** DRAFT - DISCUSSION COPY **

Transcription

1 ** DRAFT - DISCUSSION COPY ** AUDITED FINANCIAL STATEMENTS Year Ended December 31, 2013

2 CONTENTS Page(s) Independent Auditors' Report 2 (Two Pages) Financial Statements: Balance Sheet 3 Statement of Revenues and Expenses 4 and Net Assets Statement of Cash Flows 5 Notes to Financial Statements 6-10 Supplementary Information: Schedules of Operating Fund Revenues and Expenses - Budget to Actual Schedules of Changes in Replacement Fund 23 Future Major Repairs and Replacements 24-31

3 3301 Bonita Beach Road, Suite 306 Bonita Springs, Florida Telephone (239) Fax (239) INDEPENDENT AUDITORS REPORT To the Board of Directors Bayside Master Association, Inc. Bonita Springs, Florida We have audited the accompanying financial statements of Bayside Master Association, Inc., which comprise the balance sheet as of December 31, 2013, and the related statements of revenues, expenses, and changes in fund balance and cash flows for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bayside Master Association, Inc. as of December 31, 2013, and results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Member of American Institute of Certified Public Accountants Member of Florida Institute of Certified Public Accountants

4 INDEPENDENT AUDITORS REPORT (Continued) Disclaimer of Opinion on Required Supplementary Information Accounting principles generally accepted in the United States of America require that the future major repairs and replacements information on pages be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Financial Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. ** DRAFT DISCUSSION COPY ** Certified Public Accountants Bonita Springs, Florida May 21, 2014 Member of American Institute of Certified Public Accountants Member of Florida Institute of Certified Public Accountants

5 BALANCE SHEET As of December 31, 2013 Operating Replacement Totals Fund Fund 2013 ASSETS Cash and cash equivalents $ 317,125 $ 353,311 $ 670,436 Accounts receivable - members, net 12,825-12,825 Accounts receivable - developer 30,910-30,910 Property, net of accumulated depreciation 322, ,947 Prepaid expenses 40,048-40,048 TOTAL ASSETS $ 723,855 $ 353,311 $ 1,077,166 LIABILITIES AND FUND BALANCES Accounts payable $ 34,878 $ - $ 34,878 Accrued payables 4,817-4,817 Foreclosure liability 322, ,947 Prepaid assessments 122, ,350 Security deposit 1,000-1,000 TOTAL LIABILITIES 485, ,992 FUND BALANCES Fund balance - Common 120,481 66, ,118 Fund balance - Waterside I & II (11,055) 72,980 61,925 Fund balance - Waterside III & IV (13,137) 65,672 52,535 Fund balance - Cabanas III & IV (319) 18,503 18,184 Fund balance - Waterside V & VI (3,736) 54,808 51,072 Fund balance - Cabanas V & VI ,853 34,319 Fund balance - Manatee Bay & Sunset Gulf 3,735 40,858 44,593 Capital Contributions 141, ,428 TOTAL FUND BALANCES 237, , ,174 TOTAL LIABILITIES AND FUND BALANCES $ 723,855 $ 353,311 $ 1,077,166 3

6 STATEMENT OF REVENUES AND EXPENSES AND NET ASSETS For the Year Ended December 31, 2013 Operating Replacement Totals Fund Fund 2013 REVENUES Operating assessments $ 888,450 $ - $ 888,450 Reserve assessments - 123, ,663 Dock assessments 6, ,707 Interest income and late fees 4,461 1,861 6,322 Rental income 12,000-12,000 Other income 5,418-5,418 EXPENSES Total Revenues 916, ,062 1,042,560 Administrative 81,287-81,287 Insurance 35,851-35,851 Maintenance - building and amenity 297, ,432 Maintenance - grounds 114, ,041 Utilities 367, ,549 Depreciation expense 12,441-12,441 Reserve expenditures - 126, ,704 Total Operating Expenses 908, ,704 1,035,305 Excess (deficiency) of revenues over expenses 7,897 (642) 7,255 OTHER COMPREHENSIVE INCOME (LOSS) Gain on foreclosurd unit 12,441-12,441 Total excess (deficiency) of revenues over expenses 20,338 (642) 19,696 BEGINNING FUND BALANCES 217, , ,899 Interfund transfers (8,423) 8,423 - Contributions 8,002-8,002 Prior period adjustment - 21,577 21,577 ENDING FUND BALANCES $ 237,863 $ 353,311 $ 591,174 4

7 STATEMENT OF CASH FLOWS For the Year Ended December 31, 2013 CASH FLOWS FROM OPERATING ACTIVITIES Operating Replacement Totals Fund Fund 2013 Excess (deficiency) of revenues over expenses $ 20,338 $ (642) $ 19,696 Adjustment to reconcile excess of revenues to net cash provided by operating activities: Depreciation 12,441-12,441 (Increase) decrease in: Accounts receivable - members, net (4,747) - (4,747) Accounts receivable - Waterside III 1,000-1,000 Interfund receivable - 7,841 7,841 Prepaid expenses 50,000-50,000 Utility deposits 1,949-1,949 Increase (decrease) in: Accounts payable (44,207) - (44,207) Accrued payables 4,817-4,817 Interfund payable (7,841) - (7,841) Foreclosure liability (12,441) - (12,441) Prepaid assessments 33,960-33,960 Due to MBCOPA (100) - (100) Net Cash Provided (Used) by Operating Activities 55,169 7,199 62,368 Net change in cash and cash equivalents 55,169 7,199 62,368 CASH AND CASH EQUIVALENTS, Beginning of Year 262, , ,489 Interfund transfers (8,423) 8,423 - Contributions 8,002-8,002 Prior period adjustment - 21,577 21,577 CASH AND CASH EQUIVALENTS, End of Year $ 317,125 $ 353,311 $ 670,436 5

8 NOTES TO FINANCIAL STATEMENTS December 31, 2013 NOTE 1 NATURE OF ORGANIZATION Bayside Master Association, Inc. (the Association ) is incorporated in the State of Florida according to the terms of Florida Statutes, Chapter 617 and 720. The Association is responsible for the operation and maintenance of the common property within the Bayside complex. The Association is a 24.5 acre planned community located on Fort Myers Beach, which as of the balance sheet date, had sold 400 units. The Association began its operations on February 3, The Association s members are the only members. NOTE 2 DATE OF MANAGEMENT S REVIEW In preparing the financial statements, the Association has evaluated events and transactions for potential recognition or disclosure through April 30, 2014, the date that the financial statements were available for issuance. NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements. Additionally, generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Basis of Accounting - Fund Accounting The Association prepares its financial statements on the accrual basis of accounting. To ensure observance of limitations and restrictions on the use of financial resources, the Association maintains its accounts using fund accounting. Financial resources are classified for accounting purposes in the following funds established according to their nature and purposes: Operating Fund This fund is used to account for financial resources available for the general operations of the Association. Replacement Fund This fund is used to accumulate financial resources designated for future major repairs and replacements. Cash and Cash Equivalents The Association considers cash and cash equivalents to include all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. Read independent auditors report. 6

9 NOTES TO FINANCIAL STATEMENTS December 31, 2013 NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Concentration of Credit Risk The majority of the Association s cash is placed in various financial institutions. At times, these balances may exceed federally insured limits. To date, the Association has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk with regards to its cash and cash equivalents. Property and Equipment The Association capitalizes all property and equipment to which it has title or other evidence of ownership with the exception of real property directly associated with the units. Ownership of the commonly held assets is vested directly or indirectly in the Member owners and those assets are not deemed to be severable. As a result, commonly owned assets are not presented in the Association s financial statements. Owners Assessments - Revenue Recognition All owners of the Association are obligated to pay quarterly assessments (maintenance fees) to provide funds for the Association s operating expenses, future capital acquisitions, and future major repairs and replacements. The annual budget and assessments of the owners are determined and approved by the Board of Directors. Interest Income Interest income is earned in the operating and replacement funds in direct proportion to the investments of each fund. NOTE 4 INCOME TAXES Homeowners associations may be taxed as either homeowners associations or regular corporations. Bayside Master Association, Inc. has elected to be taxed as a homeowners association. Under this election, the Association is taxed on its nonexempt function income, such as interest earnings. Exempt function income, which consists primarily of member assessments, is not taxable. The Association incurred no income taxes for the year ended December 31, As of December 31, 2013, the statute of limitations remains open for tax returns filed subsequent to and including 2011; however, no tax return examinations are in process or anticipated. Read independent auditors report. 7

10 NOTES TO FINANCIAL STATEMENTS December 31, 2013 NOTE 5 COMPONENTS OF CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of the following: December 31, 2013 Operating Fund Cash : Banking Institutions $ 317,125 Replacement Fund Cash : Banking Institutions 353,311 Total $ 670,436 NOTE 6 ACCOUNTS RECEIVABLE MEMBER OWNERS Assessments receivable at the balance sheet date represent fees due from Member owners. Normally, the Association s policy is to place liens on the properties of homeowners whose assessments are substantially delinquent. As of December 31, 2013 delinquent assessments for the Association, including developer receivables, totaled $30,799. The Association has recorded an allowance for doubtful accounts as of December 31, 2013 of $17,974. NOTE 7 FORECLOSED PROPERTY The association has acquired property in a foreclosure, the cost basis of which was fair value in the year of foreclosing plus costs associated with acquisition. The foreclosed property consists of: December 31, 2013 Condo unit #7103 $ 342,127 Less: Accumulated Depreciation (19,180) Property and Equipment Net $ 322,947 Depreciation expense for the year ended December 31, 2013 was $12,441. Being that there is sufficient evidence as of the balance sheet date that the bank will be foreclosing, a liability for the book value of the foreclosed property has been included in the financial statements. As a result of depreciation, the book value of the property that is liable to be due to the bank, decreased in 2013, which therefore requires a gain entry to be made to offset the loss associated with the prior year liability. Read independent auditors report. 8

11 NOTES TO FINANCIAL STATEMENTS December 31, 2013 NOTE 8 ASSESSMENTS RECEIVED IN ADVANCE Revenue from owners assessments is recorded as earned. Prepaid assessments are recorded as a deferred liability until such time as they are deemed due, at which time, the prepaid assessments are recognized as income to the Association. At December 31, 2013 prepaid assessments totaled $122,350. NOTE 9 REPLACEMENT FUND Florida Statutes require the Association to accumulate funds for future major repairs and replacements unless waived by the Association. Accumulated funds are held in separate banking accounts, and generally are not available for expenditures related to normal operations. The Board of Directors conducted an internal study to estimate the remaining useful lives and the replacement costs of the components of common property. The table included in the unaudited supplementary information on Future Major Repairs and Replacements is based on the internal study. In addition to the regular assessments, the Association s governing documents require that funds be accumulated for future major repairs and replacements for the common areas. A portion of the yearly assessments is designated for this purpose. Accumulated funds, which aggregated $353,311 as of December 31, 2013 have been designated for this purpose. The Association uses the Cash Flow Funding method for calculating required funding levels. Under this method, the Association assigns a pool of funds to be used for any and all reserve projects. The Association performs an annual reserve study to estimate the remaining useful lives and replacement costs of the common property components. The Association is funding such major repairs and replacements over the estimated useful lives of the components based on the study's estimates of current replacement costs, considering amounts previously accumulated in the replacement fund. Actual expenditures, however, may vary from the estimated amounts, and the variations may be material. The following is a table of the activity in the replacement fund: Fund Description Balance December 31, 2012 Additions to Funds Charges/ Transfers to Funds Balance December 31, 2013 General $322,285 $ 154,201 $ (125,036) $351,450 Interest 1,668 1,861 (1,668) 1,861 Total $ 323,953 $ 156,062 $ (126,704) $ 353,311 Read independent auditors report. 9

12 NOTES TO FINANCIAL STATEMENTS December 31, 2013 NOTE 10 COMMITMENTS AND CONTINGENCIES The Association currently has contracts with various vendors, including a management contract. In addition, there is a contingent liability, not shown on the balance sheet, related to the foreclosure of the unit #7103 property. The original amount in dispute was $16,750 plus interest accrued at an annual 18% interest rate. The association believes that it can defend this litigation in court, but if not, the estimated liability as of December 31, 2013 is $19,292. Read independent auditors report. 10

13 SUPPLEMENTARY INFORMATION 11

14 SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, 2013 (Unaudited) Favorable Budget Actual (Unfavorable) REVENUES Operating Assessments $ 888,451 $ 888,450 $ (1) Dock Assessments 6,169 6,169 - Interest Income and Late Fees Operating interest Interest & late fees 2,000 3,891 1,891 2,500 4,461 1,961 Rental Income 6,000 12,000 6,000 Other Income Proximity/barcode income Collection fee FPL sales tax refund - 4,668 4,668-5,418 5,418 EXPENSES Total Operating Income 903, ,498 13,378 Administrative Expenses Accounting 24,720 21,930 2,790 Corporate annual report Management fees 9,120 9, Professional & legal 9,000 14,612 (5,612) Licenses & permits 1,625 1, Miscellaneous 10,377 9,083 1,294 Office 8,500 11,371 (2,871) Unit #7103 6,000 13,710 (7,710) 69,404 81,287 (11,883) Insurance Insurance - worker's comp (96) Insurance 32,956 35,251 (2,295) Insurance - fidelity bond 1,000-1,000 34,460 35,851 (1,391) Maintenance - Building and Amenity Gate guard contract 141, ,510 20,890 Gate maintenance 5,000 10,813 (5,813) Generator & fire pump 14,800 21,337 (6,537) Janitorial service 31,580 35,300 (3,720) Janitorial supplies 360 2,355 (1,995) 12

15 SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, (Continued) EXPENSES -- Continued Budget Favorable (Unaudited) Actual (Unfavorable) Lift station - contract 9,500 11,048 (1,548) Gatehouse maintenance 300 2,818 (2,518) Pool contract 33,600 33, Pool repairs 43,000 31,939 11,061 Pool supplies 7,000 7,071 (71) Golf cart 1,000 1,590 (590) Geo thermal contract 2,800 1, Tennis courts 11,900 14,516 (2,616) Decorations 3,000 2, , ,432 7,808 Maintenance - Grounds Grounds maint contract 35,760 37,600 (1,840) Grounds repair 13,000 6,611 6,389 Grounds mulch 11,000 11,000 - Irrigation wells 3, ,831 Lake & fountain maint 5,814 6,095 (281) Mangrove trimming 30,600 42,600 (12,000) Plant replacements 4,000-4,000 Pet stations 2,700 1,258 1,442 Irrigation repair & supplies 1,500 3,453 (1,953) Street sign & fences Tree trimming 16,700 4,910 11, , ,041 10,533 Utilities Cable 241, ,199 (6,531) Electricity 49,100 81,334 (32,234) Internet 600 1,010 (410) Electric - lift station 1, Electric - geo thermal 12,200 7,503 4,697 Propane 3,835 1,489 2,346 Telephone 1,700 1, Water - tennis courts 12,000 6,476 5,524 Water & sewer 16,425 19,200 (2,775) 338, ,549 (28,791) Total Operating Expenses 872, ,160 (23,724) Depreciation Expense - 12,441 (12,441) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ 30,684 $ 7,897 $ (22,787) 13

16 SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, (Continued) Budget Favorable (Unaudited) Actual (Unfavorable) Other Comprehensive Income Gain on foreclosure unit - 12,441 12,441 Dock assessment - reserves adjustment (538) Prior year surplus/(deficit) (31,222) - 31,222 TOTAL EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ - $ 20,338 $ 20,338 14

17 COMMONS SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, 2013 REVENUES (Unaudited) Favorable Budget Actual (Unfavorable) Operating Assessments $ 352,003 $ 352,000 $ (3) Dock Assessments 6,169 6,169 - Interest Income and Late Fees Operating interest Interest & late fees 2,000 3,891 1,891 2,500 4,461 1,961 Rental Income 6,000 12,000 6,000 Other Income Proximity/barcode income Collection fee FPL sales tax refund EXPENSES Total Operating Income 366, ,406 8,734 Administrative Expenses Accounting 24,720 21,930 2,790 Corporate annual report Management fees 9,120 9, Professional & legal 9,000 14,612 (5,612) Miscellaneous 8,670 7,592 1,078 Office 8,500 11,371 (2,871) Unit #7103 6,000 13,710 (7,710) 66,072 78,296 (12,224) Insurance Insurance - worker's comp (96) Insurance 6,200 6, ,704 6,740 (36) Maintenance - Building and Amenity Gate guard contract 141, ,510 20,890 Gate maintenance 5,000 10,813 (5,813) Janitorial supplies 360 2,355 (1,995) Gatehouse maintenance 300 2,818 (2,518) Golf cart 1,000 1,590 (590) Tennis Courts 11,900 14,516 (2,616) Decorations 3,000 2, , ,274 7,686 15

18 COMMONS SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, (Continued) EXPENSES -- Continued Budget Favorable (Unaudited) Actual (Unfavorable) Maintenance - Grounds Grounds maint contract 35,760 37,600 (1,840) Grounds repair 5,000 4, Grounds mulch 11,000 11,000 - Irrigation wells 3, ,831 Lake & fountain maint 5,814 6,095 (281) Mangrove trimming 30,600 42,600 (12,000) Plant replacements 4,000-4,000 Pet stations 2,700 1,258 1,442 Irrigation repair & supplies 1,500 3,453 (1,953) Street sign & fences Tree trimming 11,000 3,195 7, , , Utilities Electricity 5,600 7,828 (2,228) Internet 600 1,010 (410) Telephone 1,700 1, Water - tennis courts 12,000 6,476 5,524 Water & sewer ,600 17,485 3,115 Depreciation Expense - 12,441 (12,441) Total Operating Expenses 367, ,640 (13,430) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ (538) $ (5,234) $ (4,696) Other Comprehensive Income Gain on #7103 foreclosure 12,441 12,441 Dock assessment - reserve adjustment (538) TOTAL EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ - $ 7,207 $ 7,207 BEGINNING FUND BALANCE 113,274 ENDING FUND BALANCE $ 120,481 16

19 WATERSIDE I & II SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, 2013 REVENUES (Unaudited) Favorable Budget Actual (Unfavorable) Operating Assessments $ 128,566 $ 128,565 $ (1) EXPENSES Total Operating Income 128, ,565 (1) Administrative Expenses Licenses & permits Miscellaneous Insurance Insurance 3,162 6,543 (3,381) 3,162 6,543 (3,381) Maintenance - Building and Amenity Generator & fire pump 1,800 1, Janitorial service 6,500 9,252 (2,752) Lift station - contract 3,000 8,961 (5,961) Pool contract 9,000 8, Pool repairs 13,000 9,671 3,329 Pool supplies 1, ,300 38,247 (3,947) Maintenance - Grounds Grounds repair 1,500-1,500 Tree trimming , ,600 Utilities Cable 68,000 70,891 (2,891) Electricity 17,340 19,095 (1,755) Propane Water & sewer 3,000 3,893 (893) 88,840 94,255 (5,415) Total Operating Expenses 128, ,620 (11,054) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ - $ (11,055) $ (11,055) BEGINNING FUND BALANCE (18,470) Prior period adjustment 18,470 ENDING FUND BALANCE $ (11,055) 17

20 WATERSIDE III & IV SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, 2013 REVENUES (Unaudited) Favorable Budget Actual (Unfavorable) Operating Assessments $ 144,376 $ 144,379 $ 3 EXPENSES Total Operating Income 144, ,379 3 Administrative Expenses Licenses & permits Miscellaneous Insurance Insurance 3,200 4,729 (1,529) Insurance - fidelity bond 1,000-1,000 4,200 4,729 (529) Maintenance - Building and Amenity Generator & fire pump 6,000 12,422 (6,422) Janitorial service 8,500 10,500 (2,000) Lift station - contract 2, ,195 Pool contract 10,500 10,878 (378) Pool repairs 7,500 11,920 (4,420) Geo thermal contract 1, ,500 47,471 (11,971) Maintenance - Grounds Grounds repair 1,000-1,000 Tree trimming , (10,617) Utilities Cable 68,000 71,191 (3,191) Electricity 8,160 7, Electric - lift station Electric - geo thermal 6,200 7,503 (1,303) Propane 1, Water & sewer 4,300 4, ,260 90,801 (2,541) Total Operating Expenses 167, ,976 (25,057) Prior Year Surplus (13,540) - 13,540 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ (36,500) $ 403 $ 36,903 BEGINNING FUND BALANCE (16,647) Prior period adjustment 3,107 ENDING FUND BALANCE $ (13,137) 18

21 WATERSIDE CABANAS III & IV SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, 2013 (Unaudited) Favorable Budget Actual (Unfavorable) REVENUES Operating Assessments $ 14,220 $ 14,220 $ - EXPENSES Total Operating Income 14,220 14,220 - Administrative Expenses Miscellaneous Insurance Insurance 5,626 5,962 (336) 5,626 5,962 (336) Maintenance - Building and Amenity Janitorial service 1, , Utilities Water & sewer 1,100 1, ,100 1, Total Operating Expenses 7,879 7, Prior Year Surplus (6,341) - 6,341 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ - $ 6,811 $ 6,811 BEGINNING FUND BALANCE (7,130) ENDING FUND BALANCE $ (319) 19

22 WATERSIDE V & VI SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, 2013 REVENUES (Unaudited) Favorable Budget Actual (Unfavorable) Operating Assessments $ 102,076 $ 102,075 $ (1) Other Income FPL sales tax refund - 2,614 2,614-2,614 2,614 EXPENSES Total Operating Income 102, ,689 2,613 Administrative Expenses Licenses & permits Miscellaneous Insurance Insurance 3,468 1,736 1,732 3,468 1,736 1,732 Maintenance - Building and Amenity Generator & fire pump 4,500 5,355 (855) Janitorial service 8,580 8, Lift station - contract 2, ,555 Pool contract 9,300 9,734 (434) Pool repairs 15,000 3,726 11,274 Pool supplies 1, ,052 Geo thermal contract ,830 28,913 12,917 Maintenance - Grounds Grounds repair 1,000 1,551 (551) Tree trimming 2,000-2,000 45,780 1,551 14,376 Utilities Cable 35,500 35,854 (354) Electricity 8,900 31,276 (22,376) Electric - lift station Propane Water & sewer 1,200 1,536 (336) 46,735 69,435 (22,700) Total Operating Expenses 138, ,332 6,330 Prior Year Surplus (6,341) - 6,341 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ (42,780) $ 2,357 $ 45,137 BEGINNING FUND BALANCE (6,093) ENDING FUND BALANCE $ (3,736) 20

23 WATERSIDE CABANAS V & VI SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, 2013 REVENUES (Unaudited) Favorable Budget Actual (Unfavorable) Operating Assessments $ 15,468 $ 15,468 $ - EXPENSES Total Operating Income 15,468 15,468 - Administrative Expenses Miscellaneous (861) (861) Insurance Insurance 7,200 5,962 1,238 7,200 5,962 1,238 Maintenance - Building and Amenity Janitorial service 1, , Utilities Water & sewer 1,825 1,904 (79) 1,825 1,904 (79) Total Operating Expenses 10,068 9, Prior Year Surplus (5,400) - 5,400 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ - $ 6,398 $ 6,398 BEGINNING FUND BALANCE (5,932) ENDING FUND BALANCE $

24 MANATEE BAY & SUNSET GULF SCHEDULE OF OPERATING FUND REVENUES AND EXPENSES - BUDGET TO ACTUAL For the Year Ended December 31, 2013 REVENUES (Unaudited) Favorable Budget Actual (Unfavorable) Operating Assessments $ 131,743 $ 131,743 $ - Other Income FPL sales tax refund - 2,028 2,028-2,028 2,028 EXPENSES Total Operating Income 131, ,771 2,028 Administrative Expenses Licenses & permits Miscellaneous Insurance Insurance 4,100 4,179 (79) 4,100 4,179 (79) Maintenance - Building and Amenity Generator & fire pump 2,500 2, Janitorial service 6,000 6,665 (665) Lift station - contract 2, ,663 Pool contract 4,800 4,800 - Pool repairs 7,500 6, Pool supplies 4,500 5,791 (1,291) Geo thermal contract ,650 26,909 1,741 Maintenance - Grounds Grounds repair 4, ,129 Tree trimming 2, ,585 36,500 1,286 8,305 Utilities Cable 70,168 70,263 (95) Electricity 9,100 15,925 (6,825) Electric - lift station Electric - geo thermal 6,000-6,000 Propane 1,500-1,500 Water & sewer 4,300 6,223 (1,923) 91,398 92,591 (1,193) Total Operating Expenses 161, ,554 9,180 Prior Year Surplus (400) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES $ (29,500) $ 8,217 $ 37,717 BEGINNING FUND BALANCE (4,482) ENDING FUND BALANCE $ 3,735 22

25 COMBINED SCHEDULE OF CHANGES IN REPLACEMENT FUND For the Year Ended December 31, 2013 Pooled Fund Balance Fund Balance January 1, 2013 Replacement Assessments Interest Charges to Fund Other Income Fund Balance December 31, 2013 Commons $ 90,753 $ 32,000 $ 313 $ (56,967) $ 538 $ 66,637 Waterside I & II 54,994 22, (5,065) - 72,980 Waterside III & IV 67,754 27, (29,686) - 65,672 Waterside Cabanas III & IV 35,968 3, (20,723) - 18,503 Waterside V & VI 35,448 19, ,808 Waterside Cabanas V & VI 30,172 3, ,853 Manatee Bay & Sunset Gulf 38,864 16, (14,263) 40,858 Totals $ 353,953 $ 123,663 $ 1,861 $ (126,704) $ 538 $ 353,311 23

26 The following table is based on estimates provided by the management company at the time of the financial review, using replacement costs and estimates from vendors. The table presents significant information about the components of the common property: Components SUPPLEMENTAL INFORMATION OF FUTURE MAJOR REPAIRS AND REPLACEMENTS (COMBINED) As of December 31, 2013 Unaudited Estimated Estimated Remaining Future Fund Approved Useful Useful Replacement (Expenditure) Budgeted Lives Lives Costs Requirements Funding Fire Pump Replacement $ 446,699 $ - $ - Generator Replacement , Guard Gate Equipment , Insurance , Interior Renovations, Restrooms , Lake Fountain / Areator Allowance 8 6 3, Landscaping , Lift Station 3 Year Cleanout 3 3 6, Lift Stations - Full Replacement , Paint Exterior Poolhouse ,265 7,700 7,700 Painting , Painting - Guardhouse Exterior 7 1 2,288 2,357 2,357 Paving Asphalt Overlay , Pool / Spa Interior Resurfacing and Tile , Pool Deck Brick Pavers , Pool Deck Fencing and Gates , Pool Deck Furniture , Pool Deck Furniture - New , Pool Equipment & Pumps ,000 Pool Heaters, Geothermal , Pool Heaters, Propane , Roof Replacement , Roof Replacement Poolhouse , Roofing - Guardhouse , Structural Replacements , Tennis Court Fencing and Gates , Tennis Lights Allowance , $ 1,787,900 $ 10,057 $ 131,175 Replacement Fund Balance at December 31, 2013 $ 353,311 24

27 COMMONS SUPPLEMENTAL INFORMATION OF FUTURE MAJOR REPAIRS AND REPLACEMENTS As of December 31, 2013 Unaudited Components Estimated Estimated Remaining Future Fund Approved Useful Useful Replacement (Expenditure) Budgeted Lives Lives Costs Requirements Funding Paving Asphalt Overlay $ 40,200 $ - $ - Lake Fountain / Areator Allowance 8 6 3, Landscaping , Painting - Guardhouse Exterior 7 1 2,288 2,357 2,357 Roofing - Guardhouse , Guard Gate Equipment , Tennis Court Fencing and Gates , Tennis Lights Allowance , Lift Stations - Full Replacement , Lift Station 3 Year Cleanout 3 3 6, Insurance , $ 321,788 $ 2,357 $ 39,000 Replacement Fund Balance at December 31, 2013 $ 66,637 25

28 WATERSIDE I & II SUPPLEMENTAL INFORMATION OF FUTURE MAJOR REPAIRS AND REPLACEMENTS As of December 31, 2013 Unaudited Components Estimated Estimated Remaining Future Fund Approved Useful Useful Replacement (Expenditure) Budgeted Lives Lives Costs Requirements Funding Fire Pump Replacement $ 110,000 $ - $ - Interior Renovations, Restrooms , Paint Exterior Poolhouse 7 5 2, Pool Deck Brick Pavers , Pool Deck Fencing and Gates , Pool Deck Furniture , Pool Heaters, Geothermal , Pool / Spa Interior Resurfacing and Tile , Roof Replacement Poolhouse , $ 284,414 $ - $ 22,500 Replacement Fund Balance at December 31, 2013 $ 72,980 26

29 WATERSIDE III & IV SUPPLEMENTAL INFORMATION OF FUTURE MAJOR REPAIRS AND REPLACEMENTS As of December 31, 2013 Unaudited Components Estimated Estimated Remaining Future Fund Approved Useful Useful Replacement (Expenditure) Budgeted Lives Lives Costs Requirements Funding Fire Pump Replacement $ 110,000 $ - $ - Generator Replacement , Interior Renovations, Restrooms , Paint Exterior Poolhouse 7 7 7, Pool Deck Brick Pavers , Pool Deck Fencing and Gates , Pool Deck Furniture , Pool Equipment & Pumps , Pool Heaters, Geothermal , Pool / Spa Interior Resurfacing and Tile , Roof Replacement Poolhouse , $ 390,431 $ - $ 28,900 Replacement Fund Balance at December 31, 2013 $ 65,672 27

30 WATERSIDE CABANAS III & IV SUPPLEMENTAL INFORMATION OF FUTURE MAJOR REPAIRS AND REPLACEMENTS As of December 31, 2013 Unaudited Components Estimated Estimated Remaining Future Fund Approved Useful Useful Replacement (Expenditure) Budgeted Lives Lives Costs Requirements Funding Painting 7 1 $ 5,025 $ - $ - Roof Replacement , Structural Replacements , $ 68,465 $ - $ 3,000 Replacement Fund Balance at December 31, 2013 $ 18,503 28

31 WATERSIDE V & VI SUPPLEMENTAL INFORMATION OF FUTURE MAJOR REPAIRS AND REPLACEMENTS As of December 31, 2013 Unaudited Components Estimated Estimated Remaining Future Fund Approved Useful Useful Replacement (Expenditure) Budgeted Lives Lives Costs Requirements Funding Fire Pump Replacement $ 110,000 $ - $ - Generator Replacement , Interior Renovations, Restrooms , Paint Exterior Poolhouse 7 4 3, Pool Deck Brick Pavers , Pool Deck Fencing and Gates , Pool Deck Furniture - Old - - 9, Pool Deck Furniture - New , Pool Heaters, Geothermal , Pool / Spa Interior Resurfacing and Tile , Roof Replacement Poolhouse , $ 339,600 $ - $ 20,000 Replacement Fund Balance at December 31, 2013 $ 54,808 29

32 WATERSIDE CABANAS V & VI SUPPLEMENTAL INFORMATION OF FUTURE MAJOR REPAIRS AND REPLACEMENTS As of December 31, 2013 Unaudited Components Estimated Estimated Remaining Future Fund Approved Useful Useful Replacement (Expenditure) Budgeted Lives Lives Costs Requirements Funding Painting 7 4 $ 8,000 $ - $ - Roof Replacement , Structural Replacements , $ 44,680 $ - $ 775 Replacement Fund Balance at December 31, 2013 $ 33,853 30

33 MANATEE BAY & SUNSET GULF SUPPLEMENTAL INFORMATION OF FUTURE MAJOR REPAIRS AND REPLACEMENTS As of December 31, 2013 Unaudited Components Estimated Estimated Remaining Future Fund Approved Useful Useful Replacement (Expenditure) Budgeted Lives Lives Costs Requirements Funding Fire Pump Replacement $ 116,699 $ - $ - Generator Replacement , Interior Renovations, Restrooms , Paint Exterior Poolhouse 7 1 7,700 7,700 7,700 Pool Deck Brick Pavers , Pool Deck Fencing and Gates , Pool Deck Furniture , Pool Heaters, Propane , Pool / Spa Interior Resurfacing and Tile , Roof Replacement Poolhouse , $ 338,522 $ 7,700 $ 17,000 Replacement Fund Balance at December 31, 2013 $ 40,858 31