Management's Plans Regarding Liquidity and Capital Resources

12 Months Ended

Dec. 31, 2013

Restructuring And Related Activities [Abstract]

Management's Plans Regarding Liquidity and Capital Resources

3. Management’s Plans Regarding Liquidity and Capital Resources

As a result of the continuing economic recession, the hospitality industry has suffered declines in terms of hotel rates and occupancy during 2013 and 2012. These negative industry trends have similarly impacted the Company’s revenues during this period, which contributed to the Company’s approximate $823,000 net loss in 2013 and an approximate $2,722,000 net loss in 2012.

In response to this situation, management has implemented the following programs and measures to help the Company mitigate these unfavorable conditions:

A. Management has continued its focus on controlling the variable costs for the Company. This includes reducing labor costs and sales and marketing expenses by actively reviewing the Company’s lodging, food and beverage, and facilities demands and attempting to match them with the appropriate level of resources.

B. During the first quarter of 2014, the Company has experienced increased resort revenues primarily due to increased group bookings and the related activity compared to the same period in 2013. During 2013 and through the first quarter of 2014, the Company has continued to invest significantly in the grounds and building exteriors to increase the attractiveness of the Resort for potential group and social customers planning for conferences, meetings or social events such as weddings. As a result of this investment, the Company has experienced and expects to continue to experience increased group bookings for the remainder of the first half of 2014. These increased bookings are expected to positively impact the Company’s results of operations and cash flows during 2014.

C. The Company is in its fourth year of its association with two top golf teaching professionals which has significantly increased the brand awareness and recognition of the Company’s affiliated Golf and Tennis Academy by industry leaders. As stated above, the Company has significantly invested in the Resort’s grounds, specifically upgraded golf training facilities. In addition, the Company has been and will continue to appeal to international students by aligning with organizations that have the ability to direct these potential students to the Golf and Tennis Academy. These investments have resulted in increased numbers of students attending the Golf and Tennis Academy during 2013 and 2014.

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. During 2013, the Company received approximately $1 million in loans from these affiliated Companies which was a reduction of the amount of loans the Company received from these affiliated entities by approximately $1.6 million in 2012. In addition to the shareholder’s financial ability, these affiliated companies are expected to continue to generate positive cash flows during fiscal 2014 should additional funding be required to support the Company’s operations.

The Company’s term note obtained from a third party lender matures in March 2014. The Company’s third party lender has granted an extension to the above date for ninety days. The Company is currently in negotiations with several third party lenders to refinance the existing term note. The Company’s ultimate shareholder has the financial ability to satisfy the current term note due June 12, 2014, should the Company be delayed in securing replacement financing.