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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, 2013

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, 2013 and December 31, 2012

     3   

Statements of Operations and Retained Earnings for the three months and nine months ended September  30, 2013 and 2012

     4   

Statements of Cash Flows for the nine months ended September 30, 2013 and 2012

     5   

Notes to Financial Statements

     6   

Saddlebrook Rental Pool Operation

  

Balance Sheets at September 30, 2013 and December 31, 2012

     9   

Statements of Operations for the three months and nine months ended September 30, 2013 and 2012

     10   

Statements of Changes in Participants’ Fund Balance for the nine months ended September  30, 2013 and 2012

     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,
2013
(Unaudited)
     December 31,
2012
 

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 697,978       $ 2,098,331   

Escrowed cash

     218,196         258,941   

Accounts receivable, net

     496,270         928,030   

Due from related parties

     641,025         665,043   

Inventory and supplies

     1,355,194         1,367,232   

Prepaid expenses and other current assets

     674,391         741,145   
  

 

 

    

 

 

 

Total current assets

     4,083,054         6,058,722   

Property, buildings and equipment, net

     19,656,953         20,531,351   

Deferred charges, net

     5,586         13,965   
  

 

 

    

 

 

 

Total assets

   $ 23,745,593       $ 26,604,038   
  

 

 

    

 

 

 

Liabilities and Shareholder’s Equity

     

Current liabilities:

     

Current portion of long-term debt

   $ 4,674,669       $ 2,077,332   

Current portion of capital lease obligations

     62,686         68,735   

Escrowed deposits

     218,196         258,941   

Accounts payable

     556,565         585,609   

Accrued rental distribution

     274,782         527,234   

Accrued expenses and other liabilities

     1,766,742         1,753,426   

Current portion of deferred income

     702,747         730,210   

Guest deposits

     788,980         675,473   

Due to related parties

     7,146,787         7,495,320   
  

 

 

    

 

 

 

Total current liabilities

     16,192,154         14,172,280   

Long-term debt

     —           4,530,335   

Long-term capital lease obligations

     227,547         274,878   

Deferred income

     746,674         854,380   
  

 

 

    

 

 

 

Total liabilities

     17,166,375         19,831,873   
  

 

 

    

 

 

 

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

     5,466,091         5,659,038   
  

 

 

    

 

 

 

Total shareholder’s equity

     6,579,218         6,772,165   
  

 

 

    

 

 

 
   $ 23,745,593       $ 26,604,038   
  

 

 

    

 

 

 

The accompanying notes are an integral part

of these financial statements

 

- 3 -


Table of Contents

SADDLEBROOK RESORTS, INC.

STATEMENTS OF OPERATIONS

AND RETAINED EARNINGS

(Unaudited)

 

     Three months ended
September 30,
    Nine months ended
September 30,
 
     2013     2012     2013     2012  

Revenues

   $ 3,601,561      $ 4,667,046      $ 19,790,093      $ 21,891,140   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

        

Operating costs

     3,668,823        5,002,452        15,194,979        18,535,208   

Sales and marketing

     254,308        360,946        1,015,534        1,266,886   

General and administrative

     723,554        762,359        2,268,751        2,460,626   

Depreciation

     468,682        454,124        1,389,725        1,372,756   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     5,115,367        6,579,881        19,868,989        23,635,476   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net operating loss before other income (expenses)

     (1,513,806     (1,912,835     (78,896     (1,744,336
  

 

 

   

 

 

   

 

 

   

 

 

 

Other (expenses) income

        

Interest income

     —          591        —          610   

Other income

     3,966        5,801        42,815        17,390   

Interest expense

     (41,043     (46,312     (156,866     (133,867
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expenses

     (37,077     (39,920     (114,051     (115,867

Net loss

     (1,550,883     (1,952,755     (192,947     (1,860,202

Retained earnings at beginning of period

     7,016,974        8,473,731        5,659,038        8,381,178   
  

 

 

   

 

 

   

 

 

   

 

 

 

Retained earnings at end of period

   $ 5,466,091      $ 6,520,976      $ 5,466,091      $ 6,520,976   
  

 

 

   

 

 

   

 

 

   

 

 

 

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,
 
     2013     2012  

Operating activities:

    

Net loss

   $ (192,947   $ (1,860,202

Non-cash items included in net loss:

    

Provision for doubtful accounts

     —          (1,435

Depreciation

     1,389,725        1,372,756   

Amortization of debt financing costs

     14,885        8,379   

Gain on sale of assets

     —          (2,165

Decrease (increase) in:

    

Accounts receivable

     431,760        37,231   

Inventory and supplies

     12,038        129,954   

Prepaid expenses and other current assets

     66,754        (2,569

(Decrease) increase in:

    

Accounts payable

     (29,044     (111,422

Accrued rental distribution

     (252,452     (26,789

Guest deposits

     113,507        17,666   

Accrued expenses and other liabilities

     13,316        299,363   

Deferred income

     (135,169     (161,531
  

 

 

   

 

 

 

Cash flow from operating activities

     1,432,373        (300,764
  

 

 

   

 

 

 

Investing activities:

    

Capital expenditures

     (515,327     (790,298

Proceeds from the sale of property and equipment

     —          2,165   
  

 

 

   

 

 

 

Cash flow from investing activities

     (515,327     (788,133
  

 

 

   

 

 

 

Financing activities:

    

Payments on long-term debt

     (432,998     (432,999

Payments on capital lease obligations

     (53,380     (74,204

Payments on line of credit

     (1,500,000     500,000   

Debt issuance costs

     (6,506     —     

Net borrowings from related parties

     (324,515     1,129,236   
  

 

 

   

 

 

 

Cash flow from financing activities

     (2,317,399     1,122,033   
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (1,400,353     33,136   

Cash and cash equivalents at beginning of period

     2,098,331        592,313   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 697,978      $ 625,449   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Cash paid for interest

   $ 141,980      $ 125,488   
  

 

 

   

 

 

 

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, 2013, and its statements of operations and retained earnings and cash flows for the periods ended September 30, 2013 and 2012, 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, 2012 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, 2012.

Note 2. Accounts Receivable

 

     September 30,
2013
(Unaudited)
    December 31,
2012
 

Trade accounts receivable

   $ 534,728      $ 977,957   

Less allowance for bad debts

     (38,458     (49,927
  

 

 

   

 

 

 
   $ 496,270      $ 928,030   
  

 

 

   

 

 

 

 

- 6 -


Table of Contents

Note 3. Property, Buildings and Equipment

 

     September 30,
2013
(Unaudited)
    December 31,
2012
 

Land and land improvements

   $ 6,802,067      $ 6,802,067   

Buildings and recreational facilities

     30,549,381        30,321,030   

Machinery and equipment

     18,479,132        18,343,095   

Construction in progress

     1,313,191        1,163,830   
  

 

 

   

 

 

 
     57,143,771        56,560,022   

Less accumulated depreciation

     (37,486,818     (36,098,671
  

 

 

   

 

 

 
   $ 19,656,953      $ 20,531,351   
  

 

 

   

 

 

 

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,
2013
(Unaudited)
    December 31,
2012
 

Debt issue costs

   $ 62,401      $ 55,895   

Less accumulated amortization

     (56,815     (41,930
  

 

 

   

 

 

 
   $ 5,586      $ 13,965   
  

 

 

   

 

 

 

 

- 7 -


Table of Contents

Note 5. Long-term debt and Capital Lease Obligation

At September 30, 2013, the outstanding balance on the term note was $4,674,669. 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, 2013 was 2.68%. 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.

The Company had a $1,500,000 line of credit from the same lender that expired on June 30, 2013 and was fully repaid on that date.

On December 13, 2012, the Company entered into a capital lease obligation for equipment in the amount of $80,479. The capital lease is secured by the equipment purchased, matures in November 2017 and requires monthly payments of $1,426, including interest at 2.44%. At September 30, 2013, the amount due on the capital lease obligation was $67,727.

On December 2, 2012, the Company entered into a capital lease obligation for equipment in the amount of $255,874. The assets associated with this lease cost $294,724, of which $38,850 was reduced through the Company’s trade-in of existing equipment. This capital lease is secured by the equipment purchased, matures in December 2017 and requires monthly payments of $4,995, including interest at 6.41%. At September 30, 2013, the amount due on the capital lease obligation was $222,506.

Note 6. Related Party Receivables

Related party receivables and payables at September 30, 2013 and December 31, 2012 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.

Note 8. Subsequent Events

Subsequent to September 30, 2013, the Company experienced damage to storage facilities and equipment as a result of a fire. The Company intends to file an insurance claim; however, the extent of the damage is not known as of the date of the Form 10-Q filing. The Company’s insurance policy has a $100,000 deductible.

 

- 8 -


Table of Contents

SADDLEBROOK RENTAL POOL OPERATION

BALANCE SHEETS

DISTRIBUTION FUND

 

     September 30,
2013
(Unaudited)
     December 31,
2012
 

Assets

     

Receivable from Saddlebrook Resorts, Inc.

   $ 274,782       $ 527,234   
  

 

 

    

 

 

 

Liabilities and Participants’ Fund Balance

     

Due to participants for rental pool distribution

   $ 259,289       $ 449,362   

Due to maintenance escrow fund

     15,493         77,872   
  

 

 

    

 

 

 
   $ 274,782       $ 527,234   
  

 

 

    

 

 

 

MAINTENANCE ESCROW FUND

 

     September 30,
2013
(Unaudited)
     December 31,
2012
 

Assets

     

Cash and cash equivalents

   $ 199,297       $ 237,059   

Receivables:

     

Distribution fund

     15,493         77,872   

Owner payments

     —           —     

Linen inventory

     9,424         43,600   

Furniture inventory

     78,045         49,784   

Prepaid expenses and other assets

     12,577         14,234   
  

 

 

    

 

 

 
   $ 314,836       $ 422,513   
  

 

 

    

 

 

 

Liabilities and Participants’ Fund Balance

     

Accounts payable

   $ 57,806       $ 92,946   

Participants’ fund balance

     257,030         329,567   
  

 

 

    

 

 

 
   $ 314,836       $ 422,513   
  

 

 

    

 

 

 

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,
 
     2013     2012     2013     2012  

Rental pool revenues

   $ 751,050      $ 1,423,407      $ 5,281,364      $ 6,378,609   
  

 

 

   

 

 

   

 

 

   

 

 

 

Deductions:

        

Marketing fee

     56,329        106,756        396,103        478,396   

Management fee

     93,881        177,926        660,171        797,327   

Travel agent commissions

     3,119        63,688        205,278        265,604   

Credit card expense

     21,523        33,262        139,030        148,957   
  

 

 

   

 

 

   

 

 

   

 

 

 
     174,852        381,632        1,400,582        1,690,284   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net rental income

     576,198        1,041,775        3,880,782        4,688,325   

Less operator share of net rental income

     (259,289     (468,799     (1,746,351     (2,109,747

Other revenues (expenses):

        

Complimentary room revenues

     4,919        9,415        17,929        31,544   

Minor repairs and replacements

     (47,046     (37,582     (138,437     (107,075
  

 

 

   

 

 

   

 

 

   

 

 

 

Amount available for distribution

   $ 274,782      $ 544,809      $ 2,013,923      $ 2,503,047   
  

 

 

   

 

 

   

 

 

   

 

 

 

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,
 
     2013     2012  

Balance at beginning of period

   $ —        $ —     

Additions:

    

Amount available for distribution

     2,013,923        2,503,047   

Reductions:

    

Amount withheld for maintenance escrow fund

     (267,572     (393,300

Amount accrued or paid to participants

     (1,746,351     (2,109,747
  

 

 

   

 

 

 

Balance at end of period

   $ —        $ —     
  

 

 

   

 

 

 

MAINTENANCE ESCROW FUND

 

                             
     Nine months ended
September 30,
 
     2013     2012  

Balance at beginning of period

   $ 329,567        266,786   

Additions:

    

Amount withheld from distribution fund

     267,572        393,300   

Unit owner payments

     38,720        230,819   

Interest earned

     32        30   

Reductions:

    

Escrow account refunds

     (2,966     (1,192

Maintenance charges

     (196,656     (296,076

Unit renovations

     (5,692     (62,732

Linen replacement

        (173,547        (166,792
  

 

 

   

 

 

 

Balance at end of period

   $ 257,030      $ 364,143   
  

 

 

   

 

 

 

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 2013 compared to third quarter 2012

The Company’s total revenues decreased $1,065,485, or 23%, for the three months ended September 30, 2013 compared to the same period in the prior year. Total revenues for the Rental Pool decreased $672,357, or 47%. These changes are directly related to a decrease in occupancy of 43% over the prior period.

Total costs and expenses decreased $1,464,514, or 22%, for the Company, and $206,780, or 54%, for the Rental Pool Operation. These decreases in costs and expenses are directly related to the decreases in revenues and occupancy.

The Company experienced a net loss for the quarter in the amount of $1,550,883, compared to the net loss of the prior comparable quarter of $1,952,755. Amounts available for distribution for the Rental Pool Operation decreased $270,027, or 50%, from the comparable period last year.

 

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Table of Contents

First nine months 2013 compared to first nine months 2012

The Company’s total revenues decreased $2,101,047, or 10%, for the nine months ended September 30, 2013 compared to the same period in the prior year. The total revenues for the Rental Pool decreased $1,097,245, or 17%. Both of these decreases are directly related to the decrease in occupancy of 19% when comparing the two periods.

Total costs and expenses for the Company decreased $3,766,487, or 16%. Total costs and expenses for the Rental Pool Operation increased by $289,702, or 17%.

The Company experienced a net loss for the period of $192,947, compared with a net loss of $1,860,202 in the comparable period. The Company’s decrease in net loss of $1,667,255 over the comparable period is directly contributed to cost savings in labor, and by reducing cost of materials and supplies by joining a major procurement service. Amounts available for distribution for the Rental Pool Operation decreased $489,124 over the same period in the prior year.

Impact of Current Economic Conditions

The Company believes that reduced occupancy rates will 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 of the Resort.

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 (2.68% at September 30, 2013) and matures in March 2014. The Company’s $1,500,000 line of credit expired on June 30, 2013 and was fully repaid on that date.

 

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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.

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, 2013, 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, 2013 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, 2013 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, 2013    

/s/    Donald L. Allen        

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

 

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