SADDLEBROOK RENTAL POOL OPERATION

BALANCE SHEETS

DISTRIBUTION FUND


	September 30,
	2018		December 31,
	(Unaudited)		2017
Assets
Receivable from Saddlebrook Resorts, Inc.	$	299,482	$	637,290

Liabilities and Participants’ Fund Balance
Due to participants for rental pool distribution	$	262,797	$	522,179
Due to maintenance escrow fund		36,685		115,111

	$	299,482	$	637,290

MAINTENANCE ESCROW FUND


	September 30,
	2018		December 31,
	(Unaudited)		2017
Assets
Cash and cash equivalents	$	1,559,080	$	244,558
Receivables:
Distribution fund		36,685		115,111
From owners		—		1,503
Prepaid expenses and other assets		14,783		51,098
Linen Inventory		25,459		—
Furniture Inventory		39,651		49,747

	$	1,675,658	$	462,017

Liabilities and Participants’ Fund Balance
Accounts payable	$	44,796	$	127,625
Participants’ fund balance		1,630,862		334,392

	$	1,675,658	$	462,017

SADDLEBROOK RENTAL POOL OPERATION

STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Rental pool revenues	$	940,783		$	1,077,320		$	6,837,458		$	6,940,134

Deductions:
Marketing fee		70,559			80,799			512,809			520,510
Management fee		117,598			134,665			854,682			867,517
Travel agent commissions		133,515			82,573			486,262			484,304
Credit card expense		35,118			38,332			205,591			195,037
Bad debt expense		—			5,000			—			45,000

		356,790			341,369			2,059,344			2,112,368

Net rental income		583,993			735,951			4,778,114			4,827,766
Less operator share of net rental income		(262,797	)		(331,178	)		(2,150,152	)		(2,172,494	)
Other revenues (expenses):
Complimentary room revenues		2,334			8,702			22,252			28,509
Minor repairs and replacements		(24,048	)		(36,945	)		(71,187	)		(99,122	)

Amount available for distribution	$	299,482		$	376,530		$	2,579,027		$	2,584,659

The accompanying notes are an integral part

of these financial statements

SADDLEBROOK RENTAL POOL OPERATION

STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES

(Unaudited)

DISTRIBUTION FUND


	Nine months ended September 30,
	2018			2017
Balance at beginning of period	$	—		$	—
Additions:
Amount available for distribution		2,579,027			2,584,659
Reductions:
Amount withheld for maintenance escrow fund		(428,876	)		(412,164	)
Amount accrued or paid to participants		(2,150,151	)		(2,172,495	)

Balance at end of period	$	—		$	—

MAINTENANCE ESCROW FUND
	Nine months ended September 30,
	2018			2017
Balance at beginning of period	$	334,392			371,247
Additions:
Amount withheld from distribution fund		428,876			412,164
Unit owner payments		1,366,311			107,921
Interest earned		37			—
Reductions:
Escrow account refunds		(10,731	)		(20,742	)
Maintenance charges		(190,006	)		(286,336	)
Unit renovations		(186,683	)		(130,756	)
Linen replacement		(111,334	)		(185,436	)

Balance at end of period	$	1,630,862		$	268,062

The accompanying notes are an integral part

of these financial statements

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.