Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 14-May-15 | |
Document and Entity Information | ||
Entity Registrant Name | CASTLE GROUP INC | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Entity Central Index Key | 918543 | |
Current Fiscal Year End Date | -19 | |
Entity Common Stock, Shares Outstanding | 10,046,392 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
THE_CASTLE_GROUP_INC_CONDENSED
THE CASTLE GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEET MARCH 31, 2015 & DECEMBER 31, 2014(UNAUDITED) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $1,847,436 | $1,753,780 |
Accounts receivable, net of allowance for bad debts | 1,960,310 | 2,365,071 |
Deferred tax asset current | 474,092 | 474,092 |
Note receivable, current portion | 15,000 | 15,000 |
Prepaid and other current assets | 331,612 | 443,011 |
Total Current Assets | 4,628,450 | 5,050,954 |
Property plant & equipment, net | 6,731,188 | 6,701,806 |
Deposits and other assets | 174,940 | 186,246 |
Note receivable | 182,962 | 185,018 |
Investment in limited liability company | 544,064 | 564,064 |
Deferred tax asset | 558,985 | 651,744 |
Goodwill | 54,726 | 54,726 |
TOTAL ASSETS | 12,875,315 | 13,394,558 |
Current Liabilities | ||
Accounts payable | 2,353,432 | 2,541,770 |
Payable to related parties | 5,509 | 0 |
Deposits payable | 688,712 | 862,527 |
Current portion of long term debt | 361,296 | 374,736 |
Current portion of long term debt to related parties | 31,855 | 45,072 |
Accrued salaries and wages | 1,585,635 | 1,579,974 |
Accrued taxes | 34,162 | 61,482 |
Other current liabilities | 45,582 | 2,714 |
Total Current Liabilities | 5,106,183 | 5,468,275 |
Non-Current Liabilities | ||
Long term debt, net of current portion | 6,298,278 | 6,621,571 |
Notes payable to related parties, net of current portion | 63,981 | 72,244 |
Total Non-Current Liabilities | 6,362,259 | 6,693,815 |
Total Liabilities | 11,468,442 | 12,162,090 |
Stockholders' Equity | ||
Preferred stock, $100 par value, 50,000 shares authorized, 11,050 shares issued and outstanding in 2015 and 2014, respectively | 1,105,000 | 1,105,000 |
Common stock, $.02 par value, 20,000,000 shares authorized, 10,046,392 & 10,046,392 shares issued and outstanding in 2015 and 2014, respectively | 200,929 | 200,929 |
Additional paid in capital | 4,941,784 | 4,877,774 |
Retained deficit | -4,863,989 | -4,978,419 |
Accumulated other comprehensive income | 23,149 | 27,184 |
Total Stockholders' Equity | 1,406,873 | 1,232,468 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $12,875,315 | $13,394,558 |
THE_CASTLE_GROUP_INC_BALANCE_S
THE CASTLE GROUP INC. BALANCE SHEET (PARENTHETICAL) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position | ||
Preferred stock authorized | 50,000 | 50,000 |
Preferred stock par value | $100 | $100 |
Preferred stock issued | 11,050 | 11,050 |
Preferred stock outstanding | 11,050 | 11,050 |
Common stock authorized | 20,000,000 | 20,000,000 |
Common stock par value | $0.02 | $0.02 |
Common stock issued | 10,046,392 | 10,046,392 |
Common stock outstanding | 10,046,392 | 10,046,392 |
THE_CASTLE_GROUP_INC_CONDENSED1
THE CASTLE GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31, 2015 & 2014 (UNAUDITED) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Revenues | ||
Revenue attributed from properties | $3,373,651 | $3,391,112 |
Management & Service | 2,719,820 | 2,709,465 |
Other Revenue | 400 | 0 |
Total Revenues | 6,093,871 | 6,100,577 |
Operating Expenses | ||
Attributed property expenses | 2,827,294 | 2,891,900 |
Payroll and office expenses | 2,757,162 | 2,714,651 |
Administrative and general | 203,997 | 192,152 |
Depreciation | 56,421 | 55,570 |
Total Operating Expense | 5,844,874 | 5,854,273 |
Operating Income | 248,997 | 246,304 |
Investment income | 50,000 | 49,095 |
Interest Expense | -91,808 | -90,272 |
Income before taxes | 207,189 | 205,127 |
Income taxes | -92,759 | -104,478 |
Net Income | 114,430 | 100,649 |
Other Comprehensive Income | ||
Foreign currency translation adjustment | -4,035 | -17,950 |
Total Comprehensive Income | $110,395 | $82,699 |
Earnings Per Share Basic | $0.01 | $0.01 |
Earnings Per Share Diluted | $0.01 | $0.01 |
Weighted Average Shares Basic | 10,046,392 | 10,026,392 |
Weighted Average Shares Diluted | 10,414,725 | 10,394,725 |
THE_CASTLE_GROUP_INC_CONDENSED2
THE CASTLE GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2015 & 2014 (UNAUDITED) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash Flows from Operating Activities | ||
Net income | $114,430 | $100,649 |
Depreciation | 56,421 | 55,570 |
Non cash interest expense | 64,010 | 50,011 |
Investment income | -50,000 | -49,095 |
Deferred taxes | 92,759 | 104,478 |
(Increase) decrease in Accounts receivable | 402,092 | 233,361 |
(Increase) decrease in Other current assets | 104,480 | -95,303 |
(Increase) decrease in Notes receivable | 2,056 | 2,296 |
(Increase) decrease in Deposits and other assets | 5,503 | 6,106 |
Increase (decrease) in Accounts payable and accrued expenses | -142,132 | -185,505 |
Increase (decrease) in Customer advance deposits | -170,868 | 62,093 |
Net Change From Operating Activities | 478,751 | 284,661 |
Cash Flows from Investing Activities | ||
Distributions from investments | 70,000 | 0 |
Purchase of assets | -325,465 | -13,541 |
Net Change from Investing Activities | -255,465 | -13,541 |
Cash Flows from Financing Activities | ||
Payments on notes to related parties | -21,480 | 0 |
Payments on notes | -85,797 | -171,621 |
Net Change from Financing Activities | -107,277 | -171,621 |
Effect of foreign currency exchange rate on changes in cash and cash equivalents | -22,353 | 31,887 |
Net Change in Cash and Cash Equivalents | 93,656 | 131,386 |
Beginning Balance | 1,753,780 | 1,137,215 |
Ending Balance | 1,847,436 | 1,268,601 |
Supplementary Information | ||
Cash Paid for Interest | -41,798 | -43,307 |
Cash Paid for Income Taxes | $0 | $0 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 | |
Notes | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | |
Organization | |
The Castle Group, Inc. was incorporated under the laws of the State of Utah on August 21, 1981. The Castle Group, Inc. operates in the hotel and resort management industry in the State of Hawaii and in New Zealand under the trade name “Castle Resorts and Hotels.” The Company also has inactive operations in Saipan, Guam and Thailand. The accounting and reporting policies of The Castle Group, Inc. (the “Company” or “Castle”) conform with U.S. generally accepted accounting principles and practices within the hotel and resort management industry. | |
industry. | |
Principles of Consolidation | |
The condensed consolidated financial statements of the Company include the accounts of The Castle Group, Inc. and its wholly-owned subsidiaries, Hawaii Reservations Center Corp., HPR Advertising, Inc., Castle Resorts & Hotels, Inc., Castle Resorts & Hotels Thailand Ltd., NZ Castle Resorts and Hotels Limited (a New Zealand Corporation), and NZ Castle Resorts and Hotels’ wholly-owned subsidiary, Mocles Holdings Limited (a New Zealand Corporation). All significant inter-company transactions have been eliminated in the condensed consolidated financial statements. | |
Note 1 Basis of Presentation | |
The accompanying condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. In the opinion of management, the accompanying interim financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation. The results of operations for the three month period ended March 31, 2015, are not necessarily indicative of the results for a full-year period as the tourism industry that the Company relies on is highly seasonal. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in Castle’s most recent Annual Report on Form 10-K. | |
Revenue Recognition | |
In accordance with ASC 605: Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price charged is fixed or determinable, and collectability is reasonably assured. | |
The Company recognizes revenue from the management of resort properties according to terms of its various management contracts. | |
The Company has two basic types of agreements, a “Gross Contract” and a “Net Contract”. | |
Under a “Gross Contract” the Company records revenue which is based on a percentage of the gross rental proceeds received from the rental of hotel or condominium units. The Company pays the remaining gross rental proceeds to the owner of the rental unit. The Company only records the difference between the gross rental proceeds and the amount paid to the owner of the rental unit as “Revenue Attributed from Properties.” Under this arrangement, the Company is responsible for all of the operating expenses for the hotel or condominium unit. The Company records the expenses of operating the rental program at the property covered by the agreement. These expenses typically include housekeeping, food & beverage, maintenance, front desk, sales & marketing, advertising and all other operating costs at the property covered by the agreement and are recorded as “Attributed Property Expenses.” | |
Under a “Net Contract”, the Company receives a management fee that is based on a percentage of the gross rental proceeds received from the rental of hotel or condominium units. Under this arrangement, the owner of the hotel or condominium unit is responsible for all of the operating expenses of the rental program covering the owner’s unit and in addition to the percentage of gross rental proceeds the Company typically receives an incentive management fee based on the net operating profit of the | |
covered property. Additionally, we employ on-site personnel to provide services such as housekeeping, maintenance and administration to property owners under our management agreements and for such services the Company recognizes revenue in an amount equal to the expenses incurred. Revenues received under the net contract are recorded as Management and Service Income. Under a Net Contract, the Company does not record the operating expenses of the property covered by the agreement, other than the personnel costs mentioned above. | |
The difference between the Gross and Net contracts is that under a Gross Contract, all expenses, and therefore the ownership of any profits or the covering of any operating loss, belong to and is the responsibility of the Company; under a Net Contract, all expenses, and therefore the ownership or any profits or the covering of any operating loss belong to and is the responsibility of the owner of the property. | |
Under both types of agreements, revenues are recognized after services have been rendered. A liability is recognized for any deposits received for which services have not yet been rendered. | |
Note 2 New Accounting Pronouncements | |
From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption. | |
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. | |
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of its pending adoption of ASU 2014-09 on the Company’s consolidated financial statements and has not yet determined the method by which we will adopt the standard in 2017. | |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern. ASU 2014-15 requires management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans and requires an express statement and other disclosures when substantial doubt is not alleviated. ASU No. 2014-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, early application is permitted. We are currently evaluating the accounting implication and do not believe the adoption of ASU 2014-15 to have material impact on our consolidated financial statements, although there may be additional disclosures upon adoption. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Notes | |
Income Taxes | |
Note 3 Income Taxes | |
Income tax expense reflects the expense or benefit only on the Company’s domestic taxable income. Income tax expense and benefit from the Company’s foreign operations are not recognized as they have been fully reserved. |
Equitybased_Compensation
Equity-based Compensation | 3 Months Ended |
Mar. 31, 2015 | |
Notes | |
Equity-based Compensation | |
Note 4 Equity-Based Compensation | |
None issued during the quarters ended March 31, 2015 or 2014. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Policies | |
Organization | |
Organization | |
The Castle Group, Inc. was incorporated under the laws of the State of Utah on August 21, 1981. The Castle Group, Inc. operates in the hotel and resort management industry in the State of Hawaii and in New Zealand under the trade name “Castle Resorts and Hotels.” The Company also has inactive operations in Saipan, Guam and Thailand. The accounting and reporting policies of The Castle Group, Inc. (the “Company” or “Castle”) conform with U.S. generally accepted accounting principles and practices within the hotel and resort management industry. | |
industry. | |
Principles of Consolidation | |
Principles of Consolidation | |
The condensed consolidated financial statements of the Company include the accounts of The Castle Group, Inc. and its wholly-owned subsidiaries, Hawaii Reservations Center Corp., HPR Advertising, Inc., Castle Resorts & Hotels, Inc., Castle Resorts & Hotels Thailand Ltd., NZ Castle Resorts and Hotels Limited (a New Zealand Corporation), and NZ Castle Resorts and Hotels’ wholly-owned subsidiary, Mocles Holdings Limited (a New Zealand Corporation). All significant inter-company transactions have been eliminated in the condensed consolidated financial statements. | |
Basis of Presentation | |
Note 1 Basis of Presentation | |
The accompanying condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. In the opinion of management, the accompanying interim financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation. The results of operations for the three month period ended March 31, 2015, are not necessarily indicative of the results for a full-year period as the tourism industry that the Company relies on is highly seasonal. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in Castle’s most recent Annual Report on Form 10-K. | |
Revenue Recognition | |
Revenue Recognition | |
In accordance with ASC 605: Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price charged is fixed or determinable, and collectability is reasonably assured. | |
The Company recognizes revenue from the management of resort properties according to terms of its various management contracts. | |
The Company has two basic types of agreements, a “Gross Contract” and a “Net Contract”. | |
Under a “Gross Contract” the Company records revenue which is based on a percentage of the gross rental proceeds received from the rental of hotel or condominium units. The Company pays the remaining gross rental proceeds to the owner of the rental unit. The Company only records the difference between the gross rental proceeds and the amount paid to the owner of the rental unit as “Revenue Attributed from Properties.” Under this arrangement, the Company is responsible for all of the operating expenses for the hotel or condominium unit. The Company records the expenses of operating the rental program at the property covered by the agreement. These expenses typically include housekeeping, food & beverage, maintenance, front desk, sales & marketing, advertising and all other operating costs at the property covered by the agreement and are recorded as “Attributed Property Expenses.” | |
Under a “Net Contract”, the Company receives a management fee that is based on a percentage of the gross rental proceeds received from the rental of hotel or condominium units. Under this arrangement, the owner of the hotel or condominium unit is responsible for all of the operating expenses of the rental program covering the owner’s unit and in addition to the percentage of gross rental proceeds the Company typically receives an incentive management fee based on the net operating profit of the | |
covered property. Additionally, we employ on-site personnel to provide services such as housekeeping, maintenance and administration to property owners under our management agreements and for such services the Company recognizes revenue in an amount equal to the expenses incurred. Revenues received under the net contract are recorded as Management and Service Income. Under a Net Contract, the Company does not record the operating expenses of the property covered by the agreement, other than the personnel costs mentioned above. | |
The difference between the Gross and Net contracts is that under a Gross Contract, all expenses, and therefore the ownership of any profits or the covering of any operating loss, belong to and is the responsibility of the Company; under a Net Contract, all expenses, and therefore the ownership or any profits or the covering of any operating loss belong to and is the responsibility of the owner of the property. | |
Under both types of agreements, revenues are recognized after services have been rendered. A liability is recognized for any deposits received for which services have not yet been rendered. | |
New Accounting Pronouncements | |
Note 2 New Accounting Pronouncements | |
From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption. | |
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. | |
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of its pending adoption of ASU 2014-09 on the Company’s consolidated financial statements and has not yet determined the method by which we will adopt the standard in 2017. | |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern. ASU 2014-15 requires management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans and requires an express statement and other disclosures when substantial doubt is not alleviated. ASU No. 2014-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, early application is permitted. We are currently evaluating the accounting implication and do not believe the adoption of ASU 2014-15 to have material impact on our consolidated financial statements, although there may be additional disclosures upon adoption. |