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EX-32.2 - CHIEF FINANCIAL OFFICER SECTION 1350 - SADDLEBROOK RESORTS INCd173515dex322.htm
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EX-31.2 - CHIEF FINANCIAL OFFICER RULE 15D-14(A) - SADDLEBROOK RESORTS INCd173515dex312.htm
EX-31.1 - CHIEF EXECUTIVE OFFICER RULE 15D-14(A) - SADDLEBROOK RESORTS INCd173515dex311.htm
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 March 31, 2016

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. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

 

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 March 31, 2016 and December 31, 2015

     3   
    

Statements of Operations and Accumulated Earnings for the three months ended March  31, 2016 and 2015

     4   
    

Statements of Cash Flows for the three months ended March 31, 2016 and 2015

     5   
    

Notes to Financial Statements

     6   
     Saddlebrook Rental Pool Operation   
    

Balance Sheets at March 31, 2016 and December 31, 2015

     9   
    

Statements of Operations for the three months ended March 31, 2016 and 2015

     10   
    

Statements of Changes in Participants’ Fund Balance for the three months ended March  31, 2016 and 2015

     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      14   
  Item 4. Controls and Procedures      15   

PART II - OTHER INFORMATION

  

  Item 1. Legal Proceedings      15   
  Item 6. Exhibits      16   

Signature

     17   

 

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Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SADDLEBROOK RESORTS, INC.

BALANCE SHEETS

 

     March 31,
2016
(Unaudited)
     December 31,
2015
 

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 1,685,339       $ 375,912   

Escrowed cash

     311,566         397,721   

Accounts receivable, net

     3,622,929         1,521,133   

Due from related parties

     1,061,851         1,108,339   

Inventory and supplies

     1,244,499         1,270,969   

Prepaid expenses and other assets

     1,097,465         1,020,292   
  

 

 

    

 

 

 

Total current assets

     9,023,649         5,694,366   

Property, buildings and equipment, net

     19,873,112         20,019,161   
  

 

 

    

 

 

 

Total assets

   $ 28,896,761       $ 25,713,527   
  

 

 

    

 

 

 

Liabilities and Shareholder’s Equity

     

Current liabilities:

     

Current portion of long-term debt

   $ 352,560       $ 352,560   

Current portion of capital lease obligation

     123,142         121,008   

Escrowed deposits

     311,566         397,721   

Accounts payable

     853,330         593,328   

Accrued rental distribution

     1,456,100         488,021   

Accrued expenses and other liabilities

     1,731,449         1,509,529   

Current portion of deferred income

     833,110         715,661   

Guest deposits

     1,097,123         1,632,372   

Due to related parties

     10,500,094         10,101,171   
  

 

 

    

 

 

 

Total current liabilities

     17,258,474         15,911,371   

Long-term debt, net of deferred issuance costs of $73,157 and $78,174 at March 31, 2016 and December 31, 2015, respectively

     6,361,142         6,444,266   

Long-term capital lease obligation

     154,015         185,612   

Deferred income

     562,225         585,571   
  

 

 

    

 

 

 

Total liabilities

     24,335,856         23,126,820   
  

 

 

    

 

 

 

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

     3,447,778         1,473,580   
  

 

 

    

 

 

 

Total shareholder’s equity

     4,560,905         2,586,707   
  

 

 

    

 

 

 

Total liabilities and shareholder’s equity

   $ 28,896,761       $ 25,713,527   
  

 

 

    

 

 

 

The accompanying Notes to Financial Statements are an integral part of these financial statements

 

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Table of Contents

SADDLEBROOK RESORTS, INC.

STATEMENTS OF OPERATIONS

AND ACCUMULATED EARNINGS

(Unaudited)

 

     Three months ended
March 31,
 
     2016     2015  

Resort revenues

   $ 12,343,843      $ 11,465,502   
  

 

 

   

 

 

 

Costs and expenses:

    

Operating costs

     8,403,355        7,661,855   

Sales and marketing

     538,424        590,513   

General and administrative

     888,488        805,539   

Net Gain on disposal of assets

     —          (454,618

Depreciation

     468,509        422,372   
  

 

 

   

 

 

 

Total costs and expenses

     10,298,776        9,025,661   
  

 

 

   

 

 

 

Net operating income before other (income) and expense

     2,045,067        2,439,841   
  

 

 

   

 

 

 

Other (income) and expense:

    

Other income

     (8,017     (38,153

Interest expense

     78,886        58,677   
  

 

 

   

 

 

 

Total other expense

     70,869        20,524   
  

 

 

   

 

 

 

Net income

     1,974,198        2,419,317   

Accumulated earnings at beginning of period

     1,473,580        2,070,479   
  

 

 

   

 

 

 

Accumulated earnings at end of period

   $ 3,447,778      $ 4,489,796   
  

 

 

   

 

 

 

The accompanying Notes to Financial Statements are an integral part of these financial statements

 

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Table of Contents

SADDLEBROOK RESORTS, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Three months ended
March 31,
 
     2016     2015  

Operating activities:

    

Net income

   $ 1,974,198      $ 2,419,317   

Non-cash items included in net income:

    

Depreciation

     468,509        422,372   

Amortization of debt financing costs

     5,017        3,420   

(Increase) decrease in:

    

Accounts receivable

     (2,101,796     (2,890,237

Inventory and supplies

     26,470        (549

Prepaid expenses and other assets

     (77,173     (90,951

(Decrease) increase in:

    

Accounts payable

     260,002        577,604   

Guest deposits

     (535,249     (439,446

Accrued expenses and other liabilities

     1,190,002        708,290   

Deferred income

     94,102        (5,381
  

 

 

   

 

 

 

Cash flow provided by operating activities

     1,304,082        704,439   
  

 

 

   

 

 

 

Investing activities:

    

Capital expenditures

     (322,462     (181,836
  

 

 

   

 

 

 

Cash flow used in investing activities

     (322,462     (181,836
  

 

 

   

 

 

 

Financing activities:

    

Payments on long-term debt

     (88,141     —     

Payments on capital lease obligations

     (29,463     (27,488

Net borrowings (payments) from related parties

     445,411        (224,134
  

 

 

   

 

 

 

Cash flow provided by (used in) financing activities

     327,807        (251,622
  

 

 

   

 

 

 

Net increase in cash

     1,309,427        270,981   

Cash at beginning of period

     375,912        875,314   
  

 

 

   

 

 

 

Cash at end of period

   $ 1,685,339      $ 1,146,295   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Cash paid for interest

   $ 73,869      $ 55,257   
  

 

 

   

 

 

 

Non-cash investing activities

As a result of a fire on the property that occurred in September 2013, the Company received insurance proceeds of $354,618 during March 2015.

The accompanying Notes to Financial Statements are an integral part of these financial statements.

 

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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 March 31, 2016, and its statements of operations and accumulated earnings and cash flows for the three month periods ended March 31, 2016 and 2015, 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, 2015 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 future interim periods or 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, 2015.

Note 2. Accounts Receivable

 

     March 31,
2016
(Unaudited)
     December 31,
2015
 

Trade accounts receivable

   $ 3,652,375       $ 1,550,845   

Less reserve for bad debts

     (29,446      (29,712
  

 

 

    

 

 

 
   $ 3,622,929       $ 1,521,133   
  

 

 

    

 

 

 

Note 3. Property, Buildings and Equipment

 

     March 31,
2016
(Unaudited)
     December 31,
2015
 

Land and land improvements

   $ 8,417,431       $ 8,417,431   

Buildings and recreational facilities

     31,255,743         31,230,183   

Machinery and equipment

     20,083,018         20,017,312   

Construction in progress

     1,157,987         926,792   
  

 

 

    

 

 

 
     60,914,179         60,591,718   

Less accumulated depreciation

     (41,041,067      (40,572,557
  

 

 

    

 

 

 
   $ 19,873,112       $ 20,019,161   
  

 

 

    

 

 

 

The Company’s property, buildings and equipment are pledged as security for its debt (see Note 4).

 

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Table of Contents

Note 4. Notes Payable and Capital Lease Obligation

On December 6, 2015 the Company’s financing agreement with a third party lender was modified to include renewal for the existing principal balance of $4,875,000, along with an advance of an additional $2,000,000. The new term note expires December 6, 2020. At March 31, 2016 $6,786,859 was outstanding under the note. The term note requires monthly principle payments of $29,380 plus interest of 3% over the one month Libor index (3.44% at March 31, 2016). The term note is collateralized by all current and subsequently acquired real and personal property. The term note requires the Company to maintain a Debt Ratio, as defined, of 1.25%.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 required retrospective adoption and became effective with respect to the Company’s financial statements on January 1, 2016. Prior to the effective date, such issuance costs were classified as assets and included as deferred charges, net, in the Company’s balance sheet. Under the provisions of ASU 2015-03, such issuance costs are presented as a direct deduction from the carrying amount of the related debt in the accompanying March 31, 2016 balance sheet, and have been reclassified in the December 31, 2015 balance sheet to conform to the 2016 presentation.

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 March 31, 2016, the amount due on this capital lease obligation was $27,920.

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%, beginning in January 2013. At March 31, 2016, the amount due on this capital lease obligation was $98,986.

On January 15, 2014 the Company entered into a capital lease obligation for equipment in the amount of $150,000. The capital lease is secured by equipment purchased, matures in December 2018 and requires monthly payments of $3,024 including interest of 7.75%. At March 31, 2016, the amount due on this capital lease obligation was $87,159.

On January 15, 2014, the Company entered into a capital lease obligation for equipment in the amount of $102,000. The capital lease is secured by equipment purchased, matures in December 2018 and requires monthly payments of $2,233, including interest an 11.30%. At March 31, 2016 the amount due on this capital lease obligation was $63,092.

 

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Table of Contents

Note 5. Related Party Receivables and Payables

Related party receivables and payables at March 31, 2016 and December 31, 2015 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 6. 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 the Company’s parent company.

 

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Table of Contents

SADDLEBROOK RENTAL POOL OPERATION

BALANCE SHEETS

DISTRIBUTION FUND

 

     March 31,
2016
(Unaudited)
     December 31,
2015
 

Assets

     

Receivable from Saddlebrook Resorts, Inc.

   $ 1,456,100       $ 488,021   
  

 

 

    

 

 

 

Liabilities and Participants’ Fund Balance

     

Due to participants for rental pool distribution

   $ 1,237,219       $ 439,589   

Due to maintenance escrow fund

     218,881         48,432   
  

 

 

    

 

 

 
   $ 1,456,100       $ 488,021   
  

 

 

    

 

 

 

MAINTENANCE ESCROW FUND

 

     March 31,
2016
(Unaudited)
     December 31,
2015
 

Assets

     

Cash and cash equivalents

   $ 290,216       $ 372,021   

Receivables:

     

Distribution fund

     218,881         48,432   

Accrued Interest

     9         (16

Prepaid expenses and other assets

     —           34   

Linen Inventory

     107,789         17,925   

Furniture Inventory

     48,299         43,421   
  

 

 

    

 

 

 
   $ 665,194       $ 481,817   
  

 

 

    

 

 

 

Liabilities and Participants’ Fund Balance

     

Accounts payable

   $ 220,688       $ 186,109   

Participants’ fund balance

     444,506         295,708   
  

 

 

    

 

 

 
   $ 665,194       $ 481,817   
  

 

 

    

 

 

 

 

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Table of Contents

SADDLEBROOK RENTAL POOL OPERATION

STATEMENTS OF OPERATIONS

(Unaudited)

DISTRIBUTION FUND

 

     Three months ended March 31,  
     2016     2015  

Rental pool revenue

   $ 3,636,773      $ 3,498,187   
  

 

 

   

 

 

 

Deductions:

    

Marketing fee

     272,758        262,364   

Management fee

     454,597        437,273   

Travel agent commissions

     88,535        182,238   

Credit card expense

     71,508        81,693   
  

 

 

   

 

 

 
     887,398        963,568   
  

 

 

   

 

 

 

Net rental income

     2,749,375        2,534,619   

Less operator share of net rental income

     (1,237,219     (1,140,579

Other revenues (expenses):

    

Complimentary room revenues

     16,899        6,440   

Minor repairs and replacements

     (72,955     (67,496
  

 

 

   

 

 

 

Amount available for distribution

   $ 1,456,100      $ 1,332,984   
  

 

 

   

 

 

 

 

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Table of Contents

SADDLEBROOK RENTAL POOL OPERATION

STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES

(Unaudited)

DISTRIBUTION FUND

 

     Three months ended March 31,  
     2016     2015  

Balance at beginning of period

   $ —        $ —     

Additions:

    

Amount available for distribution

     1,456,100        1,332,984   

Reductions:

    

Amount withheld for maintenance escrow fund

     (218,881     (192,405

Amount accrued or paid to participants

     (1,237,219     (1,140,579
  

 

 

   

 

 

 

Balance at end of period

   $ —        $ —     
  

 

 

   

 

 

 

MAINTENANCE ESCROW FUND

 

     Three months ended
March 31,
 
     2016     2015  

Balance at beginning of period

   $ 295,708        236,911   

Additions:

    

Amount withheld from distribution fund

     218,881        192,405   

Unit owner payments

     13,864        78,900   

Interest earned

     —          3   

Reductions:

    

Escrow account refunds

     —          (2,737

Maintenance charges

     (83,947     (46,734

Unit renovations

     —          (82,014

Linen replacement

     —          (32,405
  

 

 

   

 

 

 

Balance at end of period

   $ 444,506      $ 344,329   
  

 

 

   

 

 

 

 

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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.

 

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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 (the “Rental Pool”) 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

First quarter 2016 compared to first quarter 2015

The Company’s total revenues increased $878,000, or 8%, for the three months ended March 31, 2016 compared to the same period in the prior year. Total revenues for the Rental Pool increased $139,000, or 4%. These changes are directly related to an increase in occupancy over the prior period.

Total costs and expenses increased $818,000, or about 9%, for the Company prior to the offset of $455,000 in insurance proceeds recorded as gain on disposal of assets in the prior period. Total costs and expenses for the Rental Pool Operation decreased $76,000, or about 8%.

The Company’s net income for the quarter increased in the amount of $9,500 compared to the same period in the prior year, prior to the recording of insurance proceeds in the prior period. Amounts available for distribution for the Rental Pool Operation increased $123,000 from the comparable period last year.

Impact of Current Economic Conditions

The Company continues to experience increased occupancy rates, when compared to prior periods. Ancillary service revenue is now beginning to show increases when compared to the prior periods as well. The Company believes that businesses have begun to alter their spending patterns and that this is a result of a turnaround in the economy.

In response to this trend, the Company has increased its sales force to focus more in the area of corporate meetings. The Company continues 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 to help the Company 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.

 

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Table of Contents

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 and its affiliates’ current cash reserves and cash generated by the Resort’s operations.

On December 6, 2015 the Company’s financing agreement with a third party lender was modified to include renewal for the existing principal balance of $4,875,000, along with an advance of an additional $2,000,000. The new term note expires December 6, 2020. At March 31, 2016 $6,786,859 was outstanding under the note. The term note requires monthly principle payments of $29,380 plus interest of 3% over the one month Libor index (3.44% at March 31, 2016). The term note is collateralized by all current and subsequently acquired real and personal property. The term note requires the Company to maintain a Debt Ratio, as defined, of 1.25%.

The Company’s ultimate shareholder has the financial ability and intent to continue to fund operations through affiliated companies that are 100% owned by the Company’s ultimate shareholder to the extent required to support the Company’s operations. The Company has loans outstanding to the affiliated companies of approximately $10.5 million and $10.1 million as of March 31, 2016 and December 31, 2015, respectively. In addition to the shareholders’ financial ability these affiliated Companies are expected to continue to generate positive cash flows during fiscal year 2016 should additional funding be required to support the Company’s operations.

The Company’s operation of the Resort is not considered to be dependent on any individual or small group of customers, the loss of which would have a material adverse effect on the Company’s business or financial condition.

Seasonality

The Company’s operations are seasonal with the highest volume of revenue 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 period 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 note bears interest at 3.0% over the one month LIBOR index and matures in December 2020.

 

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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 March 31, 2016, 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 March 31, 2016 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 March 31, 2016 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 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.INS

  XBRL Instance Document

101.SCH

  XBRL Taxonomy Extension Schema Document

101.CAL

  XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

  XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

  XBRL Taxonomy Extension Label Linkbase Document

101.PRE

  XBRL Taxonomy Extension Presentation Linkbase Document

 

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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: May 13, 2016     /s/    Donald L. Allen        
    Donald L. Allen
    Vice President and Treasurer
   

(Principal Financial and

Accounting Officer)

 

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