Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 14, 2016 | |
Document and Entity Information: | ||
Entity Registrant Name | CASTLE GROUP INC | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Entity Central Index Key | 918,543 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 10,056,392 | |
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 | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | cagu |
THE CASTLE GROUP, INC. CONDENSE
THE CASTLE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2016 & DECEMBER 31, 2015 (UNAUDITED) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 1,663,750 | $ 2,370,557 |
Accounts receivable, net of allowance for bad debts | 2,524,130 | 2,037,058 |
Deferred tax asset current | 0 | 509,117 |
Note receivable, current portion | 15,000 | 15,000 |
Prepaid and other current assets | 583,788 | 384,170 |
Total Current Assets | 4,786,668 | 5,315,902 |
Non-Current Assets | ||
Property and equipment, net | 6,289,692 | 6,032,375 |
Deposits and other assets | 137,745 | 146,271 |
Note receivable | 174,994 | 178,536 |
Investment in limited liability company | 588,967 | 562,367 |
Deferred tax asset non current | 721,070 | 390,331 |
Goodwill | 54,726 | 54,726 |
TOTAL ASSETS | 12,753,862 | 12,680,508 |
Current Liabilities | ||
Accounts payable | 2,641,341 | 2,694,688 |
Payable to related parties | 3,527 | 0 |
Deposits payable | 917,644 | 816,264 |
Current portion of long term debt | 394,025 | 364,870 |
Current portion of long term debt to related parties | 36,987 | 34,325 |
Accrued salaries and wages | 1,436,642 | 1,521,489 |
Accrued taxes | 18,077 | 52,507 |
Other current liabilities | 0 | 3,232 |
Total Current Liabilities | 5,448,243 | 5,487,375 |
Non-Current Liabilities | ||
Long term debt, net of current portion | 5,237,724 | 5,509,766 |
Long term debt to related parties, net of current portion | 9,837 | 37,919 |
Total Non-Current Liabilities | 5,247,561 | 5,547,685 |
Total Liabilities | 10,695,804 | 11,035,060 |
Stockholders' Equity | ||
Preferred stock, $100 par value, 50,000 shares authorized, 11,050 shares issued and outstanding at September 30, 2016 and December 31, 2015 | 1,105,000 | 1,105,000 |
Common stock, $.02 par value, 20,000,000 shares authorized, 10,056,392 shares issued and outstanding at September 30, 2016 and December 31, 2015 | 201,129 | 201,129 |
Additional paid in capital | 5,243,644 | 5,093,614 |
Retained deficit | (4,539,389) | (4,803,759) |
Accumulated other comprehensive income | 47,674 | 49,464 |
Total Stockholders' Equity | 2,058,058 | 1,645,448 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 12,753,862 | $ 12,680,508 |
THE CASTLE GROUP INC. BALANCE S
THE CASTLE GROUP INC. BALANCE SHEET (PARENTHETICAL) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
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 | 10,056,392 | 10,056,392 |
Common stock outstanding | 10,056,392 | 10,056,392 |
THE CASTLE GROUP, INC. CONDENS4
THE CASTLE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues | ||||
Revenue attributed from properties | $ 3,275,971 | $ 3,048,075 | $ 9,671,051 | $ 9,102,454 |
Management and service | 3,723,485 | 3,269,573 | 9,703,279 | 8,688,151 |
Other revenue | 700 | 800 | 2,400 | 2,600 |
Total Revenues | 7,000,156 | 6,318,448 | 19,376,730 | 17,793,205 |
Operating Expenses | ||||
Attributed property expenses | 2,958,553 | 2,869,177 | 8,602,538 | 8,415,285 |
Payroll and office expenses | 3,472,295 | 3,203,476 | 9,441,789 | 8,757,648 |
Administrative and general | 155,608 | 98,596 | 490,736 | 390,510 |
Depreciation | 69,457 | 50,923 | 191,027 | 164,148 |
Total Operating Expense | 6,655,913 | 6,222,172 | 18,726,090 | 17,727,591 |
Operating Income | 344,243 | 96,276 | 650,640 | 65,614 |
Equity method investment income | 14,000 | 11,000 | 42,000 | 79,000 |
Interest expense | (78,859) | (81,584) | (238,250) | (261,496) |
Income (Loss) before taxes | 279,384 | 25,692 | 454,390 | (116,882) |
Income tax (expense) | (112,274) | (25,080) | (190,020) | (31,319) |
Net Income (Loss) | 167,110 | 612 | 264,370 | (148,201) |
Change in unpaid cumulative dividends on convertible preferred stock | (20,720) | (20,720) | (62,156) | (62,156) |
Net Income (Loss) applicable to Common Stockholders | $ 146,390 | $ (20,108) | $ 202,214 | $ (210,357) |
Earnings (Loss) Per Share Basic | $ 0.02 | $ 0 | $ 0.03 | $ (0.01) |
Earnings (Loss) Per Share Diluted | $ 0.02 | $ 0 | $ 0.03 | $ (0.01) |
Weighted Average Shares Basic | 10,056,392 | 10,056,392 | 10,056,392 | 10,052,253 |
Weighted Average Shares Diluted | 10,424,725 | 10,424,725 | 10,424,725 | 10,052,253 |
Net Income (Loss) | $ 167,110 | $ 612 | $ 264,370 | $ (148,201) |
Other Comprehensive (Loss) Income | ||||
Foreign currency translation adjustment | (1,362) | 19,353 | (1,790) | 30,340 |
Total Comprehensive Income (Loss) | $ 165,748 | $ 19,965 | $ 262,580 | $ (117,861) |
THE CASTLE GROUP, INC. CONDENS5
THE CASTLE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows from Operating Activities | ||
Net Income (Loss) | $ 264,370 | $ (148,201) |
Depreciation | 191,027 | 164,148 |
Stock issued as compensation | 0 | 2,000 |
Imputed interest expense | 150,030 | 150,030 |
Equity method investment income | (42,000) | (79,000) |
Deferred taxes | 178,378 | 31,319 |
(Increase) decrease in Accounts receivable | (388,749) | 650,859 |
(Increase) decrease in Prepaid and other current assets | (228,191) | (127,926) |
(Increase) decrease in Deposits and other assets | 15,189 | 15,622 |
Increase (decrease) in Accounts payable and accrued expenses | (349,307) | (543,523) |
Increase (decrease) in Deposits payable | 94,101 | (53,577) |
Net Change from Operating Activities | (115,152) | 61,751 |
Cash Flows from Investing Activities | ||
Distributions from investments | 15,400 | 104,650 |
Purchase of property and equipment | (67,518) | (365,319) |
Net Change from Investing Activities | (52,118) | (260,669) |
Cash Flows from Financing Activities | ||
Proceeds from notes | 40,178 | 200,000 |
Proceeds from notes receivable | 3,542 | 5,113 |
Payments on long term debt to related parties | (25,420) | (31,979) |
Payments on long term debt | (601,290) | (252,048) |
Net Change from Financing Activities | (582,990) | (78,914) |
Effect of foreign currency exchange rate on changes in cash and cash equivalents | 43,453 | (92,035) |
Net Change in Cash and Cash Equivalents | (706,807) | (369,867) |
Beginning Balance | 2,370,557 | 1,753,780 |
Ending Balance | 1,663,750 | 1,383,913 |
Supplementary Information | ||
Cash Paid for Interest | 88,220 | 111,466 |
Noncash Forgiveness of Related Party Debt | 0 | 14,000 |
Cash Paid for Income Taxes | $ (11,642) | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
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 (GAAP) and practices within the hotel and resort management 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 and nine month periods ended September 30, 2016, 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 condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in Castles most recent Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 30, 2016. The Companys significant accounting policies are set forth in Note 1 to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2015. Revenue Recognition In accordance with ASC 605: Revenue Recognition The Company recognizes revenue from the management of 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 and beverage, maintenance, front desk, sales and 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 owners 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, the Company employs on-site personnel to provide services such as housekeeping, maintenance and administration to property owners under its management agreements. 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 revenue. 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 are the responsibility of the Company. Under a Net Contract, all expenses, and therefore the ownership of any profits or the covering of any operating loss belong to and are 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 Financial Accounting Standards Board (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 Companys consolidated financial statements upon adoption. In May 2014, the FASB issued Accounting Standards Update (ASU) 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, 2017, 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 Companys consolidated financial statements and has not yet determined the method by which it will adopt the standard in 2018. 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. The Company is currently evaluating the accounting implication and does not believe the adoption of ASU 2014-15 will have material impact on the consolidated financial statements, although there may be additional disclosures upon adoption. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, that requires companies to classify all deferred tax assets and liabilities, along with any valuation allowance, as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company has prospectively classified all of its deferred tax asset as of September 30, 2016 as a noncurrent asset. Prior periods have not been adjusted or re-classified. In February 2016, the FASB issued ASU No. 2016-02, Leases, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, a lessee will be required to recognize assets and liabilities for capital and operating leases with lease terms of more than 12 months. Additionally, this ASU will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impact this new standard may have on its financial statements. In March 2016, the FASB issued ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net), which updates the new revenue standard by clarifying the principal versus agent implementation guidance, but does not change the core principle of the new standard. The updates to the principal versus agent guidance (1) require an entity to determine whether it is a principal or an agent for each distinct good or service (or a distinct bundle of goods or services) to be provided to the customer; (2) illustrate how an entity that is a principal might apply the control principle to goods, services, or rights to services, when another party is involved in providing goods or services to a customer; (3) clarify that the purpose of certain specific control indicators is to support or assist in the assessment of whether an entity controls a specified good or service before it is transferred to the customer, provide more specific guidance on how the indicators should be considered, and clarify that their relevance will vary depending on the facts and circumstances; and (4) revise existing examples and add two new ones to more clearly depict how the guidance should be applied. The effective date and transition requirements for ASU 2016-08 are the same as the effective date and transition requirements of Topic 606, Revenue from Contracts with Customers (see ASU 2014-09 above). The Company is currently evaluating the potential impact this new standard may have on its financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which introduces targeted amendments intended to simplify the accounting for stock compensation. Specifically, the ASU requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether the benefit reduces taxes payable in the current period. That is, off balance sheet accounting for net operating losses stemming from excess tax benefits would no longer be required and instead such net operating losses would be recognized when they arise. Existing net operating losses that are currently tracked off balance sheet would be recognized, net of a valuation allowance if required, through an adjustment to opening retained earnings in the period of adoption. Entities will no longer need to maintain and track an APIC pool. The ASU also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows. In addition, the ASU elevates the statutory tax withholding threshold to qualify for equity classification up to the maximum statutory tax rates in the applicable jurisdiction(s). The ASU also clarifies that cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. The ASU provides an optional accounting policy election (with limited exceptions), to be applied on an entity-wide basis, to either estimate the number of awards that are expected to vest (consistent with existing U.S. GAAP) or account for forfeitures when they occur. The ASU is effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period for which the financial statements have not been issued or made available to be issued. Certain detailed transition provisions apply if an entity elects to early adopt. The Company is currently evaluating the potential impact this new standard may have on its financial statements. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Income Taxes | Note 3 Income Taxes Income tax expense reflects the expense or benefit only on the Companys domestic taxable income. Income tax expense and benefit from the Companys foreign operations are not recognized as they have been fully reserved. |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Long Term Debt | Note 4 Long Term Debt In June 2015, the Company received a term loan of $200,000 from a local bank which was used to fund upgrades to the property management and central reservation systems. These outflows will be recouped by the Company through reimbursements from managed properties. The loan is for a fixed interest rate of 5.875% with monthly payments of $3,855 and matures in June 2020. The outstanding balance of this loan was $155,200 and $191,033 as of September 30, 2016 and September 30, 2015, respectively. In April 2016, the Company received a loan of $40,178 to finance the purchase carts for one of its managed properties. The loan is secured by the equipment purchased. The loan is for a fixed interest rate of 4.43% with monthly payments of $749 and matures in March, 2021. The outstanding balance of this loan was $36,555 at September 30, 2016. |
Equity-based Compensation
Equity-based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Equity-based Compensation | Note 5 Equity-Based Compensation In April 2015, the Company issued 10,000 shares of restricted common stock as a hiring incentive to one of its employees. The shares were assigned a value of $0.20 per share or a total of $2,000 as compensation to the employee. There have been no issuances of equity-based compensation during the nine months ended September 30, 2016. |
Basic and Dilutive Earnings Per
Basic and Dilutive Earnings Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Basic and Dilutive Earnings Per Share | Note 6 Basic and Dilutive Earnings Per Share Basic earnings per share (EPS) is computed by dividing net income (loss) (the numerator) by the weighted average number of common shares outstanding for the period (denominator). Diluted EPS is computed by dividing net income (loss) by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, and restricted stock. The number of potential common shares outstanding relating to stock options, warrants, and restricted stock is computed using the treasury stock method. As the Company incurred losses for the nine months ended September 30, 2015, the potentially dilutive shares are anti-dilutive and are thus not added into the loss per share calculations. As of September 30, 2016, there were 368,333 potentially dilutive shares. During the periods ended September 30, 2016 and 2015, the Company had warrants for shares totaling 400,000 outstanding at each period end, respectively, that were excluded from the computations of diluted net income per share because the exercise prices were greater than the market prices during the reporting periods. |
Summary of Significant Accoun11
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
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 (GAAP) and practices within the hotel and resort management 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 and nine month periods ended September 30, 2016, 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 condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in Castles most recent Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 30, 2016. The Companys significant accounting policies are set forth in Note 1 to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2015. |
Revenue Recognition | Revenue Recognition In accordance with ASC 605: Revenue Recognition The Company recognizes revenue from the management of 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 and beverage, maintenance, front desk, sales and 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 owners 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, the Company employs on-site personnel to provide services such as housekeeping, maintenance and administration to property owners under its management agreements. 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 revenue. 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 are the responsibility of the Company. Under a Net Contract, all expenses, and therefore the ownership of any profits or the covering of any operating loss belong to and are 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 Financial Accounting Standards Board (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 Companys consolidated financial statements upon adoption. In May 2014, the FASB issued Accounting Standards Update (ASU) 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, 2017, 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 Companys consolidated financial statements and has not yet determined the method by which it will adopt the standard in 2018. 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. The Company is currently evaluating the accounting implication and does not believe the adoption of ASU 2014-15 will have material impact on the consolidated financial statements, although there may be additional disclosures upon adoption. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, that requires companies to classify all deferred tax assets and liabilities, along with any valuation allowance, as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company has prospectively classified all of its deferred tax asset as of September 30, 2016 as a noncurrent asset. Prior periods have not been adjusted or re-classified. In February 2016, the FASB issued ASU No. 2016-02, Leases, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, a lessee will be required to recognize assets and liabilities for capital and operating leases with lease terms of more than 12 months. Additionally, this ASU will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impact this new standard may have on its financial statements. In March 2016, the FASB issued ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net), which updates the new revenue standard by clarifying the principal versus agent implementation guidance, but does not change the core principle of the new standard. The updates to the principal versus agent guidance (1) require an entity to determine whether it is a principal or an agent for each distinct good or service (or a distinct bundle of goods or services) to be provided to the customer; (2) illustrate how an entity that is a principal might apply the control principle to goods, services, or rights to services, when another party is involved in providing goods or services to a customer; (3) clarify that the purpose of certain specific control indicators is to support or assist in the assessment of whether an entity controls a specified good or service before it is transferred to the customer, provide more specific guidance on how the indicators should be considered, and clarify that their relevance will vary depending on the facts and circumstances; and (4) revise existing examples and add two new ones to more clearly depict how the guidance should be applied. The effective date and transition requirements for ASU 2016-08 are the same as the effective date and transition requirements of Topic 606, Revenue from Contracts with Customers (see ASU 2014-09 above). The Company is currently evaluating the potential impact this new standard may have on its financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which introduces targeted amendments intended to simplify the accounting for stock compensation. Specifically, the ASU requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) to be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits, and assess the need for a valuation allowance, regardless of whether the benefit reduces taxes payable in the current period. That is, off balance sheet accounting for net operating losses stemming from excess tax benefits would no longer be required and instead such net operating losses would be recognized when they arise. Existing net operating losses that are currently tracked off balance sheet would be recognized, net of a valuation allowance if required, through an adjustment to opening retained earnings in the period of adoption. Entities will no longer need to maintain and track an APIC pool. The ASU also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows. In addition, the ASU elevates the statutory tax withholding threshold to qualify for equity classification up to the maximum statutory tax rates in the applicable jurisdiction(s). The ASU also clarifies that cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. The ASU provides an optional accounting policy election (with limited exceptions), to be applied on an entity-wide basis, to either estimate the number of awards that are expected to vest (consistent with existing U.S. GAAP) or account for forfeitures when they occur. The ASU is effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period for which the financial statements have not been issued or made available to be issued. Certain detailed transition provisions apply if an entity elects to early adopt. The Company is currently evaluating the potential impact this new standard may have on its financial statements. |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Details | |||
Proceeds from notes | $ 200,000 | $ 40,178 | $ 200,000 |
Accounts Payable, Interest-bearing, Interest Rate | 5.88% | ||
Loan Payable Monthly Payment | $ 3,855 | ||
Balance Due On Term Loan | $ 155,200 | $ 191,033 | |
April Loan 2016 Interest Rate | 4.43% | ||
April Loan 2016 Payable Monthly Payment | $ 749 | ||
April 2016 Loan Balance | $ 36,555 |
Equity-based Compensation (Deta
Equity-based Compensation (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Apr. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Details | |||
Stock Issued During Period, Shares, Issued for Services | 10,000 | ||
Shares Issued, Price Per Share | $ 0.20 | ||
Stock issued as compensation | $ 0 | $ 2,000 |
Basic and Dilutive Earnings P14
Basic and Dilutive Earnings Per Share (Details) | 9 Months Ended |
Sep. 30, 2016shares | |
Details | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 368,333 |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 400,000 |
Uncategorized Items - cagu-2016
Label | Element | Value |
Equity method investment income {1} | us-gaap_InvestmentIncomeNet | $ 14,000 |
Equity method investment income {1} | us-gaap_InvestmentIncomeNet | $ 11,000 |