Form 10-Q

Table of Contents

Table of Contents

Table of Contents

Table of Contents

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Table of Contents

Table of Contents

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Table of Contents

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10-Q 1 d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER: 333-147447

SALAMANDER INNISBROOK, LLC

(Exact name of registrant as specified in its charter)


Florida		26-0442888
(State of incorporation)		(IRS employer identification no.)

36750 US Highway 19 North, Palm Harbor, FL 34684

(Address of principal executive offices)

727-942-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of the Regulation S-T (229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ¨ NO ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

The Rental Pool operated by the Registrant has 594 Participants.

INDEX


		Page
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Salamander Innisbrook, LLC

Condensed Balance Sheets at June 30, 2010 (Unaudited) and December 31, 2009		4
Condensed Statements of Operations and Changes in Member’s Equity (Unaudited) for the three and six months ended June 30, 2010 and 2009		5
Condensed Statements of Cash Flows (Unaudited) for the six months ended June 30, 2010 and 2009		6
Notes to Condensed Financial Statements (Unaudited)		7

Innisbrook Rental Pool Lease Operation

Condensed Balance Sheets at June 30, 2010 (Unaudited) and December 31, 2009		10
Condensed Statements of Operations (Unaudited) for the three months and six months ended June 30, 2010 and 2009		11
Condensed Statements of Changes in Participants’ Fund Balance (Unaudited) for the six months ended June 30, 2010 and 2009		12
Notes to Condensed Financial Statements (Unaudited)		13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13

Item 3. Quantitative and Qualitative Disclosures about Market Risk		15

Item 4T. Controls and Procedures		15

PART II — OTHER INFORMATION

Item 1. Legal Proceedings		16
Item 1A. Risk Factors		16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		16
Item 3. Defaults Upon Senior Securities		16
Item 4. Removed and Reserved		16
Item 5. Other information		16
Item 6. Exhibits		17

Signature		18
EX-31.1		19
EX-31.2		20
EX-32.1		21
EX-32.2		22

Cautionary Note Regarding Forward-Looking Statements

The following report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements that predict or describe future events or trends and that do not relate solely to historical matters. All of our projections in this quarterly report are forward-looking statements. You can generally identify forward-looking statements as statements containing the words “believe,” “expect,” “will,” “anticipate,” “intend,” “estimate,” “project,” “assume” or other similar expressions. You should not place undue reliance on our forward-looking statements because the matters they describe are subject to known (and unknown) risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our forward-looking statements are based on the limited information currently available to us and speak only as of the date on which this report was filed with the SEC. Our continued internet posting or subsequent distribution of this dated report does not imply continued affirmation of the forward-looking statements included in it. We undertake no obligation, and we expressly disclaim any obligation, to issue any updates to our forward-looking statements, even if subsequent events cause our expectations to change regarding the matters discussed in those statements. Future events are inherently uncertain. Moreover, it is particularly difficult to predict business activity levels at the Resort with any certainty. Accordingly, our projections in this quarterly report are subject to particularly high uncertainty. Our projections should not be regarded as legal promises, representations or warranties of any kind whatsoever. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and harmful to your interests.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

SALAMANDER INNISBROOK, LLC

CONDENSED BALANCE SHEETS


	June 30, 2010		December 31, 2009
	(Unaudited)
Assets
Current assets:
Cash	$	2,160,742	$	997,652
Accounts receivable trade, net		2,067,111		2,015,986
Inventories and supplies		899,320		1,003,806
Prepaid expenses and other		437,829		731,193
Due from affiliates		79,578		65,939

Total current assets		5,644,580		4,814,576

Property, buildings and equipment, net		43,765,090		44,882,478
Intangibles, net		8,391,189		9,235,086
Deposits and other assets		312,302		317,240

Total assets	$	58,113,161	$	59,249,380


Liabilities and Member’s Equity
Current liabilities:
Accounts payable	$	463,172	$	942,938
Accrued liabilities		2,405,063		1,852,263
Deferred revenue		1,932,013		2,299,725
Current portion of long term-refurbishment		25,810		22,885
Current portion of capital lease obligations		111,294		108,137

Total current liabilities		4,937,352		5,225,948

Deferred revenue		1,129,679		1,062,543
Refurbishment obligation, net of current portion		48,632		62,935
Capital lease obligations, net of current portion		80,187		136,818


Total liabilities		6,195,850		6,488,244

Member’s equity		51,917,311		52,761,136

Total liabilities and member’s equity	$	58,113,161	$	59,249,380

See accompanying notes to unaudited condensed financial statements.

SALAMANDER INNISBROOK, LLC

CONDENSED STATEMENTS OF OPERATIONS AND CHANGES IN MEMBER’S EQUITY

(Unaudited)


	For the three months ended June 30,						For the six months ended June 30,
	2010			2009			2010			2009

Resort revenues	$	8,938,748		$	8,611,761		$	20,433,494		$	21,270,231


Costs and expenses:
Operating costs and expenses		3,913,659			4,061,158			8,456,044			9,018,669
General and administrative		4,557,143			4,892,615			9,847,406			10,672,703
Depreciation and amortization		1,030,003			1,278,182			2,063,584			2,556,362

Total costs and expenses		9,500,805			10,231,955			20,367,034			22,247,734

Operating income/(loss)		(562,057	)		(1,620,194	)		66,460			(977,503	)

Interest expense, net		7,790			68,128			18,468			147,753


Net income/(loss)		(569,847	)		(1,688,322	)		47,992			(1,125,256	)

Member’s equity, beginning of period		53,333,714			55,310,279			52,761,136			49,156,244
Member’s contributions (distributions)		(846,556	)		1,330,143			(891,817	)		6,921,112

Member’s equity, end of period	$	51,917,311		$	54,952,100		$	51,917,311		$	54,952,100

See accompanying notes to unaudited condensed financial statements.

SALAMANDER INNISBROOK, LLC

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended June 30,
	2010			2009

Operating activities:
Net income/(loss)	$	47,992		$	(1,125,256	)
Adjustments to reconcile net income/(loss) to net cash provided (used in) operating activities
Provision for bad debt expense		9,000			26,758
Depreciation and amortization		2,063,584			2,556,362
Loss on disposal of property & equipment		18,317			—
Other changes in operating assets and liabilities		101,482			(2,276,674	)

Net cash provided by (used in) operating activities		2,240,375			(818,810	)


Cash flows from investing activities:
Capital expenditures		(120,616	)		(5,328,989	)

		(120,616	)		(5,328,989	)


Cash flows from financing activities:
Member contributions (distributions)		(891,817	)		6,921,112
Repayment of capital lease obligations		(53,474	)		(144,457	)
Repayment of refurbishment obligation		(11,378	)		(1,010,756	)

Net cash provided by (used in) financing activities		(956,669	)		5,765,899


Net increase/(decrease) in cash		1,163,090			(381,900	)

Cash at beginning of period		997,652			1,081,096


Cash at end of period	$	2,160,742		$	699,196


Supplemental disclosure of cash flow information:
Cash paid for interest	$	18,468		$	110,402

See accompanying notes to unaudited condensed financial statements.

SALAMANDER INNISBROOK, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of Business, Basis of Presentation and Summary of Significant Accounting Policies

Nature of business

On July 16, 2007, Salamander Innisbrook, LLC (the “Company”, “we”, “us”, or “our”), together with its affiliates, Salamander Innisbrook Securities, LLC, and Salamander Innisbrook Condominium, LLC (collectively, the “Buyer”) completed the purchase of the Innisbrook Resort and Golf Club (the “Resort”) and all of the equity interest in Golf Host Securities, Inc.

The Company assumed control and operation of the Rental Pool Lease Operations (the “Rental Pool”) which is a securitized pool of condominiums owned by participating condominium owners (the “Participating Owners”) and rented as hotel rooms to guests of the Resort; an average of 429 owners or 594 hotel rooms participate at any given time. The Rental Pool obligated the Company to make quarterly distributions of a percentage of room revenues under the Amended and Restated Innisbrook Rental Pool Master Lease Agreement, dated January 1, 2004 (the “Master Lease” or “MLA”). As described in Note 7, the MLA also entitled Participating Owners to 50% reimbursement of the refurbishment costs of their units during Phase I through IV and 25% for Phase V refurbishments (the “Refurbishment Program”). Other resort facilities include four 18-hole golf courses, four restaurants, three convention facilities, a health spa, fitness center, tennis and recreation facilities, themed water park and five swimming pools.

Basis of presentation

The accompanying condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions of Quarterly Report on Form 10-Q, consequently, do not include all disclosures normally provided in the Company’s Annual Report on Form 10-K. Accordingly, these condensed financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

In the opinion of management, the condensed financial statements reflect all adjustments which are necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. These results are not necessarily indicative of results for any other period or for a full year. It is important to note that the Company’s business is seasonal.

Note 2. Accounts Receivable


	June 30, 2010			December 31, 2009
	(Unaudited)

Trade accounts receivable	$	1,768,775		$	1,703,753
Less allowance for bad debts		(76,179	)		(84,936	)
Other receivables		374,515			397,169

	$	2,067,111		$	2,015,986

Note 3. Property, Buildings and Equipment


	June 30, 2010			December 31, 2009
	(Unaudited)

Land and land improvements	$	16,544,384		$	16,513,191
Buildings		24,948,272			24,956,595
Furniture, fixtures and equipment		7,743,928			7,686,888

		49,236,584			49,156,674
Less accumulated depreciation		(5,471,494	)		(4,274,196	)

	$	43,765,090		$	44,882,478

Note 4. Intangibles

Intangible assets represent the value of contractual arrangements assumed as of July 16, 2007, including trade names, water contract, rental pool, club memberships and future bookings. The intangible assets are being amortized over the specific term or benefit period of each related contract.


Intangible Assets	Amortization Period	June 30, 2010			December 31, 2009
		(Unaudited)

Water Contract	None since renewable in perpetuity	$	2,030,000		$	2,030,000
Rental Pool	77.5 months		9,481,717			9,481,717
Guest Bookings	36 months		1,378,000			1,378,000
Club Memberships	41.5 months		1,268,000			1,268,000
Trade Name	None since renewable in perpetuity		2,300,000			2,300,000

			16,457,717			16,457,717
Less accumulated amortization			(8,066,528	)		(7,222,631	)

		$	8,391,189		$	9,235,086

Note 5. Long-term Obligations

Leases - Leases, which transfer substantially all of the benefits and risks of ownership of property, are classified as capital leases. Assets and liabilities are recorded at amounts equal to the present value of the minimum lease payments at the beginning of the lease term. Interest expense relating to the lease liabilities is recorded to affect constant rates of interest over the terms of the leases.

Leases, which do not transfer substantially all of the benefits and risks of ownership of property, are classified as operating leases, and the related rentals are charged to expense as incurred.

Master Lease Refurbishment Program – On July 16, 2007, the Company assumed a liability to certain condominium owners under the refurbishment program committed to in the Rental Pool Master Lease Agreement (“MLA”). The liability of $74,442 represents the Company’s obligation to pay certain Rental Pool participants an amount equal to 25% of the cost to refurbish their respective units. Principal and interest payments are due quarterly for the five year repayment period of the program.

Note 6. Commitments and Contingencies

Claims and Lawsuits

The Company is involved in litigation in the ordinary course of business. In the opinion of the Company’s management, insurance or indemnification from other third parties adequately covers these matters and the effect, if any, of these claims is not material to the Company’s financial condition and results of operations.

Note 7. Related Party Transactions

The Company paid management fees to an affiliate of $268,163 and $257,382 for the three months ended; $613,004 and $638,124 for the six months ended June 30, 2010 and 2009, respectively, which is included in general and administrative expense.

At June 30, 2010 and December 31, 2009, the amounts due from affiliates was $79,578 and $65,939, respectively, which are due on demand.

RENTAL POOL LEASE OPERATIONS

The operation of the Rental Pool is tied closely to the Resort Operation. The MLA provides for quarterly distribution of a percentage of the Company room revenues to participating condominium owners (“Participants”). Because the participants share a percentage of the Company’s room revenue, the condominium units allowing Rental Pool participation are deemed securities. However, there is no market for these securities other than the normal real estate market. Since the security is real estate, no dividends have been paid or will be. However, Participants are entitled to a contractual distribution paid quarterly, as defined in the lease agreements, for the Company’s right to use the Participants’ condominium units in resort operations.

INNISBROOK RENTAL POOL LEASE OPERATION

CONDENSED BALANCE SHEETS

DISTRIBUTION FUND


	June 30, 2010		December 31, 2009
	(Unaudited)
ASSETS

Receivable from Salamander Innisbrook, LLC for distribution	$	785,860	$	464,002
Interest receivable from Rental Pool Escrow Fund		3,047		1,933

	$	788,907	$	465,935

LIABILITIES AND PARTICIPANTS’ FUND BALANCES

Due to Participants for distribution	$	512,436	$	281,828
Due to Maintenance Escrow fund		276,471		184,107

	$	788,907	$	465,935

MAINTENANCE ESCROW FUND
ASSETS

Cash	$	166,917	$	210,782
Cash equivalents		1,945,000		1,715,000
Receivable from Distribution fund		276,471		184,108
Receivable from Salamander Innisbrook, LLC		—		1,568
Inventory		18,875		—
Interest receivable		4,763		5,437

	$	2,412,026	$	2,116,895

LIABILITIES AND PARTICIPANTS’ FUND BALANCES

Accounts payable	$	17,564	$	55,574
Interest payable to Distribution fund		3,047		1,933
Carpet Care reserve		107,985		103,919
Participants’ fund balances		2,283,430		1,955,469

	$	2,412,026	$	2,116,895

See accompanying notes to unaudited condensed financial statements.

INNISBROOK RENTAL POOL LEASE OPERATION

CONDENSED STATEMENTS OF OPERATIONS

DISTRIBUTION FUND

(Unaudited)


	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009

GROSS REVENUES	$	2,201,637		$	2,029,467		$	5,357,974		$	5,780,611


DEDUCTIONS:
Agents’ commissions		80,562			39,498			169,029			164,607
Credit card fees		62,023			73,649			150,998			181,334
Audit fees		26,175			16,250			52,350			27,500
Uncollectible room rents		2,000			517			2,000			517
Linen replacements		7,575			16,251			30,805			42,629
Rental pool complimentary fees		8,344			7,508			15,277			12,168

		186,679			153,673			420,459			428,755


ADJUSTED GROSS REVENUES		2,014,958			1,875,794			4,937,515			5,351,856

AMOUNT RETAINED BY LESSEE		(1,208,975	)		(1,125,518	)		(2,962,510	)		(3,211,155	)


GROSS INCOME DISTRIBUTION		805,983			750,276			1,975,005			2,140,701

ADJUSTMENTS TO GROSS INCOME DISTRIBUTION:
General pooled expense		(1,223	)		(3,150	)		(1,949	)		(5,049	)
Miscellaneous pooling adjustments		1,486			2,673			1,675			2,673
Corporate complimentary occupancy fees		2,034			5,786			5,635			17,176
Interest		—			(998	)		—			(1,996	)
Occupancy fees		(306,099	)		(271,823	)		(653,134	)		(613,331	)
Advisory Committee expenses		(32,723	)		(32,559	)		(61,441	)		(61,067	)


NET INCOME DISTRIBUTION		469,458			450,205			1,265,791			1,479,107

ADJUSTMENTS TO NET INCOME DISTRIBUTION:
Occupancy fees		306,099			271,823			653,134			613,331
Hospitality suite fees		1,091			1,151			2,303			2,613
Associate room fees		9,212			10,878			27,293			33,026


AVAILABLE FOR DISTRIBUTION TO PARTICIPANTS	$	785,860		$	734,057		$	1,948,521		$	2,128,077

See accompanying notes to the unaudited condensed financial statements.

INNISBROOK RENTAL POOL LEASE OPERATION

STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES

(Unaudited)

DISTRIBUTION FUND


	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009

BALANCE, beginning of period	$	—		$	—		$	—		$	—

ADDITIONS:
Amounts available for distribution		785,860			734,057			1,948,521			2,128,077
Interest received or receivable from Maintenance Escrow Fund		3,047			8,933			6,263			28,154
REDUCTIONS:
Amounts withheld for Maintenance Escrow Fund		(276,471	)		(245,691	)		(593,134	)		(554,301	)
Amounts accrued or paid to participants		(512,436	)		(497,298	)		(1,361,650	)		(1,601,929	)

BALANCE, end of period	$	—		$	—		$	—		$	—

MAINTENANCE ESCROW FUND


	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009

BALANCE, beginning of period	$	2,132,810		$	1,807,668		$	1,955,469		$	1,639,345

ADDITIONS:
Amounts withheld from occupancy fees		276,472			245,691			593,135			554,301
Interest earned		3,047			8,186			3,047			27,630
Charges to participants to establish or restore escrow balances		36,594			96,610			109,944			180,140
REDUCTIONS:
Maintenance charges		(156,509	)		(294,198	)		(325,889	)		(476,105	)
Carpet care reserve deposit		(4,592	)		(9,555	)		(9,852	)		(21,508	)
Interest accrued or paid to Distribution Fund		(3,047	)		(8,186	)		(3,047	)		(27,630	)
Refunds to participants as prescribed by the master lease agreements		(1,345	)		(5,284	)		(39,377	)		(35,241	)

BALANCE, end of period	$	2,283,430		$	1,840,932		$	2,283,430		$	1,840,932

See accompanying notes to the unaudited condensed financial statements.

INNISBROOK RENTAL POOL LEASE OPERATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Rental Pool Lease Operations

Organization and Operations

The Company follows accounting policies that require estimates that are based on assumptions and judgment, which affect revenues, expenses, assets, liabilities and disclosure of contingencies in our financial statements. These estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. However, actual results may differ from these estimates due to different conditions.

The Rental Pool consists of condominiums at the Resort which are leased by the Company from their owners and used as hotel accommodations for the Resort. The Company has assumed the Master Lease Agreement (“MLA”) from the predecessor owner which provides that on an annual basis each Participant may elect to participate in the Rental Pool for the following year by signing an Annual Lease Agreement (“ALA”). Any condominium unit owner who does not sign the ALA is not permitted to participate in the Rental Pool for the following year. Under the MLA, 40% of the Adjusted Gross Revenues, as defined in the MLA, are distributed to the Rental Pool Participants and the remaining 60% is retained by the Company.

The Lessors’ Advisory Committee (“LAC”), consists of nine Participants who are elected by the Participants to advise the Company of Rental Pool Matters and to negotiate amendments to the lease agreement, the Annual Lease Agreement (“ALA”) and the MLA.

The Rental Pool consists of two funds: the Distribution Fund and the Maintenance Escrow Fund. The Distribution Fund balance sheet primarily reflects amounts receivable from the Company for the Rental Pool distribution payable to Participants and amounts due to the Maintenance Escrow Fund. The operations of the Distribution Funds reflect Participants’ earnings in the Rental Pool. The Maintenance Escrow Fund reflects the accounting for certain escrowed assets of the Participants and, therefore, has no operations. It consists primarily of amounts escrowed by Participants or due to the Distribution Fund to meet escrow requirements, fund the carpet care reserve and maintain the interior of the units.

In addition, the MLA provided to the Participants who refurbished units entering the Rental Pool during 2005, the Company assumed the obligation to reimburse the Participants an amount up to 25% of the actual unit refurbishment costs, plus interest at a rate of 2.5% per annum. The obligation to reimburse the refurbishment costs and pay interest thereon applies only if certain minimum participation thresholds are maintained.

Maintenance Escrow Fund Accounts

The MLA generally provides that 90% of the occupancy fees earned by each Participant are ultimately deposited in that Participant’s Maintenance Escrow Fund account. The account provides funds for payment of amounts that are due from all Participants for maintenance and refurbishment services for or related to their condominium unit. In the event that a Participant’s balance falls below the amount necessary to pay for maintenance and replacements in the Participants unit, the Participant is required to restore the escrow balance to a defined minimum level. The MLA requires specific fund balances be maintained, by unit type, size and age of refurbishment.

The LAC, subject to the restriction in the MLA, invests the Maintenance Escrow Fund on behalf of the Participants. Income earned on the investments of the Maintenance Escrow Funds is allocated proportionately to the respective Maintenance Escrow Fund accounts and paid quarterly through the Distribution Fund. The funds are held in certificates of deposits.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The Company operates Innisbrook Resort and Golf Club (the “Resort”) in Innisbrook, Florida, which contains 1,216 condominium units of which all have been sold to third parties or to affiliates of the Company. A large number of the condominium units, 594, are hotel accommodations that participate in a rental-pooling program (the “Rental Pool”) that provides its owners with a percentage distribution of related room revenues minus certain fees and expenses; the remainder of the condominium units are owner-occupied. Other resort property owned by the Company and its affiliates include golf courses, restaurants, tennis courts, a spa and fitness center, swimming pools, conference center facilities as well as administrative offices.

Results of Operations

The Resort is a destination golf resort that appeals to group and transient guests within all market segments. The Resort provides condominium accommodations, food and beverage dining locations (three restaurants, room service, banquet and/or catering options) and recreational entertainment to members, business meetings, group guests, leisure guests and their families. The Resort offers room-only rates, golf packages, and family vacation packages.

As a destination golf resort, open year round, the Resort’s performance is sensitive to weather conditions and seasonality as well as general trends in the economy, with any economic downturn adversely affecting operating results. The Company’s operations are seasonal with the highest volume of revenue generated in the first two quarters of each calendar year. Due to the seasonal business of the Company, the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the full fiscal year.

Results of operations for the three months ended June 30, 2010 and 2009 (unaudited)


	Three months ended June 30, 2010			%		Three months ended June 30, 2009			%		Inc/(dec)			% Chg

Resort Revenues	$	8,938,748		100.0	%	$	8,611,761		100.0	%	$	326,987		3.8	%
Costs and Expenses:
Operating costs and expenses		3,913,659		43.8	%		4,061,158		47.2	%		(147,499	)	-3.6	%
General and administrative		4,557,143		51.0	%		4,892,615		56.8	%		(335,472	)	-6.9	%
Depreciation and amortization		1,030,003		11.5	%		1,278,182		14.8	%		(248,179	)	-19.4	%

Total costs and expenses		9,500,805		106.3	%		10,231,955		118.8	%		(731,150	)	-7.1	%
Income before interest		(562,057	)	-6.3	%		(1,620,194	)	-18.8	%		1,058,137		-65.3	%
Interest (income) expense, net		7,790		0.1	%		68,128		0.8	%		(60,338	)	-88.6	%

Net loss	$	(569,847	)	-6.4	%	$	(1,688,322	)	-19.6	%	$	1,118,475		-66.2	%

For the three month period ended June 30, 2010, the resort generated overall revenues of $8,938,748 up 3.8% or $ 326,987 when compared to the same period in 2009. The results illustrate that our efforts in attracting travelers continues to pay off. Overall occupancy levels, during this difficult time, grew 3.2% from the same time period last year. Competitive pressure within the marketplace continues to be on rate which was down only 81 cents for the property when compared to prior year. With occupancy levels up, and the average rate relatively flat, the Resort generated an additional 8.6% in room revenue over prior year.

Costs and Expenses for the three month period ended June 30, 2010 were $9,500,805 showing a decline in spending of $731,150 or 7.1% when compared to the prior year. Continued compression of expenses combined with the additional $326,987 in revenue resulted in a much more controlled loss before interest of $562,057, or -6.3% of revenues. Much of the interest expense was eliminated in the first and second quarter of 2010 due to the buyout and renegotiation of leases. The net loss after interest, depreciation and amortization was $569,847 which was a 66% improvement over the prior year.

Results of operations for the six months ended June 30, 2010 and 2009 (unaudited)


	Six months ended June 30, 2010		%		Six months ended June 30, 2009			%		Inc/(dec)			% Chg

Resort Revenues	$	20,433,494	100.0	%	$	21,270,231		100.0	%	$	(836,737	)	-3.9	%
Costs and Expenses:
Operating costs and expenses		8,456,044	41.4	%		9,018,669		42.4	%		(562,625	)	-6.2	%
General and administrative		9,847,406	48.2	%		10,672,703		50.2	%		(825,297	)	-7.7	%
Depreciation and amortization		2,063,584	10.1	%		2,556,362		12.0	%		(492,778	)	-19.3	%

Total costs and expenses		20,367,034	99.7	%		22,247,734		104.6	%		(1,880,700	)	-8.5	%
Income before interest		66,460	0.3	%		(977,503	)	-4.6	%		1,043,963		-106.8	%
Interest (income) expense, net		18,468	0.1	%		147,753		0.7	%		(129,285	)	-87.5	%

Net income/(loss)	$	47,992	0.2	%	$	(1,125,256	)	-5.3	%	$	1,173,248		-104.3	%

For the six month period ended June 30, 2009, resort revenues were $20,433,494 compared to $21,270,231 in the prior year. Costs and Expenses were $20,367,034 which was 99.7% of revenues resulting in net income before interest of $66,460 or .3% of revenues. Interest expense of $18,468 was down significantly from prior year resulting in net income of $47,992. Overall net income for the first six months of 2010 dramatically improved with an overall savings from same time last year of $1,173,248.

Liquidity and Capital Resources

Future operating costs and planned expenditures for capital additions and improvements are expected to be adequately funded by cash generated by the Resort’s operations and its affiliates’ current cash reserves.

The operation of the Resort is not considered to be dependent on any individual or small group of customers, the loss of which could have a material adverse effect on the Company’s business or financial condition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4T. Controls and Procedures

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act (defined below)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Changes in Internal Control Over Financial Reporting

In addition, our management with the participation of our Principal Executive Officer and Principal Financial Officer have determined that no change in our internal control over financial reporting occurred during or subsequent to the quarter ended June 30, 2010 that has materially affected, or is (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Securities Exchange Act of 1934) reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of operations, the Company is subject to claims and lawsuits. The Company does not believe that the ultimate resolution of such matters will materially impair operations or have an adverse effect on its financial position.

Michael LeFave, et al. – On or about February 27, 2009, four former employees filed a Complaint in Federal Court for the Middle District of Florida, Tampa Division, on behalf of themselves and others who are similarly situated. Thirteen individuals opted into the Michael LeFave et al. suit as class members (including Ms. Pipinos mentioned separately below) joining the original four. The claim alleges unlawful employment practices including violations of the Florida Civil Rights Act and the Age Discrimination in Employment Act. Plaintiffs’ “Class” for the class action was conditionally certified but remains subject to decertification pending further factual analysis by the Court. The Company maintains that all employment actions were for legitimate, nondiscriminatory business reasons, and it intends to continue to vigorously defend these matters. Nevertheless, the Company’s attorneys are working with a federally appointed mediator to resolve all of these legal actions, and the Company anticipates a complete settlement within the limits of insurance coverage.

Tina Pipinos – On or about August 18, 2009, a former employee filed a lawsuit against the Company and Salamander Hospitality, LLC (Salamander Hospitality, LLC has been dismissed from the case) for alleged unlawful employment practices in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida. Ms. Pipinos also alleges a violation of the Family Medical Leave Act. Ms. Pipinos seeks reinstatement, equitable relief, damages for back pay and benefits, interest, liquidated damages, attorneys’ fees and costs. The parties are engaged in discovery. The case has not yet been scheduled for trial.

Item 1A. Risk Factors

Not required

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Removed and Reserved

Not applicable

Item 5. Other information

Not applicable

Item 6. Exhibits

(a). Exhibits


Exhibit		Item
31.1		Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2		Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		SALAMANDER INNISBROOK, LLC (Registrant)

Date: August 16, 2010		/s/ Prem Devedas
		Prem Devedas
		Manager

Date: August 16, 2010		/s/ Dale Pelletier
		Dale Pelletier
		Chief Financial Officer (Principal Financial and Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company