PARKS AMERICA, INC 10-K

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 1, 2023 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 safari parks and are in the business of acquiring, developing and operating local and regional entertainment assets 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 park in Pine Mountain, Georgia (the “Georgia Park”). Wild Animal – Missouri owns and operates the Wild Animal Safari park located in Strafford, Missouri (the “Missouri Park”). Aggieland Wild Animal – Texas owns and operates the Aggieland Wild Animal Safari 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 park revenues were 60.4% and 62.1% of annual park revenues for our 2023 and 2022 fiscal years, respectively. Since the acquisition of our Texas Park, the combined third and fourth quarter concentration of our park revenues has been reduced. During March 26-27, 2023, our Georgia Park experienced extensive damage, caused by an EF-3 tornado and over nine inches of rain, resulting in more than 4,500 fallen trees and damage to many of the Park’s animal enclosures, fencing and other infrastructure. The Walkabout Adventure Zoo (“Walkabout”) portion of the property was particularly hard hit. Our Georgia Park was closed for 20 days, including for most of its traditionally busy spring break period, which has historically comprised approximately 10%-15% of its annual revenue. The drive-through safari section of the Georgia Park reopened on April 15th. The Walkabout portion of the Park has reopened in phases, with the first phase on May 6th and the second phase on July 2nd. Approximately one-quarter of the Walkabout remains closed. 11 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. Attendance at our parks benefited in 2020 and 2021 from the COVID-19 pandemic which drove an increase in demand for outdoor entertainment. Our park revenue remains above pre-pandemic levels, however, is down from the high in 2021. In 2023, our park revenue was negatively impacted by approximately $1.0 million at our Georgia Park from the March severe weather and tornado event, subsequent closure and multi-phased reopening. Fiscal Year 2023 2022 2021 2020 2019 Total revenues $ 9,440,248 $ 10,741,417 $ 11,862,491 $ 9,507,264 $ 6,184,254 % change -12.1 % -9.5 % 24.8 % 53.7 % 2.3 % Reported income (loss) before income taxes (572,421 ) 1,030,291 3,680,546 3,693,869 1,495,438 % change na -72.0 % -0.4 % 147.0 % 5.1 % % of total revenues -6.1 % 9.6 % 31.0 % 38.9 % 24.2 % Adjusted income (loss) before income taxes (*) (203,466 ) 1,130,291 3,490,558 3,669,496 1,575,882 % change na -67.6 % -4.9 % 132.9 % 1.5 % % of total revenues -2.2 % 10.5 % 29.4 % 38.6 % 25.5 % EBITDA 1,220,535 2,168,161 4,620,623 4,457,682 2,138,546 % change -43.7 % -53.1 % 3.7 % 108.4 % -2.3 % % of total revenues 12.9 % 20.2 % 39.0 % 46.9 % 34.6 % Net cash provided by operating activities 927,478 1,540,719 3,308,718 3,680,401 1,858,158 % change -39.8 % -53.4 % -10.1 % 98.1 % 5.1 % % of total revenues 9.8 % 14.3 % 27.9 % 38.7 % 30.0 % * Excludes net tornado expenses and asset write-offs of $368,955 in 2023, 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, and $80,444 of tornado damage asset write-offs and costs in 2019. 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 the entertainment and attractions 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 income before income taxes to our EBITDA for our five most recent fiscal years: Fiscal Year 2023 2022 2021 2020 2019 Income (loss) before income taxes $ (572,421 ) $ 1,030,291 $ 3,680,546 $ 3,693,869 $ 1,495,438 Interest expense 222,396 261,621 335,944 182,926 76,003 Depreciation and amortization 884,459 782,987 704,016 576,139 453,968 (Gain) loss on disposal of operating assets, net 317,146 (6,738 ) 90,105 29,121 32,693 Tornado damage and expenses, net 368,955 - - (24,373 ) 80,444 Legal settlement - 100,000 - - - Gain on extinguishment of debt - - (189,988 ) - - EBITDA $ 1,220,535 $ 2,168,161 $ 4,620,623 $ 4,457,682 $ 2,138,546 12 For the year ended October 1, 2023, we incurred $780,941 of Georgia Park severe weather and tornado related expenses, primarily due to tree and other debris removal, repairing and replacing underground water pipes throughout the property, as well as general clean-up efforts. In addition, related asset write-offs of $275,297, primarily associated with damage to various animal exhibits, several buildings, fencing and other infrastructure. These expenses and asset write-offs were partially offset by insurance proceeds totaling $687,283, net of deductibles and co-insurance. During our 2023 fiscal year we also made capital investments of approximately $615,000 at our Georgia Park for rebuilding projects as a direct result of the tornado event. As a result of the near-term needs associated with the tornado recovery effort at our Georgia Park, we revised our 2023 fiscal year capital investment plan. Two significant new marketable attractions in our Georgia Park Walkabout, an enhanced ring-tailed lemur exhibit and new aviary, featuring macaws and a budgie parrot feeding experience, were not significantly impacted by the tornado event and opened on May 6, 2023. In addition, a new marquee otter exhibit opened in May 2023 at our Missouri Park Walkabout and a fourth drive-through pasture at our Texas Park opened in early March 2023, allowing guests to feed zebras and camels directly from their vehicles. Our 2023 fiscal year capital also included investment in fleet vehicles, roadways and other necessary safety-related capital projects. Due to the significant unplanned spending driven by the Georgia severe weather and tornado event, we paused our project related to accessing public water in Texas as well as several other minor projects to manage cash flow. Our plan to open a significant new giraffe exhibit at our Georgia Park, initiated during our 2022 fiscal year, experienced delays due to a highly inflationary period for building materials and a challenging labor market. While we remain committed to this showcase attraction, the severe weather and tornado event caused the management team to reprioritize capital projects. We also mutually agreed to terminate the contract with the initial design and general contracting partner for this project, resulting in a $196,000 project cost write-off. We expect to establish a revised timeline for a new giraffe exhibit at our Georgia Park during our 2024 fiscal year. Our 2024 fiscal year capital plan reflects the further strategic rebuild of our Georgia Park following the March 2023 severe weather event and continues to set the stage for longer-term master planning and optimization at each of our parks. The centerpiece of our 2024 capital plan is a new restroom building and main entry plaza at our Georgia Park. The existing restroom building was near the end of its useful life, and the tornado damage rendered it beyond repair. We believe this investment is paramount in improving the overall guest experience and will pave the way for a new standard. The new main entry plaza will provide an improved arrival experience and a place for our guests to dwell, which we believe will positively impact our Georgia Park for decades to come. Also in Georgia, our carnivore night house will be rebuilt, a capybara encounter area will be added, roadway infrastructure improved, and additional fencing and sidewalks repaired. We continue to take a strategic and measured approach to the rebuild at our Georgia Park, ensuring we put in place a product that will withstand the test of time and improve the guest, animal and staff experience, ultimately delivering higher revenue and profitability. At our Missouri Park, the 2024 capital plan is focused on activation of a guest-facing pond within the Walkabout featuring a nature trail and floating dock, the expansion of shade structures, additional rental vehicles, and equipment capital. Capital spending planned for 2024 at our Texas Park will be focused on key infrastructure needs, including hay storage, the completion of the keeper facility and general safety related improvements. We remain committed to our long-term vision for our parks, and we believe our 2024 capital plan balances additional needs from the Georgia Park tornado and deferred maintenance, along with the addition of guest facing improvements and amenities. Our 2024 fiscal year capital plan anticipates spending approximately $1.4 million, which will again be fully funded from our existing cash and continues to demonstrate our commitment to building for long-term, sustainable growth. We are committed to leveraging the strong operating model we have established at our Georgia Park at all three of our properties, with a focus on increasing attendance through enhanced marketing efforts and focused capital investments, as well as continuing to prudently increase the average revenue generated per guest visit via concession and gift shop revenues. In addition to rebuilding and improving our Georgia Park Walkabout, among our highest priorities over the next several years are the enhancement of the overall guest experience, streamlining and optimizing our systems, operating standards and practices, and increasing per capita revenue, through the introduction of new programming and more targeted marketing efforts. Our Texas Park opened to the public in May 2019 and we believe there remains long-term potential to increase attendance by increasing the local and regional awareness of this facility via advertising and promotion. We remain encouraged by the higher levels of attendance at our Missouri Park which began in the spring of 2020 and plan on prudently leveraging the increased exposure of this facility to continue to build on this success. 13 Our long-term business plan also includes adjacent expansion and expansion via the acquisition of additional local or regional entertainment assets and attractions. We believe adjacent development and acquisitions, if any, should not unnecessarily encumber the Company with additional debt that cannot be justified by current operations. We may also pursue contract management opportunities for attractions owned by third parties. By using a combination of equity, debt and other financing options, we intend to carefully monitor stockholder value in conjunction with the pursuit of growth. Strong annual operating cash flow over the past several fiscal years has provided us with incremental operating margin, funded significant increases in capital investment, allowed us to paydown debt following the Aggieland Safari acquisition in 2020, and quickly reopen after the significant damage and business interruption caused by the March 2023 severe weather event at our Georgia Park. However, our current size and operating model leaves us little room for error. Any future capital raised by us may result in dilution to existing stockholders. It is possible that the cash generated by, or available to, us may not be sufficient to fund our capital and liquidity needs for the near term. Consolidated and Segment Results of Operations for the Year Ended October 1, 2023 as Compared to the Year Ended October 2, 2022 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 October 1, 2023 and October 2, 2022: Georgia Park Missouri Park Texas Park Consolidated Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 Total revenues $ 5,873,526 $ 7,086,232 $ 1,692,765 $ 1,691,602 $ 1,873,957 $ 1,963,583 $ 9,440,248 $ 10,741,417 Segment income (loss) from operations 1,511,142 2,895,820 (18,153 ) (344,404 ) (353,982 ) (254,834 ) 1,139,007 2,296,582 Segment operating margin % 25.7 % 40.9 % -1.1 % -20.4 % -18.9 % -13.0 % 12.1 % 21.4 % Corporate expenses (1,200,307 ) (995,946 ) Tornado expenses and write-offs, net 368,955 - Legal settlement - 100,000 Other income, net 80,230 91,276 Interest expense (222,396 ) (261,621 ) Income (loss) before income taxes $ (572,421 ) $ 1,030,291 Total Net Sales Our total revenues for the year ended October 1, 2023 were $9.44 million, a decrease of $1.30 million, compared to the year ended October 1, 2022. Our park revenues decreased by $1.34 million or 12.6%, while animal sales increased by $34,457. As a result of a severe weather and tornado event on March 26-27, 2023, our Georgia Park was closed for 20 days, with the drive through section of the park reopening on April 15th and roughly three-quarters of the Walkabout portion reopening in two phases, on May 6th and July 2nd, respectively. Based on the comparable prior year period, we believe Georgia Park revenues were negatively impacted by approximately $1.0 million due to the severe weather and tornado related closure and phased reopening during the year ended October 1, 2023. On a pro forma basis, assuming flat park revenues for our Georgia Park from March 26th through May 6th, our park revenues for the year ended October 1, 2023 decreased by approximately $356,000 or 3.2%. Georgia park revenues were $5.82 million, a decrease of $1.24 million or 17.5%, while animal sales increased by $27,473. On a pro forma basis, assuming flat sales during the severe weather and tornado closure and phased reopening period, Georgia park revenues decreased by approximately $240,000 or 3.4%. Missouri park revenues increased by $25,220 or 1.5%, to $1.69 million, while animal sales decreased by $24,057. Texas park revenues decreased by $120,667 or 6.4%, to $1.76 million, while animal sales increased by $31,041. For the year ended October 1, 2023, paid attendance at our Missouri Park increased by 15.3%, while paid attendance at our Georgia and Texas Parks decreased by 17.1% and 6.7%, respectively. Adjusted for the severe weather and tornado closure and phased reopening impact, on a pro forma basis, Georgia Park paid attendance decreased by approximately 3.8%, which we believe was driven by lost momentum following the closure and phased reopening, and increased regional competition. We also believe unfavorable weather and a challenged consumer spending landscape, particularly in our fiscal fourth quarter, proved to be a headwind across all three of our parks, as well as for the overall industry. 14 Segment Operating Margin Our consolidated segment operating margin decreased $1.16 million, resulting in segment income from operations of $1.14 million for the year ended October 1, 2023 compared to segment income from operations of $2.30 million for the year ended October 2, 2022. Our Georgia Park’s segment income was $1.51 million, a decrease of $1.38 million, principally attributable to lower park revenues and the associated margin loss related to the severe weather and tornado closure, as well as higher general operations spending and higher asset write-offs, partially offset by lower advertising expense and higher animal sales. Our Missouri Park generated a segment operating loss of $18,153, compared to a segment operating loss of $344,404 for the year ended October 2,2022, resulting in a net improvement of $326,251, primarily attributable to higher park revenues and expenses for a drive-through Christmas lights display which negatively impacted fiscal 2022. Our Missouri Park segment income was also favorably impacted by lower advertising and wage expenses, and improved margins on in-park revenues, partially offset by lower animal sales and higher depreciation expense. Our Texas Park generated a segment loss of $353,982, compared to $254,834 for the year ended October 2, 2022, resulting in an increase of $99,148, primarily attributable to lower park revenues, as well as higher depreciation expense and asset write-offs, partially offset by higher animal sales and improved margins on in-park revenues. Corporate Expenses Corporate spending increased by $204,361 to $1.20 million for the year ended October 1, 2023, primarily attributable to higher wages due to management redundancies during the executive transition period and higher professional fees. Tornado Expenses and Write-offs, Net As a result of the damage caused by the March 2023 severe weather and tornado event at our Georgia Park, we recorded $780,941 of related expenses, primarily due to tree and other debris removal, repairing and replacing underground water pipes throughout the property, as well as general clean-up and reopening efforts. In addition, we recorded asset write-offs of $275,297, primarily associated with damage to various animal exhibits, several buildings, fencing and other infrastructure. These expenses and write-offs were partially offset by $687,283 of insurance proceeds from our commercial property coverage. For additional information, see “N ote 3. TORNADO EXPENSES AND ASSET WRITE-OFFS” of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K. 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 “N ote 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 $80,230 for the year ended October 1, 2023, a decrease of $11,046, primarily attributable to higher other expenses and lower mineral rights royalty income from our Texas Park property, partially offset by higher interest income. Interest Expense Interest expense for the year ended October 1, 2023 was $222,396, a decrease of $39,225, primarily attributable to a reduction in term loan interest expense, as well as imputed interest on a right of use asset in the prior year. Income Taxes For the year ended October 1, 2023, we generated a pre-tax loss of $572,421 and recorded a tax benefit provision of $88,683, resulting in an effective tax rate of approximately 15.5%, which was unfavorably impacted by state income taxes due to operating losses for our Missouri and Texas Parks. For the year ended October 2, 2022, we generated income before income taxes of $1.03 million and recorded a tax provision of $302,000, resulting in an effective tax rate of approximately 29.4%, which was also unfavorably impacted by state income taxes due to operating losses for our Missouri and Texas Parks. For additional information, see “N ote 7. Income Taxes ” of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K. 15 Net Income and Income Per Share Our reported net loss for the year ended October 1, 2023 was $483,738 or $0.01 per basic share and per fully diluted share, a net decrease of $1.21 million or $0.02 per basic and fully diluted share, as compared with reported net income of $727,491 million or $0.01 per basic share and per fully diluted share, for the year ended October 2, 2022. For the year ended October 1, 2023 October 2, 2022 Net income (loss) $ (483,738 ) $ 727,491 Tornado expenses and write-offs, net 368,955 - Tax impact - Tornado expenses and write-offs (99,620 ) - Legal settlement - 100,000 Tax impact - legal settlement - (27,000 ) Adjusted net income (loss) $ (214,403 ) $ 800,491 As shown in the table above, several one-time items impacted our year-over-year reported net income comparison. Our 2023 fiscal year included $368,955 of Georgia Park severe weather and tornado related expenses and asset write-offs, net of insurance proceeds. Our 2022 fiscal year included a legal settlement charge of $100,000. Management believes that adjusted net income, excluding one-time items, should be considered in evaluating the ongoing operating performance of our business. Excluding the $269,335 after-tax effect of the Georgia Park net tornado expenses and asset write-offs for the year ended October 1, 2023, as well as the $73,000 after-tax expense associated with a legal settlement during the year ended October 2, 2022, our adjusted net income decreased $1.01 million. This decrease is primarily attributable to a $1.38 million decrease in segment income for our Georgia Park, a $204,361 increase in Corporate expenses, a $99,148 increase in the segment loss for our Texas Park, and a $11,046 decrease in other income, partially offset by a $326,251 decrease in the segment loss for our Missouri Park, a $39,225 decrease in interest expense and a $318,863 net decrease in our adjusted income tax expense. 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 2023 and 2022 fiscal years we did not utilize any seasonal borrowing. Our working capital was $3.69 million as of October 1, 2023, compared to $4.67 million as of October 2, 2022. The year-over-year decrease in working capital primarily reflects cash used for capital investments, Georgia Park tornado clean-up expenses, net of insurance proceeds, and scheduled term loan payments, partially offset by cash generated by operating activities during our 2023 fiscal year. Total loan debt, including current maturities, as of October 1, 2023 was $4.23 million compared to $4.96 million as of October 2, 2022. The year-over-year decrease in total loan debt was the result of scheduled term loan payments during our 2023 fiscal year. As of October 1, 2023, we had equity of $14.99 million and total loan debt of $4.23 million, resulting in a debt to equity ratio of 0.28 to 1.0, compared to 0.32 to 1.0 as of October 2, 2022. Operating Activities Net cash provided by operating activities was $927,478 for our 2023 fiscal year, compared to $1.54 million, for our 2022 fiscal year, resulting in a decrease of $613,241, principally due to lower net income and net working capital usage, partially offset by non-cash expenses. 16 Investing Activities Our 2023 fiscal year investing activities included $1.56 million of capital improvements, compared to $1.84 million spent on capital improvements during our 2022 fiscal year, a decrease of $281,547, and other net investing activities decreased by $12,781. During our 2023 fiscal year, property and equipment investing at our Georgia Park included various enclosure updates including the addition of a state-of-the-art ring-tailed lemur exhibit, an aviary and walk-in budgie parrot feeding experience, the general rebuild of many areas impacted by the severe weather and tornado event, as well as guest rental vehicle fleet and capital equipment additions. For our Missouri Park, 2023 fiscal year property and equipment investments included the completion of a new otter exhibit which opened in May 2023, renovations of various animal shelters and exhibits, and capital equipment additions. For our Texas Park, 2023 fiscal year property and equipment investments included several animal acquisitions, an additional drive-through zone for zebras and camels, and several capital maintenance projects. 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 initial phases of a new otter exhibit which opened in 2023, 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. Financing Activities Net cash used in financing activities totaled $738,617 for the year ended October 1, 2023, compared to $866,193 million for the year ended October 2, 2022, resulting in a decrease of $127,576, primarily due to principal payments on a Missouri Park Christmas Lights financing lease obligation entered into near the beginning of our 2022 fiscal year and terminated before the end of our 2022 fiscal year. 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 $1.38 million as of October 1, 2023. On April 27, 2020, through our wholly owned subsidiary Aggieland-Parks Inc., we acquired Aggieland Wild Animal – Texas. In part, this acquisition was financed with the “2020 Term Loan” from First Financial Bank (“First Financial”). 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 $2.89 million as of October 1, 2023. Subsequent Events None 17 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. 18 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 a 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 on pages F-1 through F-18. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None