March Madness

There seems to be a lot of confusion over the Board’s recent announcement of the March LLC Financials.

Along with the financials were statements saying that as of March, for the year 2025, the courses were “Cash Flow positive”.

Then, an assurance from the same spokesperson that collections from SPA 2024 would be available to assist in funding the courses.

In my opinion, this is all doodly-squat and not to be believed.

A few statements concerning this matter.

1.       The Board transferred $42,300 during March 2025, and, it is my opinion, based on the evidence, transferred an additional $65,000, for a total of $107,300.

2.      The CCR amendment allowed 10% on an annual basis to be transferred.  This is $507,600.

3.      As of March 31, 2025, the Board has transferred [ (42,300 x 3) + 50,000 + 55,000 + 65,000] = $296,900.

4.      At the current rate the Board is transferring money to the Golf Courses, they will have reached their ceiling by May 2025.  The date of this writing is May 15, 2025. 

If the HOA Board transferred amounts in April and May, similar to the amounts transferred in March 2025, then the Board has reached its limits for 2025. Any further funding of the Golf Courses by the HOA would be a covenant violation and subject the Board to legal action and possibly fines and penalties.

5.      The Board promised a financial review of the golf courses on July 1, 2025.  In preparation for their decision, the Board is starting their P.R. campaign to influence the community with the announcement the courses have positive cash flow.

6.      With the release of the March Financials, a spokesperson for the Board said the courses were “cash flow positive”.  I do not agree.  I do not know what the Board uses for a derivation of cash flow.  Quickbooks, the Board’s preferred accounting platform, adds changes to working capital to net income and labels that cash flow.  I think most practitioners would disagree.  I disagree.

7.      Cash Flow is a very generic phrase. Most finance professionals use EBITDA as a measure of the cash-generating ability of a corporation. EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization.

8.      EBITDA is also called unlevered, pretax operating earnings.  Since the courses do not depreciate until the final month of the year, and all the LLC's debt is carried on the HOA’s Balance Sheet, we can use Operating Earnings as calculated by QuickBooks and located on the Income Statement.  It is simply revenue minus expenses, making it a pure indication of financial health.

9.      Operating Earnings (EBITDA)*:

·         January 2025                                                  $(71,566.54)

·         February 2025                                                $(10,041.35)

·         March 2025                                                     $(4,814.59)

Total YTD EBITDA (Cash Flow)                      $(86,422.48)

*Values obtained from LLC Financial Statements published by the HOA Board of Directors

10. The LLC is not generating positive cash flow as of March 31, 2025.

11. Honestly, folks, wake up and smell the roses. The Board admits to experiencing over $90,000 of operating losses, and they expect us to believe they have positive cash flow? Where would this positive cash flow come from?  Maybe using some fairy dust that they received from a pig with wings?

12.  There has been manipulation of the SPA 2024 accounts on the Balance Sheet.  Back in October 2024, the entire declared value of SPA 2024 was recognized as Cash + Receivables.  (35,895 + 457,705) = $493,600.  The account is off by $100 due to seed money deposited to establish the account. Receivables at this point can only go down as funds are collected. Receivables cannot go up.

13.  In March SPA 2024 Receivables increased from $17,283.09 to $26,000. This is impossible unless back in October of 2024 and every month since, accounting for SPA 2024 has been incorrect.

14.  Notice the nice round number of $26,000?  That is evidence the number is not valid.  Financial data is random.  To have receivables increase to a nice round number -- sorry, doesn't happen; that’s a "plug" number.

15.  All the assets of SPA 2024 have been recognized.  How could receivables increase by $8,716.91?  How could this happen? Why did it happen? The increase in receivables represents 49.81 people deciding to pay the $175 Special Assessment. That’s a lot of people.  But why isn’t it a round number like 50 people? Where did we find 0.81 of a person?  The only way receivables could increase is by "cooking" the books. Back in October 2024, $493,600 was recognized.  It is impossible to recognize an increase in receivables unless there is an increase in the declared value of SPA 2024.

16.  At the end of February, SPA 2024 had assets of $45,277.50 in cash and $17,283.09 in Receivables.  This is $62,560.59.  Given, the Board transferred an additional $65,000 in March, SPA 2024 should have a reduced value of a March 2025  $(2,439.41).  A value less than zero (0).

17.  Instead, at March 31, 2025, it is $26,000 in receivables and $52,240 in cash for a total of $78,240, $15,679.41 greater.

18.   At TownCrier.Biz, there is a blog titled “It Won’t Be Enough”.  I wrote this comment back on October 28, 2024. The blog determines that $15 monthly, per resident, will not be adequate to fund the courses. The golf courses will need $35 a month, per resident, to keep afloat.

https://www.towncrier.biz/post/it-won-t-be-enough

19.  Let's examine what the Board has provided to the golf courses for 2025.

                                January              $92,300    or      $32.73 per resident

                                February            $97,300    or      $34.50 per resident

                                March                 $107,300   or      $38.05 per resident

                                Average per month for 3 months:  $35.10 per resident

20.    Dang, am I good, or what?

Thank you. Stay tuned for more.