10-Q 1 d351568d10q.htm FORM 10-Q Form 10-Q
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 June 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

     3   

Saddlebrook Resorts, Inc.

  

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

     3   

Statements of Operations and Accumulated Earnings for the three months and six months ended June 30, 2012 and 2011

     4   

Statements of Cash Flows for the six months ended June 30, 2012 and 2011

     5   

Notes to Financial Statements

     6   

Saddlebrook Rental Pool Operation

  

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

     9   

Statements of Operations for the three months and six months ended June 30, 2012 and 2011

     10   

Statements of Changes in Participants’ Fund Balance for the six months ended June 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

     15   

Item 1. Legal Proceedings

     15   

Item 6. Exhibits

     15   

Signature

     16   

 

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Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SADDLEBROOK RESORTS, INC.

BALANCE SHEETS

 

     June 30,
2012
(Unaudited)
     December 31,
2011
 

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 1,157,678       $ 592,313   

Escrowed cash

     127,470         216,851   

Accounts receivable, net

     2,388,486         1,124,269   

Due from related parties

     492,378         438,238   

Inventory and supplies

     1,468,237         1,576,875   

Prepaid expenses and other current assets

     801,662         745,410   
  

 

 

    

 

 

 

Total current assets

     6,435,911         4,693,956   

Property, buildings and equipment, net

     20,668,682         21,024,081   

Deferred charges, net

     19,551         25,137   
  

 

 

    

 

 

 

Total assets

   $ 27,124,144       $ 25,743,174   
  

 

 

    

 

 

 

Liabilities and Shareholder’s Equity

     

Current liabilities:

     

Current portion of long-term debt

   $ 577,332       $ 577,332   

Current portion of capital lease obligation

     58,985         99,593   

Escrowed deposits

     126,070         216,851   

Accounts payable

     765,394         734,427   

Accrued rental distribution

     1,019,802         571,598   

Accrued expenses and other liabilities

     1,910,954         1,728,111   

Current portion of deferred income

     801,768         798,981   

Guest deposits

     790,637         667,606   

Due to related parties

     5,709,358         4,704,094   
  

 

 

    

 

 

 

Total current liabilities

     11,760,300         10,098,593   

Long-term debt

     4,819,001         5,107,668   

Long-term capital lease obligation

     —           8,537   

Deferred income

     957,984         1,034,071   
  

 

 

    

 

 

 

Commitments

     17,537,285         16,248,869   
  

 

 

    

 

 

 

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

     8,473,732         8,381,178   
  

 

 

    

 

 

 

Total shareholder’s equity

     9,586,859         9,494,305   
  

 

 

    

 

 

 
   $ 27,124,144       $ 25,743,174   
  

 

 

    

 

 

 

The accompanying notes are an integral part

of these financial statements

 

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SADDLEBROOK RESORTS, INC.

STATEMENTS OF OPERATIONS

AND ACCUMULATED EARNINGS

(Unaudited)

 

     Three months ended
June 30,
    Six months ended
June 30,
 
     2012     2011     2012     2011  

Revenues

   $ 9,307,363      $ 6,101,004      $ 17,224,094      $ 13,893,337   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

        

Operating costs

     7,325,279        5,332,199        13,532,755        11,255,407   

Sales and marketing

     455,709        359,864        905,939        664,392   

General and administrative

     819,799        791,562        1,698,267        1,533,179   

Depreciation

     459,283        477,855        918,632        955,713   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     9,060,070        6,961,480        17,055,593        14,408,691   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income (loss) before other income (expenses)

     247,293        (860,476     168,501        (515,354
  

 

 

   

 

 

   

 

 

   

 

 

 

Other (expenses) income

        

Interest income

     17        93        18        97   

Other income

     5,202        32,060        11,589        36,469   

Interest expense

     (45,118     (64,666     (87,555     (130,481
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other (expenses) income

     (39,899     (32,513     (75,948     (93,915

Net income (loss)

     207,394        (892,989     92,553        (609,269

Accumulated earnings at beginning of period

     8,266,338        11,908,889        8,381,179        11,625,169   
  

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated earnings at end of period

   $ 8,473,732      $ 11,015,900      $ 8,473,732      $ 11,015,900   
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part

of these financial statements

 

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SADDLEBROOK RESORTS, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Six months ended
June 30,
 
     2012     2011  

Operating activities:

    

Net income (loss)

   $ 92,553      $ (609,269

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

    

Provision for doubtful accounts

     (431     (2,729

Depreciation

     918,632        955,713   

Amortization of debt financing costs

     5,586        5,586   

Gain on sale of assets

     (2,165     (428

(Increase) decrease in:

    

Accounts receivable

     (1,263,786     560,945   

Inventory and supplies

     108,638        66,422   

Prepaid expenses and other assets

     (56,252     (146,651

Increase (decrease) in:

    

Accounts payable

     30,967        (289,027

Accrued rental distribution

     448,204        66,195   

Guest deposits

     121,631        137,964   

Accrued expenses and other liabilities

     182,844        3,647   

Deferred income

     (73,300     (116,606
  

 

 

   

 

 

 

Cash flow provided by operating activities

     513,121        631,762   
  

 

 

   

 

 

 

Investing activities:

    

Capital expenditures

     (563,234     (143,819

Proceeds from the sale of property and equipment

     2,165        1,800   
  

 

 

   

 

 

 

Cash flow used in investing activities

     (561,069     (142,019
  

 

 

   

 

 

 

Financing activities:

    

Payments on long-term debt

     (288,666     (530,000

Payments on capital lease obligations

     (49,145     (46,638

Net collections from (advances to) related parties

     951,124        (135,491
  

 

 

   

 

 

 

Cash flow provided by (used in) Financing activities

     613,313        (712,129
  

 

 

   

 

 

 

Net increase (decrease) in cash

     565,365        (222,386

Cash and cash equivalents at beginning of period

     592,313        1,038,368   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,157,678      $ 815,982   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information: Cash paid for interest

   $ 81,969      $ 125,688   
  

 

 

   

 

 

 

The accompanying notes are an integral part

of these financial statements

 

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Table of Contents
For the quarterly period ended June 30, 2012

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 June 30, 2012, and its statements of operations and accumulated earnings and cash flows for the periods ended June 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

 

     June 30,
2012
(Unaudited)
    December 31,
2011
 

Trade accounts receivable

   $ 2,425,248      $ 1,161,462   

Less allowance for bad debts

     (36,762     (37,193
  

 

 

   

 

 

 
   $ 2,388,486      $ 1,124,269   
  

 

 

   

 

 

 

 

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Note 3. Property, Buildings and Equipment

 

     June 30,
2012
(Unaudited)
    December 31,
2011
 

Land and land improvements

   $ 6,802,067      $ 6,802,067   

Buildings and recreational facilities

     30,236,140        30,164,381   

Machinery and equipment

     17,834,470        17,669,598   

Construction in progress

     1,124,947        807,611   
  

 

 

   

 

 

 
     55,997,624        55,443,657   

Less accumulated depreciation

     (35,328,942     (34,419,576
  

 

 

   

 

 

 
   $ 20,668,682      $ 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

 

     June 30,
2012
(Unaudited)
    December 31,
2011
 

Debt issue costs

   $ 55,895      $ 55,895   

Less accumulated amortization

     (36,344     (30,758
  

 

 

   

 

 

 
   $ 19,551      $ 25,137   
  

 

 

   

 

 

 

 

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Table of Contents

Note 5. Long-term debt and Capital Lease Obligation

At June 30, 2012, the outstanding balance on the term note was $ 5,396,333. 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 June 30, 2012 was 2.74%. 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 expires in November 2012. At June 30, 2012, the Company had no borrowings 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 June 30, 2012, the amount due on the capital lease obligation was $ 58,985.

Note 6. Related Party Receivables

Related party receivables and payables at June 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.

 

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Table of Contents
Additional Financial Information Disclosure

SADDLEBROOK RENTAL POOL OPERATION

BALANCE SHEETS

DISTRIBUTION FUND

 

                                             
     June 30,
2012
(Unaudited)
     December 31,
2011
 

Assets

     

Receivable from Saddlebrook Resorts, Inc.

   $ 1,019,802       $ 571,598   
  

 

 

    

 

 

 

Liabilities and Participants’ Fund Balance

     

Due to participants for rental pool distribution

   $ 862,074       $ 473,950   

Due to maintenance escrow fund

     157,728         97,648   
  

 

 

    

 

 

 
   $ 1,019,802       $ 571,598   
  

 

 

    

 

 

 

MAINTENANCE ESCROW FUND

 

                                             
     June 30,
2012
(Unaudited)
     December 31,
2011
 

Assets

     

Cash and cash equivalents

   $ 102,938       $ 195,369   

Receivables:

     

Distribution fund

     157,728         97,648   

Owner payments

     96,758         —     

Linen inventory

     15,194         —     

Furniture inventory

     51,780         48,418   

Prepaid expenses and other assets

     42,824         7,545   
  

 

 

    

 

 

 
   $ 467,222       $ 348,980   
  

 

 

    

 

 

 

Liabilities and Participants’ Fund Balance

     

Accounts payable

   $ 74,219       $ 82,194   

Participants’ fund balance

     393,003         266,786   
  

 

 

    

 

 

 
   $ 467,222       $ 348,980   
  

 

 

    

 

 

 

The accompanying notes are an integral part

of these financial statements

 

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Table of Contents

SADDLEBROOK RENTAL POOL OPERATION

STATEMENTS OF OPERATIONS

(Unaudited)

 

     Three months ended
June 30,
    Six months ended
June 30,
 
     2012     2011     2012     2011  

Rental pool revenues

   $ 2,554,454      $ 1,575,226      $ 4,955,202      $ 3,886,211   
  

 

 

   

 

 

   

 

 

   

 

 

 

Deductions:

        

Marketing fee

     191,584        118,142        371,640        291,466   

Management fee

     319,307        196,903        619,401        485,776   

Travel agent commissions

     66,279        43,987        201,916        101,392   

Credit card expense

     61,564        44,267        115,695        96,295   

Provision for bad debts

     —          3,000        —          3,000   
  

 

 

   

 

 

   

 

 

   

 

 

 
     638,734        406,299        1,308,652        977,929   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net rental income

     1,915,720        1,168,927        3,646,550        2,908,282   

Less operator share of net rental income

     (862,074     (526,017     (1,640,948     (1,308,727

Other revenues (expenses):

        

Complimentary room revenues

     11,729        5,993        22,129        12,623   

Minor repairs and replacements

     (45,573     (32,757     (69,493     (63,341
  

 

 

   

 

 

   

 

 

   

 

 

 

Amount available for distribution

   $ 1,019,802      $ 616,146      $ 1,958,238      $ 1,548,837   
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part

of these financial statements

 

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Table of Contents

SADDLEBROOK RENTAL POOL OPERATION

STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES

(Unaudited)

DISTRIBUTION FUND

 

                                                     
     Six months ended
June 30,
 
     2012     2011  

Balance at beginning of period

   $ —        $ —     

Additions:

    

Amount available for distribution

     1,958,238        1,548,837   

Reductions:

    

Amount withheld for maintenance escrow fund

     (317,290     (240,110

Amount accrued or paid to participants

     (1,640,948     (1,308,727
  

 

 

   

 

 

 

Balance at end of period

   $ —        $ —     
  

 

 

   

 

 

 

MAINTENANCE ESCROW FUND

 

                                                     
     Six months ended
June 30,
 
     2012     2011  

Balance at beginning of period

   $ 266,786        657,499   

Additions:

    

Amount withheld from distribution fund

     317,290        240,110   

Unit owner payments

     121,805        35,630   

Interest earned

     21        778   

Reductions:

    

Escrow account refunds

     (1,192     (16,940

Maintenance charges

     (133,619     (137,933

Unit renovations

     (62,732     4,625   

Linen replacement

     (115,356     (58,573
  

 

 

   

 

 

 

Balance at end of period

   $ 393,003      $ 725,196   
  

 

 

   

 

 

 

The accompanying notes are an integral part

of these financial statements

 

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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 expense 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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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

Second quarter 2012 compared to second quarter 2011

The Company’s total revenues increased approximately $3,206,000, or about 53%, for the three months ended June 30, 2012 compared to the same period in the prior year. Total revenues for the Rental Pool increased approximately $979,000, or about 62%. These changes are directly related to an increase in occupancy of approximately 48% over the prior period.

Total costs and expenses increased approximately $2,099,000, or about 30%, for the Company, and $232,000, or about 57%, for the Rental Pool Operation. These increases in costs and expenses are directly related to the increases in revenues.

The Company experienced a net income for the quarter in the amount of approximately $207,000, compared to the net loss of the prior comparable quarter of approximately $893,000. Amounts available for distribution for the Rental Pool Operation increased approximately $404,000, or about 65%, from the comparable period last year.

 

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First six months 2012 compared to first six months 2011

The Company’s total revenues increased approximately $3,331,000, about 24%, for the six months ended June 30, 2012 compared to the same period in the prior year. The total revenues for the Rental Pool increased approximately $1,069,000, or about 28%. Both of these increases are directly related to the increase in occupancy of approximately 19% when comparing the two periods.

Total costs and expenses for the Company increased approximately $2,647,000 or 18%. Total costs and expenses for the Rental Pool Operation increased by about $331,000.

The Company experienced a net income for the period of approximately $93,000, compared with a net loss of approximately $610,000 in the comparable period. Amounts available for distribution for the Rental Pool Operation increased approximately $409,000 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 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 Golf Academy.

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 note obtained from a third-party lender bears interest at 2.5% over the one month LIBOR index (2.74% at June 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 expires in November 2012. At June 30, 2012, the Company had no borrowings 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 note 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 June 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 June 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 June 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.

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: August 14, 2012      

/s/    Donald L. Allen        

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

 

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