SOCC, INC. dba SEVEN OAKS COUNTRY CLUB
FINANCIAL REPORT December 31, 2022
SEVEN OAKS COUNTRY CLUB
DECEMBER 31, 2022
BOARD OF DIRECTORS
Scott Howry (President)
Paul Miller (Vice President/President Elect)
Dave Mettler (Secretary)
Mike Anderson (Golf/Greens Chairman)
Jim Varner (Finance Chairman)
Kyle Wigley (Membership Committee)
Mike Burton (Past President)
Jay Ericsson
Clarine Gilliam
ADMINISTRATIVE STAFF
Enrique Contreras (General Manager)
John Pitre (Chief Financial Officer)
Maddi Padgett (Controller)
C O N T E N T S
INDEPENDENT AUDITOR'S REPORT
1-3
FINANCIAL STATEMENTS
Statements of financial position
4
Statements of activities
5
Statements of cash flows
6
Notes to financial statements
7-15
SUPPLEMENTARY INFORMATION
Departmental schedules of expenses
16-17
An independently owned member RSM US Alliance
Member of AICPA Division for Firms Private Companies Practice Section
SHANNON M. WEBSTER
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors SOCC, Inc. dba
Seven Oaks Country Club
Bakersfield, California
Qualified Opinion We have audited the financial statements of SOCC, Inc. dba Seven Oaks Country Club (the Club) which comprise the statements of financial position as of December 31, 2022 and 2021, the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of the Club as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the year ended December 31, 2022 in accordance with accounting principles generally accepted in the United States of America. Disclaimer of Opinion on 2021 Operations and Cash Flows We do not express an opinion on the accompanying results of operations and cash flows for the year ended December 31, 2021. Because of the significance of the matter described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the results of operations and cash flows. Basis for Qualified Opinion Accounting principles generally accepted in the United States of America require that lessees recognize right-of-use assets and lease liabilities for long-term leases. Management has informed us that they have not recognized leased assets and related liabilities in the accompanying financial statements, and that the effects of this departure from accounting principles generally accepted in the United States of America on financial position, results of operations and cash flows have not been determined. We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standar ds are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Club and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the statements of financial position as of December 31, 2022 and 2021, and the statements of activities and cash flows for the year ended December 31, 2022.
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300 New Stine Road – Bakersfield, CA 93309 – Tel. 661.834.7411 – Fax.661.834.4389 – www. dpvb.com
Basis for Disclaimer of Opinion of 2021 Operations and Cash Flows In accordance with the terms of our engagement, we were not engaged as the auditors for the Club as of and for the year ended December 31, 2020, and were unable to satisfy ourselves by performing other auditing procedures concerning opening balances held at December 31, 2020. Since opening balances enter into the determination of the change in net assets and cash flows, we were unable to determine whether any adjustments might have been necessary in respect to the change in net assets for the year reported in the statement of activities and the net cash flows from operating activities reported in the cash flow statement. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Club ’s ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. Auditor’s Responsibilities for the Audit of t he Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 Club ’ s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Club ’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control – related matters that we identified during the audit.
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Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information, except for the effects of the matters discussed in the basis for qualified opinion and basis for disclaimer of opinion of 2021 operations and cash flow paragraphs on pages 1 and 2, has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, except for the effects of the matters discussed in the basis for qualified opinion and basis for disclaimer of opinion of 2021 operations and cash flow paragraphs on pages 1 and 2, the information is fairly stated in all material respects in relation to the financial statements as a whole. Daniells Phillips Vaughan & Bock Bakersfield, California April 21, 2023
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SOCC, INC. dba SEVEN OAKS COUNTRY CLUB
STATEMENTS OF FINANCIAL POSITION December 31, 2022 and 2021
2022
2021
ASSETS
Current Assets Cash and cash equivalents
$
1,913,070
$
1,847,212
Accounts receivable, net of allowance for doubtful accounts 2022 $17,168; 2021 $7,219 Employee Retention Credit receivable (Note 1)
1,090,975
505,765
600,488 18,250 244,104 211,991
-
Membership fees receivables
11,750 178,889 134,376
Inventories (Note 3) Prepaid expenses
Total current assets
4,078,878
2,677,992
Property and Equipment, including assets acquired under capital lease (Notes 4, 5, 6 and 7)
14,375,591
14,141,439
Other Assets Investment in captive insurance company
137,718
137,718
$ 18,592,187
$ 16,957,149
LIABILITIES AND NET ASSETS
Current Liabilities Current maturities of long-term debt (Note 6)
$
12,950 160,611 311,377 431,757 665,823 255,453
$
1,063
Current portion of obligations under capital lease (Note 7)
150,205 203,443 341,842 587,408 182,715
Accounts payable Accrued expenses
Employee Retention Credit payable (Note 1)
Deferred revenue
Total current liabilities
1,837,971
1,466,676
Long-term Liabilities Long-term debt, less current maturities (Note 6)
485,987 344,112 830,099
498,937 151,946 650,883
Obligations under capital lease, less current portion (Note 7)
Commitments and Contingencies (Note 10)
Net Assets Without donor restrictions (Note 9)
15,924,117
14,839,590
$ 18,592,187
$ 16,957,149
See Notes to Financial Statements.
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SOCC, INC. dba SEVEN OAKS COUNTRY CLUB
STATEMENTS OF ACTIVITIES Years Ended December 31, 2022 and 2021
2022
2021
Revenues: Membership dues (Note 8)
$ 7,255,277
$ 6,582,586
Food and beverage Golf: Sale of merchandise
4,227,830
3,205,205
431,286 416,054 187,257 171,696 119,754 455,065
409,135 421,359 130,779 189,664 67,680 260,265
Cart rentals and trail fees
Greens fees
Lessons
Tournament fees
Other income
13,264,219
11,266,673
Expenses: Food and beverage
4,168,462 2,945,410 1,697,454 1,467,350 1,190,590
3,107,826 2,654,037 1,458,751 1,215,958 1,078,570
Golf course maintenance General and administrative Clubhouse maintenance Golf activities and pro shop
Sports and fitness
444,561 375,369
383,421 343,096
Membership and marketing
12,289,196
10,241,659
Excess of revenue over expenses before other revenue (expenses) and other changes in net assets without donor restrictions
975,023
1,025,014
Other revenue (expenses): Employee Retention Credit (Note 1)
600,488 (28,513) (131,161) (686,910) (246,096)
1,160,904 (29,677) (174,956) (709,106) 247,165
Interest (expense)
(Loss) on disposition of property and equipment
Depreciation
Excess of revenue over expenses before other changes in net assets without donor restrictions
728,927
1,272,179
Other changes in net assets without donor restrictions: Initiation and transfer fees - non-proprietary
110,700 291,800 (46,900) 355,600
111,183 154,200 (37,518) 227,865
Sale of proprietary memberships
Redemption of proprietary memberships
Increase in net assets without donor restrictions
1,084,527
1,500,044
Net assets without donor restrictions: Beginning
14,839,590
13,339,546
Ending
$ 15,924,117
$ 14,839,590
See Notes to Financial Statements.
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SOCC, INC. dba SEVEN OAKS COUNTRY CLUB
STATEMENTS OF CASH FLOWS Years Ended December 31, 2022 and 2021
2022
2021
Cash Flows From Operating Activities Change in net assets without donor restrictions
$
1,084,527
$
1,500,044
Adjustments to reconcile change in net assets without donor restrictions to net cash provided by operating activities: Depreciation
686,910 131,161
709,106 174,956
Loss on disposition of property and equipment
Provision for doubtful accounts
9,949
7,219
Membership fees activity
(355,600)
(227,865)
Changes in assets and liabilities: (Increase) decrease in: Accounts receivable
(595,159) (600,488) (6,500) (65,215) (77,615) 107,934 89,915 78,415 72,738 560,972
(125,107)
Employee Retention Credit receivable
-
Membership fees receivables
5,100
Inventories
17,254
Prepaid expenses
(150,706)
Increase (decrease) in: Accounts payable
(103,056) (160,917) 587,408 27,274 2,260,710
Accrued expenses
Employee Retention Credit payable
Deferred revenue
Net cash provided by operating activities
Cash Flows From Investing Activities Purchase of property and equipment -
Net cash (used in) investing activities
(686,054)
(1,308,969)
Cash Flows From Financing Activities Net (payments) on revolving credit agreement
- -
(300,000) 350,000
Proceeds from long-term debt
Principal (payments) on long-term debt
(1,063)
-
Principal (payments) on capital lease obligations Proceeds from sale of proprietary memberships Redemption of proprietary memberships Proceeds from initiation and transfer fees
(163,597) 291,800 (46,900) 110,700 190,940 65,858
(198,064) 154,200 (37,518) 111,183
Net cash provided by financing activities Net increase in cash and cash equivalents
79,801
1,031,542
Cash and cash equivalents: Beginning
1,847,212 1,913,070
815,670
Ending
$
$
1,847,212
See Notes to Financial Statements.
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2022
2021
Supplemental Disclosures of Cash Flow Information Cash payments for interest
$
15,909
$
24,867
Supplemental Schedule of Noncash Investing and Financing Activities Capital lease obligation incurred for purchase of property and equipment
$
366,169
$
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SOCC, INC. dba
SEVEN OAKS COUNTRY CLUB
NOTES TO FINANCIAL STATEMENTS
Note 1. Nature of Activities and Significant Accounting Policies
Nature of activities: SOCC, Inc. dba Seven Oaks Country Club (the Club), currently operates as a not-for- profit organization. The Club is an exempt organization under Section 501(c)(7) of the Internal Revenue Code. It is organized as a not-for-profit mutual benefit corporation under its articles of incorporation filed with the State of California. The Club is organized for the benefit of its members who are the owners. The Club owns and operates amenities located in Bakersfield, California. The amenities consist of a golf course, restaurants and bars, swimming pools, tennis and pickleball facilities, and fitness centers. Its revenues are generated primarily from equity members and their guests who use the facility for recreation and are primarily residents of Kern County. Employee Retention Credit : The Employee Retention Credit (ERC) program was created under the Coronavirus Aid, Relief, and Economic Securities (CARES) Act and is available to employers to encourage employers to retain and continue paying employees during periods of pandemic-related reductions in business volume even if those employees are not actually working, and therefore, are not providing a service to the employer. The ERC is considered a conditional grant and has been recognized in accordance with ASU 958-605. Additionally, laws and regulations concerning governmental programs, including the ERC established by the CARES Act, are complex and subject to varying interpretations. Claims made under the CARES Act may also be subject to retroactive audit and review. There can be no assurance that regulatory authorities will not challenge the Club ’ s claim to the ERC, and it is not possible to determine the impact, if any, this would have upon the Club. The Club received revenue related to the ERC program of $1,748,312 during the year ended December 31, 2021. Subsequent to the receipt of the ERC funds the Club determined they applied for and received ERC funds they were not eligible for. The Club recorded a liability in the statement of financial position at December 31, 2021 for $587,408, the amount they expect to repay. The Club recognized revenue related to the ERC program of $1,160,904 for the year ended December 31, 2021 in the statements of activities. During the year ended December 31, 2022 the Club recorded revenue and a corresponding receivable of $600,488 for additional amounts related to the ERC program. Additionally, the Club determined they were also not entitled to an additional $78,415 increasing the ERC payable to $665,823 at December 31, 2022. The related ERC receivable and payable have been recorded in the statements of financial position and the related revenue has been recorded in the statement of activities as of and for the year ended December 31, 2022.
A summa ry of the Club’s significant accounting policies follows:
Basis of presentation: The financial statements of the Club have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), whi ch require the Club to report information regarding its financial position and activities according to the following net asset classifications: Net assets without donor restrictions: Net assets that are not subject to donor-imposed restrictions and may be expended for any purpose in performing the primary objectives of the Club. These net assets may be used at the discretion of the C lub’s manag ement and the board of directors. Net assets with donor restrictions: Net assets subject to stipulations imposed by donors, and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the Club or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity.
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SOCC, INC. dba
SEVEN OAKS COUNTRY CLUB
NOTES TO FINANCIAL STATEMENTS
Measure of operations: The statements of activities report all changes in net assets, including changes in net assets from operating and nonoperating activities. Operating activities consists of those items attributable to the Club ’s ongoi ng activities. Nonoperating activities are limited to resources that generate return from other activities considered to be of a more unusual or nonrecurring nature. Use of estimates: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Equity memberships : Each Equity Member shall have voting rights, as stated in the Club's Bylaws. The Club has the right to sell up to 785 active Equity Memberships. Each Equity Member is allowed full access to the Club facilities in accordance with the Club Regulations. The redemption of an Equity Membership certificate is contingent upon and funded by the purchase of an Equity Membership by an incoming replacement member, subject to a 30% transfer fee. Members may also resign their membership by surrendering their equity to the Club. The Board of Governors (Board) has the power to grant the use of Club Facilities to Licensees designated as "Social Members." Social Members will have rights to use the Club Facilities, excluding the golf course and golf locker rooms. The Club has the right to sell up to 400 active Social Memberships, subject to an increase. Cash and cash equivalents : For purposes of reporting cash flows, the Club considers all cash accounts which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Club maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Club has not experienced any losses in such accounts. The Club believes it is not exposed to any significant credit risk on cash and cash equivalents. The allowance for doubtful accounts is recorded based on certain percentages of aged receivables, which are determined based on historical experience and management ’s assessment of the general financial conditions affecting the Club ’s member base. If actual collections experience changes, revisions to the allowance may be required. There are a limited number of members with individually large amounts due at any given statement of financial position date. Any unanticipated change in one of those members ’ credit worthiness or other matters affecting the collectability of amounts due from such members, could have a material effect on our results of operations in the period in which such changes or events occur. After all attempts to collect a receivable have failed, the receivable is written off against the allowance an d the member’s club memb ership is terminated. Allowance for doubtful accounts:
Inventories: Inventories consist of food, beverages, liquor and golf supplies, equipment and clothing which are stated at the lower of cost (first-in, first-out method) or net realizable value.
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SOCC, INC. dba
SEVEN OAKS COUNTRY CLUB
NOTES TO FINANCIAL STATEMENTS
Property and equipment: Property and equipment is recorded at cost with a capitalization policy of $5,000 or greater for items expected to be utilized by the Club in excess of one year. Depreciation is provided by using the straight-line method over the following estimated useful lives:
Years
Land improvements
3 - 20 3 - 40 3 - 20 3 - 10
Buildings and improvements Machinery and equipment
Furniture and fixtures Computer and software
3
Revenue recognition: •
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the guidance requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. • The Club recognizes revenue in accordance with FASB Accounting Standards Codification Topic 606, “ Revenue from Contracts with Customers, ” which provides a five-step model for recognizing revenue from contracts with customers as follows: o Identify the contract with the customer o Identify the performance obligation in the contract o Determine the transaction price o Allocate the transaction price to the performance obligations in the contract o Recognize revenue when or as performance obligations are satisfied • The Club is a not-for-profit entity with revenue derived from membership dues, golf-related fees, and retail sales from food, beverage and the golf pro shop. The Club ’ s products and services are marketed and sold to the Club ’ s members and their guests. Club results of operations are substantially affected by economic conditions and can be affected by member disposable income levels and spending habits. Membership dues: The Club records membership dues on the first of each month when billed and recognizes membership dues as revenue as the customer simultaneously receives and consumes the benefits of membership throughout the period. The timing of revenue recognition is monthly as the Club provides access to the benefits. • Food, beverage and sports activities: The Club records food, beverage and sports activities revenue from Club facilities upon delivery of these goods and services to the customer, which is when the performance obligation is satisfied. • Initiation fees: The Club records initiation fees not deemed as ownership transactions as deferred revenue when billed. The member ’ s right to renew without paying an additional initiation fee provides the member with a material right, which is accounted for as a separate performance obligation, and the Club recognizes revenue over the average term of a Club membership or when the member allows the option to renew to expire. Nature of products and services •
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SOCC, INC. dba
SEVEN OAKS COUNTRY CLUB
NOTES TO FINANCIAL STATEMENTS
• Sales and use taxes: The Club collects and remits sales and use taxes to customers at the time of dues and initiation fees billing and at the point of sale for retail transactions and reports such amounts under the net method on the statements of activities. Accordingly, these taxes are not included in gross revenue. • Payment terms for dues, goods and services to members are billed to member accounts and are typically due in 30 days. Consideration for goods and services delivered to non-members is due at the point of sale. In instances where the timing of revenue recognition differs from the timing of the right to invoice, the Club has determined that a significant financing component does not exist. The primary purpose of the Club ’ s invoicing terms is to provide members with simplified and predictable ways of purchasing products and services and not to receive financing from or providing financing to the member. Additionally, the Club has elected the practical expedient that permits the Club to not recognize a significant financing component if the time between the transfer of a good or service and payment is one year or less.
• As discussed previously, revenue from retail sales and golf activities is recognized at a point in time, whereas membership dues are recognized over time.
Transaction price •
The transaction price of goods and services from food, beverage and sports activities is the amount of consideration to which the Club expects to be entitled in exchange for transferring goods and services to the customer. Revenue from sales of food and beverage, pro shop merchandise and golf activities is recorded based on the fixed transaction price. • Customers are granted the right to return merchandise within 30 days of purchase. The Club does not deem recording of variable consideration on retail transactions necessary as merchandise returns historically have not had a significant impact on the Club ’ s retail merchandise revenue. The Club records accounts receivable when it has the unconditional right to issue an invoice and receive payment, regardless of whether revenue has been recognized. When consideration is received and revenue has not yet been recognized, a contract liability (deferred revenue) also is recorded. The Club does not recognize revenue in advance of the right to invoice and therefore has not recorded a contract asset. Membership transactions : Membership transfer fees, initiation fees, and proceeds from the sale of proprietary memberships are recorded in the period that the Board of Governors approve the membership. The Club ’ s current practice is to allocate initiation and transfer fees, excluding proceeds from the sale of proprietary memberships, to operations. Assessments are recognized as additions to net assets without donor restrictions when approved by the Board of Governors and billed to the members. Contract balances • Operating income/performance measurement: The Club considers the excess of revenues over expenses before other revenues (expenses) and other changes in net assets without donor restrictions in the accompanying statements of activities to be operating income for performance measurement purposes, as this is the line item they budget for financial management and internal reporting purposes.
Deferred revenue: Dues and initiation fees billed in advance represent funds received for services to be provided in the subsequent year.
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SOCC, INC. dba
SEVEN OAKS COUNTRY CLUB
NOTES TO FINANCIAL STATEMENTS
Income and franchise taxes: The Club is a not-for-profit corporation, exempt under Section 501(c)(7) of the Internal Revenue Code from federal income taxes on all income other than net income derived from nonmember activities. For California franchise tax purposes, the Club, under Section 23701g of the California Code, is an exempt, not-for-profit corporation and is required to pay franchise taxes on net income from nonmember revenue in excess of 15% of total revenue. Nonmember revenues accounted for 10.2% and 4.6%, of the total gross revenue of the Club for the years ended December 31, 2022 and 2021, respectively. The Club has adopted the accounting standard on accounting for uncertainty in income taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under the guidance the Club may recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The guidance on accounting for uncertainty in income taxes also addresses de-recognition, classification, interest and penalties on income taxes, and accounting in interim periods.
Advertising : The Club expenses advertising costs as incurred. Advertising expense totaled $19,487 and $17,728 for the years ended December 31, 2022 and 2021, respectively.
Authoritative pronouncement adopted: In September 2020, the FASB issued ASU 2020-07, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets , which requires a not-for-profit entity to present contributed nonfinancial assets in the statement of activities as a line item that is separate from contributions of cash or other financial assets. ASU 2020-07 also requires additional qualitative and quantitative disclosures about contributed nonfinancial assets received, disaggregated by category. The adoption of ASU 2020-07 did not have a significant impact on the Club ’ s financial statements.
Reclassifications : Certain items in the 2021 financial statements have been reclassified to conform to the 2022 presentation, with no effect on change in net assets.
Subsequent events: The Club has evaluated subsequent events through April 21, 2023, the date on which the financial statements were available to be issued. No events were identified by management which would require disclosure in the financial statements.
Note 2. Availability and Liquidity
The following represents t he Club’s financial assets at December 31, 2022 and 2021:
2022
2021
Financial assets at year end: Cash and cash equivalents
$ 1,913,070
$ 1,847,212
Accounts receivable
1,090,975
505,765
Employee Retention Credit receivable
600,488 18,250
-
Membership fees receivable
11,750
Financial assets available to meet general expenditures over the next twelve months
$ 3,622,783
$ 2,364,727
The Clu b’s goal is g enerally to maintain financial assets to meet thirty days of operating expenses (approximately $1,020,000).
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SOCC, INC. dba
SEVEN OAKS COUNTRY CLUB
NOTES TO FINANCIAL STATEMENTS
Note 3. Inventories
Inventories consist of the following as of December 31, 2022 and 2021:
2022
2021
Golf shop Beverage
$
173,761 49,798 20,545 244,104
$
87,200 58,072 33,617 178,889
Food
$
$
Note 4. Property and Equipment
Property and equipment consist of the following as of December 31, 2022 and 2021:
2022
2021
Land improvements
$ 11,278,097
$ 11,301,410
Buildings and improvements Machinery and equipment
8,987,592 4,860,416 1,548,828 1,165,561
8,584,729 4,714,512 1,548,828 1,165,561
Furniture and fixtures
Land
Computers and software Construction in progress
15,330 132,803
5,330
32,387
27,988,627 13,613,036
27,352,757 13,211,318
Less accumulated depreciation
$ 14,375,591
$ 14,141,439
Note 5. Pledged Assets and Note Payable
The Club has a $500,000 secured credit agreement with a bank. The agreement provides for revolving credit through September 5, 2023. As of December 31, 2022 the full amount was available for draws under the agreement. The note bears interest at the banks prime rate (7.50% at December 31, 2022) plus 0.75%, with a floor rate of 4%, and is collateralized by cash and cash equivalents, accounts receivable, inventories, and property and equipment.
Note 6. Pledged Assets and Long-term Debt
The Club obtained a loan through the United States Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL) program in the amount of $500,000 with monthly installment payments of $2,209, beginning December 2022. Interest on outstanding borrowings accrues at 2.75% per annum. Borrowings on the SBA loan are secured by certain personal property. The loan matures in May 2050 at which point all remaining principal and interest is due and payable.
Aggregate maturities required on long term debt during the next five years are: 2023, $12,950, 2024, $13,310, 2025, $13,681; 2026, $14,062, 2027, $14,454.
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SOCC, INC. dba
SEVEN OAKS COUNTRY CLUB
NOTES TO FINANCIAL STATEMENTS
Note 7. Obligations Under Capital Lease
At December 31, 2022, equipment with a depreciated cost of $709,036 was being acquired under capital leases. The liability under capital lease at December 31, 2022 totaled $504,723, which represents the present value of the balance due in future years, discounted from 3.54% through 7.56%. The liability is payable in monthly installments ranging from $548 to $6,760, through November 2027. The following is a schedule of future minimum lease payments due under capital leases, together with the present value of net minimum lease payments as of December 31, 2022:
Year ending December 31,
2023 2024 2025 2026 2027
$
188,587 129,397 96,413 87,692 79,293 581,382 76,659 504,723 160,611 344,112
Minimum lease payments
Less amount representing interest
Present value of minimum lease payments
Less current portion
$
Note 8. Membership Dues
Annually, the Board of Directors establishes the rate of dues to be assessed to members based upon the projected operating needs of the Club. The dues assessed to regular equity members was $740 and $690 for the years ended December 31, 2022 and 2021, respectively. The dues assessed for social members was $342 and $292 for the years ended December 31, 2022 and 2021, respectively. The Board of Directors also elected to assess capital dues from the membership. Capital dues assessed for equity members and non- equity members were $38 and $8 per month, respectively, for each of the years ended December 31, 2022 and 2021. The Board of Directors also elected to assess monthly capital fees from all membership. Capital fees for the year ended December 31, 2021 was $25 per month through March 2021 at which time capital fees increased to $40 per month, which remained unchanged for the year ended December 31, 2022. Total dues for the years ended December 31, 2022 and 2021 was $7,255,277 and $6,582,586, respectively. This consists of $6,480,467 and $5,841,946 of membership dues, $315,081 and $313,880 of capital dues and $459,729 and $426,760 of capital fees, for the years ended December 31, 2022 and 2021, respectively. The Board of Directors designated all capital and reserve and replacement dues for capital improvements for the years ended December 31, 2022 and 2021. The total amount designated for repairs and replacements and capital improvements as of December 31, 2022 and 2021 was $180,093 and $88,663, respectively (See Note 9).
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SOCC, INC. dba
SEVEN OAKS COUNTRY CLUB
NOTES TO FINANCIAL STATEMENTS
Note 9. Designated Net Assets Without Donor Restrictions
The Board of Directors has designated certain amounts of net assets without donor restrictions for repairs and replacements and capital improvements. Following is a summary of the account activity for the years ended December 31, 2022 and 2021:
2022
2021
Capital reserves, beginning of year
$
88,663 290,384 423,694
$
258,464 306,640 416,916 (150,000) 350,000 (1,093,357)
Capital assessment - golf
Capital dues
Line of credit paydown
- -
Deposits of funds from operations Expenditures for capital improvements
(622,648) 180,093
Capital reserves, end of year
$
$
88,663
Note 10. Commitments and Contingencies
Lease Commitments
The Club leases equipment under two non-cancelable operating leases. The leases expire in April 2023 and January 2025 and require monthly rent requirements of $2,700 and $6,840. The following is a schedule of future minimum lease payments due under operating leases as of December 31, 2022:
Year ending December 31,
2023 2024 2025
$
59,757 32,397 2,700 94,854
$
Total rent expense for the years ended December 31, 2022 and 2021 was $114,477 and $111,777 respectively.
Contingencies
The Club is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material effect on the financial condition or results of operations of the Club.
Note 11. Defined Contribution Retirement Plan
The Club offers a 401(k) Retirement Plan that covers all employees who have reached the age of 18 and have completed one year of service. The Club may make matching contributions equal to a discretionary percentage of a participants compensation or a discretionary dollar amount, to be determined by the Club. Discretionary matching contributions for the years ended December 31, 2022 and 2021 were $37,609 and $34,208, respectively.
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SOCC, INC. dba
SEVEN OAKS COUNTRY CLUB
NOTES TO FINANCIAL STATEMENTS
Note 12. Functional Expenses
As a not-for-profit entity, the Club is required to present expenses by functional classification for program and supporting activities. The Club ’ s primary program activities are food and beverage and sports and recreational activities. Expenses reported as supporting activities are incurred in support of these primary program activities.
Expenses by functional classification for the years ended December 31, 2022 and 2021, consist of the following:
2022
Program Activities
Food and Sports and Supporting Beverage Recreation Activities
Total
Cost of sales
$ 1,488,412 2,313,770
$ 349,313 3,189,589 2,509,009 $ 6,047,911
$
-
$ 1,837,725
Payroll and related
1,050,923 1,021,900 $ 2,072,823
6,554,282 3,897,189
Supplies, services and other
366,280
$ 4,168,462
$ 12,289,196
2021
Program Activities
Food and Sports and Supporting Beverage Recreation Activities
Total
Cost of sales
$ 1,126,828 1,731,068
$ 412,327 2,783,999 2,135,660 $ 5,331,986
$
-
$ 1,539,155
Payroll and related
914,860 886,987
5,429,927 3,272,577
Supplies, services and other
249,930
$ 3,107,826
$ 1,801,847
$ 10,241,659
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SUPPLEMENTARY INFORMATION
SOCC, INC. dba SEVEN OAKS COUNTRY CLUB
DEPARTMENTAL SCHEDULES OF EXPENSES Years Ended December 31, 2022 and 2021
2022
2021
Food and beverage: Payroll and related costs
$
2,313,770 1,488,412
$
1,731,068 1,126,828
Cost of sales
Laundry and uniforms
141,800 139,192 63,046 17,346
86,752 102,706 45,090 11,137
Supplies
Professional services
Repairs and maintenance
Taxes and licenses
2,355 1,755
2,255 1,078
Training
Travel
606 180
-
Contract labor
912
$
4,168,462
$
3,107,826
Golf course maintenance: Payroll and related costs Repairs and maintenance
$
1,745,878
$
1,602,417
420,042 231,768 194,754 97,106 88,075 70,792 38,054 34,135 13,992
306,989 277,981 143,237 78,839 52,072 89,831 30,284 28,971 36,076
Utilities
Chemicals
Landscaping
Seed
Fertilizer
Equipment rent
Laundry and uniforms Professional services
Supplies Training
9,394 1,420
6,655
685
$
2,945,410
$
2,654,037
General and administrative: Payroll and related costs
$
856,483 208,266 134,432 106,026 105,843 74,767 65,978 48,516 39,393 13,577 13,464 10,549
$
726,243 179,129 133,743 77,380 107,708 73,806 61,125 36,528
Professional services
Property tax
Insurance
Information technology costs
Utilities
Bank charges and fees
Security services
Bad debt Supplies
5,182
11,331
Dues and subscriptions
9,742
Taxes and licenses
11,988
Postage
6,175 4,721 4,594 4,298
4,336
Travel
-
Equipment rent
6,750
Training
13,173
Laundry and uniforms Repairs and maintenance
372
525
-
62
$
1,697,454
$
1,458,751
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SOCC, INC. dba SEVEN OAKS COUNTRY CLUB
DEPARTMENTAL SCHEDULES OF EXPENSES Years Ended December 31, 2022 and 2021
2022
2021
Clubhouse maintenance: Utilities Payroll and related costs Repairs and maintenance
$
743,263 418,822 213,347 51,929 21,104 14,374
$
549,760 361,865 180,392 45,337 54,845 13,071
Supplies
Pool supplies and maintenance
Laundry and uniforms
Contract labor
2,895 1,220
6,240 4,448
Professional services
Travel
396
-
$
1,467,350
$
1,215,958
Golf activities and pro shop: Payroll and related costs
$
634,737 349,313 88,190 43,896 27,995 23,027 17,814
$
465,778 412,327 96,648 38,448 29,409 20,438 13,155
Cost of sales Equipment rent
Repairs and maintenance
Supplies
Laundry and uniforms Tournaments and events Professional services
3,555
946
Miscellaneous
775 726 562
- -
Travel
Training
1,421
$
1,190,590
$
1,078,570
Sports and fitness: Payroll and related costs
$
390,152 40,460
$
353,939 24,529
Supplies
Miscellaneous
9,977 2,193
2,582
Tournaments and events
- -
Travel
896 666 217
Training
783
Repairs and maintenance
1,588
$
444,561
$
383,421
Membership and marketing: Payroll and related costs Advertising and promotions
$
194,440 160,574 15,821
$
188,617 140,004
Professional services
8,431 5,953
Supplies Training
4,513
21
-
Laundry and uniforms
-
91
$
375,369
$
343,096
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