Innisbrook Resortand Golf Club(the "Resort") in Palm Harbor, Florida, containing 1,216 condominium units; all of which have been sold to third parties or to affiliates of the Company. 423 of the condominium units are hotel accommodations that participate in a rental-pooling program (the " Rental Pool") that provides 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 and administrative offices. Results of Operations
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.
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 economic downturns adversely affecting our 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
June 30, 2014and 2013 (unaudited) Three months ended Three months ended June 30, 2014 % June 30, 2013 % Inc/(dec) % Chg Resort Revenues $ 9,304,241 100.0 % $ 8,450,066 100.0 % $ 854,17510.1 % Costs and Expenses:
Operating costs and expenses 4,283,713 46.0 % 3,809,400 45.1 % 474,313 12.5 % General and administrative 4,812,727 51.7 % 4,498,755 53.2 % 313,972 7.0 % Depreciation and amortization 531,649 5.7 % 827,559 9.8 % (295,910 ) -35.8 % Total costs and expenses 9,628,089 103.5 % 9,135,714 108.1 % 492,375 5.4 % Loss before interest (323,848 ) -3.5 % (685,648 ) -8.1 % 361,800 -52.8 % Interest expense, net (3,389 ) 0.0 %
(3,283 ) 0.0 % (106 ) 3.2 % Net loss $ (327,237 ) -3.5 % $ (688,931 ) -8.2 %
$ 361,694-52.5 %
For the second quarter 2014, Resort Revenues increased 10.1% as compared to the same period last year. Both Group and Package markets were strong increasing revenues
$219,806and $153,684or 32.6% and 27.1%, respectively over the same quarter last year. Our Transient market had modest growth year over year of $59,348or 7.2%. Cost and Expenses had an overall increase due to the increased activity predominantly in our Sales & Marketing efforts. The decrease in depreciation and amortization expense year over year is the result of fully amortizing certain intangible assets. 14 Results of operations for the six months ended June 30, 2014and 2013 (unaudited) Six months ended Six months ended June 30, 2014 % June 30, 2013 % Inc/(dec) % Chg Resort Revenues $ 21,990,939100.0 % $
22,424,163 100.0 %
Operating costs and expenses 9,089,648 41.3 % 9,069,124 40.4 % 20,524 0.2 % General and administrative 10,614,798 48.3 % 10,104,461 45.1 % 510,337 5.1 % Depreciation and amortization 1,062,530 4.8 % 1,651,815 7.4 % (589,285 ) -35.7 % Total costs and expenses 20,766,976 94.4 % 20,825,400 92.9 % (58,424 ) -0.3 %
Income before interest 1,223,963 5.6 % 1,598,763 7.1 % (374,800 ) -23.4 % Interest expense, net (19,975 ) -0.1 %
(7,426 ) 0.0 % (12,549 ) 169.0 % Net income
$ 1,203,9885.5 % $ 1,591,3377.1 % $ (387,349 )-24.3 %
For the six months ended
June 30, 2014, revenues were down $433,224or 1.9% over the same period last year. Overall, costs and expenses are down 0.3% after increased spending in General & Administrative was offset by the decrease in Depreciation and Amortization due to certain intangible assets becoming fully amortized.
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 and funding from our sole member or affiliates' current cash reserves.
Our revenue stream 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 Statesrequires us to make estimates and assumptions and to 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, 2013, and there have been no material changes during the six months ended June 30, 2014.
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 believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's financial statements upon adoption.