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ILXRQ 8k
http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=7450735
Item 1.03 Bankruptcy or Receivership
Item 2.01 Completion of Acquisition or Disposition of Assets
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
Item 3.03 Material Modification to Rights of Security Holders
As previously reported in Current Reports on Form 8-K, the Company and certain of its subsidiaries and limited liability companies (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Arizona (the “Bankruptcy Court”) on March 2, 2009 and on July 23, 2010, the Bankruptcy Court confirmed the First Amended Joint Plan of Reorganization by Textron Financial Corporation (“TFC”) and Debtors (“Joint Plan”) and approved the related Sale Order both contemplating the sale of substantially all of the assets of the Debtors to ILX Acquisition, Inc, a Delaware corporation. (the “Asset Sale”).
Upon the closing of the Asset Sale on September 1, 2010, the Joint Plan became effective. The Asset Sale included an assumption of approximately $23.8 million in indebtedness to, and the liens of TFC and a payment of approximately $5.9 million in cash. Pursuant to the Joint Plan, this cash, together with cash already on hand of the Debtors, will be used to pay allowed administrative claims and allowed priority claims in full and to provide payment in full to allowed secured claims on the sold assets, except for claims of TFC. Certain assets of the Debtors that were not sold, including certain cash on hand of the Debtors, were either returned to secured claim holders in exchange for satisfaction of indebtedness or conveyed to a liquidating trust for the benefit of allowed unsecured claims. In addition, certain assets which are the subject of TFC’s security interest were conveyed to a stock pool for the benefit of holders of ILX Resorts Incorporated preferred and common stock (the “Stock Pool”) as of the effective date of the plan. Holders of common and preferred stock of ILX as of the effective date receive the right to receive distributions from the Stock Pool in accordance with a formula set forth in the Joint Plan. Distributions from the Stock Pool will be made on a pro rata basis to the ILX stockholders such that for every dollar distributed, preferred shareholders shall receive two-thirds of such distributions (up to a maximum distribution of $2.00 per share) and common holders shall receive one-third of such distributions until preferred shareholders receive their maximum $2.00 distributions under the Joint Plan, after which common shareholders receive the balance of the Stock Pool funds pro rata amongst themselves. Funds remaining in the Stock Pool as a result of failure by stockholders to respond to notice provided pursuant to the terms of the Joint Plan shall be distributed after one year to those stockholders who have responded according to the terms of the Joint Plan.
All preferred and common shares as of the Joint Plan effective date are cancelled and ILX has instructed FINRA to cease quotation of its common stock on the over the counter bulletin board effective August 31, 2010.
The Joint Plan was filed as an Exhibit to the Company’s 8-K dated July 23, 2010 and is incorporated herein by reference.
Crazy!!!!
When I find it, you'll know :)
so holding since april ?
nice same as the other co you picked up .0001 what is the next one
you like talking to yourself lol
Actually I grabbed some at 0001...lol.
I'd like to mod -- since I am here...
LOL. Gonna chuck in 150 bucks so when it starts trading, I may get a spike...
The price is right. LOL.
Yup, dust has to settle.
Waiting to see how it gets to the PK...
Should provide for some good entry pos.
LOL... Well, it has a low float... Still a good target.
Timber;)
Didn't know you had a split personality. LOL.
EX-99.1 2 ilx8k030609ex99-1.htm PRESS RELEASE DATED MARCH 10, 2009
Exhibit 99.1
FOR IMMEDIATE RELEASE
March 10, 2009
ILX RESORTS RECEIVES DELISTING NOTIFICATION
PHOENIX, ARIZONA – March 10, 2009 - ILX RESORTS INCORPORATED (NYSE Alternext: ILX) a leading developer, operator and marketer of upscale flexible-stay vacation ownership resorts in the western United States, announced that the Company received a letter from NYSE Alternext (“the Exchange) on March 6, 2009 indicating the Exchange’s intent to suspend trading and delist the Company’s common stock. The Exchange has determined the Company is not in compliance with Section 1003(a)(iv) of the Company Guide due to its recent filing of Chapter 11 under the U.S. Bankruptcy Code and Section 1002(b) due to low market capitalization of the common stock. The Company does not intend to appeal the determination. The Company plans to apply to be quoted on the Pink Quote system.
For more information about the Company, visit: www.ilxresorts.com.
Forward-Looking Statements; Risks and Uncertainties
Statements contained in this document that disclose the Company’s or management’s intentions, expectations or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions that these statements involve risks and uncertainties and other factors that may cause results to differ materially from those anticipated at the time such statements are made. For example, future results, performance and achievements may be affected by the impact of today’s announcement on our operations, the ability to continue as a going concern, the ability to obtain court approval of our motions in the Chapter 11 proceedings, our ability to develop, pursue, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 cases, our ability to obtain and maintain normal terms with vendors and service providers, our ability to attract and retain customers, our ability to provide financing to purchasers of vacation ownership interests, the performance of our portfolio of consumer notes receivable, our ability to successfully implement our strategic, operational and marketing plans, general economic conditions, availability of capital in the financial markets, the impact of war and terrorist activity, business and financing conditions, governmental and regulatory actions, the cyclicality of the vacation ownership industry, relationships with key employees and our ability to attract and retain employees , domestic and international political and geopolitical conditions, competition, downturns in leisure travel patterns, risk associated with the level and structure of our indebtedness, and other circumstances and uncertainties. We believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, but we can give no assurance that our expectations will be attained or that results will not materially differ. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
10-Q 1 ilx10q093008.htm ILX RESORTS INCORPORATED FORM 10-Q SEPTEMBER 30, 2008
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended September 30, 2008
Commission File Number 001-13855
ILX RESORTS INCORPORATED
(Exact name of registrant as specified in its charter)
ARIZONA
86-0564171
(State or other jurisdiction of
(IRS Employer Identification Number)
incorporation or organization)
2111 East Highland Avenue, Suite 200, Phoenix, Arizona 85016
(Address of principal executive offices)
Registrant's telephone number, including area code 602-957-2777
_____________________________________
Former name, former address, and former fiscal year, if changed since last report.
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 o
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 the definitions of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company x
Indicate by check mark whether the registrant is a shell company. o Yes x No
Indicate the number of shares outstanding of each of the Registrant’s classes of stock, as of the latest practicable date.
Class
Outstanding at September 30, 2008
Common Stock, without par value
3,642,204 shares
ITEM 1. FINANCIAL STATEMENTS
ILX RESORTS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31,
September 30,
2007
2008
ASSETS
Cash and cash equivalents, including restricted cash of $101,113 and $0, respectively
$ 3,332,922 $ 2,888,260
Notes receivable, net of allowance for uncollectible notes
of $3,801,902 and $2,405,197, respectively
35,369,404 19,860,710
Resort property held for Vacation Ownership Interest sales
18,655,976 24,598,069
Resort property under development
4,659,865 1,269,445
Land held for sale
585,511 586,681
Property and equipment, net
20,003,338 20,130,853
Other assets
2,611,469 2,672,854
Deferred tax asset
- 1,663,874
TOTAL ASSETS
$ 85,218,485 $ 73,670,746
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable
$ 1,409,993 $ 1,363,283
Accrued expenses and other liabilities
3,784,582 3,967,527
Income tax payable
44,232 -
Notes payable
37,353,072 37,925,323
Note payable affiliate
600,000 -
Deferred income taxes
3,830,318 -
TOTAL LIABILITIES
47,022,197 43,256,133
MINORITY INTERESTS
2,032,716 1,994,151
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value; 10,000,000 shares authorized;
117,722 shares issued and outstanding; liquidation preference of $1,177,220
746,665 746,665
Common stock, no par value; 30,000,000 shares authorized;
5,477,257 and 5,580,259 shares issued and outstanding, respectively
29,018,839 29,322,887
Treasury stock, at cost, 1,925,496 and 1,938,055 shares, respectively
(9,973,257 ) (10,000,210 )
Additional paid-in capital
59,435 59,435
Deferred compensation
(265,513 ) (136,645 )
Retained earnings
16,577,403 8,428,330
TOTAL SHAREHOLDERS' EQUITY
36,163,572 28,420,462
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 85,218,485 $ 73,670,746
See notes to condensed consolidated financial statements.
2
ILX RESORTS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended September 30,
Nine months ended September 30,
2007
2008
2007
2008
REVENUES:
Sales of Vacation Ownership Interests
$ 6,134,279 $ 4,936,013 $ 19,228,836 $ 15,657,867
Estimated uncollectible revenue
(268,648 ) (14,765,160 ) (839,097 ) (15,234,768 )
Resort operating revenue
5,324,324 5,188,714 14,831,125 15,292,829
Interest and finance income
890,162 522,259 2,665,790 2,040,871
Total revenues
12,080,117 (4,118,174 ) 35,886,654 17,756,799
COST OF SALES AND OPERATING EXPENSES:
Cost of Vacation Ownership Interests sold (recovered)
754,658 (2,641,944 ) 2,419,608 (1,242,527 )
Cost of resort operations
4,656,385 4,589,281 13,262,044 13,553,999
Sales and marketing
4,495,338 3,626,697 13,839,827 11,404,765
General and administrative
1,616,566 1,694,664 4,679,529 4,904,364
Depreciation and amortization
359,101 274,120 1,103,107 882,575
Total cost of sales and operating expenses
11,882,048 7,542,818 35,304,115 29,503,176
Timeshare and resort operating income (loss)
198,069 (11,660,992 ) 582,539 (11,746,377 )
Income from land and other, net (including Related Party)
(14,364 ) 9,115 75,158 55,293
Total operating income (loss)
183,705 (11,651,877 ) 657,697 (11,691,084 )
Interest expense
(687,223 ) (663,184 ) (2,013,570 ) (1,972,901 )
Loss before income taxes and minority interest
(503,518 ) (12,315,061 ) (1,355,873 ) (13,663,985 )
Income tax benefit
193,161 4,960,508 534,063 5,489,872
Loss before minority interest
(310,357 ) (7,354,553 ) (821,810 ) (8,174,113 )
Minority interest in loss of consolidated subsidiary
20,616 13,050 20,616 38,565
NET LOSS
$ (289,741 ) $ (7,341,503 ) $ (801,194 ) $ (8,135,548 )
NET LOSS PER SHARE:
Total Basic net loss per share
$ (0.09 ) $ (2.01 ) $ (0.24 ) $ (2.24 )
Total Diluted net loss per share
$ (0.09 ) $ (2.01 ) $ (0.24 ) $ (2.24 )
DIVIDENDS PER SHARE
$ 0.125 $ - $ 0.375 $ -
See notes to condensed consolidated financial statements.
3
ILX RESORTS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
2007
2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$ (801,194 ) $ (8,135,548 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Loss on sale of property and equipment
394 683
Gain of sale of investment in common stock
(29,327 ) -
Minority interest in net loss
(20,616 ) (38,565 )
Income tax benefit
(534,063 ) (5,489,872 )
Estimated uncollectible revenue
839,097 15,234,768
Depreciation and amortization
1,103,107 882,575
Amortization of deferred compensation
193,317 132,916
Change in assets and liabilities:
Decrease in notes receivable, net
398,971 273,926
Increase in resort property held for Vacation Ownership Interest sales
(1,786,826 ) (5,942,093 )
(Increase) decrease in resort property under development
(1,509,998 ) 3,390,420
Increase in land held for sale
(10,174 ) (1,170 )
Increase in other assets
(675,555 ) (195,038 )
Increase (decrease) in accounts payable
254,102 (46,710 )
Increase in accrued and other liabilities
1,864,037 182,945
Decrease in deferred income taxes
(18,760 ) (4,320 )
Decrease in income taxes payable
(530,627 ) (44,232 )
Net cash (used in) provided by operating activities
(1,264,115 ) 200,685
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(1,869,279 ) (877,120 )
Proceeds from sale of investment in common stock
29,327 -
Proceeds from sale of other assets
100,000 -
Proceeds from sale of property and equipment
11,383 -
Assumption of First Piggy LLC membership interests
- 33,263
Net cash used in investing activities
(1,728,569 ) (843,857 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable
9,752,804 9,188,944
Principal payments on notes payable
(8,702,372 ) (8,616,693 )
Principal payment on note payable to affiliate
- (300,000 )
Preferred stock dividends
(46,788 ) (46,788 )
Acquisition of treasury stock
(357,090 ) (26,953 )
Common stock dividend
(786,352 ) -
Net cash (used in) provided by financing activities
(139,798 ) 198,510
DECREASE IN CASH AND CASH EQUIVALENTS
(3,132,482 ) (444,662 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
5,583,721 3,332,922
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 2,451,239 $ 2,888,260
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Value of dividend shares issued under DRIP plan
$ 712,433 $ -
Deferred compensation resulting from unvested common stock issuance
267,648 4,048
Assets acquired through capital lease
406,205 -
Note receivable issued for sale of property and equipment
700,000 -
Common stock issued to repay portion of note payable to affiliate
- 300,000
See notes to condensed consolidated financial statements.
4
ILX RESORTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation and Business Activities
The condensed consolidated financial statements include the accounts of ILX Resorts Incorporated, and its wholly owned subsidiaries (“ILX” or the “Company”). All significant intercompany transactions and balances have been eliminated in consolidation.
The accompanying condensed consolidated balance sheet as of December 31, 2007, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the nine-month period ended September 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. The accompanying financial statements should be read in conjunction with the Company’s most recent audited financial statements.
The Company’s significant business activities include developing, operating, marketing and financing ownership interests (“Vacation Ownership Interests”) in resort properties located in Arizona, Colorado, Indiana, Nevada and Mexico.
Revenue Recognition
Revenue from sales of Vacation Ownership Interests is recognized in accordance with Statement of Financial Accounting Standards No. 152, Accounting for Real Estate Time-Sharing Transactions (“SFAS 152”). No sales are recognized until such time as a minimum of 10% of the purchase price and any incentives given at the time of sale has been received in cash, the statutory rescission period has expired, the buyer is committed to continued payments of the remaining purchase price and the Company has been released of all future obligations for the Vacation Ownership Interest. Resort operating revenue represents daily room rentals (inclusive of homeowner’s dues) and revenues from food and other resort services. Such revenues are recorded as the rooms are rented or the services are performed.
Condensed Consolidated Statements of Cash Flows
Cash equivalents are liquid investments with an original maturity of three months or less. The following summarizes interest paid (excluding capitalized interest), income taxes paid and interest capitalized.
Three Months Ended September 30,
Nine Months Ended September 30,
2007
2008
2007
2008
Interest paid
$ 687,223 $ 663,184 $ 2,013,570 $ 1,976,978
Income taxes paid
- 4,320 706,386 48,552
Interest capitalized
399,752 245,778 980,648 778,714
Stock Based Compensation
The Company records stock based compensation in accordance with the provisions of SFAS No. 123R. SFAS No. 123R addresses the accounting for share-based payments to employees, including grants of employee stock options. Under the standard, the Company is required to account for such transactions using a fair-value method and recognize the expense in the condensed consolidated statement of operations. The Company had no unvested options at September 30, 2008.
5
ILX RESORTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2. Notes Receivable, Net
During the third quarter of 2008, the Company recorded an increase in its estimated uncollectible revenue of $14,549,432 million and a reduction in cost of Vacation Ownership Interests owned in the amount of $3,281,615, the “allowance adjustment,” to record the reduction in its expectation of collectability of both past due and currently performing Customer Notes and consumer notes sold with recourse and the recovered Vacation Ownership Interests as a result. In conjunction with these entries the Company wrote off Customer Notes in excess of 90 days delinquent in the amount of $16,420,471, increased resort property held for sale by $3,281,615 and recognized an income tax benefit of $4,507,127. The reduction in expectation of collectability is based upon recent economic, financial and credit conditions.
Notes receivable consist of the following:
December 31,
September 30,
2007
2008
Vacation Ownership Interest notes receivable
$ 35,049,568 $ 18,682,535
Holdbacks by financial institutions
2,584,131 2,174,484
Other receivables
1,537,607 1,408,888
Allowance for possible credit losses
(3,801,902 ) (2,405,197 )
$ 35,369,404 $ 19,860,710
The following summarizes activity in the allowance for possible credit losses for the twelve and nine month periods ended:
December 31,
September 30,
2007
2008
Beginning balance
$ 4,265,108 $ 3,801,902
Estimated uncollectible revenue
1,100,556 15,234,768
Amounts written off
(1,563,762 ) (16,631,473 )
Ending balance
$ 3,801,902 $ 2,405,197
Note 3. Basic and Diluted Net Loss Per Share
In accordance with SFAS No. 128, “Earnings Per Share,” the following presents the computation of basic and diluted net loss per share:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2007
2008
2007
2008
Net loss
$ (289,741 ) $ (7,341,503 ) $ (801,194 ) $ (8,135,548 )
Less: Series A preferred stock dividends
(11,697 ) (11,697 ) (35,091 ) (35,091 )
Basic and Diluted Net Loss Available to Common Shareholders
$ (301,438 ) $ (7,353,200 ) $ (836,285 ) $ (8,170,639 )
Basic Weighted-Average Common Shares Outstanding
3,530,014 3,652,820 3,510,476 3,642,941
Effect of dilutive securities:
Stock options
- - - -
Diluted Weighted-Average Common Shares Outstanding
3,530,014 3,652,820 3,510,476 3,642,941
Basic Net Loss Per Common Share
$ (0.09 ) $ (2.01 ) $ (0.24 ) $ (2.24 )
Diluted Net Loss Per Common Share
$ (0.09 ) $ (2.01 ) $ (0.24 ) $ (2.24 )
Stock options to purchase 25,000 shares of common stock at a price of $9.90 per share were outstanding at September 30, 2008 and 2007, but were not included in the computation of diluted net income per share because their effect would be anti-dilutive. These options expire in 2009.
6
ILX RESORTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4. Shareholders’ Equity
During the nine months ended September 30, 2008, the Company issued 6,000 shares of common stock, valued at $17,376 to employees under the Stock Bonus Plan. These shares have voting rights and therefore are included in shares outstanding. The 6,000 shares are contingent upon the recipients being employed by the Company on January 15, 2011. The $17,376 deferred expense is being amortized pro-rata over the vesting period and the unrecognized portion is included in deferred compensation on the condensed consolidated balance sheet. Deferred compensation of $13,328, representing 3,000 shares issued in January 2007 and 2008 was reversed in the nine months ended September 30, 2008 due to the termination of Stock Bonus Plan participants prior to vesting in the shares. The Company also issued 100,002 restricted common shares valued at the fair value of $300,000 to six former members of First Piggy LLC as partial repayment of a $600,000 note payable to affiliates.
In December 2002, the Company announced an annual cash dividend of $0.40 per common share to be paid in equal quarterly installments, payable on the tenth day of the calendar month following the end of each calendar quarter, to common shareholders of record as of the last day of each calendar quarter in 2003. The Company continued to pay the dividend each year and for 2007 the dividend was established at $0.50 per common share to be paid in equal quarterly installments of $0.125. In December 2007, the dividend was discontinued and no payment was made for the fourth quarter 2007. In March 2003, the Company adopted the ILX Resorts Incorporated Dividend Reinvestment Plan (“DRIP”). The DRIP was amended and restated in March 2006. Under the terms of the DRIP, shareholders could elect to reinvest dividends in shares of the Company’s common stock, with no brokerage or other fees to the shareholder.
Note 5. Share Based Compensation
Employee Stock Options
The Company has Stock Option Plans pursuant to which options (which term as used herein includes both incentive stock options and non-statutory stock options) could have been granted through 2005 to key employees, including officers, whether or not they are directors, and non-employee directors and consultants, who are determined by the Board of Directors to have contributed in the past, or who may be expected to contribute materially in the future, to the success of the Company. The exercise price of the options granted pursuant to the Plans could be not less than the fair market value of the shares on the date of grant. All outstanding stock options require the holder to have been a director or employee of the Company for at least one year before exercising the option. Incentive stock options are exercisable over a five-year period from date of grant if the optionee was a ten-percent or more shareholder immediately prior to the granting of the option and over a ten-year period if the optionee was not a ten-percent shareholder. No further grants may be made under the Plans.
Stock Bonus Plan
The Company’s Stock Bonus Plan was created to advance the interests of the Company and its shareholders, by encouraging and enabling selected officers, directors, consultants and key employees upon whose judgment, initiative and effort the Company is largely dependent for the successful conduct of its business to acquire and retain a proprietary interest in the Company by ownership of its stock.
A summary of the non-vested stock under the Stock Bonus Plan at September 30, 2008 follows:
Non-Vested Shares
Weighted Average Grant Date Fair Value
Non-vested at December 31, 2007
93,000
$7.83
Stock Granted
6,000
2.90
Stock Vested
(26,000 )
7.70
Stock Forfeited
(3,000 )
4.44
Non-vested at September 30, 2008
70,000
$7.61
Deferred compensation of $44,177 and $132,916 was amortized in the three and nine months ended September 30, 2008, respectively. Unamortized deferred compensation of $136,645 will be amortized over the weighted average remaining term of 1.18 years. The value of the non-vested stock under the Stock Bonus Plan at September 30, 2008 is $104,300.
7
ILX RESORTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6. Related Party Transactions
During the nine months ended September 30, 2008, the Company’s wholly owned subsidiary, Genesis Investment Group, Inc. (“Genesis”), recorded the sale of 33 Vacation Ownership Interests to Premiere Vacation Club homeowners’ association, an Arizona nonprofit corporation (“PVC”). PVC purchased the intervals at $2,415 per interval, the same price at which it has historically acquired intervals in arms-length negotiations with unaffiliated third parties. PVC is owned by the holders of its vacation ownership interests, including the Company. A gain of $30,295 was recorded on the sale. At September 30, 2008, deeds of trust for 623 of the Vacation Ownership Interests secure outstanding indebtedness from PVC to Genesis of $1,408,888 which is included in notes receivable.
The Company, together with James Bruno Enterprises LLC (Bruno), formed ILX-Bruno LLC (“ILX-Bruno”) in August 2005 to purchase and develop three parcels approximating 22 acres of land in Sedona, Arizona from the Forest Service of the Department of Agriculture and an unrelated party (approximately one acre). The Company entered into an Operating Agreement with Bruno, as a member of ILX-Bruno, in which the Company was named as the manager of ILX-Bruno. The Company held an 85.0% interest in ILX-Bruno as of September 30, 2008. ILX-Bruno is included in the Company’s condensed consolidated financial statements as of September 30, 2008 with Bruno’s capital contributions net of operating losses included as Minority Interests on the accompanying condensed consolidated balance sheets.
At December 31, 2007, a note payable to former First Piggy LLC members in the principal amount of $600,000 (bearing interest at 8.0%) was outstanding, together with interest payable in the amount of $4,077. The note provided for principal payments of $300,000 in each of 2008 and 2009. In February 2008, $300,000 of the note payable was satisfied through the issuance of 100,002 shares of the Company’s common stock, and the remaining $300,000 principal plus accrued interest was paid in cash.
In April 2008, Sedona Vacation Club Incorporated homeowners’ association (“SVC”) and PVC entered into loan agreements to borrow up to $350,000 and $900,000, respectively, at an interest rate of 6.15% to finance renovations and the purchase of certain equipment. The borrowings have a maturity date of March 31, 2011. ILX Resorts Incorporated has guaranteed the borrowings, including interest, for both SVC and PVC and has entered into a Guarantee Fee Agreement with SVC and PVC under which it received a guarantee fee of 1% of the maximum principal amount under the loan agreements. The amounts outstanding under the loan agreements as of September 30, 2008 are $350,000.
Note 7. Profit Sharing Plan
On October 1, 2008, the Board of Directors of the Company voted to terminate the ILX Resorts Incorporated Profit Sharing Plan effective September 15, 2008.
8
ILX RESORTS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 8. Commitments and Contingencies
Legal Proceedings
In October 2005, The Greens of Las Vegas, Inc. (“GOLV”) filed suit against the Company, VCA-Nevada (“VCA-NV”), Greens Worldwide Incorporated (“GWWI”) and all of the directors of GWWI from 2003 to the present. GOLV alleged that the Company interfered with prospective advantages between GOLV and third parties, interfered with contracts between GOLV and VCA-NV, fraud, unjust enrichment and civil conspiracy. All Defendants answered the Complaint on March 16, 2006 and asserted various counterclaims. In February 2008, the Nevada trial court granted the Company’s Motion to Dismiss the Complaint and in April 2008 reaffirmed its decision and awarded that GOLV pay the Company’s attorneys’ fees in the amount of $626,000. The counterclaims of the Company against the Plaintiffs still remained. GOLV appealed to the Nevada Supreme Court and, at a mandatory settlement conference in June 2008, the parties agreed to settle the entire matter with prejudice. The Company dismissed its counterclaims and agreed not to execute the attorneys’ fees judgment among other things. GOLV dismissed its claims against all Defendants and the pending appeals.
Other litigation has arisen in the normal course of the Company’s business, none of which is deemed to be material.
9
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of the Company’s financial condition and results of operations includes certain forward-looking statements. When used in this Form 10-Q, the words “estimate,” “projection,” “intend,” “anticipates,” “expects,” “may,” “should,” “believes” and similar terms are intended to identify forward-looking statements that relate to the Company’s future performance. Such statements are subject to substantial risks and uncertainties that could cause actual results to differ materially from those projected, including, without limitation, the risks and uncertainties set forth below. Readers are cautioned not to place undue reliance on the forward-looking statements set forth below. The Company undertakes no obligation to publicly update or revise any of the forward-looking statements contained herein.
Overview
ILX Resorts Incorporated (“ILX” or the “Company”) is one of the leading developers, marketers and operators of timeshare resorts in the western United States and Mexico. The Company’s principal operations consist of (i) acquiring, developing and operating timeshare resorts marketed by the Company as vacation ownership resorts, (ii) marketing and selling vacation ownership interests in the timeshare resorts, which typically have entitled the buyers thereof to ownership of a fully-furnished unit for a one-week period on either an annual or an alternate year (i.e., bienniel) basis (“Vacation Ownership Interests”), and (iii) providing purchase money financing to the buyers of Vacation Ownership Interests at its resorts. In addition, the Company receives revenues from the rental of unused or unsold inventory of units at its vacation ownership resorts, and from the sale of food, beverages and other services at such resorts. The Company’s current portfolio of resorts consists of eight resorts in Arizona, one in Indiana, one in Colorado, one in San Carlos, Mexico, land in Puerto Penãsco (Rocky Point), Mexico and land in Sedona, Arizona (collectively, the “ILX Resorts”). One of the resorts in Arizona is not at this time registered with the Arizona Department of Real Estate nor is being marketed for sale as Vacation Ownership Interests, and is operated under a long-term lease arrangement. The Company also owns 2,233 Vacation Ownership Interests in a resort in Las Vegas, Nevada, all of which have been annexed into Premiere Vacation Club, 193 Vacation Ownership Interests in a resort in Pinetop, Arizona, all of which have been annexed into Premiere Vacation Club and 175 Vacation Ownership Interests in a resort in Phoenix, Arizona, 174 of which have been annexed into Premiere Vacation Club.
Significant Accounting Policies
Principles of Consolidation and Business Activities
The condensed consolidated financial statements include the accounts of ILX Resorts Incorporated, and its wholly owned subsidiaries (“ILX” or the “Company”). All significant intercompany transactions and balances have been eliminated in consolidation.
The accompanying condensed consolidated balance sheet as of December 31, 2007, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Registration S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the nine-month period ended September 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. The accompanying financial statements should be read in conjunction with the Company’s most recent audited financial statements.
The Company’s significant business activities include developing, operating, marketing and financing ownership interests (“Vacation Ownership Interests”) in resort properties located in Arizona, Colorado, Indiana and Mexico.
10
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Revenue Recognition
Revenue from sales of Vacation Ownership Interests is recognized in accordance with Statement of Financial Accounting Standards No. 152, Accounting for Real Estate Time-Sharing Transactions (“SFAS 152”). No sales are recognized until such time as a minimum of 10% of the purchase price and any incentives given at the time of sale has been received in cash, the statutory rescission period has expired, the buyer is committed to continued payments of the remaining purchase price and the Company has been released of all future obligations for the Vacation Ownership Interest. Resort operating revenue represents daily room rentals (inclusive of homeowner’s dues) and revenues from food and other resort services. Such revenues are recorded as the rooms are rented or the services are performed.
Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 is effective for the Company as of January 1, 2008. In February 2008, the FASB issued FASB Staff Position No. 157-2 (FSP 157-2); which extended the effective date for certain nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. The adoption of the portions of SFAS 157 that were not postponed by FSP 157-2 did not have a material impact on the Company’s consolidated financial statements. Adoption of the postponed portions of SFAS 157 is not anticipated to cause a material change in financial position or results of operations.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159), which allows an irrevocable election to measure certain financial assets and financial liabilities at fair value on an instrument-by-instrument basis, with unrealized gains and losses recognized currently in earnings. Under SFAS 159, the fair value option may only be elected at the time of initial recognition of a financial asset or financial liability or upon the occurrence of certain specified events. Additionally, SFAS 159 provides that application of the fair value option must be based on the fair value of an entire financial asset or financial liability and not selected risks inherent in those assets or liabilities. SFAS 159 requires that assets and liabilities which are measured at fair value pursuant to the fair value option be reported in the financial statements in a manner that separates those fair values from the carrying amounts of similar assets and liabilities which are measured using another measurement attribute. SFAS 159 also provides expanded disclosure requirements regarding the effects of electing the fair value option on the financial statements. SFAS 159 was effective prospectively for fiscal years beginning after November 15, 2007. The adoption of this standard did not have a material effect on the Company’s financial position or results of operations.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R) Business Combinations (SFAS 141(R)) and Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51 (SFAS 160). SFAS 141(R) requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. SFAS 160 seeks to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 141(R) and SFAS 160 are effective for fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company is currently evaluating the impact the adoption of these standards will have on the Company’s financial position or results of operations.
In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 Disclosures about Derivative Instruments and Hedging Activities (SFAS 161). SFAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities. SFAS 161 is effective for fiscal years beginning on or after November 15, 2008. Earlier adoption is encouraged. The adoption of this standard is not expected to have a material effect on the Company’s financial position or results of operations.
11
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Results of Operations
Non-GAAP Financial Measures
The following table of certain operating information for the Company is presented with information both inclusive and exclusive of an adjustment to increase the allowance for uncollectible notes and write-off certain Customer Notes in the third quarter of 2008. See a discussion below of the allowance adjustment. In presenting these comparative operating results, the Company has included a column which excludes the effect of the allowance adjustment as the Company believes this information is reflective of the Company’s operations for the three and nine months ended September 30, 2008. The following comparison of the three and nine months ended September 30, 2008 with the three and nine months ended September 30, 2007 is based on the results prior to the allowance adjustment.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2008
2008
2008
2008
Prior to
Allowance
Prior to
Allowance
2007
Adjustment
Adjustment
2008
2007
Adjustment
Adjustment
2008
As a percentage of total revenues:
Sales of Vacation Ownership Interests
50.8 % 47.3 % (119.8 )% 53.6 % 48.5 % 88.2 %
Estimated uncollectible revenue
(2.2 )% (2.0 )% 360.5 % 358.5 % (2.3 )% (2.1 )% (83.7 )% (85.8 )%
Resort operating revenue
44.1 % 49.7 % (126.0 )% 41.3 % 47.3 % 86.1 %
Interest and finance income
7.3 % 5.0 % (12.7 )% 7.4 % 6.3 % 11.5 %
Total revenues
100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
As a percentage of sales of Vacation Ownership Interests(1):
Cost of Vacation Ownership Interests sold (recovered)
12.9 % 13.6 % (34.1 )% (26.9 )% 13.2 % 13.6 % (296.1 )% (293.7 )%
Sales and marketing
76.6 % 76.8 % 36.9 % 75.3 % 76.2 % (2695.5 )%
Contribution margin percentage from sale of Vacation Ownership Interests (2)
10.5 % 9.6 % (110.0 )% 11.6 % 10.2 % (2301.9 )%
As a percentage of resort operating revenue:
Cost of resort operations
87.5 % 88.4 % 88.4 % 89.4 % 88.6 % 88.6 %
As a percentage of total revenues(1):
General and administrative
13.4 % 16.2 % 41.1 % 13.0 % 15.2 % 27.6 %
Depreciation and amortization
3.0 % 2.6 % 6.7 % 3.1 % 2.7 % 5.0 %
Total operating income (loss)
1.5 % (3.7 )% (282.9 )% 1.8 % (2.4 )% (65.8 )%
Selected operating data:
Vacation Ownership Interests sold (3) (4)
244 207 207 810 678 678
Average sales price per Vacation Ownership Interest sold (excluding revenues from Upgrades) (4)
$ 17,976 $ 16,845 $ 16,845 $ 17,776 $ 17,157 $ 17,157
Average sales price per Vacation Ownership Interest sold (including revenues from Upgrades) (4)
$ 24,432 $ 23,281 $ 23,281 $ 22,859 $ 22,526 $ 22,526
Hmm... Thinking of a run here... This could be fun... Thinking.
Put some pics in the iBOX -- I wish I could go to one of them... Vacation would be nice (before dropping dead).
Almost. LOL.
get it done yet?
Someone is listening..:P
Umm... I dunno what to post -- not much has changed...
Current OS: 3,509,630
Latest 10Q:
http://www.sec.gov/Archives/edgar/data/819551/000109690608001493/ilxresortsinc10q063008.htm
Good numbers and dividends issued, relative to PPS.
Recent Form 4s are all disposals for payment:
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000819551
Sorry -- tomorrow night. I am dozing off and need to relax.
I am hoping to work on this tonight since I did the HRAL one last night. I'll catch up.
Will work on the iBOX. Note, this is an ill-liquid low floater. Trade w/ volume or else.
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