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Item 7. Management’s Discussion and Analysis

2021-12-09 compared with 2020-12-15 · 380 added, 194 removed, 18 unchanged (97% of the section changed)

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 year ended September 27, 2020 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.

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”).

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 year ended October 3, 2021 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.

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.

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

On April 27, 2020, we acquired substantially all the assets of Aggieland Safari LLC and related entities (“Aggieland

For additional information see “NOTE 3.

ACQUISITION” of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information on this matter.

Our Parks are open year round but experience increased seasonal attendance, typically beginning in the latter half of March through early September.

As a result, our combined third and fourth quarter net sales have historically ranged from 68% to 72% of our annual net sales.

The table below outlines our annual net sales, reported and adjusted income before income taxes, and net cash provided by operating activities for the last five fiscal years.

During the past five fiscal years, our Georgia Park in particular has benefitted from several 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 close the Aggieland Safari acquisition.

Total net sales

Reported income before income taxes

ACQUISITION” of the Notes to the Consolidated Financial Statements

included in this Annual Report on Form 10-K for additional information on this matter.

Parks are open year round but experience increased seasonal attendance, typically beginning in the latter half of March through early

As a result, our combined third and fourth quarter net sales have historically ranged from 68% to 72% of our annual attendance

based net sales.

For our 2021 fiscal year, the first full year including our Texas Park, combined third and fourth quarter net sales

were approximately 60% of our annual attendance based net sales

table below outlines our annual net sales, reported and adjusted income before income taxes, and net cash provided by operating activities

for the last five fiscal years.

During the past five fiscal years, our Georgia Park has benefitted from several 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.

income before income taxes

of total net sales

Adjusted income before income taxes (*)

income before income taxes (*)

of total net sales

Net cash provided by operating activities

of total net sales

* - Excludes $24,373 of tornado related insurance proceeds in 2020, $80,444 of tornado damage asset write-offs and costs in 2019, $130,532 of deferred financing costs write-offs in 2018, a $80,000 settlement gain in 2017, and judgment award charges of $68,088 in 2016.

The rapid acceleration of the COVID-19 pandemic in the United States occurred at the beginning of our 2020 fiscal year annual high season.

cash provided by operating activities

of total net sales

- Excludes $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, $130,532 of deferred financing costs write-offs in 2018, and a $80,000 settlement gain in

rapid acceleration of the COVID-19 pandemic in the United States occurred at the beginning of our 2020 fiscal year annual high season.

We began to see a significant reduction in paid attendance at our Georgia and Missouri Parks beginning the week of March 9, 2020.

Effective April 3, 2020, both Parks were closed to the public as a result of shelter-in-place mandates in Georgia and Missouri.

Prior to our acquisition of our Texas Park, its operations were also closed to the public for the majority of April 2020 due to a shelter-in-place mandate in Texas.

In compliance with respective state issued guidelines, our Georgia Park and our Texas Park each reopened on May 1, 2020, and our Missouri Park reopened on May 4, 2020.

Attendance levels have been strong at each of our three Parks from mid-May through the end of our 2020 fiscal year end, which has continued to the early part of our 2021 fiscal year.

We believe the strong year-over-year attendance growth each of our Parks experienced during the last five months of our 2020 fiscal year is a reflection of the principally outdoor nature of the family-friendly, wild animal education and entertainment experience provided at each of our Parks.

The experience offered at each of our Parks is particularly attractive during the COVID-19 pandemic as potential guests are seeking outdoor entertainment options.

While we have seen many repeat customers since reopening in May 2020, we have also experienced an increase in first time visitors seeking an outdoor entertainment alternative.

We believe this has increased the local and regional awareness for each of our Parks, which we believe will have longer-term, positive ramifications for our business.

However, there is also the possibility of longer-term negative impacts to our business, results of operations and cash flows, and financial condition as a result of the COVID-19 pandemic.

These negative impacts include changes in customer behavior and preferences causing significant volatility or reductions in attendance at one or more of our Parks, increases in operating expenses to comply with additional hygiene-related protocols, limitations in our ability to recruit and maintain staffing, limitations on our employees ability to work and travel, and significant changes in the economic or political conditions in the areas our Parks are located.

Despite our efforts to manage these impacts, the ultimate impact may be material, and will depend on a number of factors beyond our control, including the duration and severity of the COVID-19 pandemic and actions by governmental authorities taken to contain its spread and mitigate its public health effects.

There is also the potential for our attendance levels to decline after other attractions have reopened to full capacity once the COVID-19 pandemic has run its course or vaccines are in use and made widely available.

We are committed to leveraging the strong operating model we have established at our Georgia Park, with a focus on increasing attendance, as well as increasing the average revenue generated per guest visit via concession and gift shop revenues.

Among our highest priorities over the next several years is continuing the integration our Texas Park.

Because 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 during the latter half of our 2020 fiscal year.

We plan on leveraging the increased exposure of this facility to continue to build on this recent success.

Our business plan includes expansion via the acquisition of additional local or regional theme parks and attractions, if attractive opportunities arise.

We believe acquisitions, if any, should not unnecessarily encumber the Company with additional debt that cannot be justified by current operations.

April 3, 2020, both Parks were closed as a result of shelter-in-place mandates in Georgia and Missouri.

Also note that prior to our acquisition

of our Texas Park, its operations were suspended for the majority of April 2020 due to a shelter-in-place mandate in Texas.

compliance with respective state issued guidelines, our Georgia Park and our Texas Park each reopened on May 1, 2020, and our Missouri

Park reopened on May 4, 2020.

Attendance levels were strong at each of our three Parks for the balance of our 2020 fiscal year, which

continued throughout our 2021 fiscal year, compared to pre-COVID 19 comparable periods.

While attendance based net sales remained strong

versus the comparable pre-COVID-19 period, we experienced a year-over-year decline in attendance based net sales and attendance during

the final 22 weeks of our 2021 fiscal year versus the comparable period of our 2020 fiscal year.

We believe the increased attendance

levels each of our Parks has experienced since reopening in early May 2020 reflects the principally outdoor nature of the family-friendly,

wild animal education and entertainment experience provided at each of our Parks.

The experience offered at each of our Parks is particularly

attractive during the COVID-19 pandemic as potential guests are seeking outdoor entertainment options.

While we have seen many repeat

customers since reopening in early May 2020, we also experienced an increase in first time visitors seeking an outdoor entertainment

We believe this has increased the local and regional awareness for each of our Parks, which we believe will have positive

longer-term ramifications for our business.

there remains the possibility of longer-term negative impacts to our business, results of operations and cash flows, and financial condition,

as a result of the COVID-19 pandemic.

These negative impacts may include changes in customer behavior and preferences causing significant

volatility or reductions in attendance at one or more of our Parks, increases in operating expenses to comply with additional hygiene-related

protocols, limitations in our ability to recruit and maintain staffing, limitations on our employees ability to work and travel, and

significant changes in the economic or political conditions in the areas our Parks are located.

Despite our efforts to manage these potential

impacts, the ultimate impact may be material, and will depend on a number of factors beyond our control, including the duration and severity

of the COVID-19 pandemic, the outbreak of new variants of the COVID-19 virus, and actions by governmental authorities taken to contain

its spread and mitigate its public health effects.

There is also the potential for attendance levels at our Parks to moderate or decline

as alternative entertainment venues reopen to full capacity once the COVID-19 pandemic has run its course or vaccines are widely adopted

and proven effective.

are committed to leveraging the strong operating model we have established at our Georgia Park, with a focus on increasing attendance,

as well as increasing the average revenue generated per guest visit via concession and gift shop revenues.

Among our highest priorities

over the next several years is continuing the integration of our Texas Park.

As our Texas Park first opened to the public in May 2019,

we believe there remains tremendous potential to increase attendance by increasing the local and regional awareness of this facility

via advertising and promotion.

We are pleased with the expanded attendance at our Missouri Park since it reopened in May 2020 and plan

on leveraging the increased exposure of this facility to continue to build on this recent success.

our 2021 fiscal year, we engaged an experienced amusement industry consulting firm to assist us in developing a master plan for our Georgia

Our 2022 fiscal year capital plan includes the first major project within that master plan, an impressive giraffe exhibit.

exhibit will be a new showcase for our Georgia Park, allowing our guests to encounter our giraffes regardless of weather conditions or

outside temperatures.

In aggregate, our 2022 fiscal year capital investment plan involves nearly $3.0 million of improvements across

all three of our parks.

This significant increase in capital investment spending will be fully funded from our existing cash, and

demonstrates our commitment to building for long-term, sustainable growth.

long-term business plan includes expansion via the acquisition of additional local or regional theme parks and attractions, if attractive

opportunities arise.

We believe acquisitions, if any, should not unnecessarily encumber the Company with additional debt that cannot

be justified by current operations.

We may also pursue contract management opportunities for themed attractions owned by third parties.

By using a combination of equity, debt and other financing options, we intend to carefully monitor stockholder value in conjunction with the pursuit of growth.

Strong growth in our annual operating cash flow over the past five to six years has provided us with incremental cash flow, and provided us with the financial strength to complete the Aggieland Safari acquisition.

However, our current size and operating model leave us little room for error.

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.

growth in our annual operating cash flow over the past five to six fiscal years has provided us with incremental cash flow, and provided

us with the financial strength to complete the Aggieland Safari acquisition.

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 September 27, 2020 as Compared to the Year Ended September 29, 2019

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.

The following table shows our consolidated and segment operating results for the years ended September 27, 2020 and September 29, 2019:

Missouri Park

Total net sales

Segment income (loss) from operations

Segment operating margin %

Corporate expenses

Other income, net

Interest expense

Income before income taxes

Total Net Sales

The Company’s total net sales for the year ended September 27, 2020 increased by $3.32 million or 53.7%, to $9.51 million versus $6.18 million for the year ended September 29, 2019.

Our Parks’ combined attendance based net sales increased by $3.34 million or 54.7%, while animal sales decreased by $13,701.

Excluding our Texas Park, acquired on April 27, 2020, our attendance based net sales increased by $2.17 million or 35.5%, while animal sales decreased by $23,640.

Each of our Parks was closed to the public during the majority of April 2020 as a result of COVID-19 pandemic related state level shelter-in-place mandates.

Subsequent to reopening in early May 2020, each Park experienced strong attendance level growth versus the prior year.

Our Georgia Park’s attendance based net sales increased by $1.68 million or 32.4%, to $6.84 million, while animal sales decreased by $24,652 to $36,856.

Our Missouri Park’s attendance based net sales increased by $492,806 or 52.6%, to $1.43 million, and animal sales increased by $1,012 to $19,483.

Subsequent to the acquisition of our Texas Park, it has generated attendance based sales of $1.17 million and animal sales of $9,939.

For the year ended September 27, 2020, attendance at our Georgia Park and our Missouri Park increased by approximately 33.5% and 47.6%, respectively.

Segment Operating Margin

Our consolidated segment operating margin increased by $2.24 million, resulting in segment income from operations of $4.63 million for the year ended September 27, 2020 compared to segment income from operations of $2.39 million for the year ended September 29, 2019.

Excluding our recently acquired Texas Park, our segment income from operations increased by $1.81 million.

Our Georgia Park’s segment income was $4.11 million, an increase of $1.43 million, principally as a result of higher attendance based net sales, partially offset by higher cost of sales and higher compensation expense.

Our Missouri Park generated a segment operating income of $84,836, a net increase of $380,470.

Excluding an insurance recovery of $24,373 for tornado damage during our 2020 fiscal year, as well as the associated asset write-offs and expenses of $80,444 during our 2019 fiscal year, our Missouri Park’s segment operating income increased by $275,653, primarily as a result of higher attendance based net sales and lower other asset write-offs, partially offset by higher cost of sales, and higher compensation, insurance and depreciation expenses.

Subsequent to its acquisition on April 27, 2020, our Texas Park generated segment income of $433,916.

Corporate Expenses

Corporate spending decreased by $62,727 to $783,671 during the year ended September 27, 2020, primarily due to lower professional fees and compensation expenses, partially offset by higher insurance expense.

Professional fees for the year ended September 27, 2020 included approximately $93,200 associated with Aggieland Safari acquisition due diligence and related services, as well as approximately $38,700 in legal fees associated with the Marlton books and records matter.

Professional fees for the year ended September 29, 2019, included $75,000 in consulting fees and approximately $46,300 in legal fees associated with the Marlton books and records matter.

Compensation expense in our 2019 fiscal year included approximately $88,000 pursuant to the death benefit terms of the 2017 Meikle Employment Agreement.

Other Income, Net

Other income, net, was $27,788 for the year ended September 27, 2020, compared to $27,104 for the year ended September 29, 2019, an increase of $684, as oil and gas mineral rights income from our Texas property offset lower interest income.

Interest Expense

Interest expense, including the amortization of loan fees, was $182,926 for the year ended September 27, 2020, an increase of $106,923, primarily as a result of debt incurred related to the acquisition of our Texas Park on April 27, 2020.

For the year ended September 27, 2020, we generated income before income taxes of $3.69 million and recorded a tax provision of $926,400, for an effective tax rate of approximately 25.1%.

For the year ended September 29, 2019, we generated income before income taxes of $1.50 million and recorded a tax provision of $398,900, for an effective tax rate of approximately 26.7%.

For additional information, see “NOTE 8.

INCOME TAXES” of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information on this matter.

Net Income and Income Per Share

Our net income for the year ended September 27, 2020 was $2.77 million or $0.04 per basic share and per fully diluted share, an increase of $1.67 million as compared with a net income of $1.10 million or $0.01 per basic share and per fully diluted share, for the year ended September 29, 2019.

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.

and Segment Results of Operations for the Year Ended October 3, 2021 as Compared to the Year Ended September 27, 2020

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.

2021 fiscal year was comprised of 53-weeks, compared to our 2020 fiscal year which was comprised of 52-weeks.

Furthermore, our Texas

Park was acquired on April 27, 2020, as such was included in our 2020 fiscal year reported results for a partial year.

Therefore, in

addition to full year reported attendance based sales comparisons, attendance based sales analyses will include comparable 53-week pro

forma sales comparisons as if our Texas Park were acquired at the beginning of our 2020 fiscal year.

following table shows our consolidated and segment operating results for the years ended October 3, 2021 and September 27, 2020:

income (loss) from operations

operating margin %

on extinguishment of debt

before income taxes

Company’s total net sales for the year ended October 3, 2021 increased by $2.35 million or 24.8%, to $11.86 million compared to

$9.51 million for the year ended September 27, 2020.

Our Parks’ combined attendance based net sales increased by $2.21 million

or 23.5%, and animal sales increased by $140,555.

On a comparable 53-week pro forma basis, our attendance based net sales increased by

$1.36 million or 13.3%.

a reported basis, our Georgia Park’s attendance based net sales increased by $1.10 million or 16.2%, to $7.95 million, our Missouri

Park’s attendance based net sales increased by $338,839 or 23.7%, to $1.77 million, and our Texas Park’s attendance based

sales increased by $770,094 to $1.94 million.

a comparable 53-week basis, our Georgia Park’s attendance based net sales increased by $973,189 or 14.0% and our Missouri Park’s

attendance based net sales $313,720 or 21.6%.

On a comparable 53-week pro forma basis, our Texas Park’s attendance based sales

increased approximately $76,966 or 4.1%

comparable 53-week basis, paid attendance at our Missouri Park increased by approximately 11.7%, while paid attendance at our

Georgia Park declined by approximately 4.5%.

On a comparable 53-week pro forma basis paid attendance at our Texas Park increased by approximately

Operating Margin

consolidated segment operating margin increased $24,646, resulting in segment income from operations of $4.66 million for the year ended

October 3, 2021 compared to segment income from operations of $4.63 million for the year ended September 27, 2020.

Our Georgia Park’s

segment income was $4.52 million, an increase of $403,723, principally as a result of higher attendance based net sales and higher animal

sales, partially offset by higher cost of sales, as well as higher compensation and general operating expenses.

Our Missouri Park generated

a segment operating income of $202,597, an increase of $117,761.

Excluding an insurance recovery of $24,373 for tornado damage during

our 2020 fiscal year, our Missouri Park’s segment operating income increased by $142,134, primarily as a result of higher attendance

based net sales, partially offset by higher cost of sales, and higher compensation and general operating expenses.

Our Texas Park generated

a segment loss of $62,922 for the year ended October 3, 2021, compared to segment income of $433,916 after its acquisition on April 27,

2020, resulting in a net decrease of $496,838.

This decrease is primarily attributable higher cost of sales, higher compensation,

advertising and general operating expenses, as well as higher depreciation expense, partially offset by higher attendance based net sales

and higher animal sales.

spending increased by $112,465 to $896,136 during the year ended October 3, 2021, primarily due to the hiring of an Executive Vice President

of Operations and higher travel expenses, partially offset by lower professional fees.

income, net, was $65,314 for the year ended October 3, 2021, an increase of $37,526, primarily attributable to a full year of

mineral rights royalty income for our Texas Park, partially offset by lower interest income.

on Extinguishment of Debt

the year ended October 3, 2021, we received notification the SBA approved both our Wild Animal – Georgia and Wild Animal –

Missouri Paycheck Protection Program (“PPP”) loan forgiveness applications, resulting in a gain on extinguishment of debt

totaling $189,988.

expense for the year ended October 3, 2021 was $335,944, an increase of $153,018, primarily as a result of debt incurred related to the

acquisition of our Texas Park on April 27, 2020, partially offset by a lower interest rate associated with the June 2021 refinancing

of our Synovus Bank (“Synovus”) term loan.

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 the year ended

September 27,

September 29,

Tornado damage and expenses, net

Tax impact - tornado damage and expenses

Adjusted net income

As shown in the table above, several one-time items impacted our year-over-year net income comparison.

Our 2020 fiscal year included an insurance recovery of $24,373 associated with tornado damages at our Missouri Park, which resulted in $80,444 of asset write-offs and clean up expenses during our 2019 fiscal year.

Excluding the after-tax effect of these items, our 2020 and 2019 fiscal year adjusted net income would have been $2.75 million and $1.16 million, respectively, resulting in an increase in adjusted net income of $1.59 million.

Excluding these items, the increase in our adjusted net income is attributable to a $1.43 million increase in segment income for our Georgia Park, a $275,653 net increase in the segment income of our Missouri Park, $433,916 of segment income generated by our Texas Park, and a $62,727 decrease in Corporate expenses, partially offset by a $106,923 increase in interest expense, and a $505,490 increase in our income tax provision.

Financial Condition, Liquidity and Capital Resources

Financial Condition and Liquidity

Our primary sources of liquidity are cash generated by operations and borrowings under our loan agreements.

Historically our slow season starts after Labor Day in September and runs until Spring Break, which typically beginning in the latter of March.

The first and second quarters of our fiscal year have historically generated negative cash flow, requiring us 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 2020 and 2019 fiscal years we did not utilize any seasonal borrowing.

As a result of the initial negative impacts of the COVID-19 pandemic on our attendance revenues, we took actions to reduce spending while our Parks were closed to the public during the majority of April 2020.

We also secured Paycheck Protection Program (“PPP”) loans primarily to support the payroll for our employees during the Park closures and uncertainties of when we would be able to reopen our Parks.

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”).

During the next twelve to eighteen months our focus will be on running our Parks in a manner that supports the health and safety of our guests, employees and animals, at the same time prudently managing our cash flows.

Any significant slowdown in revenues or unusual capital outlays may require us reduce spending and potentially seek additional capital.

Our working capital was $3.86 million as of September 27, 2020, compared to $3.45 million as of September 29, 2019.

This increase in working capital primarily reflects cash flow provided by operating activities, partially offset by net cash invested in the Aggieland Safari acquisition and other capital investment spending, as well as scheduled term loan payments during our 2020 fiscal year.

Total loan debt, including current maturities, as of September 27, 2020 was $7.02 million compared to $1.36 million as of September 29, 2019.

The increase in total loan debt is the result of the Texas Park acquisition on April 27, 2020 and PPP loans entered into during our 2020 fiscal year, partially offset by scheduled payments against our 2018 term loan during the year ended September 27, 2020.

There were no borrowings on our bank line of credit (“LOC”) as of September 27, 2020 and September 29, 2019, respectively.

As of September 27, 2020, we had equity of $11.73 million and total loan debt of $7.02 million, resulting in a debt to equity ratio of 0.60 to 1.0, compared to 0.15 to 1.0 as of September 29, 2019.

Operating Activities

Net cash provided by operating activities was $3.68 million and $1.86 million, for our 2020 and 2019 fiscal years, respectively, resulting in an increase of $1.82 million, primarily as a result of a higher net income, higher net non-cash expenses and lower net working capital uses, largely due to higher deferred revenues, as well as higher accrued income taxes and sales tax.

Investing Activities

During our 2020 fiscal year we acquired Aggieland Safari, investing approximately $6.37 million of cash.

Our 2020 fiscal year also included $525,409 of capital improvements at our Parks, compared to $554,039 spent on capital improvements during our 2019 fiscal year.

During our 2020 fiscal year, property and equipment investing at our Georgia Park included improvements to our drive-through roads, improvements and additions to animal shelters and exhibits, spending on annual requirements for our rental vehicle fleet, and various animal acquisitions.

For our Missouri Park, 2020 fiscal year property and equipment investments included the completion of a new giraffe barn and primate night house, various animal acquisitions, fencing improvements and the acquisition of various equipment.

For our Texas Park, 2020 fiscal year property and equipment investments included various park maintenance equipment and animal acquisitions.

For our Georgia Park, 2019 fiscal year spending on property and equipment included improvements to our drive-through roads, new roofs for our ticket/concession and gift shop buildings, improvements and additions to animal shelters and exhibits, spending on annual requirements for our rental vehicle fleet, additions to our park maintenance equipment, and various animal acquisitions.

For our Missouri Park, 2019 fiscal year spending on property and equipment included new guest restrooms, various animal acquisitions, and improvements to several animal shelters and exhibits.

Financing Activities

During our 2020 fiscal year, net cash provided by financing activities related to our Aggieland acquisition totaled $4.94 million and $188,087 was provided by PPP loans.

Cash used in financing activities for scheduled payments against our 2018 Term Loan were $207,135 for our 2020 fiscal year, compared to $197,097 for our 2019 fiscal year.

Borrowing Agreements

On April 27, 2020, we acquired Aggieland Wild Animal – Texas, financing the transaction with the 2020 Term Loan from First Financial Bank (“First Financial”) and the Aggieland Seller Note.

The 2020 Term Loan in the original principal amount of $5,000,000 from First Financial is secured by substantially all of 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, with interest only payable monthly through April 2021.

September 27, 2020, we generated income before income taxes of $3.69 million and recorded a tax provision of $926,400, for an effective

tax rate of approximately 25.1%.

additional information, see “N ote 8.

Taxes ” of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Income and Income Per Share

reported net income for the year ended October 3, 2021 was $2.80 million or $0.04 per basic share and per fully diluted share, an increase

of $31,077 as compared with reported net income of $2.77 million or $0.04 per basic share and per fully diluted share, for the

year ended September 27, 2020.

the year ended

on extinguishment of debt

damage and expenses, net

impact - tornado damage and expenses

shown in the table above, several one-time items impacted our year-over-year reported net income comparison.

Our 2021 fiscal year included

a gain on extinguishment of debt totaling $189,988.

Our 2020 fiscal year included an insurance recovery of $24,373 associated with tornado

damages at our Missouri Park.

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 2021 and 2020 fiscal year adjusted

net income would have been $2.61 million and $2.75 million, respectively, resulting in a decrease in adjusted net income of $139,658.

The decrease in our adjusted net income is attributable to a $496,838 decline in the segment income generated by our Texas Park, a $112,465

increase in Corporate expenses, and a $153,018 increase in interest expense, partially offset by a $403,723 increase in segment income

for our Georgia Park, a $142,134 increase in the segment income of our Missouri Park, a $37,526 increase in other income and a $39,280

decrease in our income tax provision.

Condition, Liquidity and Capital Resources

Condition and Liquidity

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 2021 and 2020 fiscal years we did not utilize any seasonal

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.

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.

working capital was $5.70 million as of October 3, 2021, compared to $3.86 million as of September 27, 2020.

The year-over-year increase

in working capital primarily reflects cash flow provided by operating activities, partially offset by capital investments, the payoff

of the Aggieland Seller Note, as well as net term debt payments during our 2021 fiscal year.

loan debt, including current maturities, as of October 3, 2021 was $5.66 million compared to $7.02 million as of September 27, 2020.

The year-over-year decrease in total loan debt is the result of the payoff of the Aggieland Seller Note, the forgiveness of our PPP loans

and net term debt payments during our 2021 fiscal year.

Our bank line of credit (“LOC”) was terminated effective June 18,

2021 and there were no borrowings on the LOC as of September 27, 2020.

of October 3, 2021, we had equity of $14.57 million and total loan debt of $5.66 million, resulting in a debt to equity ratio of 0.39

to 1.0, compared to 0.60 to 1.0 as of September 27, 2020.

cash provided by operating activities was $3.31 million for our 2021 fiscal year, compared to $3.68 million, for our 2020 fiscal year,

resulting in a decrease of $371,683, primarily due to working capital uses.

2021 fiscal year included $988,901 of capital improvements, compared to $525,409 spent on capital improvements during our 2020

In addition, during our 2020 fiscal year we acquired Aggieland Safari, investing approximately $6.37 million of cash.

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.

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.

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.

our 2020 fiscal year, property and equipment investing at our Georgia Park included improvements to our drive-through roads, improvements

and additions to animal shelters and exhibits, spending on annual requirements for our rental vehicle fleet, and various animal acquisitions.

For our Missouri Park, 2020 fiscal year property and equipment investments included the completion of a new giraffe barn and primate

night house, various animal acquisitions, fencing improvements and the acquisition of various equipment.

For our Texas Park, 2020 fiscal

year property and equipment investments included various park maintenance equipment and animal acquisitions.

cash used in financing activities was $1.20 million for the year ended October 3, 2021, compared to net cash provided by financing activities

of $4.92 million for the year ended September 27, 2020.

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 $1.00 million

against our 2020 Term Loan.

In addition, on June 29, 2021, we paid off the $750,000 Aggieland Safari Seller Note.

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.

the year ended September 27, 2020, net cash provided by financing activities related to our Aggieland acquisition totaled $4.94 million,

cash provided by PPP loans totaled $188,087 was provided by PPP loans, while cash used for scheduled payments against our 2018 Term Loan

totaled $207,135.

June 18, 2021, through our wholly owned subsidiary Wild Animal – Georgia, we 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

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 $1.89 million

as of October 3, 2021.

April 27, 2020, we acquired Aggieland Wild Animal – Texas, financing the transaction with the 2020 Term Loan from First Financial

Bank (“First Financial”) and the Aggieland Seller Note.

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.

The Aggieland Seller Note represents a deferred portion of the purchase price, has a face value of $750,000, bears no interest, has a maturity date of June 30, 2021, and is 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 will be amortized as interest expense over the 14 month period until the note matures.

Including the remaining unamortized discount, the recorded value of the Aggieland Seller Note as of September 27, 2020 was $736,015.

On July 11, 2018, through our wholly owned subsidiary Wild Animal – Georgia, we completed the 2018 Refinancing with Synovus Banks (“Synovus”).

The 2018 Refinancing included the 2018 Term Loan in the original principal amount of $1.60 million and a LOC of up to $350,000 (the “2018 LOC”).

The 2018 Term Loan bears interest at a rate of 5.0% per annum and is payable in monthly payments of approximately $22,672, based on a seven year amortization period.

The 2018 Term Loan has 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 LOC bears interest at a rate of 4.75% and interest only payments are due monthly.

The 2018 LOC matures on July 11, 2021, with an option to renew for an additional three-year term.

The 2018 Term Loan and the 2018 LOC are secured by a security deed on the assets of Wild Animal – Georgia.

We used the proceeds of the 2018 Term Loan, along with available cash of $1.25 million, to refinance the then outstanding balance of the 2013 Refinancing 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 $3.83 million as of October 3, 2021.

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.

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

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 outstanding balance of the 2018 Term Loan was $1,164,113 as of September 27, 2020.

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.

Including accrued interest, the principal outstanding our PPP loans was $188,925 as of September 27, 2020.

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.

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.

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 is two years, with an interest rate of 1.0% per annum.

All payments are deferred for the first six months of these PPP loans, with accrued interest being added to the principal during the payment deferral period.

After the initial six-month deferral period, monthly principal and interest payments will be due until maturity for any portion of the PPP loans not forgiven.

Under the terms of the CARES Act, some or all of the PPP loan proceeds are eligible to be forgiven.

The amount of the PPP loans eligible to be forgiven are based on the use of the proceeds for payroll costs, mortgage interest, rent or utility costs, and the maintenance of employee and compensation levels, subject to limitations and ongoing rulemaking by the SBA.

While not assured, we anticipate a substantial portion of our PPP loan proceeds have been used for costs that are eligible for forgiveness, based on the current SBA guidelines and we intend to apply for such forgiveness in the first half of our 2021 fiscal year.

Subsequent Events

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.

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

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.

Balance Sheet Arrangements

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.

Accounting Policies and Estimates

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, 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.

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.

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

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.

Assets, including Property and Equipment

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 the Company has received or expects to receive in exchange for those services or products.

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.

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.

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 the Company has received or expects to receive in exchange for those services or products.

admission fee revenues from advance online ticket purchases are deferred until the customers’ visit to the parks.

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.

Revenues from retail and concession sales are generally recognized upon the concurrent receipt of payment and delivery of goods to the

Sales taxes billed and collected are not included in revenue.

for Income Taxes

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.

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 9.

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.

have various contingencies, as described in “NOTE 9.

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements and related notes are set forth at pages F-1 through F-18.

financial statements and related notes are set forth at pages F-1 through F-18.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis