EFTA01044402.pdf

From: Stephen Hanson To: Jeffrey / E / Epstein <jeevacation®gmail.com> Subject: Fwd: LHO Revised Draft Date: Sat, 03 Jun 2017 11:59:03 +0000 This is in regards to asking about the 1.7mm now affiliated loan which had been listed as non Affiliated Next e. My first set of questions to david Sent from my iPad Begin forwarded message: From: Stephen Hanson < Date: June 3, 2017 at 7:57:25 AM EDT To: David Mitchell Cc: Stacy Gilbert , "Howard Muchnick, Esq. Mirium / howie muchnick , Shanson900 Subject: Re: LHO Revised Draft But it was not in reference to the 2mm you stated below When will you send the first requested info I have been emailing you regarding Sent from my iPad On Jun 3, 2017, at 7:16 AM, David Mitchell 5 > wrote: Our investor note was in offering in the fall of 2016 DAVID MITCHELL Mitchell Holdings LLC 801 Madison Avenue New York NY 10065 On Jun 3, 2017, at 7:05 AM, Stephen Hanson 5 > wrote: David. The statement is from 12/31. We did not issue the 2 mm request prior to 12/31 And unless the accountant is a complete idiot the recorded amount is not 2 mm actual So the below 2mm is a different issue Next issue It's 6/3. We are working off 12/31/16 does. How is this 6 months late EFTA01044402 Sent from my iPad On Jun 2, 2017, at 6:28 PM, David Mitchell < wrote: The members note is the $2,000,000 was offered to all LLC members first As LLC investors you got it and you also chose not to participate Do you need copy of it again, The TIC question I will investigate what is needed DAVID MITCHELL Mitchell Holdings LLC 801 Madison Avenue New York NY 10065 USA On Jun 2, 2017, at 5:43 PM, Stephen Hanson < wrote: David We need the correct answer asap Sent from my iPad On Jun 2, 2017, at 5:40 PM, Stacy Gilbert < wrote: I took a quick look. They made a lot of the changes to the financial statement that I had questioned. Apparently they realized that certain things were incorrect. As far as the receivable from the TIC owners, which they are now saying is an Affiliated party, the accountant said they are they are "still awaiting further information" so we still have the same questions. The other question that was not really answered is who the $2 million loan was from. They just said a "member" loan. Most other changes were more accounting type issues and you can see their answers next to each of my questions. From: Shanson900 [mailto Sent: June 02, 2017 4:44 PM To: Stacy Gilbert •c > Cc: Howard Muchnick, Esq. >; Mirium / howie muchnick Subject: Re: LHO Revised Draft Stacy. Howie will bring all with him Stacy if you can review and advise us As I'm meeting howie sat am to review Sent from my iPhone EFTA01044403 On Jun 2, 2017, at 4:31 PM, Stacy Gilbert < wrote: Just received the attached and the below but have not reviewed yet. I am leaving the office shortly. ; .. Citrin Cooperman STACY GILBERT, CPA Partner AN INDEPENDENT FIRM ASSOCIATED WITH MOORE STEPHENS ;2, My conclusions reached in this e-mail or any of its attachments are based on staled facts and current tax law. Any change in facts or current tax law can have a significant impact on the conclusions reached. CONFIDENTIALITY NOTICE: This email and any attachments may be confidential and protected by legal privilege. If you are not the intended recipient. be aware that any disclosure. copying. distribution, storing or use of the e-mail or any attachment is prohibited. If you have received this email in error, please notify sender immediately by replying to the sender and delete this copy and the reply from your system. Thank you for your cooperation. From: Dennis Burbridge [mailto: Sent: June 02, 2017 4:18 PM To: Stacy Gilbert Cc: Sam Spitz < ; 'David Mitchell i Subject: LHO Revised Draft Stacy — Attached please find a revised draft for LHO along with responses to your queries in black below. We can speak further next week. Have a great weekend. Dennis • How does the contribution of property on the Statement of Changes in Members' Equity reconcile to Note 11? • See revision of draft • Note 10 reflects $1,356,478 borrowed on the Building loan and the Project loan but the Statement of Cash Flows has $1,106,478 as proceeds. What accounts for the $250k difference? • See revision of draft • Are there any noncash items that should be reflected on the Statement of Cash Flows? I would have thought the contribution of property would have been on there but are there any other items? • See Note 16 • Some notes refer to sale of food and beverage but I thought the restaurant wasn't opened yet. Is that correct? • Correct, the restaurant was not open; however, during the course of initially establishing the entity's accounting policies, food and beverage sales were addressed and made it into the notes. EFTA01044404  We have removed to eliminate any confusion on behalf of the reader. • With regards to the penalties and interest on the late payment/filing of the hotel occupancy tax, is GAM responsible for that? • Yes, under the terms of the management contract with GAM, GAM is liable, however any assessment of underpayment, interest and/or penalty by the taxing authority will be against the LLC, and possibly it's members, as they are the registered and authorized collection agent. • The note on intangibles refers to organization and start-up costs but I believe these should be expensed for GAAP purposes. Does the balance sheet include these costs? Perhaps there aren't any. • Correct, similar to the food and beverage above • Note 6 refers to an "Unaffiliated party receivable" of $1,788,815. Can you provide more details as to who this is a receivable from and the nature/reason of the loan? Are there terms for repayment? What is the current balance? • This is related to TIC transfer and still awaiting further information • You know more about the loan costs than I do but out of curiosity did you consider ASU 2015-03 where the costs are netted against the loan? Just a presentation issue that the bank may be aware of. • Upon technical quality review as to debt issuance costs defined, we concur and have changed the presentation. • To whom is the Accrued Developer Fee owed to as referred to in Note 9? • The accrued developer fee is owed to David Mitchell, an investor in a member entity. • To whom is the $2,000,000 loan owed as referred to in Note 16? • As disclosed in Note 16, the $2,000,000 loan is a subordinated member loan. Dennis Burbridge CPA <image001.jpg> 16 Village Court Hazlet, NJ 07730 PRIVILEGED AND CONFIDENTIAL This communication and any accompanying documents are confidential and privileged. They are intended for the sole use of the addressee. If you receive this transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon this communication is strictly prohibited. Moreover, any such disclosure shall not compromise or waive the attorney-client, accountant-client, or other privileges as to this communication or otherwise. If you have received this communication in error, please contact me at the above email address. Thank you. Disclaimer Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, SKE Group LLC would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services. <LHO LLC DRAFT FS 12.31.16 dtd 6.2.17.pdf> EFTA01044405