SECOND AMENDMENT TO CONDOMINIUM OFFERING PLAN FOR THE CORINTHIAN OFFICE CONDOMINIUMS

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1 SECOND AMENDMENT TO CONDOMINIUM OFFERING PLAN FOR THE CORINTHIAN OFFICE CONDOMINIUMS This Second Amendment (this Amendment ) modifies and supplements the terms of the Condominium Offering Plan for the premises known as The Corinthian Office Condominiums, 345 East 37 th Street (a/k/a 330 East 38 th Street), New York, New York 10016, first accepted for filing on August 18, 2016 (as amended, the Plan ) and is incorporated into and should be read in conjunction with the Plan. The terms of this Amendment are as follows: 1. Purpose of Amendment The purpose of this Amendment is to update and/or revise certain information set forth in the Plan and to extend the term of the offering under the Plan. 2. First Year of Office Section Operation; Budget; Schedule A The First Year of Office Section Operation is hereby amended to commence on January 1, 2018 and to expire on December 31, In connection therewith, Sponsor has adopted a revised budget for the new First Year of Office Section Operation, attached hereto as Exhibit A-1, which budget reflects an increase of approximately 3.8% in total Office Common Charges, due in part to the following increases: (i) the insurance premium for the Office Section; (ii) salary escalations for unionized employees at the Building; (iii) the adoption by the Board of service contracts for metal and marble maintenance and elevator testing; and (iv) general cost of operation due to the new budget year. In connection therewith, an updated Certification from Sponsor s budget expert, included as Exhibit 9C in Part II of the Plan, is attached hereto as Exhibit A-2. Further, an updated Schedule A to the Plan is attached hereto as Exhibit B. 3. Projected Electrical Cost for Office Units In connection with the change in the First Year of Office Section Operation, as set forth in Paragraph 3 herein, the Projected Individual Unit Electric Costs, as set forth in the Plan are hereby increased by an estimated 3%, based upon the estimates provided by Horizon Engineering Associates, LLP, in a letter dated June 27, Attached as Exhibit C is a revised schedule of estimated electrical costs for each Office Unit. 4. Financial Update The first closing of an Office Unit under the Plan has not yet occurred. Accordingly, no financial statements of the Office Section are available at the time of this Amendment. The Office Section s financial statements will be included in an amendment when issued. The financial statements for the Condominium for the year(s) ending in, April 30, 2015 (with the financial statement for April 30, 2014, restated) and April 30, 2016 are attached hereto as Exhibit D. Further: KL

2 A. Office Common Charges and Real Estate Taxes. The assessment and collection of Office Common Charges and real estate taxes for the individual Office Units has not begun; B. Monthly Rents. As of June 30, 2017 approximately twenty-five (25) Office Units offered under the Plan were leased or occupied and the aggregate monthly rental income for such Office Units was approximately $250,269; C. Financial Obligations. Sponsor has no financial obligations to the Office Section under the Plan that will become due within twelve (12) months from the date of this Amendment, other than its obligation following the First Office Closing, to pay Office Common Charges due and payable on Unsold Office Units. No additional reserve fund is being established for the Office Section, other than as set forth in the Projected Budget for First Year of Office Section Operation. A Working Capital Fund for the Office Units will be established through payments made therefor by each Purchaser at Closing, such fund to be held or used for working capital and for such other appropriate purposes as the Office Board may determine; and D. Mortgages on Unsold Office Units. As of the date of this Amendment, Sponsor s Loan is secured by one or more mortgage(s) on the Unsold Office Units. Sponsor s lender is Manufacturer s and Traders Trust Company. The unpaid balance of Sponsor s Loan as of July 13, 2017 was approximately $32,750,000 and Sponsor s Loan has a maturity date of September 1, Payments are interest only on a monthly basis based on the outstanding amount of the Sponsor s Loan from time to time. E. Payment of Obligations. Sponsor s financial obligations to the Office Section, when due, will be funded from the proceeds of future sales of Unsold Office Units and from rental payments from tenants of Unsold Office Units owned by Sponsor. F. Payments Current. As of the filing of this Amendment, Sponsor is and has during the twelve (12) month period prior to filing this Amendment been current on all of its financial obligations including, but not limited to, mortgage debt service payments, payment of Office Common Charges, if any, and reserve fund payments, if any. 5. Sponsor and Principals of Sponsor There are no lawsuits, administrative proceedings or other proceedings the outcome of which may materially affect the offering, the Office Section, the rights of Office Unit Owners, Sponsor s capacity to perform all of its obligations under the Plan, the Office Section, or the operation of the Office Section. Sponsor, its principals and affiliated entities have not been involved in any cooperative or condominium offerings in the State of New York within the past five years and do not own 10% or more of the unsold units or unsold shares in any building, other than (i) Kevin Chisholm, Bastien Broda and Jason Hart are principals of 20 West 33 rd Street Property Owner, L.L.C., the sponsor of the condominium offering plan for the 20 West 33 rd Street Condominium, located at 18 & West 33 rd Street, New York, New York (File No. CD ); and (ii) Jason Hart is a principal of 866 Plaza Owner, L.L.C., the sponsor with respect to certain unsold units and storage licenses at 866 United Nations Plaza Condominium, 866 United Nations Plaza, New York, New York (File No. CD ). Offering Plans for the aforementioned buildings are available for public inspection at the Department of Law.

3 6. Extension of Plan The effective period for the term of the Plan is extended for a period of six (6) months from the filing of this Amendment. 7. Definitions Except as herein defined, all capitalized terms used in this Amendment which are defined in the Plan shall have the respective meanings ascribed to such terms in the Plan. 8. Incorporation of the Plan The Plan, as modified and supplemented by this Amendment, is incorporated herein by reference with the same force and effect as if set forth at length. 9. No Material Changes in the Plan There have been no material changes in the Plan except as set forth in this Amendment. The Plan, as hereby amended, does not knowingly omit any material fact. Dated: July 20, 2017 SPONSOR: 345 EAST 37TH STREET PROPERTY OWNER, L.L.C.

4 Exhibit A-1 [Projected Budget for the First Year of Office Section Operation on next page]

5 2. SCHEDULE B The Corinthian Office Condominiums 345 East 37th Street, New York, NY Projected Budget for the First Year of Operation: January 1, December 31, 2018 (1) ESTIMATED INCOME Common Charges - Office Units (2) 854,443 Total Estimated Common Charges 854,443 ESTIMATED EXPENSES Total Expenses Payroll (3) 269,736 Heating (4) - Utilities (electricity) (5) 97,295 Repairs, maintenance and supplies (6) 27,490 Service contracts (7) 85,531 a Metal & Marble $8,867 b Rubbish Removal $9,745 c Fire Protections $11,927 d Uniforms $1,814 e Elevators $22,935 f Air Conditioning $27,565 g Grounds $2,678 Insurance (8) $15,500 Management fees (9) $123,600 Legal fees and audit fees (10) $20,600 Other - CAM Charges (11) 187,190 a Water 43,592 b Insurance 33,960 c Management Fee 13,481 d R&M, Building Supplies, Grounds 74,773 e Professional Fees, Residential Payroll 21,384 Other - Misc. Professional Fees & Misc. Operating Expenses (12) 27,501 Total 854,443

6 Exhibit A-2 [Certification of Sponsor s Budget Expert on next page]

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11 Exhibit B [Schedule A on next page]

12 D. SCHEDULES AND NOTES 1. SCHEDULE A The Corinthian Office Condominiums 345 East 37th Street, New York, NY Projected Common Charges and Real Esate Taxes are for the Projected First Year of Operation: January 1, December 31, 2018 (1) (2) (3) (4) (5) (5) (6) (6) (7) (7) General Projected Projected Projected Projected Office Common Common Real Estate Real Estate Carrying Purchase Common Charges Charges Taxes Taxes Charges Price Interest Monthly Annual Monthly Annual Monthly Approximate Square Footage Carrying Charges Annual UnitExisting Lease 201 Y 2, $2,716, % $1,777 $21,329 $1,781 $21,368 $3,558 $42, N 2, $2,353, % $1,540 $18,482 $1,543 $18,515 $3,083 $36, A Y 1, $2,129, % $1,335 $16,023 $1,338 $16,052 $2,673 $32, Y 4, $4,655, % $3,338 $40,061 $3,345 $40,134 $6,683 $80, N 14, $13,819, % $9,603 $115,233 $9,620 $115,443 $19,223 $230, N 3, $3,083, % $2,089 $25,065 $2,093 $25,111 $4,181 $50, N 2, $2,749, % $1,862 $22,348 $1,866 $22,389 $3,728 $44, N 3, $3,059, % $2,073 $24,871 $2,076 $24,917 $4,149 $49, Y 2, $2,093, % $1,525 $18,304 $1,528 $18,337 $3,053 $36, Y 10, $10,199, % $6,874 $82,492 $6,887 $82,642 $13,761 $165, Y 1, $2,134, % $1,314 $15,764 $1,316 $15,793 $2,630 $31, Y 3, $4,140, % $2,596 $31,156 $2,601 $31,213 $5,197 $62, Y 2, $2,636, % $1,623 $19,477 $1,626 $19,512 $3,249 $38, Y 2, $2,450, % $1,651 $19,816 $1,654 $19,852 $3,306 $39, Y 2, $2,309, % $1,656 $19,873 $1,659 $19,909 $3,315 $39, Y 3, $3,191, % $2,325 $27,904 $2,330 $27,955 $4,655 $55, Y 4, $4,700, % $3,168 $38,015 $3,174 $38,084 $6,342 $76, Y 2, $2,894, % $1,951 $23,407 $1,954 $23,450 $3,905 $46, Y 3, $3,338, % $2,217 $26,602 $2,221 $26,651 $4,438 $53, Y 2, $2,296, % $1,596 $19,153 $1,599 $19,188 $3,195 $38, N 2, $2,658, % $1,723 $20,674 $1,726 $20,711 $3,449 $41, Y 2, $2,665, % $1,687 $20,245 $1,690 $20,282 $3,377 $40, Y 4, $4,535, % $2,844 $34,124 $2,849 $34,187 $5,693 $68, Y 2, $2,348, % $1,486 $17,835 $1,489 $17,867 $2,975 $35, Y 2, $2,388, % $1,713 $20,552 $1,716 $20,590 $3,428 $41, Y 1, $1,556, % $1,087 $13,046 $1,089 $13,070 $2,176 $26, Y 2, $2,258, % $1,577 $18,927 $1,580 $18,961 $3,157 $37, Y 2, $2,653, % $1,633 $19,598 $1,636 $19,634 $3,269 $39, Y 1, $1,512, % $1,073 $12,876 $1,075 $12,900 $2,148 $25, Y 1, $2,026, % $1,248 $14,971 $1,250 $14,999 $2,497 $29, Y 1, $2,127, % $1,310 $15,715 $1,312 $15,744 $2,622 $31, Y 2, $2,446, % $1,709 $20,504 $1,712 $20,541 $3,420 $41,045 Total 105, ,128, % $71,204 $854,443 $71,333 $856,000 $142,537 $1,710,443 The Notes to this Schedule A below are an integral part of this Schedule and should be read in conjunction herewith.

13 Exhibit C [Projected Electrical Cost for Office Units on next page]

14 Unit Sub-Meter/Survey Square Footage Total KW/hrs. Cost 201 Direct Meter 2,637 18,354 $4, Allocation 2,285 15,904 $3, A Allocation 1,979 13,774 $3, Direct Meter 4,953 34,473 $7, Direct Meter 14,247 99,159 $22, Direct Meter 3,100 21,576 $4, Direct Meter 2,763 19,230 $4, Direct Meter 3,075 21,402 $4, Direct Meter 2,262 15,744 $3, Direct Meter 10,200 70,992 $16, Direct Meter 1,949 13,565 $3, Direct Meter 3,853 26,817 $6, Allocation 2,409 16,767 $3, Allocation 2,450 17,052 $3, Allocation 2,456 17,094 $3, Allocation 3,436 23,915 $5, Allocation 4,699 32,705 $7, Allocation 2,894 20,142 $4, Direct Meter 3,289 22,891 $5, Direct Meter 2,367 16,474 $3, Direct Meter 2,556 17,790 $4, Direct Meter 2,504 17,428 $3, Allocation 4,217 29,350 $6, Allocation 2,205 15,347 $3, Direct Meter 2,541 17,685 $4, Direct Meter 1,613 11,226 $2, Direct Meter 2,341 16,293 $3, Allocation 2,422 16,857 $3, Allocation 1,592 11,080 $2, Allocation 1,852 12,890 $2, Allocation 1,943 13,523 $3, Allocation 2,535 17,644 $3,998.04

15 Exhibit D [Financial Statements for Years Ending on April 30, 2015 (with financials for the year ending on April 30, 2014, restated) and April 30, 2016 on next page]

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36 THE CORINTHIAN CONDOMINIUM FINANCIAL STATEMENTS FOR THE YEAR ENDED APRIL 30, 2016

37 THE CORINTHIAN CONDOMINIUM INDEX INDEPENDENT AUDITORS REPORT FINANCIAL STATEMENTS: BALANCE SHEET STATEMENT OF OPERATIONS AND CHANGES IN MEMBERS EQUITY STATEMENT OF CASH FLOWS... 7 Page NOTES TO FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION INDEPENDENT AUDITORS REPORT ON SUPPLEMENTARY INFORMATION SUPPORTING SCHEDULES STATEMENT OF OPERATIONS: Operating Expenses (Schedule 1) Repairs and Maintenance (Schedule 2) Administrative Expenses (Schedule 3) Health Club Expenses (Schedule 4)... 19

38 352 SEVENTH AVENUE SUITE 207 NEW YORK, NY Greenberg & Brennan, CPA s, P.C. Certified Public Accountants TELEPHONE (212) FAX (212) ALBERT M. KUSHNIROV, CPA JOHN J. BRENNAN, CPA WILLIAM J. GREENBERG, CPA ( ) A PRACTICE LIMITED TO COOPERATIVES AND CONDOMINIUMS To the Board of Managers and Unit Owners of The Corinthian Condominium INDEPENDENT AUDITORS REPORT We have audited the accompanying financial statements of The Corinthian Condominium (the Association ), which comprise the balance sheet as of April 30, 2016, and the related statements of operations and changes in members equity, 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 auditors consider 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.

39 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Corinthian Condominium as of April 30, 2016, and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matter Management has omitted the supplementary information on future major repairs and replacements that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing 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. Our opinion on the basic financial statements is not affected by this missing information. GREENBERG & BRENNAN, CPA s, P.C. New York, New York August 4, 2016 Greenberg & Brennan, CPA s, P.C. Certified Public Accountants

40 THE CORINTHIAN CONDOMINIUM BALANCE SHEET APRIL 30, 2016 CURRENT ASSETS ASSETS Cash and Equivalents: (Note 2B) Operating Account $ 1,337,338 Reserve Fund (Note 5) 2,117,031 Total Cash and Equivalents 3,454,369 Receivables: Residential Unit Owners Net of Allowance for Doubtful Accounts (Note 2E) 102,027 Commercial Unit Owners (Notes 2E and 3) 127,078 Miscellaneous 2,182 Total Receivables 231,287 Prepaid Expenses: Insurance 117,049 Service Contracts 27,052 Utilities 21,855 Health Club Management Fee and Payroll 32,776 Total Prepaid Expenses 198,732 TOTAL CURRENT ASSETS 3,884,388 Depreciable Assets (Note 2D) Equipment, Furniture and Fixtures 228,563 Accumulated Depreciation (88,465) Net Book Value of Depreciable Assets 140,098 Other Assets Security Deposit (Note 9) 3,600 TOTAL ASSETS $ 4,028,086 See Independent Auditors Report and Notes to Financial Statements. 3

41 THE CORINTHIAN CONDOMINIUM BALANCE SHEET APRIL 30, 2016 LIABILITIES AND MEMBERS EQUITY Current Liabilities Accounts Payable $ 232,696 Accrued Expenses 229,700 Accrued Major Repairs and Replacements (Note 9) 666,178 Prepaid Common Charges 192,154 Total Current Liabilities 1,320,728 Members Equity Working Capital Contributions (Note 2H) 604,027 Accumulated Surplus 2,103,331 Total Members Equity 2,707,358 TOTAL LIABILITIES AND MEMBERS EQUITY $ 4,028,086 See Independent Auditors Report and Notes to Financial Statements. 4

42 THE CORINTHIAN CONDOMINIUM PAGE 1 OF 2 STATEMENT OF OPERATIONS AND CHANGES IN MEMBERS EQUITY FOR THE YEAR ENDED APRIL 30, 2016 OPERATING INCOME Common Charges: Residential (Note 2E) $ 7,736,025 Office (Note 3) 155,327 Garage (Note 3) 45,820 Laundry Income 168,000 Move In/Out Fees 120,175 Valet 42,000 Fines 27,700 Late Fees 23,726 Storage 17,350 Health Club Fees 14,715 Miscellaneous Income 5,878 Total Operating Income 8,356,716 COST OF OPERATIONS Operating Expenses Schedule 1 5,197,996 Repairs and Maintenance Schedule 2 721,334 Administrative Expenses Schedule 3 961,560 Health Club Expenses Schedule 4 469,727 Association Taxes (Note 2F) 9,026 Total Cost of Operations 7,359,643 TOTAL OPERATING SURPLUS FOR THE YEAR 997,073 (Continued) See Independent Auditors Report and Notes to Financial Statements. 5

43 THE CORINTHIAN CONDOMINIUM PAGE 2 OF 2 STATEMENT OF OPERATIONS AND CHANGES IN MEMBERS EQUITY FOR THE YEAR ENDED APRIL 30, 2016 NON-OPERATING INCOME Capital Assessment (Note 6) 1,288,699 Interest Income 4,126 Total Non-Operating Income 1,292,825 NON-OPERATING EXPENSES Hallway Renovation (Note 9) 1,297,344 Fire Alarm System Upgrades 97,050 Wi-Fi Installation 4,744 Waterproofing 303,521 Superintendent s Unit Renovation 5,280 Health Club Renovation 16,000 Chiller Tube Integrity Test 30,409 Total Non-Operating Expenses 1,754,348 TOTAL NON-OPERATING (DEFICIT) FOR THE YEAR (461,523) TOTAL SURPLUS BEFORE DEPRECIATION AND PRIOR PERIOD ADJUSTMENTS 535,550 Depreciation Expense (32,652) Prior Period Adjustments (Note 10) 533,507 NET SURPLUS FOR THE YEAR 1,036,405 MEMBERS EQUITY Beginning 1,628,816 Working Capital Contributions (Note 2H) 42,137 MEMBERS EQUITY Ending $ 2,707,358 See Independent Auditors Report and Notes to Financial Statements. 6

44 THE CORINTHIAN CONDOMINIUM STATEMENT OF CASH FLOWS FOR THE YEAR ENDED APRIL 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net Surplus for the Year $ 1,036,405 Adjustments to Reconcile Net Surplus to Net Cash Provided by Operating Activities: Depreciation Expense 32,652 (Increase) Decrease in Accounts Receivable (161,379) (Increase) Decrease in Prepaid Expenses (143,391) (Increase) Decrease in Security Deposits (3,600) Increase (Decrease) in Accounts Payable and Accrued Expenses 309,421 Increase (Decrease) in Security Deposits Payable (82,338) Increase (Decrease) in Prepaid Maintenance (6,296) Total Adjustments (54,931) Net Cash Provided by Operating Activities 981,474 CASH FLOWS FROM FINANCING ACTIVITIES: Working Capital Contributions 42,137 Net Cash Provided by Financing Activities 42,137 Net Increase in Cash and Equivalents 1,023,611 Cash and Equivalents, Beginning 2,430,758 Cash and Equivalents, Ending $ 3,454,369 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid During the Year: Association Taxes $ 7,250 Interest $ See Independent Auditors Report and Notes to Financial Statements. 7

45 THE CORINTHIAN CONDOMINIUM NOTES TO FINANCIAL STATEMENTS APRIL 30, 2016 NOTE 1 THE ASSOCIATION The Corinthian Condominium (The Association ) is a statutory condominium association organized pursuant to Article 9-B of the Real Property Law of the State of New York as amended, commonly known as the New York State Condominium Act for the purposes of maintaining, operating and preserving the premises located at 330 East 38th Street, New York, New York. On October 16, 1986, the Association s Offering Plan, which has since been amended, was first offered to the public. The Association consists of 863 residential units, one of which is designated for use by the Association s superintendent and is a part of common elements of the Association, a health club for the exclusive use of the residents, and two commercial units, which consist of a garage and office space. The residential and commercial unit owners share the general common expenses of the Association, which are allocated among them based on their percentage of aggregate common interest, which is 88.50% for the residential and 11.50% for the commercial unit owners. In addition, the exclusive health club, aka The Corinthian Club, is a component part of the residential units and is available for use by residents without charge. Commercial unit occupants may utilize this facility subject to an annual fee. On August 14, 2014, the developer sold the remaining unsold units to Gaia Corinthian II, LLC (the Investor ), which was assigned all the rights and privileges of the developer. As of the balance sheet date, the Investor retained ownership of 98 residential units, which represent approximately 11.6% of the common interest in the Association. Under condominium ownership, each unit owner possesses title to the unit and is entitled to exclusive use of it. In addition, each unit owner has an undivided interest (a percentage) as set forth in the Public Offering Statement in the common element of the Association. The financial statements do not include the cost of the individual units and the common elements of the Association. Real estate taxes and mortgages applicable to the individual units are independently billed to and paid by each unit owner. These financial statements do not reflect such expenditures. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A) Basis of Presentation The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on the accrual basis of accounting, in which income is recognized when earned and expenses are recognized when incurred. B) Cash and Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid investments purchased with maturity of approximately three months or less to be cash equivalents. 8

46 THE CORINTHIAN CONDOMINIUM NOTES TO FINANCIAL STATEMENTS APRIL 30, 2016 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C) Concentration of Credit Risk The Association maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Association has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and equivalents. It also maintains its cash in money market funds, which do not have federal deposit insurance, but are covered by the Securities Investor Protection Corporation (SIPC). The Association has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and equivalents. The Association s policy is to classify debt securities as held-to-maturity and record them at cost adjusted for amortization of premiums or discounts. As of the balance sheet date, the Association s investments consisted of bank deposits, a certificate of deposit, a money market account, and a money market mutual fund. D) Recognition of Assets Real property and common areas acquired from the Sponsor and subsequent major repairs or improvements to such property are not recorded on the Association s balance sheet because those properties are owned by the individual unit owners in common and not by the Association. Personal property assets such as equipment, furniture and fixtures are recorded at cost and are depreciated over their estimated useful lives using the straight-line method. E) Common Charges/Accounts Receivable Unit owners are subject to monthly assessments to provide funds for the Association s operating expenses and major repairs and replacements. Any excess assessments at year end are retained by the Association for use in future years. For the fiscal year ended April 30, 2016, the Board of Managers approved the operating budget without an increase in common charges. The last common charge increase of 1.5% was in May Accounts receivable at the balance sheet date represent fees due from unit owners. The Association s policy is to retain legal counsel and in some instances place liens on the units of members whose common charges are unreasonably delinquent. If any receivables become uncollectible, they will be charged to operations when that determination is made. As of April 30, 2016, an allowance for doubtful accounts has been established in the amount of $104,806. 9

47 THE CORINTHIAN CONDOMINIUM NOTES TO FINANCIAL STATEMENTS APRIL 30, 2016 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) F) Association Taxes Certain condominiums may qualify as a homeowners association within the meaning of IRS Code Section 528 and, therefore, can elect to be exempt from income tax on common charges. In order for a condominium to qualify as a homeowners association under Internal Revenue Code Section 528(c), the condominium must qualify under, among others, the Substantially Residential Test. Under this test, at least 85% of the square footage of all the units must be used for residential purposes. The Association passes this test and, accordingly, is eligible to make the election to qualify as a homeowners association and file Form 1120H as its annual income tax return. The filing of this tax return excludes from taxation all income derived from membership activities. Net non-membership income would be subject to a flat tax rate of 30%. For a regular corporation, however, tax rates begin at 15% on the entire net income. For the fiscal year ended April 30, 2016, the Association elected taxation as a homeowners association. The Association has determined that there are no uncertain tax positions that require either recognition or disclosure in the accompanying financial statements. The Association is also subject to New York State Franchise and New York City General Corporation taxes that are calculated on the greater of its capital base or business income. Unit owners own legal title to their units. As such, the unit owners qualify to deduct New York City real estate taxes, which are billed separately to them. They will also qualify to deduct interest, within certain limitations, on debt used to acquire, construct or substantially improve any qualified residence. A qualified residence means (i) a principal residence and (ii) one secondary residence selected by the unit owner. G) Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. H) Members Working Capital Contributions Upon acquisition of title to a unit, each member of the Association is required to make a nonrefundable working capital contribution equivalent to one month s common charges assessed against the unit at the time of closing. These capital contributions may be held or used at any time for any appropriate purposes as determined by the Board of Managers. The contributions have been recorded as capital directly to the members equity in the accompanying financial statements. 10

48 THE CORINTHIAN CONDOMINIUM NOTES TO FINANCIAL STATEMENTS APRIL 30, 2016 NOTE 3 THE COMMERCIAL UNIT On January 5, 2009, the Fifty Fifth Amendment to the Offering Plan was adopted. According to the Amendment, the commercial unit, which was divided into two separate units known as the Office Unit and the Garage Unit by the Third Amendment to the Offering Plan, common charges and expenses payable by the owners of the Office Unit and Garage Unit were established as follows: Notes Expense Item Percentage of Expense Item Allocated to General Common Expenses Office Unit Share of General Common Expenses Share of Expense Item Allocated to Office Unit Garage Unit Share of General Common Expenses Share of Expense Item Allocated to Office Unit A Insurance % 8.625% % 2.875% % Water and Sewer % % % 0.500% % Audit Fees % 8.625% % 2.875% % Heating and Air Conditioning 0.00% 0.000% % 0.000% % B Elevator Maintenance 14.00% % % 0.000% % C Service Elevator Salaries 50.00% % % 0.000% % General Building Repairs 75.00% 8.625% % 2.875% % General Building Supplies 75.00% 8.625% % 2.875% % General Building Maintenance 75.00% 8.625% % 2.875% % Landscaping 60.00% % % 0.000% % A Plumbing Repairs 0.00% 0.000% % 0.000% % A Electric Repairs 0.00% 0.000% % 0.000% % D Super Salary and Benefits % 8.625% % 2.875% % Management Fees 50.00% 8.625% % 2.875% % Miscellaneous 75.00% 8.625% % 2.875% % E Legal Fees % 8.625% % 2.875% % Notes: (A) Residential and commercial units are responsible for their own heating, air conditioning, plumbing and electric repairs and maintenance. (B) For service elevator repair and maintenance, which is currently included in the service contract for the Residential Unit elevators. (C) Salary and benefits for service elevator operator. (D) Salary and benefits of superintendent only irrespective of whether Condominium has an assistant superintendent or not. (E) General condominium legal expenses only. Residential and Commercial Units will remain responsible for their own legal expenses or legal expenses specifically allocable to each Unit. 11

49 THE CORINTHIAN CONDOMINIUM NOTES TO FINANCIAL STATEMENTS APRIL 30, 2016 NOTE 3 THE COMMERCIAL UNIT (Continued) During the fiscal year ended April 30, 2016, a submeter for water and sewer was installed. Going forward, the commercial unit owners will not be charged for water and sewer, which will not be included in the common charge escalation calculation, with the exception of the submetering charges that will continue to be included. However, during the fiscal year ended April 30, 2016, the period from May 1, 2015 to May 7, 2015 was not submetered, and the amount of $2,004 has been allocated to that period based on the above formula. At the end of each fiscal year, the Association reviews the year s operating and capital expenses to determine whether the Office and Garage Unit owners have overpaid or underpaid their share of the common and capital expenses. All overpayments are applied against the current outstanding escalation balance and all underpayments must be paid in full. NOTE 4 FUTURE MAJOR REPAIRS AND REPLACEMENTS The Association s governing documents do not require the accumulation of funds to finance estimated future major repairs and replacements. The Association has not conducted a study to determine the remaining useful lives of the components of common property and estimates of the costs of major repairs and replacements that may be required in the future. The Board of Managers also has not developed a plan to fund those needs. When funds are required to meet future needs for major repairs and replacements, the Association has the option to borrow, pass special assessments or delay repairs and replacements until funds are available. The effect on future assessments has not been determined. As of April 30, 2016, The Board of Managers has established a reserve fund of approximately $2,117,031 to fund future major repairs and replacements. NOTE 5 RESERVE FUND 2016 Beginning Balance $ 2,112,905 Add: Interest 4,126 Ending Balance $ 2,117,031 Consisting of: Morgan Stanley Private Bank, NA Bank Deposit $ 1,377,447 Morgan Stanley Bank, NA Bank Deposit 245,002 Morgan Stanley Legg Mason Western Asset Institutional Liquid Reserve Mutual Fund 117,307 Capital One Bank Money Market Account 121,322 Sterling National Certificate of Deposit 255, $ 2,117,031

50 THE CORINTHIAN CONDOMINIUM NOTES TO FINANCIAL STATEMENTS APRIL 30, 2016 NOTE 6 CAPITAL ASSESSMENT Effective March 31, 2015, the Board of Managers approved a capital assessment equal to two months common charges in the total amount of $1,288,699. The assessment was billed in two equal monthly installments in the months of May 2015 and August Subsequent to the balance sheet date, the Board of Managers approved a capital assessment equal to two months common charges in the total amount of $1,288,699. The assessment has been billed in two equal monthly installments in the months of May 2016 and August Both assessments are designated to fund the renovation of the hallways and to replenish the reserve fund for future major repairs and replacements. (See Note 9.) NOTE 7 UNION BENEFITS Substantially all of the Association s employees are members of the Service Employees International Union Local 32BJ (the Union ) and are covered by the Union sponsored, collectively bargained, multiemployer defined benefit pension, annuity and health insurance plan (the Plan ). The Association s contributions to the Plan are determined in accordance with the provisions of the negotiated labor agreement, which expires on April 20, The Association s contributions to the Plan were less than 5% of the Plan s total contributions for the fiscal year ended April 30, The Association s contributions to the Building Service 32BJ Pension Fund (the Fund ), EIN , for the fiscal year ended April 30, 2016 were $ The contributions to the Fund are not segregated or restricted to provide benefits only to the Association employees. Information as to the Association s portion of the unfunded vested benefits and Fund s accumulated assets is not determinable. Under the Employee Retirement Income Security Act, as amended, an employer, upon withdrawal from the Plan, is required to continue to pay its proportionate share of the Fund s unfunded vested benefits. The Association has no intention of withdrawing from the Plan. In accordance with the Pension Protection Act of 2006, the Fund receives an annual certified zone status from its actuary, which summarizes the Fund s funding status. The Fund s most recently available certified zone status was red, which indicates that the Fund was less than 65% funded as of the Plan s year end date of June 30, The Fund is considered to be in critical status for the Plan s year beginning July 1, 2015, and its actuary has determined that there will be a funding deficiency within the next three years. A rehabilitation plan to restore the Fund s financial health has been adopted. The rehabilitation plan may involve a surcharge on employers or a reduction or elimination of certain benefits. 13

51 THE CORINTHIAN CONDOMINIUM NOTES TO FINANCIAL STATEMENTS APRIL 30, 2016 NOTE 8 CLAIMS OR LITIGATION From time to time, claims or matters of litigation may arise in the ordinary conduct of the Association s business. In the opinion of management, claims or litigation, if any, outstanding against the Association as of April 30, 2016 are either without merit or the losses stemming from such litigation, if any, would not have a material adverse effect on the financial position or results of operations of the Association. NOTE 9 MAJOR COMMITMENTS Hallway Renovation Project During the fiscal year ended April 30, 2016, the Association entered into a contract with JMPB Ventures, d.b.a. JMPB Enterprises in the final amount of $2,498,946 for the renovation of the hallways. As of April 30, 2016, the Association has paid and accrued $1,155,533 of this contract. In addition, the Association entered into a contract with Andres Escobar & Associates for the project design and supervision in the amount of $70,000. In connection with this project, the Association assessed the unit owners over the period May 2015 to August 2016 in the total amount of $2,577,398 (see also Note 6). Also, in connection with this project, on February 15, 2016, the Association entered into a sixmonth lease agreement with the Investor for the use of unit 30J as a storage and staging area. The lease agreement requires monthly rent of $3,600 and a refundable security deposit of $3,600. NOTE 10 PRIOR PERIOD ADJUSTMENTS For the year ended fiscal year ended April 30, 2016, the Association recorded the following adjustments to correct prior year balances: Understated Prepaid Expenses $ (6,238) Overstated Miscellaneous Administrative Expenses (9,849) Understated Expenses Health Club Flowers 1,796 Understated Expenses Janitorial Supplies 12,284 Overstated Major R & M Health Club Renovations (476,636) Overstated Heating Expenses (117,036) Underaccrued Reimbursable Expenses 21,069 Underaccrued Water and Sewer 41,305 Other Adjustments (202) $ (533,507) 14

52 THE CORINTHIAN CONDOMINIUM NOTES TO FINANCIAL STATEMENTS APRIL 30, 2016 NOTE 11 INCREASE IN UNIT OWNERS TAX BASIS Unit owners in a condominium may add to the tax basis of their units when the Board of Managers levies a capital assessment for the completion of major repairs and replacements. During the fiscal year ended April 30, 2016, the Board of Managers passed a capital assessment in the amount of $1,288,699, and subsequent to the balance sheet date, the Board of Managers passed a second capital assessment in the amount of $1,288,699 for the fiscal year ending April 30, 2017 (see also Note 6). To calculate the increase in your tax basis for the fiscal year ended April 30, 2016, multiply the total amount of the assessment by your ownership percentage. NOTE 12 REAL ESTATE TAX ABATEMENTS/PERSONAL EXEMPTIONS As a result of revisions to the New York State Real Property Tax Law, the City of New York has afforded a partial abatement of real estate taxes to owners of certain cooperative and condominium properties. The abatement program was created by law to partially reduce the disparate tax burden borne by owners of cooperative and condominium units in New York City in comparison to that currently assumed by the owners of one, two and three family homes. During 2015, legislation was signed extending the abatement program through June 30, 2018, although the abatement has been phased out for apartments owned by those who are not residents (for income tax purposes) of New York City. Abatements are based upon the assessed valuation of the land and building as multiplied by the current tax rate less any other abatements. The portion of the abatement, granted on a tax bill when the tax is due to be paid, serves to directly reduce the amount of real estate tax payable. NOTE 13 SUBSEQUENT EVENTS The Association has evaluated its subsequent events through the date that the accompanying financial statements were issued. The Association had no material subsequent events requiring disclosure, with the exception of the capital assessment equal to two months common charges in the total amount of $1,288,699. This assessment has been billed in the months of May 2016 and August

53 SUPPLEMENTARY INFORMATION 16

54 352 SEVENTH AVENUE SUITE 207 NEW YORK, NY Greenberg & Brennan, CPA s, P.C. Certified Public Accountants TELEPHONE (212) FAX (212) ALBERT M. KUSHNIROV, CPA JOHN J. BRENNAN, CPA WILLIAM J. GREENBERG, CPA ( ) A PRACTICE LIMITED TO COOPERATIVES AND CONDOMINIUMS INDEPENDENT AUDITORS REPORT ON SUPPLEMENTARY INFORMATION To the Board of Managers and Unit Owners of The Corinthian Condominium We have audited the financial statements of The Corinthian Condominium (the Association ) as of and for the year ended April 30, 2016, and our report thereon dated August 4, 2016, which expressed an unmodified opinion on those financial statements, appears on pages 1 and 2. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole. The information contained in the supplementary schedules on the following pages is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. GREENBERG & BRENNAN, CPA s, P.C. New York, New York August 4,

55 THE CORINTHIAN CONDOMINIUM SCHEDULE 1 SUPPORTING SCHEDULES STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2016 SCHEDULE 1 OPERATING EXPENSES Payroll and Related Payroll: Elevator Operators $ 105,963 Concierge 152,364 Superintendent and Assistant 175,901 Handymen 234,834 Doormen 536,282 Janitorial 728,001 Administrative 41,339 Total Payroll 1,974,684 Payroll Taxes 193,522 Workers Compensation and Disability Insurance 72,165 Union Benefits (Note 7) 809,372 Uniform Cleaning and Replacement 19,201 Other Payroll Costs and Parking 7,313 Payroll Reimbursement (Note 3) (258,748) Total Payroll and Related 2,817,509 Utilities Heating Steam 832,031 Electricity and Gas 626,584 Water and Sewer Charges 898,876 Water and Sewer Submetering (Note 3) (40,086) Submetering Fees 960 Total Utilities 2,318,365 Other Operating Expenses Exterminating 15,600 Permits and Inspections 17,180 Lobby Flowers 29,342 Total Other Operating Expenses 62,122 TOTAL OPERATING EXPENSES $ 5,197,996 See Independent Auditors Report and Notes to Financial Statements. 18

56 SCHEDULE 2 SCHEDULE 3 SCHEDULE 4 THE CORINTHIAN CONDOMINIUM SUPPORTING SCHEDULES STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2016 SCHEDULE 2 REPAIRS AND MAINTENANCE Elevator $ 75,834 Plumbing 41,569 HVAC 106,573 Water Treatment 20,778 Fans, Pumps and Motors 46,822 Doors and Floors 10,998 Intercom and Building Security 31,664 Landscaping 76,680 Sprinkler 5,547 Miscellaneous Exterior 10,176 Miscellaneous Interior 2,632 Janitorial Supplies and Small Equipment 334,100 Repairs and Supplies Charged Back to Unit Owners (42,039) SCHEDULE 3 TOTAL REPAIRS AND MAINTENANCE $ 721,334 ADMINISTRATIVE EXPENSES Building Insurance $ 401,624 Management 324,000 Legal Fees 73,084 Auditing 22,000 Other Professional Fees 1,678 Telephone and Cable 17,605 Miscellaneous Administrative 121,569 SCHEDULE 4 TOTAL ADMINISTRATIVE EXPENSES $ 961,560 HEALTH CLUB EXPENSES Contract Wages $ 353,807 Management Fees 39,500 Flowers 6,228 Repairs, Maintenance and Supplies 70,192 TOTAL HEALTH CLUB EXPENSES $ 469,727 See Independent Auditors Report and Notes to Financial Statements. 19