GEORGIAN INN BEACH CLUB ASSOCIATION, INC.

Financial Statements And Independent Auditors' Report

December 31,2005 And 2004

OLIVARI & ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

Georgian Inn Beach Club Association, Inc. December 31,2005 And 2004

Table Of Contents

Page

Independent Auditors I Report ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .. .. . . . . . . . . . . . . .. .. . .. . 1

Balance Sheets :..... . ... .. .. . . . . . . .. . . . . .. . . . . . . .. ..... . . . 2

Statements Of Revenues And Expenses And Changes In Fund Balances 3-4

Statements Of Cash Flows 5

Notes To Financial Statements . 6-15

Supplementary Information On Future Major Repairs And Replacements (Unaudited) .16

Independent Auditors' Report On Additional Information 17

Schedule Of Actual To Budget . 18

\

QUVARI & ASSOCIATES CERT IFIED PUBLIC ACCOUNTANTS 6

OLIVARI & ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

INDEPENDENT AUDITORS' REPORT

To The Board Of Directors And Unit Owners Georgian Inn Beach Club Association, Inc. Ormond Beach, Florida

We have audited the accompanying balance sheets of Georgian Inn Beach Club Association, Inc. (a nonprofit organization) as of December 31, 2005 and 2004, and the related statements of revenues and expenses and changes in fund balances, and cash flows, for the years then ended. These financial statements are the responsibility of the Association's management. Our responsibility is to express an opinion on these fmancial statements based on our audits .

We conducted our audits 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 fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion , the fmancial statements referred to above present fairly, in all material respects , the fmancial position of Georgian Inn Beach Club Association, Inc. as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The supplementary information on future major repairs and replacements on page 16 is not a required part of the basic financial statements of Georgian Inn Beach Club Association, Inc. but is supplementary information required by the American Institute of Certified Public Accountants. We have applied certain Timited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information . However, we did not audit the information and express no opinion on it.

Olivari & Associates Certified Public Accountants and Consultants September 15, 2006

- 1­

141 SAG E BR US H T R AI L· SUIT E D' O RM OND B EACH . FL ORI DA 32 17 4

(386) 672-0775 • FA X (386) 677 - 102 4

.1.11 VUJ UpUllVIJ, UJ"" .1.1..J.1a.u'-'.JaJ ~L.aL""JJ.1""J.JLi) J\.,.J\...J.J .....U LV auvv"",, }.J.J\",.,:)\....Ju . .IaLlJ], ill a.1! IJJaL\,,;J.1aJ J,,",~J-''''''''''~ '

the fmancial position of Georgian Inn Beach Club Association, Inc. as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

OUVAR I & ASSOCIATES ( :( I(T U1Ell l>U&. It: ....1U .JNT" NT~&.U~T"NTS

Georgian mts or Revenue!

For The Year.

2005 Replaceme

Fund (Restrlete Revenues

s 451 , Assessments from owners (Note 6) 9, Investment income (Note 4)

Loss on disposal of fixed assets Insurance proceeds Lockout fees and interest - owners Recovery of bad debt Retail sales and vending machine income

z, Miscellaneous 463 , TOIaIRevenues

Expenses Administrative - accounting Administrative - legal Administrative - supplies and mailing Administrative - payroll Amortization expense Bad debts Building expense

139, Building expense - restricted Consulting Credit card and bankfees Depreciation Division fee Dues and subscriptions Guest activities Housekeeping expense

II, Hurricane repair expense - restricted (Note 14) Income tax expense Insurance expense Interest expense Labor expense - other Licenses and permits

Statements

Operating Fund

s 1,876,955 , 3,507

(6,888)

106,626 43,446 . - 4,203

, [7,545 , 2 ,045,394

14,800 59,508 36,144

383 ,475 13,190

710,078 2,668,232

20,000 13,000 50,840 10,608 1,461 1,392

14,019

2,460 162,160 54,019 74,719 2,179

Georgian I~n Beach Club Association, Inc. or Revenues And Expenses And Changes In Fund

For The Years Ended December 31,2005 And 2004

2005 Replacement

Fund (Restricted) Total

s 451 ,130 s 2,328,085 9,817 13,n4

(6 ,888)

106,626 43,446

4 ,203 2,269 19,814

463 ,216 2,508 ,610

14,800 I 59 ,508

36,144 383 ,475

13, 1so - 710 ,078

2,668 ,232 139,694 139,694

20 ,000 13,000 50 ,840 10,608

1,461 1,392

14,019 11,385 11,385

2,460 162,160 54,019 74 ,719

2,179

Balances

Operating Fund

s 1,628,296 8,178

110,765 170,607

11,044 31 ,359

1,960 ,249

11,000 124,518 25 ,127

469 ,877

574,670 24 ,237

48 ,000 6,155

37,183 10,608

786 5,106

28,483

15,793 200,812

41,008 1,214

2004 Replacement

Fund (Restricted) Total

$ 385 ,223 $ 2,013,519 25 ,034 33,212

755,043 755 ,043 110,765 170,607

11,044 31,359

1,165,300 3 ,125 ,549

11,000 124,518 25 ,127

469 ,877

574,670 24 ,237

134,181 134,181 48,000

6,155 37,183 10,608

786 5,106

28,483 1,100 ,073 1,100,073

15,793 200 ,812

41 ,008 1,214

ing auditors ' repq The accompanying auditors ' report and notes should be read with these financial statements , -3­

OUVARI & A SSOCIATES CEIU IHF.lll '-'KlR : A,co ." INTANT~ 6r.CI.l NSULTANTS

Georg i Georgian Inn Beach Club Association, Inc . 5 Of Revenues A Statements Of Revenues And Expenses And Changes In Fund Balances (continued)

For The y , For The Years Ended December 31,2005 And 2004

200 2005 2004

Replacl Replacement Replacement

FUf Operating Fund Operating Fund (Restri Expenses (continued) Fund (Restricted) Total Fund (Restricted) Total

Meeting expense 12,511 12,511 8,649 8,649 Miscellaneous 27 ,777 27 ,777 9,581 9,581 Other building! grounds expense - restricted 225 ,248 225 ,248 18,743 18,743 Personal propeny expense - restricted 712 ,565 712 ,565 77 ,199 77 ,199 Pest control 3,100 3,100 3,142 3,142 Repairs and maintenance 95,093 95 ,093 65,487 65 ,487 Retail and vending expense 2,561 2,561 2,520 2,520 Roof expense - restricted , 15,096 15,096 · Tax expense - payroll ~> 30,212 30,212 37,651 37,651 Utilities 69,233 69 ,233 154,449 154.449

1,1 Total Expenses 4,532 ,771 1,103,988 5,636,759 1,906,056 1,330,196 3,236 ,252

« Excess (Deficit) Of Revenues Over Expenses (2,487,377) (640,772) (3,128,149) 54,193 (164 ,896) (110 ,703) ~ Fund Balances - Beginning Of Year 608,631 869 ,005 1,477,636 460 ,561 1,127 ,778 1,588 ,339

(I Net transfers 119,947 (119,947) 93,877 (93,877) $ J Fund Balances - End Of Year $ (1,758 ,799) $ 108,286 s (1,650,513) s 608 ,631 s 869,005 s 1,477,636

anying auditors ' J The accompanying auditors ' report and notes should be read with these financial statements . -4­

OUYARI & ASS OCIATES ( :( ItTWIEU t'U tsl lC ....cxx..Jrn·....NT~ .s.l l.lN SUlT....NTS

--

--

--

Georgia Georgian Inn Beach Club Associatiun, Inc. Statements Of Casb Flows

For The Yel For The Years Ended December 31, 200S And 2004

ng I

B.808 3.379 1.748 1,776) 5.351) 7.730)

0,922)

Rei

~

S Cash Flows From OperatingActivities:

Member assessmentscollected Interest received Other operating cash receipts Cash paid for expenses Property taxes paid Income taxes paid Interfund transfers

Net Cash Provided(Used) By OperatingAciivuies

Operating Fund

S 1,318.808 3.379

21.748 (3,741,776)

(265.351) (17.730)

(2.680,922)

200S Replacement

Fund (Restricted)

S 451,130 10,836

757.312 (1.899 .443)

(680,165)

S

Tutal

1,769,938 14,215

779.060 (5,641,219)

(265,351) (17.730)

(3.361.087)

Ope.....ting Fund

S 2.541,126 7,891

42.362 (1.797,120)

(268.475) (850)