Basis of Presentation

9 Months Ended

Sep. 30, 2019

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, 2019, and its statements of operations and accumulated earnings and cash flows for the nine month periods ended September 30, 2019 and 2018, 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, 2018 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, 2018.

Recently Adopted Accounting Standard

Effective January 1, 2019, the Company adopted the provisions of Accounting Standards Update (“ASU”)

2016-02,

“Leases,” which created a new Topic 842 within the Accounting Standards Codification. Topic 842 established the core principle that a lessee should recognize the assets, representing

rights-of-use,

and liabilities to make lease payments, that arise from leases.

The Company adopted the standard using an optional transition method allowed with the issuance of ASU

2018-11,

“Leases

–

Targeted Improvements (Topic 842),” in July 2018. ASU

2018-11

provides entities the option to not provide comparative period financial statements and instead apply the transition requirements as of the effective date of the new standard. Pursuant to additional guidance under Topic842, the Company also elected the optional package of practical expedients, which allowed the Company to not reassess: (i) whether expired or existing contracts contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, continues to be reported under ASC 840, “Leases”, which did not require the recognition of operating lease liabilities on the consolidated balance sheet, and is not comparative. Under Topic 842, all leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases, which is determined at the inception of the lease. The Company also elected under the package of practical expedients, to combine lease and

non-lease

components.

Under the new standard, the Company’s lease liability is based on the present value of such payments and the related

right-of-use

asset will generally be based on the lease liability.

See Note 4 for additional information regarding operating leases.