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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 10-Q

 

 

(Mark one)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

COMMISSION FILE NUMBER: 2-65481

 

 

SADDLEBROOK RESORTS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Florida   59-1917822
(State of incorporation)  

(IRS employer

identification no.)

5700 Saddlebrook Way, Wesley Chapel, Florida 33543-4499

(Address of principal executive offices)

813-973-1111

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  x    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

 

Large accelerated filer   ¨    Accelerated Filer   ¨
Non-accelerated filer   ¨    Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

Registrant has 100,000 shares of common stock outstanding, all of which are held by an affiliate of the Registrant.

 

 

 


Table of Contents

INDEX

 

     Page  

PART I - FINANCIAL INFORMATION

  

Item 1. Financial Statements

  

Saddlebrook Resorts, Inc.

  

Balance Sheets at September 30, 2012 and December 31, 2011

     3   

Statements of Operations and Accumulated Earnings for the three months and nine months ended September  30, 2012 and 2011

     4   

Statements of Cash Flows for the nine months ended September 30, 2012 and 2011

     5   

Notes to Financial Statements

     6   

Saddlebrook Rental Pool Operation

  

Balance Sheets at September 30, 2012 and December 31, 2011

     9   

Statements of Operations for the three months and nine months ended September 30, 2012 and 2011

     10   

Statements of Changes in Participants' Fund Balance for the nine months ended September  30, 2012 and 2011

     11   

Notes to Financial Statements

     12   

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     13   

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     15   

Item 4. Controls and Procedures

     15   

PART II - OTHER INFORMATION

  

Item 1. Legal Proceedings

     15   

Item 6. Exhibits

     16   

Signature

     17   

 

- 2 -


Table of Contents

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

SADDLEBROOK RESORTS, INC.

BALANCE SHEETS

 

     September 30,         
     2012      December 31,  
     (Unaudited)      2011  

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 625,449       $ 592,313   

Escrowed cash

     345,120         216,851   

Accounts receivable, net

     1,088,473         1,124,269   

Due from related parties

     706,917         438,238   

Inventory and supplies

     1,446,921         1,576,875   

Prepaid expenses and other current assets

     747,979         745,410   
  

 

 

    

 

 

 

Total current assets

     4,960,859         4,693,956   

Property, buildings and equipment, net

     20,441,622         21,024,081   

Deferred charges, net

     16,758         25,137   
  

 

 

    

 

 

 

Total assets

   $ 25,419,239       $ 25,743,174   
  

 

 

    

 

 

 

Liabilities and Shareholder’s Equity

     

Current liabilities:

     

Current portion of long-term debt

   $ 577,332       $ 577,332   

Line of credit

     500,000         —     

Current portion of capital lease obligation

     33,926         99,593   

Escrowed deposits

     345,120         216,851   

Accounts payable

     623,005         734,427   

Accrued rental distribution

     544,809         571,598   

Accrued expenses and other liabilities

     2,027,474         1,728,111   

Current portion of deferred income

     751,629         798,981   

Guest deposits

     685,272         667,606   

Due to related parties

     6,102,009         4,704,094   
  

 

 

    

 

 

 

Total current liabilities

     12,190,576         10,098,593   

Long-term debt

     4,674,668         5,107,668   

Long-term capital lease obligation

     —           8,537   

Deferred income

     919,892         1,034,071   
  

 

 

    

 

 

 

Total liabilities

     17,785,136         16,248,869   
  

 

 

    

 

 

 

Commitments and contingencies

     —           —     

Shareholder’s equity:

     

Common stock, $1.00 par value, 100,000 shares authorized and outstanding

     100,000         100,000   

Additional paid-in capital

     1,013,127         1,013,127   

Retained earnings

     6,520,976         8,381,178   
  

 

 

    

 

 

 

Total shareholder’s equity

     7,634,103         9,494,305   
  

 

 

    

 

 

 
   $ 25,419,239       $ 25,743,174   
  

 

 

    

 

 

 

The accompanying notes are an integral part

of these financial statements

 

- 3 -


Table of Contents

SADDLEBROOK RESORTS, INC.

STATEMENTS OF OPERATIONS

AND ACCUMULATED EARNINGS

(Unaudited)

 

     Three months ended
September 30,
    Nine months ended
September 30,
 
     2012     2011     2012     2011  

Revenues

   $ 4,667,046      $ 3,817,967      $ 21,891,140      $ 17,711,304   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

        

Operating costs

     5,002,452        3,967,502        18,535,208        15,222,909   

Sales and marketing

     360,946        332,346        1,266,886        996,738   

General and administrative

     762,359        607,704        2,460,626        2,140,883   

Depreciation

     454,124        487,096        1,372,756        1,442,809   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     6,579,881        5,394,648        23,635,476        19,803,339   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net operating loss before other income (expenses)

     (1,912,835     (1,576,681     (1,744,336     (2,092,035
  

 

 

   

 

 

   

 

 

   

 

 

 

Other (expenses) income

        

Interest income

     591        659        610        756   

Other income

     5,801        5,221        17,390        41,690   

Interest expense

     (46,312     (62,254     (133,867     (192,735
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other (expenses) income

     (39,920     (56,374     (115,867     (150,289

Net loss

     (1,952,755     (1,633,055     (1,860,202     (2,242,324

Accumulated earnings at beginning of period

     8,473,731        11,015,900        8,381,178        11,625,169   
  

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated earnings at end of period

   $ 6,520,976      $ 9,382,845      $ 6,520,976      $ 9,382,845   
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part

of these financial statements

 

- 4 -


Table of Contents

SADDLEBROOK RESORTS, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Nine months ended
September 30,
 
     2012     2011  

Operating activities:

    

Net loss

   $ (1,860,202   $ (2,242,324

Non-cash items included in net (loss) income:

    

Provision for doubtful accounts

     (1,435     (2,729

Depreciation

     1,372,756        1,442,809   

Amortization of debt financing costs

     8,379        8,379   

Gain on sale of assets

     (2,165     (428

Decrease (increase)in:

    

Accounts receivable

     37,231        877,135   

Inventory and supplies

     129,954        75,966   

Prepaid expenses and other assets

     (2,569     (84,636

(Decrease) increase in:

    

Accounts payable

     (111,422     (311,665

Accrued rental distribution

     (26,789     (247,929

Guest deposits

     17,666        (170,052

Accrued expenses and other liabilities

     299,363        88,212   

Deferred income

     (161,531     (237,565
  

 

 

   

 

 

 

Cash flow used in operating activities

     (300,764     (804,827
  

 

 

   

 

 

 

Investing activities:

    

Capital expenditures

     (790,298     (523,192

Proceeds from the sale of property and equipment

     2,165        1,800   
  

 

 

   

 

 

 

Cash flow used in investing activities

     (788,133     (521,392
  

 

 

   

 

 

 

Financing activities:

    

Payments on long-term debt

     (432,999     (795,000

Payments on capital lease obligations

     (74,204     (70,421

Proceeds from line of credit

     500,000        —     

Net borrowings from related parties

     1,129,236        1,867,854   
  

 

 

   

 

 

 

Cash flow provided by Financing activities

     1,122,033        1,002,433   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     33,136        (323,786

Cash and cash equivalents at beginning of period

     592,313        1,038,368   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 625,449      $ 714,582   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Cash paid for interest

   $ 125,488      $ 184,356   
  

 

 

   

 

 

 

The accompanying notes are an integral part

of these financial statements

 

- 5 -


Table of Contents

SADDLEBROOK RESORTS, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

Saddlebrook Resorts, Inc. (the “Company”) developed and operates Saddlebrook Resort, which is a condominium hotel and resort located in Wesley Chapel, Florida.

The Company’s accompanying balance sheet for September 30, 2012, and its statements of operations and accumulated earnings and cash flows for the periods ended September 30, 2012 and 2011, are unaudited but reflect all adjustments which are, in the opinion of management, necessary for the fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The balance sheet at December 31, 2011 has been derived from the audited financial statements as of that date.

The Company’s business is seasonal. Therefore, the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the full fiscal year.

These financial statements and related notes are presented for interim periods in accordance with the requirements of Form 10-Q and Article 10 of Regulation S-X, and, consequently, do not include all disclosures normally required by accounting principles generally accepted in the United States. Accordingly, these financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Note 2. Accounts Receivable

 

     September 30,        
     2012     December 31,  
     (Unaudited)     2011  

Trade accounts receivable

   $  1,124,231      $  1,161,462   

Less allowance for bad debts

     (35,758     (37,193
  

 

 

   

 

 

 
   $ 1,088,473      $ 1,124,269   
  

 

 

   

 

 

 

 

- 6 -


Table of Contents

Note 3. Property, Buildings and Equipment

 

     September 30,        
     2012     December 31,  
     (Unaudited)     2011  

Land and land improvements

   $ 6,802,067      $ 6,802,067   

Buildings and recreational facilities

     30,236,140        30,164,381   

Machinery and equipment

     17,954,527        17,669,598   

Construction in progress

     1,231,954        807,611   
  

 

 

   

 

 

 
     56,224,688        55,443,657   

Less accumulated depreciation

     (35,783,066     (34,419,576
  

 

 

   

 

 

 
   $ 20,441,622      $ 21,024,081   
  

 

 

   

 

 

 

The Company’s property, buildings and equipment are pledged as security for its long-term debt (see Note 5).

Note 4. Deferred Charges

 

      September 30,    

December 31,

 
     2012    
     (Unaudited)     2011  

Debt issue costs

   $ 55,895      $ 55,895   

Less accumulated amortization

     (39,137     (30,758
  

 

 

   

 

 

 
   $ 16,758      $ 25,137   
  

 

 

   

 

 

 

 

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Table of Contents

Note 5. Long-term debt and Capital Lease Obligation

At September 30, 2012, the outstanding balance on the term note was $ 5,252,000. The term note requires monthly principal payments of $48,111 plus monthly payments of all interest at 2.5% over the one month LIBOR index. The rate as of September 30, 2012 was 2.73%. The balance on the term note is due March 12, 2014. The note is collateralized by all current and subsequently acquired real and personal property.

In addition, the Company has the ability to obtain an additional $1,500,000 under a line of credit facility from the same lender subject to meeting certain financial covenants on an annual basis. The line of credit requires monthly payments of interest at 3% over the one month LIBOR index. The interest rate at September 30, 2012 was 3.23%. The line of credit expires in November 2012. At September 30, 2012, the Company had an outstanding balance of $500,000 on the line of credit.

On February 11, 2009, the Company entered into a capital lease for the purchase of vehicles in the amount of $370,542. The capital lease is secured by the vehicles purchased, matures in January 2013 and requires monthly payments of $8,574, including interest at 5.24%. At September 30, 2012, the amount due on the capital lease obligation was $33,926.

Note 6. Related Party Receivables

Related party receivables and payables at September 30, 2012 and December 31, 2011 are the result of net intercompany transactions and cash transfers between the Company and its shareholder and affiliated companies. Related party receivables and payables are unsecured and non-interest bearing.

Note 7. Income Taxes

The Company is currently a member of a Qualified Subchapter S Subsidiary Group. Accordingly, no income tax expense was reflected in the Company’s operating results as the tax is assessed to the shareholders of its parent company.

 

- 8 -


Table of Contents

us-gaap:AdditionalFinancialInformationDisclosureTextBlock SADDLEBROOK RENTAL POOL OPERATION

 

BALANCE SHEETS

DISTRIBUTION FUND

 

     September 30,         
     2012      December 31,  
     (Unaudited)      2011  

Assets

     

Receivable from Saddlebrook Resorts, Inc.

   $ 544,809       $ 571,598   
  

 

 

    

 

 

 

Liabilities and Participants’ Fund Balance

     

Due to participants for rental pool distribution

   $ 468,799       $ 473,950   

Due to maintenance escrow fund

     76,010         97,648   
  

 

 

    

 

 

 
   $ 544,809       $ 571,598   
  

 

 

    

 

 

 

MAINTENANCE ESCROW FUND

 

     September 30,         
     2012      December 31,  
     (Unaudited)      2011  

Assets

     

Cash and cash equivalents

   $ 323,238       $ 195,369   

Receivables:

     

Distribution fund

     76,010         97,648   

Owner payments

     573         —     

Linen inventory

     8,588         —     

Furniture inventory

     53,401         48,418   

Prepaid expenses and other assets

     11,951         7,545   
  

 

 

    

 

 

 
   $ 473,761       $ 348,980   
  

 

 

    

 

 

 

Liabilities and Participants’ Fund Balance

     

Accounts payable

   $ 109,618       $ 82,194   

Participants’ fund balance

     364,143         266,786   
  

 

 

    

 

 

 
   $ 473,761       $ 348,980   
  

 

 

    

 

 

 

The accompanying notes are an integral part

of these financial statements

 

- 9 -


Table of Contents

SADDLEBROOK RENTAL POOL OPERATION

 

STATEMENTS OF OPERATIONS

(Unaudited)

 

     Three months ended
September  30,
    Nine months ended
September 30,
 
     2012     2011     2012     2011  

Rental pool revenues

   $ 1,423,407      $ 773,085      $ 6,378,609      $ 4,659,296   
  

 

 

   

 

 

   

 

 

   

 

 

 

Deductions:

        

Marketing fee

     106,756        57,981        478,396        349,447   

Management fee

     177,926        96,636        797,327        582,412   

Travel agent commissions

     63,688        22,465        265,604        123,857   

Credit card expense

     33,262        19,052        148,957        115,347   

Provision for bad debts

     —          —          —          3,000   
  

 

 

   

 

 

   

 

 

   

 

 

 
     381,632        196,134        1,690,284        1,174,063   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net rental income

     1,041,775        576,951        4,688,325        3,485,233   

Less operator share of net rental income

     (468,799     (259,628     (2,109,747     (1,568,355

Other revenues (expenses):

        

Complimentary room revenues

     9,415        9,152        31,544        21,775   

Minor repairs and replacements

     (37,582     (24,453     (107,075     (87,794
  

 

 

   

 

 

   

 

 

   

 

 

 

Amount available for distribution

   $ 544,809      $ 302,022      $ 2,503,047      $ 1,850,859   
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part

of these financial statements

 

- 10 -


Table of Contents

SADDLEBROOK RENTAL POOL OPERATION

 

STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES

(Unaudited)

DISTRIBUTION FUND

 

     Nine months ended
September 30,
 
     2012     2011  

Balance at beginning of period

   $ —        $ —     

Additions:

    

Amount available for distribution

     2,503,047        1,850,859   

Reductions:

    

Amount withheld for maintenance escrow fund

     (393,300     (282,504

Amount accrued or paid to participants

     (2,109,747     (1,568,355
  

 

 

   

 

 

 

Balance at end of period

   $ —        $ —     
  

 

 

   

 

 

 

MAINTENANCE ESCROW FUND

 

     Nine months ended
September 30,
 
     2012     2011  

Balance at beginning of period

   $ 266,786        657,499   

Additions:

    

Amount withheld from distribution fund

     393,300        282,504   

Unit owner payments

     230,819        192,458   

Interest earned

     30        1,121   

Reductions:

    

Escrow account refunds

     (1,192     (17,709

Maintenance charges

     (296,076     (169,974

Unit renovations

     (62,732     (262,243

Linen replacement

     (166,792     (88,767
  

 

 

   

 

 

 

Balance at end of period

   $ 364,143      $ 594,889   
  

 

 

   

 

 

 

The accompanying notes are an integral part

of these financial statements

 

- 11 -


Table of Contents

SADDLEBROOK RENTAL POOL OPERATION

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

Note 1. Rental Pool Operations and Rental Pool Agreement

Condominium units are provided as rental (hotel) accommodations by their owners under the Rental Pool and Agency Appointment Agreement (the “Agreement”) with Saddlebrook Resorts, Inc. (collectively, the “Rental Pool”). Saddlebrook Resorts, Inc. (“Saddlebrook”) acts as operator of the Rental Pool which provides for the distribution of a percentage of net rental income, as defined, to the owners.

The Saddlebrook Rental Pool Operation consists of two funds: the Rental Pool Income Distribution Fund (“Distribution Fund”) and the Maintenance and Furniture Replacement Escrow Fund (“Maintenance Escrow Fund”). The operations of the Distribution Fund reflect the earnings of the Rental Pool. The Distribution Fund balance sheets reflect amounts due from Saddlebrook for the rental pool distribution payable to participants and amounts due to the Maintenance Escrow fund. The amounts due from Saddlebrook are required to be distributed no later than forty-five days following the end of each calendar quarter. The Maintenance Escrow Fund reflects the accounting for escrowed assets used to maintain unit interiors and replace furniture as it becomes necessary.

Rental pool participants and Saddlebrook share rental revenues according to the provisions of the Agreement. Net Rental Income shared consists of rentals received less a marketing surcharge of 7.5%, a 12.5% management fee, travel agent commissions, credit card expenses and provision for bad debts, if warranted. Saddlebrook receives 45% of Net Rental Income as operator of the Rental Pool. The remaining 55% of Net Rental Income, after adjustments for complimentary room revenues (ten percent of the normal unit rental price paid by Saddlebrook for promotional use of the unit) and certain minor repair and maintenance charges, is available for distribution to the participants and Maintenance Escrow Fund based upon each participant’s respective participation factor (computed using the value of a furnished unit and the number of days it was available to the pool). Quarterly, 45% of Net Rental Income is distributed to participants and 10%, as adjusted for complimentary room revenues and minor interior maintenance and replacement charges, is deposited in an escrow account until a maximum of 20% of the set value of the individual owner’s furniture package has been accumulated. Excess escrow balances are refunded to participants.

Note 2. Summary of Significant Accounting Policies

Basis of Accounting

The accounting records of the funds are maintained on the accrual basis of accounting.

Income Taxes

No federal or state taxes have been reflected in the accompanying financial statements as the tax effect of fund activities accrues to the rental pool participants and Saddlebrook.

 

- 12 -


Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The Company operates Saddlebrook Resort (the “Resort”) in Wesley Chapel, Florida, which contains condominium units that have been sold to third parties or to affiliates of the Company. The majority of the condominium units are hotel accommodations that participate in a rental-pooling program that provides its owners with a percentage distribution of related room revenues minus certain fees and expenses. The remainder of the condominium units participate in a non-pooling rental program, are owner-occupied or are designated as hospitality suites or housing for young athletes independent of the rental programs. Other resort property owned by the Company and its affiliates include golf courses, tennis courts, a spa, restaurants and conference center facilities.

Results of Operations

Third quarter 2012 compared to third quarter 2011

The Company’s total revenues increased approximately $849,000, or about 22%, for the three months ended September 30, 2012 compared to the same period in the prior year. Total revenues for the Rental Pool increased approximately $650,000, or about 84%. These changes are directly related to an increase in occupancy of approximately 62% over the prior period.

Total costs and expenses increased approximately $1,185,000, or about 22%, for the Company, and $186,000, or about 95%, for the Rental Pool Operation. These increases in costs and expenses are directly related to the increases in revenues and occupancy.

The Company experienced a net loss for the quarter in the amount of approximately $1,953,000, compared to the net loss of the prior comparable quarter of approximately $1,633,000. Amounts available for distribution for the Rental Pool Operation increased approximately $243,000, or about 80%, from the comparable period last year.

 

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Table of Contents

First nine months 2012 compared to first nine months 2011

The Company’s total revenues increased approximately $4,180,000, about 24%, for the nine months ended September 30, 2012 compared to the same period in the prior year. The total revenues for the Rental Pool increased approximately $1,720,000, or about 37%. Both of these increases are directly related to the increase in occupancy of approximately 35% when comparing the two periods.

Total costs and expenses for the Company increased approximately $3,832,000 or 19%. Total costs and expenses for the Rental Pool Operation increased by about $516,000, about 44%.

The Company experienced a net loss for the period of approximately $1,860,000, compared with a net loss of approximately $2,242,000 in the comparable period. Amounts available for distribution for the Rental Pool Operation increased approximately $652,000 over the same period in the prior year.

Impact of Current Economic Conditions

The Company believes that the reduced occupancy rates, when compared to periods prior to the year 2008, continue as a result of the current state of the United States’ economy, and the fact that businesses have altered their spending patterns in response.

In response to this trend, the Company has increased its marketing efforts toward the social clientele by developing packages designed to target more social guests, including families. These social packages are being promoted through the Company’s website as well as through travel wholesalers and with emphasis on e-commerce sites. Management has implemented programs and measures in an effort to get back to positive operating income. These programs and measures include cost control programs, consolidation of restaurant operations and efforts to increase brand awareness and recognition.

Liquidity and Capital Resources

Future operating costs and planned expenditures for minor capital additions and improvements are expected to be adequately funded by the Company’s and its affiliates’ current cash reserves and cash generated by resort operations. The Company’s term loan obtained from a third-party lender bears interest at 2.5% over the one month LIBOR index (2.73% at September 30, 2012) and matures in March 2014. The Company has the ability to obtain an additional $1,500,000 under a line of credit facility from the same lender subject to meeting certain financial covenants on an annual basis. The line of credit bears interest at 3% over the one month LIBOR index (3.23% at September 30,2012) and expires in November 2012. At September 30, 2012, the Company had an outstanding balance of $500,000 on the line of credit.

 

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Seasonality

The Company’s operations are seasonal with the highest volume of revenues generally occurring in the first quarter of each calendar year.

Due to the seasonal business of the Company, the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the full fiscal year.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s invested cash is subject to changes in market interest rates. Otherwise, the Company does not have significant market risk with respect to foreign currency exchanges or other market rates.

The Company’s term loan bears interest at 2.5% over the one month LIBOR index and matures on March 12, 2014.

The Company’s line of credit bears interest at 3% over the one month LIBOR index and expires in November 2012.

 

Item 4. Controls and Procedures

The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the disclosure controls and procedures as of September 30, 2012, pursuant to Exchange Act Rule 15d-15. Based upon that evaluation, the Company’s Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2012 in timely alerting them to material information required to be included in the Company’s periodic SEC filings.

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures over internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must be considered relative to their costs. Because of the inherent limitation in all control systems, no evaluation of controls can provide absolute assurance that all control issues within the Company have been detected.

There were no changes in the Company’s internal controls over financial reporting during the three months ended September 30, 2012 that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

The Company is from time to time involved in litigation in the ordinary course of business. In the opinion of the Company’s management, insurance or indemnification from other third parties adequately covers these matters. Accordingly, the effect, if any, of these claims is considered immaterial to the Company’s financial condition and results of operations.

 

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Item 6. Exhibits

The following exhibits are included in this Form 10-Q:

 

  31.1    -    Chief Executive Officer Rule 15d-14(a) Certification
  31.2    -    Chief Financial Officer Rule 15d-14(a) Certification
  32.1    -    Chief Executive Officer Section 1350 Certification
  32.2    -    Chief Financial Officer Section 1350 Certification
101    -    Interactive Data Files

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  SADDLEBROOK RESORTS, INC.
  (Registrant)
Date: November 14, 2012  

/s/ Donald L. Allen

  Donald L. Allen
  Vice President and Treasurer
  (Principal Financial and
  Accounting Officer)

 

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