SUMMERHOUSE BEACH AND RACQUET CLUB CONDOMINIUM ASSOCIATION, INC. CONSOLIDATED FINANCIAL REPORT. Year Ended December 31, 2013

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1 SUMMERHOUSE BEACH AND RACQUET CLUB CONDOMINIUM ASSOCIATION, INC. CONSOLIDATED FINANCIAL REPORT Year Ended December 31, 2013

2 CONTENTS INDEPENDENT AUDITORS REPORT 1 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Sheet 3 Consolidated Statement of Revenues, Expenses and Changes in s 4 Consolidated Statement of Cash Flows 5 Notes to Consolidated Financial Statements 6 SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenses and Changes in s General 11 Schedule of Future Major Repairs and Replacements 12

3 KRESGE, PLATT & ABARE, PLLC CERTIFIED PUBLIC ACCOUNTANTS 1200 Plantation Island Drive South, Ste 230 St. Augustine, FL Fax (904) Kenneth R. Kresge, CPA Benjamin L. Platt, CPA, MBA William T. Abare III, CPA, CVA, MAFF, MAcc INDEPENDENT AUDITORS REPORT To the Board of Directors of Summerhouse Beach and Racquet Club Condominium Association, Inc. Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Summerhouse Beach and Racquet Club Condominium Association, Inc., which comprise the consolidated balance sheet as of December 31, 2013, and the related consolidated statements of revenues, expenses, and changes in fund balances and cash flows for the year then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Summerhouse Beach and Racquet Club Condominium Association, Inc. as of December 31, 2013, and the results of its consolidated operations and its consolidated cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The Schedule of Revenues, Expenses and Changes in s General for the year ended December 31, 2013, on page 11, as required by Rule 61B (3), Florida Statutes, is presented for purposes of additional analysis and is not a required part of the basic consolidated financial statements. Such information is the responsibility of the Association s management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information, except for the portion marked UNAUDITED, on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole.

4 Disclaimer of Opinion on Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Schedule of Future Major Repairs and Replacements on pages be presented to supplement the basic consolidated 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 consolidated 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 consolidated financial statements, and other knowledge we obtained during our audit of the basic consolidated 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. St. Augustine, FL May 8,

5 SUMMERHOUSE BEACH AND RACQUET CLUB CONDOMINIUM ASSOCIATION, INC. CONSOLIDATED BALANCE SHEET DECEMBER 31, 2013 ASSETS ASSETS Operating s General Rental Replacement Total Cash and cash equivalents $ 146,228 $ 510,247 $ 643,602 $ 1,300,077 Certificates of deposit 78,005-39, ,404 Assessments receivable, net 1, ,943 Inventory - 4,780-4,780 Prepaid expenses and other assets 28,623 12,524-41,147 Property and equipment, net 14,811 35,313-50,124 Total assets $ 269,610 $ 562,864 $ 683,001 $ 1,515,475 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable and accrued expenses $ 14,001 $ 5,389 $ 95,534 $ 114,924 Deferred assessments 42, ,291 Prepaid rent - 378, ,462 Total liabilities 56, ,851 95, ,677 FUND BALANCES 213, , , ,798 TOTAL LIABILITIES AND FUND BALANCES $ 269,610 $ 562,864 $ 683,001 $ 1,515,475 See accompanying notes 3

6 SUMMERHOUSE BEACH AND RACQUET CLUB CONDOMINIUM ASSOCIATION, INC. CONSOLIDATED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2013 REVENUES Operating s General Rental Replacement Total Member assessments $ 897,024 $ - $ 289,476 $ 1,186,500 Rental income, net - 348, ,342 Interest ,380 Cleaning and linen fees - 125, ,257 Processing fees - 58,900-58,900 Other income 11, ,096 Total revenues 909, , ,463 1,732,475 EXPENSES Payroll and benefits 187, , ,651 Administrative 337, , ,395 Rental operating - 22,361-22,361 Cleaning and linen - 123, ,281 Repairs and maintenance 140, , ,327 Utilities 267, ,132 Depreciation 3,268 3,375-6,643 Total expenses 935, , ,252 1,783,790 EXCESS OF REVENUES OVER EXPENSES (EXPENSES OVER REVENUES) (25,962) 44,436 (69,789) (51,315) FUND BALANCES, BEGINNING 215, , ,061 1,031,113 INTERFUND TRANSFERS 23,805 (28,000) 4,195 - FUND BALANCES, ENDING $ 213,318 $ 179,013 $ 587,467 $ 979,798 See accompanying notes 4

7 SUMMERHOUSE BEACH AND RACQUET CLUB CONDOMINIUM ASSOCIATION, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2013 CASH FLOWS FROM OPERATING ACTIVITIES Operating s General Rental Replacement Total Excess of revenues over expenses/(expenses over revenues) $ (25,962) $ 44,436 $ (69,789) $ (51,315) Adjustments to reconcile excess of revenues over expenses/ (expenses over revenues) to net cash provided (used) by operating activities: Depreciation 3,268 3,375-6,643 Net changes in: Assessments receivable, net (72) - - (72) Prepaid expenses and other assets (10,910) (812) - (11,722) Inventory - (1,327) - (1,327) Accounts payable and accrued expenses (11,539) (8,932) (133,505) (153,976) Deferred assessments 19, ,030 Prepaid rent - 62,508-62,508 Net cash provided (used) by operating activities (26,185) 99,248 (203,294) (130,231) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment - (2,570) - (2,570) Net cash used by investing activities - (2,570) - (2,570) CASH FLOWS FROM FINANCING ACTIVITIES Interfund transfers 23,805 (28,000) 4,195 - Net cash provided (used) by financing activities 23,805 (28,000) 4,195 - NET INCREASE (DECREASE) IN CASH (2,380) 68,678 (199,099) (132,801) CASH, BEGINNING 226, , ,100 1,550,282 CASH, ENDING $ 224,233 $ 510,247 $ 683,001 $ 1,417,481 See accompanying notes 5

8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 ORGANIZATION Summerhouse Beach and Racquet Club Condominium Association, Inc. (the Association ), a nonprofit, non-stock corporation, was formed on November 12, 1980, under the laws of the State of Florida as a condominium association and commenced operations on June 12, The Association consists of 256 units on approximately 23.5 acres located in St. Augustine Beach, Florida. The condominium is comprised of four phases. Phase I consists of five buildings and 67 units. Each unit has a 1.49% interest in common elements of the phase and 0.39% interest in common elements of the entire condominium. Phases II, II, and IV consist of five buildings and 63 units each. Each unit has a 1.59% interest in common elements of the respective phase and 0.39% interest in common elements of the entire condominium. The primary function of the Association is to provide for the operation and maintenance of the common property of the Association. A separate corporation is responsible for the efficient and effective administration and operation of the rental program on behalf of the Association s unit owners. That corporation is consolidated in these financial statements due to the Association s board having the authority to appoint the corporation s board of directors. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidated Financial Statements The accompanying consolidated financial statements were prepared pursuant to the requirements of Florida Statutes and the American Institute of Certified Public Accountants. Principles of Consolidation The consolidated financial statements include accounts of the Association and its wholly-owned subsidiary, Summerhouse Rentals, Inc. (the Rentals ), which is included in the accompanying consolidated financial statements as a rental operating fund. All material intercompany transactions have been included as transfers between funds in the accompanying consolidated financial statements. As part of the consolidation, the Association allocates the property manager s salary between the Association (35%) and the Rentals (65%). Accounting The Association s governing documents provide certain guidelines for governing its financial activities. 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 and reporting purposes in the following funds established according to their nature and purpose: The Operating is used to account for financial resources available for the general operations of the Association and includes the General and the Rental. The General represents the operating assessments paid by unit owners to meet regular, recurring costs of operations subject to budgetary constraints and the discretion of the Board of Directors. The Rental represents the operating activities of the rental program, which is administered by Summerhouse Rentals, Inc., provided for unit owners who choose to rent their units. Expenditures are limited to those connected with rental activities. Any excess of revenues over expenses is available to be transferred as a dividend to the general operating fund at the discretion of the Board of Directors of Summerhouse Rentals, Inc. The Replacement is used to accumulate financial resources designated for major repairs and replacement, capital projects, hurricane recovery, and emergency repairs. 6

9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Common Areas As provided in the Declaration of Condominium, each unit owner owns an undivided share in common elements of the condominium. In conformity with industry practice, common property is segregated into common personal property and common real property. Common personal property is used by the Association in operating, preserving, maintaining, repairing, and replacing common property and providing other services. Common real property is property to which the Association has title and that it can dispose of for cash while retaining the process or that is used to generate significant cash flows from members on the basis of usage or from nonmembers. Accordingly, the Association recognizes the clubhouse building and improvements, furniture and fixtures and equipment as assets at cost on the dates acquired. Depreciation is provided for over the useful lives of the assets using the straight-line and accelerated methods. Other common property of the Association or each phase, including sidewalks, swimming pools, tennis courts, racquetball courts, building roofs, and parking areas, is not recognized as assets. Cash and Cash Equivalents and Certificated of Deposit For purposes of reporting cash flows, the Association considers all cash balances and highly liquid debt instruments purchased with an original maturity of 90 days or less to be cash equivalents. Inventory Inventory consists primarily of cleaning and office supplies and is valued at the lower of cost or market determined by the first-in, first-out (FIFO) method. Fair Value of Financial Instruments All financial instruments are carried at amounts that approximate estimated fair value. Property and Equipment Property and equipment are stated at historical cost. Repairs and maintenance expenditures, which extend the useful life of an asset, are capitalized. Minor expenditures are expensed as incurred. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets, which range from 3 to 20 years. Depreciation expense for the year ended December 31, 2013 was $6,643. Member Assessments Association members are subject to monthly assessments to provide funds for the Association s operating expenses and future repairs and replacements. Income and expenses are allocated equally to each unit owner. The Association s policy is to charge late fees on assessments delinquent ten days or more and to retain legal counsel and place lines on the properties of unit owners whose assessments are sixty days or more delinquent. Assessments receivable at the balance sheet date represent fees due from unit owners. Any excess assessments at year-end are retained by the Association for use in the succeeding year. The Association determines an allowance based on the status of each individual account. As of December 31, 2013, the Association considers all assessments to be collectible and, accordingly, no allowance for uncollectible accounts is deemed necessary. Deferred assessments at the balance sheet date represent fees paid in advance by property owners. 7

10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Rental Revenue Recognition Rental income is recognized based on the arrival date and the period of stay. All receipts prior to the arrival date are recorded as prepaid rent until earned. Payments to Owners The Company pays the unit owner between seventy-five and eighty percent of the gross rental income received for a unit rental. Estimates The process of preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the consolidated financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. Advertising The Association does not capitalize advertising costs, but rather expenses advertising production costs as they are incurred and advertising communication costs the first time the advertising takes place. Advertising expense was $19,247 for the year ended December 31, 2013 and is included in rental operating expenses on the consolidated statement of revenues, expenses and changes in fund balances. Income taxes The Association has elected to file its income tax return as a regular corporation for the year ended December 31, The Association receives exemption from federal and state income taxes as a homeowners association under certain provisions of the Internal Revenue Code. As such, membership income is not taxed to the extent income and expenses are related to its exempt purpose. Net nonexempt function income, which includes interest and revenues from non-members (such as rental revenue), is taxed at statutory federal and state rates. Accounting for Uncertain Tax Positions The Association has adopted FASB ASC , Accounting for Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in an entity s financial statements. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Based on analyses of various federal and state filing positions of the Association, management believes that its income tax filing positions and deductions are well documented and supported. As of December 31, 2013, the Association had no temporary differences relating to the recognition of income and expenses for financial and tax reporting purposes. Accordingly, no deferred tax assets or liabilities are recorded. Additionally, as of December 31, 2013, the Association had no uncertain tax positions that would qualify for either recognition or disclosure in the consolidated financial statements. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to FASB ASC In addition, no cumulative effect adjustment related to the adoption of FASB ASC was recorded. There have been no increases or decreases in unrecognized tax benefits for current or prior years since the date of adoption. Furthermore, no interest or penalties have been included since no reserves were recorded and no significant increases or decreases are expected to occur within the next 12 months. When applicable, such interest and penalties will be reported as income tax expense. 8

11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Since the tax matters are subject to some degree of uncertainty, there can be no assurance that the Association s tax returns will not be challenged by the taxing authorities and that the Association will not be subject to additional tax, penalties, and interest as a result of such challenge. At December 31, 2013, the periods that remain open to examination under federal statute are 2010 through NOTE 3 CERTIFICATES OF DEPOSIT At December 31, 2013, investments consisted of three certificates of deposit, with maturities in November 2014 with an interest rate ranging from 0.7% to 1.24%. NOTE 4 PROPERTY AND EQUIPMENT Major classifications of property and equipment and their respective lives at December 31, 2013 are summarized below: Clubhouse building $ 257,832 Furniture and fixtures 58,272 Equipment 72,923 Total depreciable assets 389,027 Less, accumulated depreciation (338,903) Property and equipment, net $ 50,124 NOTE 5 INTERFUND TRANSFERS Transfers for the year consisted of the following at December 31, 2013: Operating s General Rental Replacement Dividend distributions $ 10,000 $ (10,000) $ - Office rent 18,000 (18,000) - Other (4,195) - 4,195 Total fund transfers $ 23,805 $ (28,000) $ 4,195 NOTE 6 RENTAL INCOME Rental income, net of payments to owners, consisted of the following for the year ended December 31, 2013: Gross rental income $ 1,720,476 Payments to owners (1,372,134) Rental income, net $ 348,342 NOTE 7 FUTURE MAJOR REPAIRS AND REPLACEMENTS The Association s governing documents and Florida Statues require the Association to accumulate funds for future major repairs and replacements unless waived by the membership. The Board of Directors has reviewed the major components of common property and, as a part of this review, evaluated the estimated useful lives and the estimated current replacement costs of the components of the replacement fund. Where applicable, licensed contractors have been consulted regarding useful lives and current replacement costs. The Board of Directors intends to fund for major repairs and replacements over the estimated useful lives of the components based on estimates of the current replacement costs. Actual expenditures may vary 9

12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 FUTURE MAJOR REPAIRS AND REPLACEMENTS (Continued) from the estimated future expenditures and the variations may be material. Therefore, amounts accumulated in the Replacement may not be adequate to meet all future needs. If additional funds are needed, the Association has the right, subject to membership approval, to increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available. NOTE 8 CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Association to concentrations of risk, as defined by accounting principles generally accepted in the United States of America, consist primarily of bank accounts with balances in excess of amounts insured by the Federal Deposit Insurance Corporation ( FDIC ) and assessments receivable. The Association maintains its cash balances with high quality financial institutions. Accounts at these institutions currently are insured by the Federal Deposit Insurance Corporation ( FDIC ) up to $250,000. At times, such balances may be in excess of FDIC insurance limits. At December 31, 2013, the Association s uninsured cash balances totaled approximately $258,887. All of the Association s assessments receivable is related to billed assessments. The Association routinely monitors and assesses the collectability of the assessments receivable and pursues collection. As of December 31, 2013, the Association considers all assessments to be collectable. NOTE 9 COMMITMENTS AND CONTINGENCIES Insurance In the event of a disaster, the Association could be exposed to losses for damages in excess of insurance coverage limits. Management considers this risk of loss to be remote and their insurance coverage adequate. The deductible amount for named hurricane storms is estimated at $750,320, which represents 3% of insured value of all buildings, which is estimated to be $25,010,675. The Association is responsible for losses based on a deductible by building as defined in the insurance policy. Litigation During the course of its operations, the Association is subject to various claims, torts and actions. Management reviews the validity of such actions and acts accordingly. Management does not believe the outcome of any current actions will result in material loss to the Association. NOTE 10 RELATED PARTY A number of the Association s unit owners participate in a rental program administered by Summerhouse Rentals, Inc. (the SRI ). SRI is a separate corporation that is responsible for the efficient and effective administration and operation of the rental program on behalf of the Association s unit owners. The Association s Board of Directors has the authority to appoint SRI s Board of Directors. For the year ended December 31, 2013 the Association received $10,000 dividend distribution and $18,000 of rental income from SRI. NOTE 11 SUBSEQUENT EVENTS Subsequent events have been evaluated through May 8, No events were identified as necessary to be disclosed to keep these consolidated financial statements from being misleading or that provide additional evidence about conditions that existed at December 31, 2013, including estimates inherent in the process of preparing these consolidated financial statements. 10

13 SUPPLEMENTARY INFORMATION

14 SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCES GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2013 Phase I Phase II Phase III Phase IV Total REVENUES Member assessments $ 234,948 $ 220,692 $ 220,692 $ 220,692 $ 897,024 Interest Other income 3,089 2,669 2,669 2,669 11,096 Total revenues 238, , , , ,083 EXPENSES Payroll and benefits 48,970 46,051 46,051 46, ,123 Administrative 88,660 81,696 81,697 85, ,447 Repairs and maintenance 37,029 34,253 33,726 35, ,075 Utilities 68,192 66,286 66,284 66, ,132 Depreciation ,268 Total expenses 243, , , , ,045 EXCESS OF EXPENSES OVER REVENUES (5,418) (5,492) (4,964) (10,088) (25,962) FUND BALANCE, BEGINNING 54,154 54,961 35,388 70, ,475 RELATED PARTY TRANSFERS Office rental income 4,710 4,430 4,430 4,430 18,000 Rental dividends 2,617 2,461 2,461 2,461 10,000 Other (4,195) (4,195) FUND BALANCE, ENDING $ 51,868 $ 56,360 $ 37,315 $ 67,775 $ 213,318 Non-assessment revenues and expenses are allocated to the condominium phase based on each condominium s pro-rata share of units, with exception of specific repairs and maintenance expense items. 11

15 SCHEDULE OF FUTURE MAJOR REPAIRS AND REPLACEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 An independent engineer conducted a study in 2011 to estimate the remaining useful lives and the replacement costs of the components of common property. Replacement costs were based on the estimated costs to repair or replace the common property components at the date of the study. Estimated current replacement costs take into account the effects of inflation between the date of the study and the date that the components will require repair or replacement. On an annual basis, the Board of Directors reviews the estimated remaining useful lives and estimated current replacement costs and makes adjustments as deemed necessary. Interest income is allocated to replacement fund components based on assessments collected during the year. In October 2006 the membership approved to allow the Board of Directors to transfer funds between the replacement fund components within a phase. The following information presents significant supplementary information concerning the replacement fund as required by accounting principles generally accepted in the United States of America: Estimated Estimated Future Major Remaining Repair or 2014 at Useful Lives Replacement Budgeted December 31, (Years) Cost ing 2013 Component Building painting/waterproofing 3 $ 14,500 $ 3,072 $ 18,006 Roofing ,034 3,072 24,733 Tennis/racquetball/shuffle board courts ,428 9,216 16,710 Paving and sealing 1-3 7,900-16,240 $ 124,862 $ 15,360 $ 75,689 December 31, Interest December 31, Component 2012 Assessments Income Expenses Transfers 2013 Building paintng/waterproofing $ 14,924 $ 3,072 $ 10 $ - $ - $ 18,006 Roofing 21,651 3, ,733 Tennis/racquetball/shuffle board courts 15,805 9, (8,340) - 16,710 Paving and sealing 16, ,240 $ 68,620 $ 15,360 $ 49 $ (8,340) $ - $ 75,689 12

16 SCHEDULE OF FUTURE MAJOR REPAIRS AND REPLACEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 Phase I The following information presents significant supplementary information concerning the replacement fund as required by accounting principles generally accepted in the United States of America: Estimated Estimated Future Major Remaining Repair or 2014 at Useful Lives Replacement Budgeted December 31 (Years) Cost ing 2013 Component Building painting/waterproofing 3 $ 77,050 $ 4,020 $ 52,778 Roofing ,965 8,844 52,309 Swimming pool ,298 6,432 (599) Paving and sealing ,738 2,412 18,632 Beach walk-over 0 24,463 2,412 6,047 Concrete restoration ,000 46,632 (42,200) $ 547,514 $ 70,752 $ 86,967 December 31, Interest December 31, Component 2012 Assessments Income Expenses Transfers 2013 Building painting/waterproofing $ 48,946 $ 4,020 $ 12 $ (200) $ - $ 52,778 Roofing 48,435 8, (4,997) - 52,309 Swimming pool 7,721 6, (15,821) 1,049 (599) Paving and sealing 19,501 2,412 7 (3,288) - 18,632 Beach walk-over 3,628 2, ,047 Concrete restoration 36,966 46, (125,941) - (42,200) $ 165,197 $ 70,752 $ 216 $ (150,247) $ 1,049 $ 86,967 13

17 SCHEDULE OF FUTURE MAJOR REPAIRS AND REPLACEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 Phase II The following information presents significant supplementary information concerning the replacement fund as required by accounting principles generally accepted in the United States of America: Estimated Estimated Future Major Remaining Repair or 2014 at Useful Lives Replacement Budgeted December 31, (Years) Cost ing 2013 Component Building painting/waterproofing 3 $ 72,450 $ 6,048 $ 46,606 Roofing ,353 9,072 43,750 Swimming pool ,575 3,780 6,948 Paving and sealing ,005 3,024 16,701 Beach walk-over 0 24,463 3,024 6,189 Concrete restoration ,000 43,848 (38,343) $ 534,846 $ 68,796 $ 81,851 December 31, Interest December 31, Component 2012 Assessments Income Expenses Transfers 2013 Building painting/waterproofing $ 40,541 $ 6,048 $ 17 $ - $ - $ 46,606 Roofing 57,003 9, (22,350) - 43,750 Swimming pool 16,987 3, (14,878) 1,049 6,948 Paving and sealing 16,761 3,024 8 (3,092) - 16,701 Beach walk-over 3,157 3, ,189 Concrete restoration (76,794) 43, (5,517) - (38,343) $ 57,655 $ 68,796 $ 188 $ (45,837) $ 1,049 $ 81,851 14

18 SCHEDULE OF FUTURE MAJOR REPAIRS AND REPLACEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 Phase III The following information presents significant supplementary information concerning the replacement fund as required by accounting principles generally accepted in the United States of America: Estimated Estimated Future Major Remaining Repair or 2014 at Useful Lives Replacement Budgeted December 31, (Years) Cost ing 2013 Component Building painting/waterproofing 3 $ 72,450 $ 5,292 $ 43,586 Roofing ,353 6,048 73,370 Swimming pool ,575 4,536 3,188 Paving and sealing ,215 1,512 22,498 Beach walk-over 0 24,463 3,024 11,844 Concrete restoration ,000 43,848 2,924 $ 534,056 $ 64,260 $ 157,410 December 31, Interest December 31, Component 2012 Assessments Income Expenses Transfers 2013 Building painting/waterproofing $ 39,096 $ 5,292 $ 17 $ (819) $ - $ 43,586 Roofing 69,768 6, (2,465) - 73,370 Swimming pool 12,468 4, (14,878) 1,048 3,188 Paving and sealing 24,073 1,512 5 (3,092) - 22,498 Beach walk-over 8,810 3, ,844 Concrete restoration 34,438 43, (75,501) - 2,924 $ 188,653 $ 64,260 $ 204 $ (96,755) $ 1,048 $ 157,410 15

19 SCHEDULE OF FUTURE MAJOR REPAIRS AND REPLACEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 Phase IV The following information presents significant supplementary information concerning the replacement fund as required by accounting principles generally accepted in the United States of America: Estimated Estimated Future Major Remaining Repair or 2014 at Useful Lives Replacement Budgeted December 31, (Years) Cost ing 2013 Component Building painting/waterproofing 3 $ 72,450 $ 5,292 $ 24,920 Roofing ,168 9,072 49,167 Swimming pool ,180 6,048 13,382 Paving and sealing ,450 3,024 15,811 Beach walk-over 0 24,463 3,024 6,186 Concrete restoration ,000 43,848 76,084 $ 434,711 $ 70,308 $ 185,550 December 31, Interest December 31, Component 2012 Assessments Income Expenses Transfers 2013 Building painting/waterproofing $ 19,603 $ 5,292 $ 25 $ - $ - $ 24,920 Roofing 41,112 9, (1,060) - 49,167 Swimming pool 21,136 6, (14,878) 1,048 13,382 Paving and sealing 16,515 3, (3,742) - 15,811 Beach walk-over 3,148 3, ,186 Concrete restoration 71,422 43, (39,392) - 76,084 $ 172,936 $ 70,308 $ 330 $ (59,072) $ 1,048 $ 185,550 16