UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

(Mark one)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

 

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: 333-147447

 

SALAMANDER INNISBROOK, LLC

(Exact name of registrant as specified in its charter)

 

Florida		26-0442888
(State of incorporation)		(IRS employer identification no.)

 

36750 US Highway 19 North, Palm Harbor, FL 34684

(Address of principal executive offices)

727-942-2000

(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 the 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 ¨      NO x

 

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 “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨      Accelerated filer ¨    Non-accelerated filer ¨ Smaller reporting company þ

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨      NO þ

 

The Rental Pool operated by the Registrant has 440 condominium rental pool units owned by approximately 398 condominium owners as of May 14, 2013.

 

 

INDEX

 

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Salamander Innisbrook, LLC
Condensed Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012	4
Condensed Statements of Operations and Changes in Member’s Equity (Unaudited) for the three months ended March 31, 2013 and 2012	5
Condensed Statements of Cash Flows (Unaudited) for the three months ended March 31, 2013 and 2012	6
Notes to Condensed Financial Statements (Unaudited)	7
Innisbrook Rental Pool Lease Operation
Condensed Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012	11
Condensed Statements of Operations (Unaudited) for the three months ended March 31, 2013 and 2012	12
Condensed Statements of Changes in Participants’ Fund Balances (Unaudited) for the three months ended March 31, 2013 and 2012	13
Notes to Condensed Financial Statements (Unaudited)	14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures about Market Risk	16
Item 4. Controls and Procedures	16
PART II — OTHER INFORMATION
Item 1.     Legal Proceedings	17
Item 1A. Risk Factors	17
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.    Defaults Upon Senior Securities	17
Item 4.    Mine Safety Disclosures	17
Item 5.    Other Information	17
Item 6.    Exhibits	17
Signatures	18
EX-31.1	19
EX-31.2	20
EX-32.1	21
EX-32.2	22

 

 

Cautionary Note Regarding Forward-Looking Statements

 

The following report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that predict or describe future events or trends and that do not relate solely to historical matters. All of our projections in this annual report are forward-looking statements. You can generally identify forward-looking statements as statements containing the words “appears,” “believe,” “expect,” “hope,” “may,” “will,” “anticipate,” “intend,” “estimate,” “project,” “assume” or other similar expressions. Certain factors that might cause such a difference include the following: changes in general economic conditions; including changes that may influence group conference and guests’ vacation plans; changes in travel patterns; changes in consumer tastes in destinations or accommodations for group conferences and vacations; changes in Rental Pool participation by the current condominium owners; our ability to continue to operate the Innisbrook Resort and Golf Club, or the “Resort” under our management contracts; and the resale of condominiums to owners who elect neither to participate in the Rental Pool nor to become members of the Resort. You should not place undue reliance on our forward-looking statements because the matters they describe are subject to known (and unknown) risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our forward-looking statements are based on the limited information currently available to us and speak only as of the date on which this report was filed with the Securities Exchange Commission. Our continued internet posting or subsequent distribution of this dated report does not imply continued affirmation of the forward-looking statements included in it. We undertake no obligation, and we expressly disclaim any obligation, to issue any updates to our forward-looking statements, even if subsequent events cause our expectations to change regarding the matters discussed in those statements. Future events are inherently uncertain. Moreover, it is particularly difficult to predict business activity levels at the Resort with any certainty. Accordingly, our projections in this annual report are subject to particularly high uncertainty. Our projections should not be regarded as legal promises, representations or warranties of any kind whatsoever. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and harmful to your interests.

 

 

 PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

 

SALAMANDER INNISBROOK, LLC

CONDENSED BALANCE SHEETS

 

		March 31,				December 31,
		2013				2012
		(Unaudited)
Assets
Current assets:
Cash		$	1,715,229			$	1,585,902
Accounts receivable, net			2,725,096				1,672,136
Inventories and supplies			897,882				784,137
Prepaid expenses and other			700,758				728,952
Total current assets			6,038,965				4,771,127
Property, buildings and equipment, net			38,302,191				38,767,414
Intangibles, net			5,134,324				5,402,432
Deposits and other assets			276,611				285,601
Total assets		$	49,752,091			$	49,226,574
Liabilities and Member's Equity
Current liabilities:
Accounts payable		$	684,089			$	1,532,143
Accrued liabilities			1,784,676				1,602,241
Accrued rental pool distribution			1,496,271				603,993
Deferred revenue			2,473,316				2,752,467
Due to affiliates			20,082				47,633
Total current liabilities			6,458,434				6,538,477
Deferred revenue			1,041,599				1,106,631
Total liabilities			7,500,033				7,645,108
Member's equity			42,252,058				41,581,466
Total liabilities and member’s equity		$	49,752,091			$	49,226,574

 

See accompanying notes to unaudited condensed financial statements.

 

 

SALAMANDER INNISBROOK, LLC

CONDENSED STATEMENTS OF OPERATIONS AND CHANGES IN MEMBER’S EQUITY

(Unaudited)

 

		Three months ended March 31,
		2013				2012
Resort revenues		$	13,974,097			$	12,795,604
Costs and expenses:
Operating costs and expenses			5,259,724				4,950,479
General and administrative			5,605,706				5,235,248
Depreciation and amortization			824,256				833,664
Total costs and expenses			11,689,686				11,019,391
Operating income			2,284,411				1,776,213
Interest expense, net			(4,143	)			(4,941	)
Net income			2,280,268				1,771,272
Member's equity, beginning of period			41,581,466				44,921,298
Member's distributions			(1,609,676	)			(1,501,631	)
Member's equity, end of period		$	42,252,058			$	45,190,939

 

See accompanying notes to unaudited condensed financial statements.

 

 

SALAMANDER INNISBROOK, LLC

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Three months ended March 31,
		2013				2012
Cash flows from operating activities:
Net income		$	2,280,268			$	1,771,272
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for bad debt expense			11,556				6,875
Depreciation and amortization			824,256				833,664
Deposits and other assets			8,990				13,528
Other changes in operating assets and liabilities			(1,295,142	)			(1,010,613	)
Net cash provided by operating activities			1,829,928				1,614,726
Cash flows from investing activities:
Purchases of property and equipment			(90,925	)			(20,991	)
Net cash used in investing activities			(90,925	)			(20,991	)
Cash flows from financing activities:
Member distributions			(1,609,676	)			(1,501,631	)
Repayment of capital lease obligations			-				(30,532	)
Repayment of refurbishment obligation			-				(7,139	)
Net cash used in financing activities			(1,609,676	)			(1,539,302	)
Net increase in cash			129,327				54,433
Cash, beginning of period			1,585,902				943,216
Cash, end of period		$	1,715,229			$	997,649
Supplemental disclosure of cash flow information:
Cash paid for interest		$	4,143			$	4,941

 

See accompanying notes to unaudited condensed financial statements.

 

 

SALAMANDER INNISBROOK, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

 

Note 1. Nature of Business, Basis of Presentation and Summary of Significant Accounting Policies

 

Nature of business

 

Salamander Innisbrook, LLC (the “Company”, “we”, “us”, or “our”), together with our affiliates, Salamander Innisbrook Securities, LLC, and Salamander Innisbrook Condominium, LLC owns and operates the Innisbrook Resort and Golf Club (the “Resort”).

 

The Company controls and operates the Rental Pool Lease Operations (the “Rental Pool”); a securitized pool of condominiums owned by participating condominium owners (the “Participating Owners”) and rented as hotel rooms to guests of the Resort (an average of 440 units or 548 hotel rooms participate at any given time). Pursuant to the Amended and Restated Innisbrook Rental Pool Master Lease Agreement, dated January 1, 2004 (the “Master Lease” or “MLA”), the Company is obligated to make quarterly distributions of a percentage of room revenues. Other resort facilities include four 18-hole golf courses, four restaurants, three convention facilities, a health spa, fitness center, tennis and recreation facilities, themed water park and five swimming pools.

 

Basis of presentation

 

The accompanying interim condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America and  the instructions of Quarterly Report on Form 10-Q. Consequently, they do not include all disclosures normally provided in the Company’s Annual Report on Form 10-K.  Accordingly, these condensed 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, 2012. 

 

In the opinion of management, the condensed financial statements reflect all adjustments which are necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. 

 

As a destination golf resort, open year round, the Resort’s performance is sensitive to weather conditions and seasonality as well as general trends in the economy, with any economic downturn adversely affecting operating results. Our operations are seasonal with the highest volume of revenue generated in the first two quarters 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.

 

Reclassifications

 

Certain amounts in the 2012 condensed financial statements were reclassified to conform to the 2013 presentation.

 

Note 2. Accounts Receivable

 

Accounts receivable consist of the following as of March 31, 2013 and December 31, 2012:

 

		March 31, 2013				December 31, 2012
Trade accounts receivable		$	2,569,154			$	1,401,447
Other receivables			279,332				382,523
Less allowance for bad debts			(123,390	)			(111,834	)
		$	2,725,096			$	1,672,136

 

 

Note 3. Property, Buildings and Equipment

 

Property, buildings and equipment consist of the following as of March 31, 2013 and December 31, 2012:

 

		March 31, 2013				December 31, 2012
Land and land improvements		$	16,801,012			$	16,801,012
Buildings			24,974,410				24,974,410
Furniture, fixtures and equipment			8,106,324				8,106,324
Contruction in progress			272,581				181,657
			50,154,327				50,063,403
Less accumulated depreciation			(11,852,136	)			(11,295,989	)
		$	38,302,191			$	38,767,414

 

Note 4. Intangibles

 

Intangible assets represent the value of the following contractual relationships acquired in connection with the acquisition of the Resort. The intangible assets are being amortized over the specific term or benefit period of each related contract.

 

				March 31,				December 31,
Intangible Assets		Amortization Period		2013				2012
Water Contract		None since renewable in perpetuity		$	2,030,000			$	2,030,000
Rental Pool		77.5 months			9,481,717				9,481,717
Trade Name		None since renewable in perpetuity			2,300,000				2,300,000
					13,811,717				13,811,717
Less accumulated amortization					(8,677,393	)			(8,409,285	)
				$	5,134,324			$	5,402,432

 

Note 5. Long-term Obligations

 

Leases - Leases, which transfer substantially all of the benefits and risks of ownership of property, are classified as capital leases. Assets and liabilities are recorded at amounts equal to the present value of the minimum lease payments at the beginning of the lease term. Interest expense relating to the lease liabilities is recorded to affect constant rates of interest over the terms of the leases.

 

Leases, which do not transfer substantially all of the benefits and risks of ownership of property, are classified as operating leases, and the related rentals are charged to expense as incurred.

 

Note 6. Commitments and Contingencies

 

Contingencies

 

In the normal course of our operations, we are subject to claims and lawsuits. Our former insurance carrier has requested reimbursement of monies from us that they paid in 2010 to settle certain claims asserted against us. We believe the request for reimbursement has no basis and, through our legal counsel, have denied the insurance carrier’s request for reimbursement and we intend to fully defend our position. The outcome of this matter cannot be determined at this time. Because of this, and because we do not believe this matter will have a material effect on our financial condition and results of operations, there have been no adjustments to the accompanying condensed financial statements as of March 31, 2013 for the effects of this matter.

 

PGA TOUR Event

 

The Resort has been the site of a PGA TOUR event since 1990. The annual event typically takes place in March, our peak demand month.

 

On March 1, 2013, EverBank, a diversified financial services company, signed a one year agreement to be the presenting sponsor of the 2013 PGA TOUR golf event held at the Resort. Because this PGA TOUR event is so highly regarded by the PGA TOUR players (strength of the Copperhead Golf Course, superior resort amenities, place in the PGA TOUR’s “Florida Swing” schedule, etc.), those associated with the event are confident that a viable sponsor will be secured in advance of the 2014 event.

 

 

Note 7. Related Party Transactions

 

We paid management fees to an affiliate of $419,255 and $384,051 for the three months ended March 31, 2013 and 2012, respectively. These fees are included in general and administrative expenses in the Condensed Statements of Operations.

 

At March 31, 2013 and December 31, 2012, amounts due to affiliates are non-interest bearing, unsecured and are due on demand.

 

The Innisbrook Rental Pool Lease Operation paid us $83,183 and $93,198 as reimbursement for maintenance and housekeeping labor, use of the telephone lines and other supplies during the three months ended March 31, 2013 and 2012, respectively. These reimbursements are reflected as a reduction of general and administrative expenses in the Condensed Statements of Operations.

 

 

RENTAL POOL LEASE OPERATIONS

 

The operation of the Rental Pool is tied closely to the Resort operations. The Rental Pool Master Lease Agreements provide for a quarterly distribution of a percentage of the Company’s room revenues to participating condominium owners (“Participants”), as defined in the agreement (see Note 1 of the Rental Pool Lease Operation financial statements). Because the Rental Pool participants share in a percentage of the room revenues, the condominium units allowing Rental Pool participation are deemed to be securities. However, there is no market for such securities other than the normal real estate market. Since the security is real estate, no dividends have been paid or will be paid.

 

The Company is a single-member limited liability company, wholly owned by Salamander Farms, LLC. There is no established market for the Member’s interest.

 

 

INNISBROOK RENTAL POOL LEASE OPERATION

CONDENSED BALANCE SHEETS

 

		March 31,				December 31,
		2013				2012
		(unaudited)
DISTRIBUTION FUND
ASSETS
RECEIVABLE FROM SALAMANDER INNISBROOK, LLC FOR DISTRIBUTION		$	1,496,271			$	603,993
INTEREST RECEIVABLE FROM RENTAL POOL ESCROW FUND			986				1,740
		$	1,497,257			$	605,733
LIABILITIES AND PARTICIPANTS' FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION		$	1,497,257			$	512,461
DUE TO MAINTENANCE ESCROW FUND			-				93,272
		$	1,497,257			$	605,733
MAINTENANCE ESCROW FUND
ASSETS
CASH		$	205,130			$	255,488
CASH EQUIVALENTS			1,150,000				1,100,000
RECEIVABLE FROM DISTRIBUTION FUND			-				93,272
INTEREST RECEIVABLE			6,006				6,097
		$	1,361,136			$	1,454,857
LIABILITIES AND PARTICIPANTS' FUND BALANCES
ACCOUNTS PAYABLE		$	39,779			$	42,111
INTEREST PAYABLE TO DISTRIBUTION FUND			986				1,740
TOTAL LIABILITIES			40,765				43,851
CARPET CARE RESERVE			60,887				61,734
PARTICIPANTS' FUND BALANCES			1,259,484				1,349,272
		$	1,361,136			$	1,454,857

 

See accompanying notes to unaudited condensed financial statements.

 

 

INNISBROOK RENTAL POOL LEASE OPERATION

CONDENSED STATEMENTS OF OPERATIONS

DISTRIBUTION FUND

(unaudited)

 

		Three months ended March 31,
		2013				2012
GROSS REVENUES		$	4,074,661			$	3,573,972
DEDUCTIONS:
Agents' commissions			114,366				97,401
Credit card fees			114,458				100,071
Audit fees			15,000				15,000
Linen replacements			27,751				30,569
Rental pool complimentary fees			8,682				6,482
			280,257				249,523
ADJUSTED GROSS REVENUES			3,794,404				3,324,449
AMOUNT RETAINED BY LESSEE			(2,276,642	)			(1,994,669	)
GROSS INCOME DISTRIBUTION			1,517,762				1,329,780
ADJUSTMENTS TO GROSS INCOME DISTRIBUTION:
General pooled expense			(1,893	)			(1,345	)
Corporate complimentary occupancy fees			5,100				4,464
Occupancy fees			(426,305	)			(401,263	)
Advisory Committee expenses			(32,988	)			(30,787	)
NET INCOME DISTRIBUTION			1,061,676				900,849
ADJUSTMENTS TO NET INCOME DISTRIBUTION:
Occupancy fees			426,305				401,263
Hospitality suite fees			793				812
Associate room fees			7,497				17,297
AVAILABLE FOR DISTRIBUTION TO PARTICIPANTS		$	1,496,271			$	1,320,221

 

See accompanying notes to the unaudited condensed financial statements.

 

 

INNISBROOK RENTAL POOL LEASE OPERATION

CONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES

 

DISTRIBUTION FUND

(unaudited)

 

		Three months ended March 31,
		2013				2012
BALANCE, beginning of period		$	-			$	-
ADDITIONS:
Amounts available for distribution			1,496,271				1,320,221
Interest received or receivable from Maintenance Escrow Fund			986				1,680
REDUCTIONS:
Amounts withheld for Maintenance Escrow Fund			-				(160,505	)
Amounts accrued or paid to participants			(1,497,257	)			(1,161,396	)
BALANCE, end of period		$	-			$	-

 

MAINTENANCE ESCROW FUND

(unaudited)

 

		Three months ended March 31,
		2013				2012
BALANCE, beginning of period		$	1,349,272			$	1,814,692
ADDITIONS:
Amounts withheld from occupancy fees			-				160,505
Interest earned			6,006				5,936
Charges to participants to establish or restore escrow balances			94,246				56,589
REDUCTIONS:
Maintenance charges			(159,226	)			(215,807	)
Interest accrued or paid to Distribution Fund			(6,006	)			(5,936	)
Refunds to participants as prescribed by the master lease agreements			(24,808	)			(88,349	)
BALANCE, end of period		$	1,259,484			$	1,727,630

 

See accompanying notes to the unaudited condensed financial statements.

 

 

INNISBROOK RENTAL POOL LEASE OPERATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

 

1. Rental Pool Lease Operations

 

Organization and Operations

 

We operate Innisbrook Resort and Golf Club (the “Resort”) in Palm Harbor, Florida, which contains 1,216 condominium units of which all have been sold to third parties or to affiliates of the Company. A large number of the condominium units, 440, 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 are owner-occupied. Other resort property owned by the Company and its affiliates include golf courses, restaurants, tennis courts, a spa and fitness center, swimming pools, conference center facilities as well as administrative offices.

 

The Rental Pool operation is highly dependent upon the operations of the Resort, and likewise, the Resort is also dependent upon the continued participation of condominium owners in the Rental Pool. Additionally, the Rental Pool and Resort are both impacted by the general economic conditions related to the destination resort industry.

 

The Rental Pool consists of condominiums at the Resort which are leased by the Company from their owners and used as hotel accommodations for the Resort. The Company has assumed the Master Lease Agreement (“MLA”) from the predecessor owner which provides that on an annual basis each Participant may elect to participate in the Rental Pool for the following year by signing an Annual Lease Agreement (“ALA”). Any condominium unit owner who does not sign the ALA is not permitted to participate in the Rental Pool for the following year. Under the MLA, 40% of the Adjusted Gross Revenues, as defined in the MLA, are distributed to the Rental Pool Participants and the remaining 60% is retained by the Company.

 

The Lessors’ Advisory Committee (“LAC”) consists of nine Participants who are elected by the Participants to advise the Company of Rental Pool Matters and to negotiate amendments to the lease agreement, the Annual Lease Agreement (“ALA”) and the MLA.

 

The Rental Pool consists of two funds: the Distribution Fund and the Maintenance Escrow Fund. The Distribution Fund balance sheet primarily reflects amounts receivable from the Company for the Rental Pool distribution payable to Participants and amounts due to the Maintenance Escrow Fund. The operations of the Distribution Funds reflect Participants’ earnings in the Rental Pool. The Maintenance Escrow Fund reflects the accounting for certain escrowed assets of the Participants and, therefore, has no operations. It consists primarily of amounts escrowed by Participants or due to the Distribution Fund to meet escrow requirements, fund the carpet care reserve and maintain the interior of the units.

 

Maintenance Escrow Fund Accounts

 

The MLA generally provides that 90% of the occupancy fees earned by each Participant are ultimately deposited in that Participant’s Maintenance Escrow Fund account. The occupancy fee percentage deposited into the Fund was reduced from 40% in 2012 to 0% in 2013 as was agreed to and amended by the 2013 Annual Lease Agreement. The account provides funds for payment of amounts that are due from all Participants for maintenance and refurbishment services for or related to their condominium unit. In the event that a Participant’s balance falls below the amount necessary to pay for maintenance and replacements in the Participants unit, the Participant is required to restore the escrow balance to a defined minimum level. The MLA requires specific fund balances be maintained, by unit type, size and age of refurbishment.

 

The LAC, subject to the restriction in the MLA, invests the Maintenance Escrow Fund on behalf of the Participants. Income earned on the investments of the Maintenance Escrow Fund is allocated proportionately to the respective Maintenance Escrow Fund accounts and paid quarterly through the Distribution Fund. The funds are held in certificates of deposits.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

General

 

The Resort is a destination golf resort that appeals to group and transient guests within all market segments. The Resort provides condominium accommodations, food and beverage dining locations (three restaurants, room service, banquet and/or catering options) and recreational entertainment to members, business meetings, group guests, leisure guests and their families. The Resort offers room-only rates, golf packages, and family vacation packages.

 

Results of operations

 

As a destination golf resort, open year round, the Resort’s performance is sensitive to weather conditions and seasonality as well as general trends in the economy, with any economic downturn adversely affecting operating results. The Company’s operations are seasonal with the highest volume of revenue generated in the first two quarters 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.

 

Results of operations for the three months ended March 31, 2013 (unaudited) and 2012

 

		Three months ended								Three months ended
		March 31, 2013				%				March 31, 2012				%				Inc/(dec)				% Chg
Resort Revenues		$	13,974,097				100.0	%		$	12,795,604				100.0	%		$	1,178,493				9.2	%
Costs and Expenses:
Operating costs and expenses			5,259,724				37.6	%			4,950,479				38.7	%			309,245				6.2	%
General and administrative			5,605,706				40.1	%			5,235,248				40.9	%			370,458				7.1	%
Depreciation and amortization			824,256				5.9	%			833,664				6.5	%			(9,408	)			-1.1	%
Total costs and expenses			11,689,686				83.7	%			11,019,391				86.1	%			670,295				6.1	%
Income before interest			2,284,411				16.3	%			1,776,213				13.9	%			508,198				28.6	%
Interest  expense, net			(4,143	)			0.0	%			(4,941	)			0.0	%			798				-16.2	%
Net income		$	2,280,268				16.3	%		$	1,771,272				13.8	%		$	508,996				28.7	%

 

For the first quarter of 2013, resort revenues of $13,974,097 exceeded 2012 first quarter revenue by $1,178,493 or 9.2%.  The room revenue growth of 14% year over year in the first quarter was a result of increased production within the transient market and secondly the golf package business.  ADR strengthened across the segments resulting in an overall 6% growth in room rate.

 

As a direct result of the increased business levels, Costs and Expenses were up for the three-month period at $5,259,724 but were down as a relative percentage of overall revenue. The Resort experienced Net Income of $2,280,268 for the three-month period. This figure reflected an improvement of $508,996 or 28.7% when compared to the same period last year.

 

Liquidity and Capital Resources

 

Future operating costs and planned expenditures for capital additions and improvements are expected to be adequately funded by cash generated by the Resort’s operations, funding from our sole member or affiliates’ current cash reserves.

 

Our revenue is not considered to be dependent on any individual or small group of customers.

 

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions and select accounting policies that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These accounting policies have been described on our Annual Report on Form 10-K for the year ended December 31, 2012, and there have been no material changes during the three months ended March 31, 2013.

 

Recent Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the company as of the specified effective date. Unless otherwise discussed, management does not believe that the impact of recently issued standards will have a material impact on the Company’s financial statements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act (defined below)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or 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 reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

 

Changes in Internal Control Over Financial Reporting

  

In addition, our management with the participation of our principal executive officer and principal financial officer have determined that no change in our internal control over financial reporting occurred during or subsequent to the quarter ended March 31, 2013 that has materially affected, or is (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Securities Exchange Act of 1934) reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

In the normal course of operations, the Company is subject to claims and lawsuits.  The Company does not believe that the ultimate resolution of such matters will materially impair operations or have an adverse effect on its financial position.

 

Our former insurance carrier has requested reimbursement of monies from us that they paid in 2010 to settle certain claims asserted against us. We believe the request for reimbursement has no basis and, through our legal counsel, have denied the insurance carrier’s request for reimbursement and we intend to fully defend our position. The outcome of this matter cannot be determined at this time. Because of this and because we do not believe this matter will have a material effect on our financial condition and results of operations, there have been no adjustments to the accompanying condensed financial statements as of March 31, 2013 for the effects of this matter.

 

 Item 1A. Risk Factors

 

Not required

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Not applicable

 

Item 3. Defaults Upon Senior Securities

 

Not applicable

 

Item 4. Mine Safety Disclosures

 

Not applicable

 

Item 5. Other information

 

Not applicable

 

Item 6. Exhibits

 

(a). Exhibits

Exhibit		Item
31.1		Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2		Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
101		Interactive Data Files

 

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

 

 

SIGNATURES

 

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.

 

		SALAMANDER INNISBROOK, LLC
		(Registrant)
Date:  May 16, 2013	/s/	Prem Devedas
		Prem Devedas
		Manager
		(Chief Executive Officer)
Date:  May 16, 2013	/s/	Dale Pelletier
		Dale Pelletier
		Chief Financial Officer
		(Principal Financial and Accounting
		Officer)