qualified Deferred Compensation Earnings | | |
All
Other Compensation | | |
Total | |
Position | |
Year | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
Dale
Van Voorhis | |
| 2022 | | |
| 100,000 | | |
| 20,000 | | |
| 10,000 | | |
| | | |
| | | |
| | | |
| 56 | | |
| 130,056 | |
Chief
Executive Officer and | |
| 2021 | | |
| 100,000 | | |
| 25,000 | | |
| 10,000 | | |
| | | |
| | | |
| | | |
| 6 | | |
| 135,006 | |
Director | |
| 2020 | | |
| 93,333 | | |
| 20,000 | | |
| 8,500 | | |
| | | |
| | | |
| | | |
| - | | |
| 121,833 | |
Mark
Whitfield | |
| 2022 | | |
| 142,500 | | |
| 30,000 | | |
| 10,000 | | |
| | | |
| | | |
| | | |
| 3,466 | | |
| 185,966 | |
Executive
Vice President | |
| 2021 | | |
| 135,000 | | |
| - | | |
| - | | |
| | | |
| | | |
| | | |
| 290 | | |
| 135,290 | |
| |
| 2020 | | |
| 2,596 | | |
| 10,000 | | |
| - | | |
| | | |
| | | |
| | | |
| - | | |
| 12,596 | |
Michael
D. Newman (1) | |
| 2022 | | |
| 14,000 | | |
| - | | |
| - | | |
| | | |
| | | |
| | | |
| - | | |
| 14,000 | |
Vice
President of Safari | |
| 2021 | | |
| 108,000 | | |
| 25,000 | | |
| - | | |
| | | |
| | | |
| | | |
| 3,661 | | |
| 136,661 | |
Operations | |
| 2020 | | |
| 102,167 | | |
| 17,000 | | |
| - | | |
| | | |
| | | |
| | | |
| 5,492 | | |
| 124,659 | |
Todd
R. White | |
| 2022 | | |
| 90,000 | | |
| 20,000 | | |
| 10,000 | | |
| | | |
| | | |
| | | |
| 3,466 | | |
| 123,466 | |
Chief
Financial Officer and | |
| 2021 | | |
| 86,250 | | |
| 25,000 | | |
| 10,000 | | |
| | | |
| | | |
| | | |
| 290 | | |
| 121,540 | |
Director | |
| 2020 | | |
| 73,750 | | |
| 20,000 | | |
| 8,500 | | |
| | | |
| | | |
| | | |
| - | | |
| 102,250 | |
(1)
Effective October 31, 2021, Mr. Newman resigned his employment with the Company.
DIRECTOR
COMPENSATION
The
following table sets forth with respect to the named director, compensation information inclusive of equity awards and payments made
in the year ended October 2, 2022.
| |
Fees
Earned or Paid in Cash | | |
Stock
Awards | | |
Option
Awards | | |
Non-Equity
Incentive Plan Compensation | | |
Change
in Pension Value and Non-Qualified Deferred Compensation Earnings | | |
All
Other Compensation | | |
Total | |
Name | |
($) | | |
Shares/($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
Dale Van Voorhis | |
$ | 10,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 10,000 | |
| |
| | | |
$ | - | | |
| | | |
| | | |
| | | |
| | | |
| | |
Lisa Brady | |
| - | | |
| 4,018 | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 2,222 | |
| |
| | | |
$ | (2,222 | ) | |
| | | |
| | | |
| | | |
| | | |
| | |
John Gannon | |
$ | 5,000 | | |
| 13,562 | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 12,500 | |
| |
| | | |
$ | (7,500 | ) | |
| | | |
| | | |
| | | |
| | | |
| | |
Charles Kohnen | |
| - | | |
| 18,083 | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 10,000 | |
| |
| | | |
$ | (10,000 | ) | |
| | | |
| | | |
| | | |
| | | |
| | |
Jeffery Lococo | |
| - | | |
| 27,124 | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 15,000 | |
| |
| | | |
$ | (15,000 | ) | |
| | | |
| | | |
| | | |
| | | |
| | |
Richard Ruffolo | |
| - | | |
| 4,018 | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 2,222 | |
| |
| | | |
$ | (2,222 | ) | |
| | | |
| | | |
| | | |
| | | |
| | |
Todd R. White | |
| - | | |
| 18,083 | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | 10,000 | |
| |
| | | |
$ | (10,000 | ) | |
| | | |
| | | |
| | | |
| | | |
| | |
Since
our 2020 fiscal year, our annual director compensation is based on a dollar award, with each director provided the option of receiving
that compensation in all Shares, all cash or a combination thereof.
Employment
Agreements
Effective
November 14, 2022, the Company and Lisa Brady, the Company’s President and Chief Executive Officer, 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 25% of her base annual compensation, subject to performance milestones. Ms. Brady is also
scheduled to receive awards of shares of Company stock, $50,000 after the first ninety days of employment, and $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 ratably over three year period. Ms. Brady also received a $5,000 sign-on bonus. The Brady Employment Agreement has a term of five
years and entitles Mr. 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.
Effective
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 ($371,667 in aggregate) or (ii) in the event of a change in control of the Company ($431,667 in aggregate),
as well as disability and death payment provisions ($199,667 in aggregate). As of October 2, 2022, the Company has not adopted any deferred
compensation plans.
Effective
May 1, 2018, the Company entered into an employment agreement with Michael D. Newman (the “Newman Employment Agreement”)
to serve as the Company’s Vice President of Safari Operations. Mr. Newman had been the general manager of Wild Animal – Georgia
since February 2011. Pursuant to the Newman Employment Agreement, Mr. Newman received an initial base annual compensation of $95,000
per year, subject to annual review by the Board of Directors. Mr. Newman also received a $5,000 signing bonus. Effective as of May 1,
2020, Mr. Newman’s annual compensation was changed to $108,000. The Newman Employment Agreement had a term of five years. Effective
October 31, 2021, Mr. Newman resigned his employment with the Company.
Stock
Option and Award Plan
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 our 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 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 we did not submit the
Plan for consideration to the Company’s stockholders at the last meeting of stockholders.
ITEM
12. EQUITY COMPENSATION PLAN INFORMATION AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following table sets forth certain information relating to the ownership of common stock by (i) each person known by us to be the beneficial
owner of more than five percent of the outstanding shares of our common stock, (ii) each of our directors, (iii) each of our named executive
officers, and (iv) all of our executive officers and directors as a group. Unless otherwise indicated, the information relates to these
persons, beneficial ownership as of December 9, 2022. Except as may be indicated in the footnotes to the table and subject to applicable
community property laws, each person has the sole voting and investment power with respect to the shares owned. The address of each beneficial
owner is care of Parks! America, Inc., 1300 Oak Grove Road, Pine Mountain, GA 31822, unless otherwise set forth below that person’s
name.
Name | |
Number
of Shares Owned | | |
Percent
(1) | | |
Title |
Lisa
Brady | |
| 4,018 | | |
| 0.0 | % | |
Chief
Executive Officer and Director |
Mark
Whitfield | |
| 18,083 | | |
| 0.0 | % | |
Officer |
Todd
R. White (2) | |
| 1,283,192 | | |
| 1.7 | % | |
Chief
Financial Officer and Director |
Dale
Van Voorhis | |
| 16,012,700 | | |
| 21.3 | % | |
Chairman
of the Board of Directors |
Charles
Kohnen (3) | |
| 22,229,208 | | |
| 29.5 | % | |
Director |
Jeffery
Lococo | |
| 581,883 | | |
| 0.8 | % | |
Secretary
and Director |
John
Gannon | |
| 24,956 | | |
| 0.0 | % | |
Director |
Rick
Ruffolo | |
| 4,018 | | |
| 0.0 | % | |
Director |
Focused
Compounding Fund, LP | |
| 13,097,450 | | |
| 17.4 | % | |
|
1700
Alma Drive, Suite 460 | |
| | | |
| | | |
|
Plano,
TX 75075 | |
| | | |
| | | |
|
|
(1) |
Based
upon shares of common stock issued and outstanding as of December 9, 2022, except that shares of common stock underlying options
and warrants exercisable within 60 days of the date hereof are deemed to be outstanding. |
|
|
|
|
(2) |
410,350
of the Company’s shares owned by Mr. White are held jointly with his spouse. |
|
|
|
|
(3) |
15,468,700
of the Company’s shares owned by Mr. Kohnen are held jointly with his spouse. |
Officers,
directors and their controlled entities, as a group, controlled approximately 53.4% of the outstanding common stock of the Company as
of December 9, 2022.
The
information as to shares beneficially owned has been individually furnished by our respective directors, named executive officers and
other stockholders, or taken from documents filed with the SEC.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Except
as set forth below, none of the following parties has, since our date of incorporation, had any material interest, direct or indirect,
in any transaction with the Company or in any presently proposed transaction that has or will materially affect the Company:
|
● |
Any
of our directors or officers; |
|
● |
Any
person proposed as a nominee for election as a director; |
|
● |
Any
person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding
shares of common stock; |
|
● |
Any
of our promoters; and |
|
● |
Any
relative or spouse of any of the foregoing persons who has the same house as such person. |
Director
Independence
Of
the members of the Company’s Board of Directors, John Gannon, Charles Kohnen, Jeffery Lococo and Rick Ruffolo are considered independent
under the listing standards of the Rules of NASDAQ set forth in the NASDAQ Manual (note, our common shares are not currently listed on
NASDAQ or any other national securities exchange, and this reference is used for definitional purposes only).
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit
Fees
GBQ
Partners LLC was appointed as our independent registered accounting firm effective April 8, 2020.
Fees
billed by our independent registered public accounting firm, for the audit and quarterly reviews of our financial statements and services
that are normally provided by an accountant in connection with statutory and regulatory filings or engagements for the years ended October
2, 2022 and October 3, 2021 were approximately $55,000 and $55,000, respectively.
All
Other Fees
Our
independent registered public accounting firm billed no other fees for the years ended October 2, 2022 and October 3, 2021.
Audit
Committee Pre-Approval Policies and Procedures
The
audit committee is required to pre-approve the audit and non-audit services performed by our independent registered public accounting
firm in order to assure that the provision of such services do not impair the registered public accounting firm’s independence.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
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.
COVID-19
Considerations
In
response to the outbreak of the COVID-19 pandemic, governmental authorities throughout the United States implemented a variety of
containment measures with the objective of slowing the spread of the virus, including travel restrictions, shelter-in-place orders
and business shutdowns. The Company implemented several measures to mitigate the impacts of the pandemic on our business and
financial position. During the initial shutdown period, the Company reduced staffing, applied for and received Paycheck Protection
Program (“PPP”) loans and reduced discretionary spending. In addition, the Company delayed closing the Texas Park
acquisition to renegotiate various terms, primarily focused on reducing the cash requirements of the acquisition in the subsequent
year.
In
early April 2020, the Company’s Georgia and Missouri Parks closed to the public due to shelter-in-place mandates. In addition,
the Company’s Texas Park, was closed to the public for the month prior to its acquisition, due to a shelter-in-place mandate. In
compliance with respective state issued guidelines, each of the Company’s parks reopened in early May 2020. After reopening, attendance
levels increased significantly at each of the Company’s parks for the balance of its 2020 fiscal year, which continued throughout
its 2021 fiscal year in comparison to comparable pre-COVID-19 periods. While attendance based net sales remain higher compared to comparable
pre-COVID-19 periods, the Company experienced a decline in comparable year-over-year attendance based net sales and attendance for the
last 22 weeks of its 2021 fiscal year and for its entire 2022 fiscal year, respectively.
As
the COVID-19 pandemic illustrates, the Company’s future operations are dependent on factors outside of management’s knowledge
or control, including the duration and severity of this pandemic or similar public health risks. Although we have experienced attendance
gains and strong cash flows subsequent to reopening our parks after the initial closures at the beginning of the pandemic, there may
be longer-term negative impacts to the Company’s business, results of operations and cash flows, and financial condition as a result
of the COVID-19 pandemic. These negative impacts may include changes in customer behavior and preferences, increases in operating expenses
to meet consumer expectations and perceptions, limitations in our ability to recruit and maintain staffing, as well as increasing wages
required retain and recruit staff. There is also the potential for attendance levels at our parks to moderate or decline as alternative
entertainment venues are now open and consumers have broader travel and entertainment options. There is also the possibility that one,
or a combination of these risk factors, may a material negative impact on the Company’s business, results of operations, cash flows,
and financial condition.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation: The Company’s consolidated financial statements are presented in accordance with accounting
principles generally accepted in the United States of America (“GAAP”). 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 Company’s financial position and results of its operations for the
periods set forth herein.
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 inter-company accounts
and transactions have been eliminated in consolidation.
Accounting
Method: The Company recognizes income and expenses based on the accrual method of accounting.
Estimates
and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with GAAP. Those estimates
and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Fiscal
Year End: The Company’s fiscal year-end is the Sunday closest to September 30, and its quarterly close dates are also determined
by the Sunday closest to the end of each quarterly reporting period. For the 2022 fiscal year, October 2 was the closest Sunday, and
for the 2021 fiscal year, October 3 was the closest Sunday. The 2022 fiscal year was comprised of 52-weeks, while the 2021 fiscal year
was comprised of 53-weeks. This fiscal calendar aligns the Company’s fiscal periods closely with the seasonality of its business.
The high season typically ends after the Labor Day holiday weekend. The period from October through early March is geared towards maintenance
and preparation for the next busy season, which typically begins at Spring Break and runs through Labor Day.
Business
Combinations: The Company accounts for acquisitions in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 805, Business Combinations. In purchase accounting, identifiable assets
acquired, and liabilities assumed, are recognized at their estimated fair values at the acquisition date, and any remaining purchase
price is recorded as goodwill. In determining the fair values of assets acquired and liabilities assumed, the Company makes significant
estimates and assumptions, particularly with respect to long-lived tangible and intangible assets. Critical estimates used in valuing
tangible and intangible assets include, but are not limited to, future expected cash flows, discount rates, market prices and asset lives.
Although estimates of fair value are based upon assumptions believed to be reasonable, actual results may differ.
Financial
and Concentrations Risk: The Company does not have any concentration or related financial credit risks. The Company maintains
its cash in bank deposit accounts, which at times may exceed federally insured limits.
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 primarily a payment upfront business; therefore, the Company typically carries little
or no accounts receivable. The Company had accounts receivable of $4,405 and $4,469 as of October 2, 2022 and October 3, 2021, respectively.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Inventory:
Inventory consists of gift shop items, animal food, and concession and park supplies, and is stated at the lower of cost or net
realizable value. Cost is determined on the first-in, first-out method. The gross profit method is used to determine the change in gift
shop inventory for interim periods. Inventories are reviewed and reconciled annually because inventory levels turn over rapidly. The
Company had inventory of $541,986 and $314,103 as of October 2, 2022 and October 3, 2021, 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
| |
| | | |
| | | |
|
| |
October 2, 2022 | | |
October 3, 2021 | | |
Depreciable Lives |
Land | |
$ | 6,389,470 | | |
$ | 6,389,470 | | |
not applicable |
Mineral rights | |
| 276,000 | | |
| 276,000 | | |
25 years |
Ground improvements | |
| 2,797,694 | | |
| 2,637,050 | | |
7-25 years |
Buildings and structures | |
| 3,922,106 | | |
| 3,827,827 | | |
10-39 years |
Animal shelters and habitats | |
| 2,479,832 | | |
| 2,282,575 | | |
10-39 years |
Park animals | |
| 1,247,777 | | |
| 1,143,133 | | |
5-25 years |
Equipment - concession and related | |
| 464,988 | | |
| 349,849 | | |
3-15 years |
Equipment and vehicles - yard and field | |
| 766,149 | | |
| 607,347 | | |
3-15 years |
Vehicles - buses and rental | |
| 267,483 | | |
| 213,951 | | |
3-5 years |
Rides and entertainment | |
| 106,247 | | |
| 228,009 | | |
5-7 years |
Furniture and fixtures | |
| 28,694 | | |
| 28,694 | | |
5-10 years |
Projects in process | |
| 808,526 | | |
| 126,755 | | |
|
Property and equipment, cost | |
| 19,554,966 | | |
| 18,110,660 | | |
|
Less accumulated depreciation | |
| (4,743,224 | ) | |
| (4,303,792 | ) | |
|
Property and equipment, net | |
$ | 14,811,742 | | |
$ | 13,806,868 | | |
|
Depreciation
expense for the years ended October 2, 2022 and October 3, 2021 totaled $766,859 and $704,016, 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 years ended October
2, 2022 and October 3, 2021 totaled $16,128 and $0, 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:
SCHEDULE OF OTHER CURRENT LIABILITIES
| |
October 2, 2022 | | |
October 3, 2021 | |
Deferred revenue | |
$ | 193,912 | | |
$ | 242,318 | |
Accrued wages and payroll taxes | |
| 122,265 | | |
| 81,160 | |
Accrued sales taxes | |
| 49,123 | | |
| 64,396 | |
Accrued property taxes | |
| 46,814 | | |
| 47,517 | |
Other accrued liabilities | |
| 109,758 | | |
| 95,956 | |
Other current liabilities | |
$ | 521,872 | | |
$ | 531,347 | |
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue
Recognition: The Company recognizes revenues in accordance with ASC 606, Revenues from Contracts with Customers. Under
ASC 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the
consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements
that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract
with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocation the
transaction price to the performance obligation in the contract; and (5) recognize revenue when (or as) the Company satisfies the performance
obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is
entitled to in exchange for the goods or services it transfers to the customer.
Revenues from park admission fees are recognized at
the point in time control transfers to the customer, which is generally when the customer accepts access to the park and the Company is
entitled to payment. Park admission 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 $193,912 and $242,318 as of October 2, 2022 and
October 3, 2021, 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 years ended October 2, 2022 and October 3, 2021 totaled $1,238,618 and $977,562, respectively.
Leases:
The Company determines if an arrangement contains a lease at inception and accounts for all leases in accordance with ASC 842,
Leases. If an arrangement contains a lease, the Company performs a classification test to determine if the lease is an operating
lease or a financing lease. Right of use assets represent the right to use an underlying asset for the lease term and lease liabilities
represent the obligation to make lease payments arising from the lease. Right of use assets are valued at the initial measurement of
the lease liability, plus any indirect costs or rent prepayments, and reduced by any lease incentives and any deferred lease payments.
Right of use assets are amortized over the lease term. Lease liabilities are recognized on the commencement date of the lease based on
the present value of the future lease payments over the lease term. The discount rate used to determine the present value of the future
lease payments is the Company’s incremental borrowing rate, unless the rate implicit in the lease is readily determinable. Lease
terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Lease expense is recognized on a straight-line basis over the life of the lease, unless management believes there is an alternative systematic
basis which better represents the pattern which the Company will consume the economic benefits thereof and is included within general
and administrative expenses. As a practical expedient, a relief provided in the accounting standard to simplify compliance, 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.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In
October 2021, the Company entered 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. Prior to termination of the lease, during the fiscal year ended October 2, 2022 the Company recognized right of use asset
amortization and interest expense related to this lease of $154,831 and $6,032, respectively.
Paycheck
Protection Program Loan Accounting Policy: Currently, there is no authoritative guidance under GAAP that addresses accounting
and reporting by a for-profit business entity that receives forgivable debt from a government entity. Accordingly, management has elected
to recognize forgivable debt received from a government entity as debt until debt extinguishment occurs when the Company is legally released
from being the obligor. Upon legal release as obligor, the Company recognized the forgiven amount as income.
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 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 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 guidance issued by the 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 October 2, 2022 or October 3, 2021.
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.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. 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 $1.64 million as of October 2, 2022.
On
July 11, 2018, the Company, through its wholly owned subsidiary Wild Animal – Georgia, completed a refinancing transaction (the
“2018 Refinancing”) with Synovus. The 2018 Refinancing included a term loan in the original principal amount of $1.6 million
(the “2018 Term Loan”). The 2018 Term Loan had an interest rate of 5.0% per annum and was payable in monthly payments of
approximately $22,672, based on a seven-year amortization period. The 2018 Term Loan had a maturity date of June 11, 2021, with an option
to renew at 5.0% per annum for an additional 49-month term. The 2018 Term Loan was secured by a security deed on the assets of Wild Animal
– Georgia. The Company paid a total of approximately $15,680 in fees and expenses in connection with the 2018 Refinancing. The
2021 Term Loan replaced the Company’s 2018 Term Loan with Synovus, which had an outstanding balance of $1.02 million, which was
paid off with the proceeds of the 2021 Term Loan.
On
April 27, 2020, the Company, through its wholly owned subsidiary Aggieland-Parks, Inc., acquired Aggieland Wild Animal – Texas.
The purchase price of $7.10 million was financed with a $5.0 million loan (the “2020 Term Loan”) from First Financial Bank,
N.A. (“First Financial”), a seller note with a face value of $750,000 (the “Aggieland Seller Note”), and cash
totaling $1.38 million. The 2020 Term Loan is secured by substantially all the Aggieland Wild Animal – Texas assets, as well as
guarantees from the Company and its
subsidiaries.
The 2020 Term Loan bears interest at a rate of 5.0% per annum, has a maturity date of April 27, 2031, and required interest only monthly
payments through April 2021. The 2020 Term Loan requires monthly payments of $53,213 beginning in May 2021. The Company paid a total
of approximately $62,375 in fees and expenses in connection with the 2020 Term Loan. On June 30, 2021, the Company used the incremental
proceeds of the 2021 Term Loan, combined with additional funds, to paydown $1.0 million against the 2020 Term Loan, which had an outstanding
balance of $3.37 million as of October 2, 2022. The Company was in compliance with the liquidity and annual debt coverage ratio financial
covenants of the 2020 Term Loan as of October 3, 2021 and October 2, 2022, and for the years then ended.
The
Aggieland Seller Note represented a deferred portion of the Aggieland Wild Animal – Texas purchase price, had a face value of $750,000,
bore no interest, matured on June 30, 2021, and was secured by a second priority subordinated lien and security interest in the acquired
mineral rights and the animal inventory. The Company applied a 2.5% discount rate to determine a fair value of $728,500 for the Aggieland
Seller Note as of April 27, 2020, with the resulting $21,500 discount amortized as interest expense over the period of the Aggieland
Seller Note. On June 29, 2021, the Company paid off the Aggieland Seller Note.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
NOTE
3. LONG-TERM DEBT (CONTINUED)
As
a result of the initial negative economic impacts and uncertainties caused by the COVID-19 pandemic, Wild Animal – Georgia and
Wild Animal – Missouri each applied for PPP loans. On April 14, 2020 and April 16,
2020, the Company received two unsecured PPP loans totaling $188,087. The PPP was established under the Coronavirus Aid, Relief, and
Economic Security (CARES) Act, which was signed into law on March 27, 2020, and is administered by the U.S. Small Business Administration
(the “SBA”). The term of the PPP loans was two years, with an interest rate of 1.0% per annum. All payments were deferred
for the first twelve months of these PPP loans, with accrued interest being added to the principal during the payment deferral period.
Under the terms of the CARES Act, some or all the PPP loan proceeds were eligible to be forgiven, based on use for specified purposes,
subject to limitations and ongoing rulemaking by the SBA. The Company applied for forgiveness of the full amount of both the Wild Animal
– Georgia and Wild Animal – Missouri PPP loans in March 2021. Effective March 29, 2021 and May 25, 2021 the SBA approved
the Forgiveness Applications for Wild Animal – Georgia and Wild Animal – Missouri, respectively, including forgiveness of
accrued interest, resulting in a gain on extinguishment of debt totaling $189,988, during the year ended October 3, 2021.
Interest
expense of $261,621
and $335,944 for
the years ended October 2, 2022 and October 3, 2021, respectively, includes $5,888
and $16,366,
respectively, of debt financing costs amortization in each period. Interest expense for the year ended October 2, 2022 also includes
financial lease cost amortization of $6,032. Interest expense for the year ended October 3, 2021 also includes $13,985
of loan discount amortization.
The
following table represents the aggregate of the Company’s outstanding long-term debt:
SCHEDULE OF DEBT
| |
| | | |
| | |
| |
As of | |
| |
October 2, 2022 | | |
October 3, 2021 | |
Loan principal outstanding | |
$ | 5,010,136 | | |
$ | 5,715,466 | |
Less: unamortized debt financing costs | |
| (49,915 | ) | |
| (55,803 | ) |
Gross long-term debt | |
| 4,960,221 | | |
| 5,659,663 | |
Less current portion of long-term debt, net of unamortized costs and
discount | |
| (732,779 | ) | |
| (699,483 | ) |
Long-term debt | |
$ | 4,227,442 | | |
$ | 4,960,180 | |
As
of October 2, 2022, the scheduled future principal maturities, by fiscal year, are as follows:
SCHEDULE
OF MATURITIES OF LONG-TERM DEBT
| | |
| | |
2023 | | |
$ | 738,666 | |
2024 | | |
| 773,563 | |
2025 | | |
| 810,139 | |
2026 | | |
| 848,474 | |
2027 | | |
| 888,656 | |
thereafter | | |
| 950,638 | |
Total | | |
$ | 5,010,136 | |
NOTE
4. LINE OF CREDIT
July
11, 2018, the Company, through its wholly owned subsidiary Wild Animal – Georgia, completed the 2018 Refinancing with Synovus.
The 2018 Refinancing included a line of credit of up to $350,000 (the “2018 LOC”). The 2018 LOC was scheduled to mature July
11, 2021, with an option to renew for an additional three-year term. On June 18, 2021, the Company, through its wholly owned subsidiary
Wild Animal – Georgia, completed the 2021 Refinancing with Synovus, which in part replaced the 2018 LOC. The Company elected to
not renew the 2018 LOC, which had never been utilized.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
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
December 13, 2021, the Company declared its annual compensation award to seven directors for their service on the Board of Directors.
Five directors were awarded $10,000 each, two new directors were awarded $2,222 each, and two directors received a total of $7,500 for
serving as committee chairpersons and as a non-employee officer, with such compensation to be paid all in shares of the Company’s
common stock, all in cash or a combination thereof, at each director’s election. Five directors elected to receive all shares,
one director elected to receive 60% in shares and 40% in cash, and one director elected all cash. Based on the closing stock price of
$0.553 per share on December 13, 2021, a total of 84,888 shares were distributed on February 21, 2022. The total compensation award cost
of $61,944 was reported as an expense in the three month period ended January 2, 2022.
On
December 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.
On
December 18, 2020, the Company declared its annual compensation award to six directors for their service on the Board of Directors.
Each director was awarded $10,000, with such compensation to be paid all in shares of the Company’s common stock, all in cash or
a combination thereof, at each director’s election. Four directors elected to receive all shares, one director elected to receive
50% in shares and 50% in cash, and one director elected all cash. Based on the closing stock price of $0.4388 per share on December 18,
2020, a total of 102,550 shares were distributed on January 11, 2021. The total compensation award cost of $60,000 was reported as an
expense in the three month period ended January 3, 2021.
Officers,
directors and their controlled entities own approximately 53.4% of the outstanding common stock of the Company as of October 2, 2022.
NOTE
6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Employment
Agreements:
Effective
November 14, 2022, the Company and Lisa Brady, the Company’s President and Chief Executive Officer, 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 25% of her base annual compensation, subject to performance milestones. Ms. Brady is also
scheduled to receive awards of shares of Company stock, $50,000 after the first ninety days of employment, and $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 ratably over three year period. Ms. Brady also received a $5,000 sign-on bonus. The Brady Employment Agreement has a term of five
years and entitles Mr. 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.
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.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
NOTE
6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
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 ($371,667 in aggregate) or (ii) in the event of a change in control of the Company ($431,667 in aggregate),
as well as disability and death payment provisions ($199,667 in aggregate). As of October 2, 2022, the Company has not adopted any deferred
compensation plans.
Effective
as of May 1, 2018, the Company entered into an employment agreement with Michael D. Newman (the “Newman Employment Agreement”)
to serve as the Company’s Vice President of Safari Operations. Mr. Newman had been the general manager of Wild Animal – Georgia
since February 2011. Pursuant to the Newman Employment Agreement, Mr. Newman received an initial base annual compensation of $95,000
per year, subject to annual review by the Board of Directors. Mr. Newman also received a $5,000 signing bonus. Effective as of May 1,
2020, Mr. Newman’s annual compensation was changed to $108,000. The Newman Employment Agreement had a term of five years. Effective
October 31, 2021, Mr. Newman resigned his employment with the Company.
NOTE
7. INCOME TAXES
For
the years ended October 2, 2022 and October 3, 2021, the Company reported a pre-tax profit of $ million and $ million, respectively.
The Company’s provision for income taxes consists of the following:
SCHEDULE OF PROVISION FOR INCOME TAX
| |
October 2, 2021 | | |
October 3, 2021 | |
| |
For the year ended | |
| |
October 2, 2022 | | |
October 3, 2021 | |
Federal | |
$ | 198,400 | | |
$ | 688,300 | |
State | |
| 104,400 | | |
| 193,700 | |
Total tax provision | |
$ | 302,800 | | |
$ | 882,000 | |
The
Company’s provision for Federal income tax consists of the following:
SCHEDULE OF COMPONENTS OF FEDERAL INCOME TAX
| |
October 2, 2021 | | |
October 3, 2021 | |
| |
For the year ended | |
| |
October 2, 2022 | | |
October 3, 2021 | |
Provision at statutory rate | |
$ | 216,361 | | |
$ | 772,915 | |
State tax benefit | |
| (21,924 | ) | |
| (40,677 | ) |
PPP loan forgiveness benefit | |
| - | | |
| (39,897 | ) |
Other | |
| 3,963 | | |
| (4,041 | ) |
Net provision for Federal income taxes | |
$ | 198,400 | | |
$ | 688,300 | |
For
the fiscal years ended October 2, 2022 and October 3, 2021, the Company recorded a provision for State of Georgia income taxes of $104,400
and $193,700, respectively.
NOTE
8. COMMITMENTS AND CONTINGENCIES
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 August 15, 2022. Effective August 5, 2022,
the Company agreed to pay the plaintiffs $100,000 to settle this Compliant and obtain a full release for any related complaints. The
release was obtained, and the full payment was made prior to October 2, 2022.
Except
as noted above, the Company is not a party to any pending legal proceeding, nor is its property the subject of a pending legal proceeding,
that is not in the ordinary course of business or otherwise material to the financial condition of its business. None of the Company’s
directors, officers or affiliates is involved in a proceeding adverse to its business or has a material interest adverse to its business.
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
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 corporate management for review and as a basis for decision-making. The primary performance measures used to allocate resources are
Park earnings before interest and tax expense, and free cash flow.
The
following tables present financial information regarding each of the Company’s reportable segments:
SCHEDULE OF REVENUE BY
REPORTING SEGMENTS
| |
October 2, 2022 | | |
October 3, 2021 | |
| |
For the year ended | |
| |
October 2, 2022 | | |
October 3, 2021 | |
Total net sales: | |
| | | |
| | |
Georgia | |
$ | 7,086,232 | | |
$ | 8,067,808 | |
Missouri | |
| 1,691,602 | | |
| 1,792,112 | |
Texas | |
| 1,963,583 | | |
| 2,002,571 | |
Consolidated | |
$ | 10,741,417 | | |
$ | 11,862,491 | |
Total net sales | |
$ | 10,741,417 | | |
$ | 11,862,491 | |
| |
| | | |
| | |
Income (loss) before income taxes: | |
| | | |
| | |
Other income, net | |
| 91,276 | | |
| 65,314 | |
Legal settlement | |
| (100,000 | ) | |
| - | |
Gain on extinguishment of debt | |
| - | | |
| 189,988 | |
Interest expense | |
| (261,621 | ) | |
| (335,944 | ) |
| |
October 2, 2022 | | |
October 3, 2021 | |
Depreciation and amortization: | |
| | | |
| | |
Georgia | |
$ | 289,961 | | |
$ | 273,900 | |
Missouri | |
| 253,182 | | |
| 223,338 | |
Texas | |
| 238,744 | | |
| 206,778 | |
Corporate | |
| 1,100 | | |
| - | |
Consolidated | |
$ | 782,987 | | |
$ | 704,016 | |
Depreciation
and amortization | |
$ | 782,987 | | |
$ | 704,016 | |
| |
| | | |
| | |
Capital expenditures | |
| | | |
| | |
Georgia | |
$ | 695,285 | | |
$ | 513,676 | |
Missouri | |
| 601,842 | | |
| 251,236 | |
Texas | |
| 542,264 | | |
| 223,989 | |
Consolidated | |
$ | 1,839,391 | | |
$ | 988,901 | |
Capital
expenditures | |
$ | 1,839,391 | | |
$ | 988,901 | |
| |
October 2, 2022 | | |
October 3, 2021 | |
| |
As of | |
| |
October 2, 2022 | | |
October 3, 2021 | |
Total assets: | |
| | | |
| | |
Georgia | |
$ | 9,402,877 | | |
$ | 9,785,396 | |
Missouri | |
| 3,468,730 | | |
| 3,388,808 | |
Texas | |
| 8,074,421 | | |
| 7,554,842 | |
Corporate | |
| 157,578 | | |
| 252,930 | |
Consolidated | |
$ | 21,103,606 | | |
$ | 20,981,976 | |
Total assets | |
$ | 21,103,606 | | |
$ | 20,981,976 | |
PARKS!
AMERICA, INC. and SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
October
2, 2022
NOTE
10. FAIR VALUE MEASUREMENTS
As
of October 2, 2022 and October 3, 2021, the fair value of our long-term debt was $4.61 million and $5.72 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 October 2, 2022 to the date these financial statements were issued and has determined
that no material subsequent events have occurred from the date of these consolidated financial statements, except as follows: on November
14, 2022, the Company entered into an employment agreement with Lisa Brady to serve as its President and CEO. For additional information,
see “NOTE 6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES” herein.