2021 Audited Financials

2021 Audited Financials

FINANCIAL REPORT DECEMBER 31, 2021

SOCC, INC. dba SEVEN OAKS COUNTRY CLUB

FINANCIAL REPORT DECEMBER 31, 2021

SEVEN OAKS COUNTRY CLUB DECEMBER 31, 2021

BOARD OF DIRECTORS Mike Burton (President) Paul Miller (Secretary) Jay Ericsson (Finance Chairman) Ryan Newman (Golf/Greens Chairman) Dianna Prather (Membership Committee) Scott Howry

(President-Elect) Jeremy Brehmer (Past President) Clarine Gilliam Dave Mettler

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

Statement of financial position

4

Statement of activities

5

Statement of cash flows

6

Notes to financial statements

7-15

SUPPLEMENTARY INFORMATION

Departmental schedule 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

Report on the Audit of the Financial Statements

Opinion

We have audited the statement of financial position of SOCC, Inc. dba Seven Oaks Country Club (the Club) as of December 31, 2021, and were engaged to audit the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements.

Disclaimer of Opinion on the Results of Operations and Cash Flows

We do not express an opinion on the results of operations and cash flows of SOCC, Inc. dba Seven Oaks Country Club for the year ended December 31, 2021. Because of the significance of the matter described in the Basis for Disclaimer of Opinion on the Results of Operations and Cash Flows 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 for the year ended December 31, 2021.

Opinion on the Financial Position

In our opinion, the statement of financial position presents fairly, in all material respects, the financial position of SOCC, Inc. dba Seven Oaks Country Club as of December 31, 2021, in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

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 of 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. We conducted our audit of the statement of financial position in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards 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 audit.

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300 New Stine Road – Bakersfield, CA 93303 – Tel. 661.834.7411 – Fax.661.834.4389 – www. dpvb.com

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our unmodified opinion on the statement of financial position. Responsibility of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these 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 SOCC, Inc. dba Seven Oaks Country Club ’s ability to continue as a going concern for a period twelve months subsequent to the date of the issuance of these financial statements. Auditor’s Responsibilities for the Audit of the Financial Statements Our responsibility is to conduct an audit of the Club’s financial statements in accordance with auditing standards generally accepted in the United States of America. However, because of the matters described in the Basis for Opinions section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the results of operations and cash flows. 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 generally accepted auditing standards (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 SOCC, Inc. dba Seven Oaks Country 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 SOCC, Inc. dba Seven Oaks Country 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 We were engaged to audit the financial statements taken as a whole. The accompanying departmental schedule of expenses is presented for purposes of additional analysis and is not a required part of the financial statements. Because of the significance of the matter described above, it is inappropriate to and we

do not express an opinion on the supplementary information referred to above. Daniells Phillips Vaughan & Bock Bakersfield, California July 6, 2022

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SOCC, INC. dba SEVEN OAKS COUNTRY CLUB STATEMENT OF FINANCIAL POSITION December 31, 2021

ASSETS Current Assets Cash

$

1,847,212

Accounts receivable, net of allowance for doubtful accounts of $7,219

505,765 11,750 178,889 272,094 2,815,710

Membership fees receivables

Inventories (Note 3) Prepaid expenses

Total current assets

Property and Equipment, including assets acquired under capital lease (Notes 4, 5, 6 and 7)

14,141,439 $ 16,957,149

LIABILITIES AND NET ASSETS Current Liabilities Current maturities of long-term debt (Note 6)

$

1,063

Current portion of obligations under capital lease (Note 7)

150,205 203,443 341,842 587,408 182,715 1,466,676

Accounts payable Accrued expenses

Employee Retention Credit payable (Note 1)

Deferred revenue

Total current liabilities

Long-term Liabilities Long-term debt, less current maturities (Note 6) Obligations under capital lease, less current portion (Note 7)

498,937 151,946 650,883

Commitments (Note 10) Net Assets Without donor restrictions (Note 9)

14,839,590 $ 16,957,149

See Notes to Financial Statements.

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SOCC, INC. dba SEVEN OAKS COUNTRY CLUB STATEMENT OF ACTIVITIES Year Ended December 31, 2021

Revenues: Membership dues (Note 8) Golf: Cart rentals and trail fees Food and beverage

$ 6,582,586 3,205,205

421,359 409,135 189,664 130,779 67,680

Sale of merchandise

Lessons

Greens fees Tournament fees

Other income

260,265 11,266,673 3,107,826 2,654,037 1,458,751 1,215,958 1,078,570 383,421 343,096 10,241,659

Expenses: Food and beverage

Golf course maintenance General and administrative Clubhouse maintenance Golf activities and pro shop

Sports and fitness

Membership and marketing

Excess of revenue over expenses before other revenue (expenses) and other changes in net assets without donor restrictions

1,025,014

Other revenue (expenses): Employee Retention Credit (Note 1)

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 Other changes in net assets without donor restrictions: Initiation and transfer fees - non-proprietary

1,272,179

111,183 154,200 (37,518) 227,865

Sale of proprietary memberships Redemption of proprietary memberships

Increase in net assets without donor restrictions

1,500,044

Net assets without donor restrictions: Beginning

13,339,546

Ending

$ 14,839,590

See Notes to Financial Statements.

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SOCC, INC. dba SEVEN OAKS COUNTRY CLUB STATEMENT OF CASH FLOWS Year Ended December 31, 2021

Cash Flows From Operating Activities Change in net assets without donor restrictions

$

1,500,044

Adjustments to reconcile change in net assets without donor restrictions to net cash provided by operating activities: Depreciation Loss on disposition of property and equipment

709,106 174,956

Provision for doubtful accounts Membership fees activity Changes in assets and liabilities: (Increase) decrease in: Accounts receivable Membership fees receivable

7,219

(227,865)

(125,107)

5,100 17,254

Inventories

Prepaid expenses Increase (decrease) in: Accounts payable Accrued expenses

(150,706)

(103,056) (160,917) 587,408 27,274 2,260,710

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

(1,308,969)

Cash Flows From Financing Activities Net (payments) on revolving credit agreement Principal (payments) on capital lease obligations Proceeds from sale of proprietary memberships Redemption of proprietary memberships Proceeds from initiation and transfer fees Proceeds from long-term debt Net cash provided by financing activities

(300,000) 350,000 (198,064) 154,200 (37,518) 111,183 79,801 1,031,542

Net increase in cash

Cash:

Beginning

815,670 1,847,212

Ending

$

Supplemental Disclosures of Cash Flow Information Cash payments for interest

$

24,867

See Notes to Financial Statements.

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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. Global pandemic: On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Club operates. While it is unknown how long these conditions will last and what the complete financial effect will be to the Club, to date, the Club is experiencing and expects to continue to experience labor and supply shortages. The Club anticipates an eight percent increase in labor, mainly due to the increase in minimum wage, which the Club projects to be approximately $400,000. Additionally, the Club anticipates an increase in fuel costs which is projected to be approximately $27,000. Lastly, the Club does not believe it is vulnerable to the risk of near-term severe impact. 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 all employers regardless of size 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 has recorded a liability in the statement of financial position at December 31, 2021 for $587,408, the amount they expect to repay. The Club has recognized revenue related to the ERC program of $1,160,904 for the year ended December 31, 2021 in the statement of activities. A summary 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”), which 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 Club’s management and the board of directors.

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SOCC, INC. dba

SEVEN OAKS COUNTRY CLUB NOTES TO FINANCIAL STATEMENTS

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, where by the donor has stipulated the funds be maintained in perpetuity. Measure of operations: The statement of activities reports 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 ongoing 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 : 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. Allowance for doubtful accounts: 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 and the member’s club membership is terminated. 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 Buildings and improvements 3 - 40 Machinery and equipment 3 - 20 Furniture and fixtures 3 - 10 Computer and software 3 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. Revenue recognition:   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. Nature of products and services  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.

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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 statement 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. Contract balances  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. 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 statement 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 dues revenue: Dues and 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 4.6% of the total gross revenue of the Club for the year ended December 31, 2021. 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. Authoritative pronouncement not yet adopted: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the statement of financial position for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of activities. A modified retrospective transition approach is required. An entity may adopt the guidance either (1) retrospectively to each prior reporting period presented in the financial statements with a cumulative effect adjustment recognized at the beginning of the earliest comparative period presented or (2) retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment. The Club expects to adopt the guidance retrospectively at the beginning of the period of adoption, January 1, 2022, through a cumulative- effect adjustment, and will not apply the new standard to comparative periods presented. The new standard provides a number of practical expedients. Upon adoption, the Club expects to elect the transition package of practical expedients permitted within the new standard, which among other things, allows the carryforward of the historical lease classification. The Club is currently evaluating the impact of the pending adoption of the new standard on its financial statements. 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. This ASU is effective for the Club beginning on January 1, 2022. The adoption of ASU 2020-07 is not expected to have a significant impact on the Club’s financial statements. Subsequent events: The Club has evaluated subsequent events through July 6, 2022, 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.

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SOCC, INC. dba

SEVEN OAKS COUNTRY CLUB NOTES TO FINANCIAL STATEMENTS

Note 2. Availability and Liquidity The following represents the Club’s financial assets at December 31, 2021:

Financial assets at year end: Cash Accounts receivable Membership fees receivable

$ 1,847,212

505,765 11,750

Financial assets available to meet general expenditures over the next twelve months

$ 2,364,727

The Club’s goal is generally to maintain financial assets to meet thirty days of operating expenses (approximately $850,000). Note 3. Inventories Inventories consist of the following as of December 31, 2021:

Golf shop Beverage

$

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, 2021:

Land improvements

$ 11,301,410 8,584,729 4,714,512 1,548,828 1,165,561

$ 10,594,294 8,304,064 4,418,954 1,670,057

Buildings and improvements Machinery and equipment Furniture and fixtures Computers and software Construction in progress Land

1,165,561 146,797

5,330 32,387

25,600

27,352,757 13,211,318 $ 14,141,439

26,325,327 12,608,795 $ 13,716,532

Less accumulated depreciation

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 June 5, 2023. As of December 31, 2021 the full amount was available for draws under the agreement. The note bears interest at the banks prime rate (3.25% at December 31, 2021) plus 1.5% and is collateralized by cash, accounts receivable, inventory, and property and equipment.

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SOCC, INC. dba

SEVEN OAKS COUNTRY CLUB NOTES TO FINANCIAL STATEMENTS

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. Monthly installment payments of $2,209 will begin 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: 2022, $1,063; 2023, $12,950, At December 31, 2021, equipment with a depreciated cost of $425,303 was being acquired under capital leases. The liability under capital lease at December 31, 2021 totaled $302,151, which represents the present value of the balance due in future years, discounted from 3.54% through 5.31%. The liability is payable in monthly installments ranging from $1,090 to $3,046, through September 2025. 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, 2021: Year ending December 31, 2022 161,515 $ 2023 107,177 2024 41,705 2025 8,721 Minimum lease payments 319,118 Less amount representing interest 16,967 Present value of minimum lease payments 302,151 Less current portion 2024, $13,310, 2025, $13,681; 2026, $14,062. Note 7. Obligations Under Capital Lease 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 and social members for the year ended December 31, 2021 was $690 and $292, respectively. The Board of Directors also elected to assess capital dues from the membership. Capital dues assessed for equity members and non-equity members for the year ended December 31, 2021 were $38 and $8 per month, respectively. The Board of Directors also elected to assess monthly capital fees from all membership. Capital fees for the year ended December 31, 2021 were $25 per month through March 2021 at which time capital fees increased to $40 per month. Total dues for the year ended December 31, 2021 was $6,582,586 which consists of $5,841,946 of membership dues, $313,880 of capital dues and $426,760 of capital fees. The Board of Directors designated all capital and reserve and replacement dues for capital improvements for the year ended December 31, 2021. The total amount designated for repairs and replacements and capital improvements as of December 31, 2021 was $88,663 (See Note 9). 150,205 151,946 $

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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 year ended December 31, 2021:

Capital reserves, beginning of year Capital assessment - golf

$

258,464 306,640 416,916 (150,000) 350,000 (1,093,357)

Capital dues

Line of credit paydown

Deposits of funds from operations Expenditures for capital improvements

$

88,663

Capital reserves, end of year

Note 10. 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, 2021: Year ending December 31, 2022 114,477 $ 2023 59,757 2024 32,397 2025 2,700 209,331 $

Total rent expense for the year ended December 31, 2021 was $111,777. 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 year ended December 31, 2021 were $34,208.

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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 year ended December 31, 2021, consist of the following:

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 5,429,927 3,272,577 $ 10,241,659

Payroll and related

914,860 886,987

Supplies, services and other

249,930

$ 3,107,826

$ 1,801,847

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SUPPLEMENTARY INFORMATION

SOCC, INC. dba SEVEN OAKS COUNTRY CLUB DEPARTMENTAL SCHEDULE OF EXPENSES Year Ended December 31, 2021

Food and beverage: Payroll and related costs

$

1,731,068 1,126,828 102,706 86,752

Cost of sales

Supplies

Laundry and uniforms Professional services Repairs and maintenance Taxes and licenses

45,090 11,137 2,255 1,078

Training

Contract labor

912 3,107,826

$

Golf course maintenance: Payroll and related costs Repairs and maintenance

$

1,602,417 306,989 277,981 143,237

Utilities Chemicals Fertilizer Landscaping

89,831 78,839 52,072 36,076 30,284 28,971 6,655

Seed

Professional services Equipment rent Laundry and uniforms

Supplies Training

685 2,654,037

$

General and administrative: Payroll and related costs Professional services

$

726,243 179,129 133,743 107,708 77,380 73,806 61,125 36,528 13,173 11,988 11,331 9,742 6,750 5,182 4,336

Property tax

Information technology costs

Insurance Utilities

Bank charges and fees Security services

Training

Taxes and licenses

Supplies

Dues and subscriptions

Equipment rent

Bad debt Postage

Laundry and uniforms Repairs and maintenance

525

62 1,458,751

$

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SOCC, INC. dba SEVEN OAKS COUNTRY CLUB DEPARTMENTAL SCHEDULE OF EXPENSES Year Ended December 31, 2021

Clubhouse maintenance: Utilities Payroll and related costs Repairs and maintenance Pool supplies and maintenance

$

549,760 361,865 180,392 54,845 45,337 13,071 6,240

Supplies

Laundry and uniforms

Contract labor

Professional services

4,448 1,215,958

$

Golf activities and pro shop: Payroll and related costs

$

465,778 412,327 96,648 38,448 29,409 20,438 13,155 1,421

Cost of sales Equipment rent

Repairs and maintenance

Supplies

Laundry and uniforms Tournament and events

Training

Professional services

946 1,078,570

$

Sports and fitness: Payroll and related costs

$

353,939 24,529

Supplies

Miscellaneous

2,582 1,588

Repairs and maintenance

Training

783 383,421

$

Membership and marketing: Payroll and related costs Advertising and promotions Professional services

$

188,617 140,004

8,431 5,953

Supplies

Laundry and uniforms

91 343,096

$

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