##### Table of Contents



As
filed with the Securities and Exchange Commission on June
20, 2011
 
 
 Registration
No. 333- 172772
 
   UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 
 Amendment
No. 2
 to
 
 FORM S-4
 REGISTRATION STATEMENT
 UNDER
 THE SECURITIES ACT OF 1933
 
 DIAMOND RESORTS CORPORATION
 (Exact name of registrant as specified in its charter)
 SEE TABLE OF ADDITIONAL REGISTRANTS
 
 Maryland(State or other jurisdiction of 
incorporation or organization)
    
    7011(Primary Standard Industrial
Classification Code Number)
    
    95-4582157(I.R.S. Employer
Identification Number)
 10600 West Charleston Boulevard
Las Vegas, Nevada 89135
Tel: (702) 684-8000  (Address, including zip code, and telephone number, including area code, of registrants principal executive offices)
 
 Elizabeth Brennan, Esq.
Executive Vice President and General Counsel
Diamond Resorts Corporation
10600 West Charleston Boulevard
Las Vegas, Nevada 89135
(702) 823-7550  (Name, address, including zip code, and telephone number, including area code, of agent for service)
 
 With a copy to:  Howard S. Lanznar, Esq.
Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
(312) 902-5200
  o
 o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 If applicable, place an X in the box to designate the appropriate rule provision relied upon
in conducting this transaction:Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) oExchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) o
 
 
 The Registrants hereby amend this Registration Statement on such date or dates as may be
necessary to delay its effective date until the Registrants shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement
shall become effective on such date as the Securities and Exchange Commission, acting pursuant to
said Section 8(a) , may determine.




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##### Table of Contents



TABLE OF ADDITIONAL REGISTRANT GUARANTORS
 State or Other
    
    I.R.S.
    
    IndustrialJurisdiction of
    
    Employer
    
    ClassificationExact Name of Registrant Guarantor as Specified in its Charter (or
    
    Incorporation or
    
    Identification
    
    CodeOther Organizational Document) (1)
    
    Organization
    
    Number
    
    NumberDiamond Resorts Parent, LLC
    
    NV
    
    
    26-2349909
    
    
    
    7011Diamond Resorts Holdings, LLC
    
    NV
    
    
    27-5181614
    
    
    
    7011AKGI-St. Maarten N.V.
    
    DE
    
    
    59-3324734
    
    
    
    7011Chestnut Farms, LLC
    
    NV
    
    
    01-0905882
    
    
    
    7011Cumberland Gate, LLC
    
    DE
    
    
    61-1596179
    
    
    
    7011Diamond Resorts California Collection Development, LLC
    
    DE
    
    
    20-0292225
    
    
    
    7011Diamond Resorts Centralized Services Company
    
    DE
    
    
    82-0554601
    
    
    
    7011Diamond Resorts Citrus Share Holding, LLC
    
    DE
    
    
    33-1014939
    
    
    
    7011Diamond Resorts Coral Sands Development, LLC
    
    DE
    
    
    33-1014958
    
    
    
    7011Diamond Resorts Cypress Pointe I Development, LLC
    
    DE
    
    
    33-1014959
    
    
    
    7011Diamond Resorts Cypress Pointe II Development, LLC
    
    DE
    
    
    33-1014960
    
    
    
    7011Diamond Resorts Cypress Pointe III Development, LLC
    
    DE
    
    
    33-1014961
    
    
    
    7011Diamond Resorts Daytona Development, LLC
    
    DE
    
    
    33-1014956
    
    
    
    7011Diamond Resorts Developer and Sales Holding Company
    
    DE
    
    
    86-0787595
    
    
    
    7011Diamond Resorts Epic Mortgage Holdings, LLC
    
    DE
    
    
    33-1014921
    
    
    
    7011Diamond Resorts Fall Creek Development, LLC
    
    DE
    
    
    33-1014962
    
    
    
    7011Diamond Resorts Finance Holding Company
    
    DE
    
    
    82-0554621
    
    
    
    7011Diamond Resorts Financial Services, Inc.
    
    NV
    
    
    88-0410455
    
    
    
    7011Diamond Resorts Grand Beach I Development, LLC
    
    DE
    
    
    33-1014963
    
    
    
    7011Diamond Resorts Grand Beach II Development, LLC
    
    DE
    
    
    33-1014965
    
    
    
    7011Diamond Resorts Greensprings Development, LLC
    
    DE
    
    
    33-1014966
    
    
    
    7011Diamond Resorts Hawaii Collection Development, LLC
    
    DE
    
    
    33-1014926
    
    
    
    7011Diamond Resorts Hilton Head Development, LLC
    
    DE
    
    
    33-1014957
    
    
    
    7011Diamond Resorts International Club, Inc.
    
    FL
    
    
    59-3510037
    
    
    
    7011Diamond Resorts International Marketing, Inc.
    
    CA
    
    
    95-4484297
    
    
    
    7011Diamond Resorts Las Vegas Development, LLC
    
    DE
    
    
    33-1014971
    
    
    
    7011Diamond Resorts Management and Exchange Holding Company
    
    DE
    
    
    33-1014911
    
    
    
    7011Diamond Resorts Management, Inc.
    
    AZ
    
    
    86-0713421
    
    
    
    7011Diamond Resorts Mortgage Holdings, LLC
    
    DE
    
    
    82-0554625
    
    
    
    7011Diamond Resorts Palm Springs Development, LLC
    
    DE
    
    
    33-1014935
    
    
    
    7011Diamond Resorts Poco Diablo Development, LLC
    
    DE
    
    
    33-1014970
    
    
    
    7011Diamond Resorts Poipu Development, LLC
    
    DE
    
    
    33-1014968
    
    
    
    7011Diamond Resorts Polo Development, LLC
    
    NV
    
    
    26-0145739
    
    
    
    7011Diamond Resorts Port Royal Development, LLC
    
    DE
    
    
    33-1014973
    
    
    
    7011Diamond Resorts Powhatan Development, LLC
    
    DE
    
    
    33-1014974
    
    
    
    7011Diamond Resorts Residual Assets Development, LLC
    
    DE
    
    
    33-1014975
    
    
    
    7011Diamond Resorts Residual Assets Finance, LLC
    
    DE
    
    
    33-1014919
    
    
    
    7011Diamond Resorts Residual Assets M&E, LLC
    
    DE
    
    
    33-1014914
    
    
    
    7011Diamond Resorts Ridge on Sedona Development, LLC
    
    DE
    
    
    33-1014976
    
    
    
    7011Diamond Resorts Ridge Pointe Development, LLC
    
    DE
    
    
    33-1014977
    
    
    
    7011Diamond Resorts San Luis Bay Development, LLC
    
    DE
    
    
    33-1014978
    
    
    
    7011Diamond Resorts Santa Fe Development, LLC
    
    DE
    
    
    33-1014979
    
    
    
    7011Diamond Resorts Scottsdale Development, LLC
    
    DE
    
    
    33-1014954
    
    
    
    7011Diamond Resorts Sedona Springs Development, LLC
    
    DE
    
    
    33-1014980
    
    
    
    7011Diamond Resorts Sedona Summit Development, LLC
    
    DE
    
    
    33-1014981
    
    
    
    7011Diamond Resorts St. Croix Development, LLC
    
    DE
    
    
    33-1014982
    
    
    
    7011Diamond Resorts Steamboat Development, LLC
    
    DE
    
    
    33-1014984
    
    
    
    7011Diamond Resorts Tahoe Beach & Ski Development, LLC
    
    DE
    
    
    33-1014986
    
    
    
    7011Diamond Resorts U.S. Collection Development, LLC
    
    DE
    
    
    33-1014915
    
    
    
    7011Diamond Resorts Villa Mirage Development, LLC
    
    DE
    
    
    33-1014985
    
    
    
    7011Diamond Resorts Villas of Sedona Development, LLC
    
    DE
    
    
    33-1014987
    
    
    
    7011Diamond Resorts West Maui Development, LLC
    
    DE
    
    
    33-1014927
    
    
    
    7011




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##### Table of Contents



State or Other
    
    I.R.S.
    
    IndustrialJurisdiction of
    
    Employer
    
    ClassificationExact Name of Registrant Guarantor as Specified in its Charter (or
    
    Incorporation or
    
    Identification
    
    CodeOther Organizational Document) (1)
    
    Organization
    
    Number
    
    NumberFoster Shores, LLC
    
    MO
    
    
    01-0905934
    
    
    
    7011George Acquisition Subsidiary, Inc.
    
    NV
    
    
    58-2385599
    
    
    
    7011Ginger Creek, LLC
    
    DE
    
    
    32-0262324
    
    
    
    7011Grand Escapes, LLC
    
    DE
    
    
    20-1884181
    
    
    
    7011International Timeshares Marketing, LLC
    
    DE
    
    
    33-1014941
    
    
    
    7011Lake Tahoe Resort Partners, LLC
    
    CA
    
    
    95-4569152
    
    
    
    7011Mazatlan Development Inc.
    
    WA
    
    
    91-1491324
    
    
    
    7011MMG Development Corp.
    
    FL
    
    
    65-0530260
    
    
    
    7011Poipu Resort Partners, L.P.
    
    HI
    
    
    95-4501724
    
    
    
    7011Resort Management International, Inc.
    
    CA
    
    
    95-4582082
    
    
    
    7011Resorts Development International, Inc.
    
    NV
    
    
    88-0198739
    
    
    
    7011Walsham Lake, LLC
    
    MO
    
    
    01-0905847
    
    
    
    7011West Maui Resort Partners, L.P.
    
    DE
    
    
    99-0327624
    
    
    
    7011
 
 (1)
    
    The address and telephone number of each registrant guarantors principal
executive offices is 10600 West Charleston Boulevard, Las Vegas, Nevada 89135, (702) 684-8000.




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##### Table of Contents



The
information in this prospectus is not complete and may be
changed. We may not exchange these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to
exchange these securities and it is not soliciting an offer to
exchange these securities in any state where the offer or sale
is not permitted.


SUBJECT TO COMPLETION, DATED
    JUNE 20, 2011
 
  PROSPECTUS
 $425,000,000
  
  Diamond
    Resorts Corporation
    The
    Exchange Offer
  
    We will exchange all outstanding notes that are validly tendered
    and not validly withdrawn for an equal principal amount of
    exchange notes that are freely tradable.
    You may withdraw tenders of outstanding notes at any time prior
    to the expiration date of the exchange offer.
    The exchange offer expires at 11:59 p.m., New York City
    time,
    on          ,
    2011, unless extended. We do not currently intend to extend the
    expiration date.
    The exchange of outstanding notes for exchange in the exchange
    offer will not be a taxable event for U.S. federal income
    tax purposes.
    We will not receive any proceeds from the exchange offer.  The
    Exchange Notes
  
    The exchange notes are being offered in order to satisfy certain
    of our obligations under the registration rights agreement
    entered into in connection with the placement of the outstanding
    notes.
    The terms of the exchange notes to be issued in the exchange
    offer are substantially identical to the outstanding notes,
    except that the exchange notes will be freely tradable.
    Each of Diamond Resorts Parent, LLC, Diamond Resorts Holdings,
    LLC and all of Diamond Resorts Corporations existing and
    future direct or indirect U.S. restricted subsidiaries
    jointly and severally, irrevocably and unconditionally
    guarantee, on a secured senior basis, the performance and full
    and punctual payment when due, whether at maturity, by
    acceleration or otherwise, of all obligations of Diamond Resorts
    Corporation under the outstanding notes, exchange notes and the
    indenture governing the notes.
    The exchange notes and the guarantees will be secured by
    first-priority liens on all Diamond Resorts Corporations
    and the guarantors assets, other than real property and
    consumer loans, subject to certain exceptions and permitted
    liens.  Resales
    of Exchange Notes
  
    The exchange notes may be sold in the
    over-the-counter
    market, in negotiated transactions or through a combination of
    such methods. We do not plan to list the exchange notes on a
    national market.      YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON
    PAGE 17 OF THIS PROSPECTUS BEFORE PARTICIPATING IN THE
    EXCHANGE OFFER.
  The notes and related guarantees described in this prospectus
    have not been recommended by or approved by the Securities and
    Exchange Commission, or the SEC, or any other federal or state
    securities commission or regulatory authority, nor has the SEC
    or any other such federal or state securities commission or
    regulatory authority passed upon the accuracy or adequacy of
    this prospectus. Any representation to the contrary is a
    criminal offense.
  The date of this prospectus
    is          ,
    2011.




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##### 



TABLE OF CONTENTS
 PROSPECTUS SUMMARY
    
    
    1RISK FACTORS
    
    
    17USE OF PROCEEDS
    
    
    38CAPITALIZATION
    
    
    39SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
    
    
    40MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    42BUSINESS
    
    
    69MANAGEMENT
    
    
    96SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    
    
    98CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    100DESCRIPTION OF OTHER INDEBTEDNESS
    
    
    102THE EXCHANGE OFFER
    
    
    105DESCRIPTION OF THE EXCHANGE NOTES
    
    
    117CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
    
    
    176CERTAIN ERISA CONSIDERATIONS
    
    
    177PLAN OF DISTRIBUTION
    
    
    179LEGAL MATTERS
    
    
    180EXPERTS
    
    
    180WHERE YOU CAN FIND ADDITIONAL INFORMATION
    
    
    180INDEX TO FINANCIAL STATEMENTS
    
    
    F-1EX-3.2EX-5.1EX-5.3EX-10.4EX-10.10EX-10.12EX-10.18EX-23.1EX-99.2
   ii




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INDUSTRY AND MARKET DATA
 
  
 TRADEMARKS
 ® ®
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
   
    
    adverse trends in economic conditions generally or in the vacation ownership, vacation
rental and travel industries;
    
    adverse changes to, or interruptions in, relationships with our affiliates and other
third parties, including our hospitality management contracts;
    
    our ability to maintain a sufficient inventory of vacation ownership interests, or VOIs,
for sale to customers without expending significant capital to develop or acquire
additional resort properties;
    
    our ability to sell, securitize or borrow against the consumer loans that we generate;
    
    decreased demand from prospective purchasers of VOIs;
    
    declines or disruptions in the travel industry;
    
    adverse events or trends in vacation destinations and regions where our resorts are
located;
    
    changes in our senior management;
    
    our ability to comply with regulations applicable to the vacation ownership industry;
    
    the effects of our indebtedness and our compliance with the terms thereof;
 iii




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##### Table of Contents




    
    our ability to successfully implement our growth strategy;
    
    our ability to compete effectively; and
    
    other risks and uncertainties discussed in Risk Factors and elsewhere in this
prospectus.
   iv




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PROSPECTUS SUMMARY
 The following summary highlights selected information contained elsewhere in this
prospectus but does not contain all the information that is important to you. You should read this
entire prospectus carefully, including the section titled Risk Factors and our consolidated
financial statements included elsewhere in this prospectus before you decide to tender outstanding
notes in the exchange offer. Except as otherwise stated or required by context, references in this
prospectus to the Company, we, us and our refer to Diamond Resorts Parent, LLC and its
subsidiaries, including Diamond Resorts Corporation. All financial information contained in this
prospectus is that of Diamond Resorts Parent, LLC.
 Company Overview
 
  
 
  
 
    
    Hospitality and Management Services.We manage 68
branded resort properties, as well as our five Collections which
hold real estate in our resort properties underlying the VOIs
that we sell. We also manage THE Club, our points-based exchange and
member services program that enables our members to vacation
throughout our resort network. We provide billing
services, account collections, accounting and treasury functions and information technology
services to our branded resorts and Collections. We also provide an online reservation
system and customer service contact center, operate the front desks and amenities and
furnish housekeeping, maintenance and human resources services for
our branded resorts. Our management contracts are
structured on a cost-plus basis, thereby providing us with a recurring and stable revenue
stream.
    
    Marketing and Sales of VOIs.We market and sell VOIs in our resort network. We
generate sales prospects by utilizing a variety of marketing programs and close
substantially all of our VOI sales following presentations at our sales centers, which we
refer to as tours. The number of points required to stay at one of our resorts
varies according to the resort, the type and size of accommodation, the season and the
length of stay. In 2010, the average cost to purchase points equivalent to a one-week
vacation at one of our resorts was $17,965.
    
    Consumer Financing of VOIs.We provide loans to eligible customers who purchase VOIs
through our U.S. sales centers and choose to finance their purchase. These loans are
collateralized by the underlying VOIs and bear interest at a fixed
rate. We manage the underwriting, services and collection of our consumer loan portfolio.




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##### Table of Contents



Our Resort Properties
  
 Managed and Branded ResortsNorth America and the CaribbeanArizona
    
    
    9California
    
    
    2Caribbean
    
    
    2Colorado
    
    
    1Florida
    
    
    2Hawaii
    
    
    2Indiana
    
    
    1Mexico
    
    
    1Missouri
    
    
    1Nevada
    
    
    3New Mexico
    
    
    1Tennessee
    
    
    1Virginia
    
    
    2Subtotal
    
    
    28EuropeAustria
    
    
    1England
    
    
    12France
    
    
    4Italy
    
    
    1Malta
    
    
    1Ireland
    
    
    3Portugal
    
    
    1Scotland
    
    
    1Spain
    
    
    16Subtotal
    
    
    40Total Managed and Branded Resorts
    
    
    68Affiliated ResortsNorth America and the CaribbeanArizona
    
    
    6California
    
    
    12Colorado
    
    
    1Canada
    
    
    2Dominican Republic
    
    
    2Florida
    
    
    8Hawaii
    
    
    10Idaho
    
    
    1Jamaica
    
    
    1Massachusetts
    
    
    3Mexico
    
    
    13Nevada
    
    
    3New Hampshire
    
    
    2North Carolina
    
    
    1Ohio
    
    
    1Oregon
    
    
    2South Carolina
    
    
    3
 2




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##### Table of Contents



Tennessee
    
    
    3Texas
    
    
    2Utah
    
    
    1Washington
    
    
    4Wisconsin
    
    
    1Subtotal
    
    
    82Europe and AfricaAustria
    
    
    4Czech Republic
    
    
    1England
    
    
    3Germany
    
    
    3Greece
    
    
    1Hungary
    
    
    1Italy
    
    
    2Morocco
    
    
    1Norway
    
    
    1Portugal
    
    
    4South Africa
    
    
    6Spain
    
    
    2Sweden
    
    
    1Turkey
    
    
    1Subtotal
    
    
    31Asia and AustraliaAustralia
    
    
    6India
    
    
    3Indonesia
    
    
    2Thailand
    
    
    7Subtotal
    
    
    18Total Affiliated Resorts
    
    
    131Cruise ShipsAlaska
    
    
    1Caribbean
    
    
    1Hawaiian
Isles
    
    
    1Mediterranean
    
    
    1Total
Cruise Ships
    
    
    4Total
Managed, Branded and Affiliated Resorts and Cruise Ships
    
    
    203
 
 Industry Overview
 3




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##### Table of Contents



*
    
    A change in ARDAs definition of the study population resulted in a
decrease in the number of resorts included in the ARDA study from 2004
to 2005, which also resulted in a decrease in the number of vacation
ownership week equivalents. This change focused ARDAs analysis on
traditional VOIs, including intervals and points, by removing
non-comparable entities such as fractionals, non-equity clubs, private
residence clubs and vacation clubs. Prior years were not restated to
give effect to this change.Source: Historical timeshare industry research conducted by Ragatz
Associates, American Economic Group and Ernst & Young on behalf of the
ARDA International Foundation, as of December 31, 2010.
 
  
 
  
 Competitive Strengths
  
 Stable cash flow from hospitality and management services.
 
 
 Capital-light business model.
 4




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##### Table of Contents



Flexible points-based vacation ownership structure.
 
 
 High customer satisfaction drives significant repeat customers.
 
 
 High-quality loan originations and reduced reliance on receivables financing.
 
 
 Strong management team.
 
 
    
    implementing a new focus on service and hospitality to provide our members a premium
experience;
    
    introducing the Diamond Resorts International brand throughout our network of managed
resorts;
    
    renegotiating our hospitality management contracts to provide improved cost recovery;
    
    implementing a capital-light business model that does not require capital-intensive
acquisitions, development or construction and reduces working capital requirements;
 5




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##### Table of Contents




    
    responding quickly to the credit crisis by substantially increasing our percentage of
all-cash sales, thereby reducing our dependence on the receivables financing market; and
    
    adjusting our marketing and sales efforts by closing certain low margin sales centers,
eliminating certain incentive programs and implementing a new sales commission
structure.
 
 Business Strategies
  
 Capitalizing on current industry dynamics to grow fee-based services.
 
 Diversify and increase revenue through new business initiatives.
 
 Strengthening our brand.
 
 Certain Transactions
 Guggenheim Transactions.
 Amendment and Restatement of 2008 Conduit Facility.
 6




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##### Table of Contents



Corporate Structure
  
 
 (1)
    
    Consists of approximately $85 million face value of (i) 16.5% preferred units and
(ii) common units representing approximately 29% of Diamond Resorts
Parent, LLCs common equity. See Note 7 to the table under Security
Ownership of Certain Beneficial Owners and Management.(2)
    
    Does not include warrants exercisable for an aggregate of 4.8% of the
fully-diluted equity of Diamond Resorts Corporation. Each warrant is
exercisable until April 26, 2014 and has an exercise price of $0.01
per share. The number of shares subject to each warrant and the
exercise price are subject to certain anti-dilution adjustments.(3)
    
    Upstream guarantees provided by all of our direct and indirect
domestic restricted subsidiaries, other than our special purpose
vehicles (see footnote 4 below), including special purpose vehicles
established in connection with certain acquisitions. See
BusinessBusiness StrategiesCapitalizing on current industry
dynamics to grow fee-based services.(4)
    
    Consists of special purpose vehicles created to issue non-recourse
indebtedness secured by our VOI consumer loans. See Description of
Other Indebtedness.
 Company Information
  The information on our
website is not part of this prospectus.
 7




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##### Table of Contents



The Exchange Offer
   
    
    the exchange notes have been registered under the Securities Act;
    
    the exchange notes are not entitled to certain registration rights which are
applicable to the outstanding notes under the registration rights agreement;
and
    
    certain special interest rate provisions are no longer applicable.
 The Exchange Offer
    
    We are offering to exchange up to $425,000,000
aggregate principal amount of our 12% Senior
Secured Notes due 2018, which have been
registered under the Securities Act, for up to
$425,000,000 aggregate principal amount of our
existing 12% Senior Secured Notes due 2018.
Outstanding notes may be exchanged only in
denominations of $2,000 and integral multiples of
$1,000 in excess of $2,000.Resale
    
    Based on an interpretation by the staff of the
Securities and Exchange Commission (the SEC)
set forth in no-action letters issued to third
parties, we believe that the exchange notes
issued pursuant to the exchange offer in exchange
for the outstanding notes may be offered for
resale, resold and otherwise transferred by you
(unless you are our affiliate within the
meaning of Rule 405 under the Securities Act)
without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that:     you are acquiring the
exchange notes in the
ordinary course of
your business; and     you have not engaged
in, do not intend to
engage in, and have
no arrangement or
understanding with
any person to
participate in, a
distribution of the
exchange notes.If you are a broker-dealer and receive exchange
notes for your own account in exchange for
outstanding notes that you acquired as a result
of market-making activities or other trading
activities, you must acknowledge that you will
deliver this prospectus in connection with any
resale of the exchange notes. See Plan of
Distribution.

Any holder of outstanding notes who:     is our affiliate;     does not acquire
exchange notes in the
ordinary course of
its business; or
 8




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##### Table of Contents



     tenders its
outstanding notes in
the exchange offer
with the intention to
participate, or for
the purpose of
participating, in a
distribution of
exchange notes;cannot rely on the position of the staff of the
SEC enunciated in Morgan Stanley & Co.
Incorporated(available June 5, 1991) and Exxon
Capital Holdings Corporation(available May 13,
1988), as interpreted in Shearman & Sterling
(available July 2, 1993), or similar no-action
letters and, in the absence of an exemption
therefrom, must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any resale of
the exchange notes.Expiration Date; Withdrawal of Tender
    
    The exchange offer will expire at 11:59 p.m., New
York City time, on       ,
2011, unless extended by us. We do not currently
intend to extend the expiration date. You may
withdraw the tender of your outstanding notes at
any time prior to the expiration of the exchange
offer. We will return to you any of your
outstanding notes that are not accepted for any
reason for exchange, without expense to you,
promptly after the expiration or termination of
the exchange offer.Conditions to the Exchange
Offer
    
    The exchange offer is subject to customary
conditions, which we may waive. See The
Exchange OfferConditions to the Exchange Offer
of this prospectus for more information.Procedures for Tendering Outstanding Notes
    
    If you wish to participate in the exchange offer and your outstanding notes are not held through The
Depository Trust Company (DTC)
you must complete, sign and date the accompanying
letter of transmittal, or a facsimile of such
letter of transmittal, according to the
instructions contained in this prospectus and the
letter of transmittal. You must then mail or
otherwise deliver the letter of transmittal, or a
facsimile of such letter of transmittal, together
with your outstanding notes and any other
required documents, to the exchange agent at the
address set forth on the cover page of the letter
of transmittal.If you hold outstanding notes through DTC and wish to
participate in the exchange offer, you must
comply with the Automated Tender Offer Program
procedures of DTC by which you will agree to be
bound by the letter of transmittal. By signing,
or agreeing to be bound by, the letter of
transmittal, you will represent to us that, among
other things:     you are not our
affiliate within
the meaning of Rule
405 under the
Securities Act;     you do not have an
arrangement or
understanding with
any person or entity
to participate in the
distribution of the
exchange notes;     you are acquiring the
exchange notes in the
ordinary course of
your business; and     if you are a
broker-dealer that
will receive exchange
notes for your own
account in exchange
for outstanding notes
that were acquired as
a result of
market-making
activities, you will
deliver a prospectus,
as required by law,
in connection with
any resale of such
exchange notes.
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##### Table of Contents



Special Procedures for 
Beneficial Owners
    
    If you are a beneficial owner of outstanding
notes which are registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee, and you wish to tender such
outstanding notes in the exchange offer, you
should contact such registered holder promptly
and instruct such registered holder to tender on
your behalf. If you wish to tender on your own
behalf, you must, prior to completing and
executing the letter of transmittal and
delivering your outstanding notes, either make
appropriate arrangements to register ownership of
the outstanding notes in your name or obtain a
properly completed bond power from the registered
holder. The transfer of registered ownership may
take considerable time and may not be able to be
completed prior to the expiration date.Guaranteed Delivery 
Procedures
    
    If you wish to tender your outstanding notes and
your outstanding notes are not immediately
available or you cannot deliver your outstanding
notes, the letter of transmittal or any other
required documents, or you cannot comply with the
procedures under DTCs Automated Tender Offer
Program for transfer of book-entry interests
prior to the expiration date, you must tender
your outstanding notes according to the
guaranteed delivery procedures set forth in this
prospectus under The Exchange OfferGuaranteed
Delivery Procedures.Effect on Holders of
Outstanding Notes
    
    As a result of the making of, and upon acceptance
for exchange of all validly tendered outstanding
notes pursuant to the terms of the exchange
offer, we and the guarantors will have fulfilled
a covenant contained in the registration rights
agreement and, accordingly, there will be no
increase in the interest rate on the outstanding
notes under the circumstances described in the
registration rights agreement. If you are a
holder of outstanding notes and you do not tender
your outstanding notes in the exchange offer, you
will continue to hold such outstanding notes and
you will be entitled to all the rights and
limitations applicable to the outstanding notes
as set forth in the indenture, except we and the
guarantors will not have any further obligations
to you to provide for the registration of
untendered outstanding notes under the
registration rights agreement.To the extent that outstanding notes are tendered
and accepted in the exchange offer, the trading
market for outstanding notes that are not so
tendered and accepted could be adversely
affected.Consequences of Failure to Exchange
    
    All untendered outstanding notes will continue to
be subject to the restrictions on transfer
provided for in the outstanding notes and in the
indenture. In general, the outstanding notes may
not be offered or sold, unless registered under
the Securities Act, except pursuant to an
exemption from, or in a transaction not subject
to, the Securities Act and applicable state
securities laws. Other than in connection with
the exchange offer, we and the guarantors do not
currently anticipate that we will register the
outstanding notes under the Securities Act.Certain United States Federal Tax Consequences
    
    The exchange of outstanding notes in the exchange
offer will not constitute a taxable event for
United States federal income tax purposes. See
Certain United States Federal Tax Consequences.Accounting Treatment
    
    We will record the exchange notes in our
accounting records at the same carrying value as
the outstanding notes, which is the aggregate
principal amount as reflected in our accounting
records on the date of exchange. Accordingly, we
will not recognize any gain or loss for
accounting purposes upon the consummation of the
exchange offer. We will record the expenses of
the exchange offer as incurred.
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##### Table of Contents



Regulatory Approvals
    
    Other than compliance with the Securities Act and
qualification of the indenture governing the
notes under the Trust Indenture Act, there are no
federal or state regulatory requirements that
must be complied with or approvals that must be
obtained in connection with the exchange offer.Use of Proceeds
    
    We will not receive any cash proceeds from the
issuance of exchange notes pursuant to the
exchange offer. See Use of Proceeds.Exchange Agent
    
    Wells Fargo Bank, National
Association, is the
exchange agent for the exchange offer. The
address and telephone number of the exchange
agent are set forth in the section captioned The
Exchange OfferExchange Agent of this
prospectus.
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##### Table of Contents



The Exchange Notes
  Issuer
    
    Diamond Resorts CorporationSecurities Offered
    
    $425,000,000 aggregate principal amount of 12% Senior Secured Notes due 2018.Maturity
    
    August 15, 2018.Interest Payment Dates
    
    February 15 and
August 15, commencing on August 15, 2011.Guarantees
    
    The exchange notes will be guaranteed on a senior secured basis by Diamond Resorts Parent, LLC and
Diamond Resorts Holdings, LLC, our indirect and direct parent companies, and all of our existing and
future direct or indirect U.S. restricted subsidiaries other than our special purpose vehicles.Collateral
    
    The exchange notes and the guarantees will be secured by a first-priority lien (subject only to certain
permitted liens such as tax, assessment and other statutory liens and pre-existing liens on acquired assets)
on the capital stock of all subsidiaries (with certain limitations on the capital stock of foreign subsidiaries),
property, equipment, contract rights, accounts, intellectual property and all other tangible and intangible
assets of Diamond Resorts Corporation and each guarantor, other than their real property and consumer
loans.  See Description of the Exchange Notes  Collateral.Ranking
    
    The exchange notes and the guarantees will be our and the guarantors senior secured obligations.
The indebtedness evidenced by the exchange notes and the guarantees will:     rank senior in right of payment to any existing and future
subordinated indebtedness;     be effectively senior to all of our and the guarantors
existing and future unsecured indebtedness to the extent of the
value of the collateral (after giving effect to any prior liens
on the collateral); and;     be effectively junior to all existing and future indebtedness
and other liabilities of our non-guarantor subsidiaries.Optional Redemption
    
    We are entitled to redeem some or all of the exchange notes at our option, in whole or in part, at
any time on or after August 15, 2014, at the redemption prices set forth in this prospectus,
together with accrued and unpaid interest, if any, to the date of redemption.We are also entitled to redeem up to 35% of the aggregate principal amount of the exchange notes, at
our option, with the net proceeds from certain equity offerings from time to time prior to August
15, 2013, at a redemption price of 112%, plus accrued and unpaid interest, if any, to the date of
redemption.We are also entitled to redeem some or all of the notes, at our option, at any time prior to August
15, 2014, at a redemption price equal to 100% of the principal amount of the notes plus a
make-whole premium as of, and accrued and unpaid interest, if any, to, the date of redemption.Required Offers
    
    Upon a change of control, we will be required to make an offer to purchase each holders notes at a
price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase.
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Subject to certain conditions and limitations, within 105 days of the end of each twelve-month
period ended December 31 beginning with the twelve-month period ended December 31, 2011, we will be
required to make an offer to purchase notes in an amount equal to 50% of the Excess Cash Flow (as
defined herein) generated during such twelve-month period, at a price equal to 101% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the date of purchase (provided
that in the case of the twelve-month period ended December 31, 2011, the Excess Cash Flow generated
during such twelve-month period shall be deemed to also include the Excess Cash Flow generated
during the three-month period ended December 31, 2010).We will also be required to make an offer to purchase notes in an amount equal to 25% of the net
proceeds of certain equity offerings at the purchase prices set forth in this prospectus, together
with accrued and unpaid interest, if any, to the date of purchase.Certain Covenants
    
    The indenture governing the exchange notes contains covenants that will, among other things, limit
our ability and the ability of our restricted subsidiaries to:     incur additional indebtedness or issue certain preferred shares;     create liens;     pay dividends or make other equity distributions;     purchase or redeem capital stock or subordinated debt;     make certain investments;     sell assets;     consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets; and     engage in transactions with affiliates.These limitations are subject to a number of important qualifications and exceptions. See
Description of the Exchange NotesCertain Covenants.Public Market
    
    The exchange notes generally will be freely tradable but will also be a new issue of securities for
which there is currently no established trading market. An active or liquid market may not develop
for the exchange notes or, if developed, be maintained. We have not applied, and do not intend to
apply, for the listing of the exchange notes on any exchange or automated dealer quotation system.Use of Proceeds
    
    There will be no cash proceeds to us from the exchange offer.Risk Factors
    
    See Risk Factors for a description of some of the risks relating to the exchange offer.
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Summary Consolidated Financial and Operating Data
 
  
  
 Three Months
    
    
    Twelve MonthsYear Ended
    
    
    Ended
    
    
    EndedDecember 31
    
    
    March 31
    
    
    March 31,2008
    
    
    2009
    
    
    2010
    
    
    2010
    
    
    2011
    
    
    2011(Audited)
    
    
    (Audited)
    
    
    (Audited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)($ in thousands)Statement of Operations Data:Total revenues
    
    $
    402,414
    
    
    $
    410,961
    
    
    $
    370,825
    
    
    $
    87,538
    
    
    $
    87,532
    
    
    $
    370,819Total costs and expenses
    
    
    489,577
    
    
    
    432,757
    
    
    
    391,258
    
    
    
    92,321
    
    
    
    92,778
    
    
    $
    391,715Loss before provision (benefit) for income taxes
    
    
    (87,163
    )
    
    
    (21,796
    )
    
    
    (20,433
    )
    
    
    (4,783
    )
    
    
    (5,246
    )
    
    
    (20,896
    )Provision (benefit) for income taxes
    
    
    1,809
    
    
    
    (799
    )
    
    
    (1,274
    )
    
    
    705
    
    
    
    1,473
    
    
    
    (506
    )Net loss
    
    $
    (88,972
    )
    
    $
    (20,997
    )
    
    $
    (19,159
    )
    
    $
    (5,488
    )
    
    $
    (6,719
    )
    
    $
    (20,390
    )Other Operating Data (Unaudited):Adjusted EBITDA(1)
    
    $
    97,685
    
    
    $
    103,059
    
    
    $
    85,689
    
    
    $
    20,077
    
    
    $
    12,939
    
    
    $
    78,551Capital expenditures
    
    
    13,861
    
    
    
    4,672
    
    
    
    5,553
    
    
    
    942
    
    
    
    2,485
    
    
    
    7,096Ratio of earnings to fixed charges(2)
    
    
    (0.2
    )x
    
    
    0.7
    x
    
    
    0.7
    x
    
    
    0.7
    x
    
    
    0.7
    x
    
    
    0.7
    xFixed charge coverage ratio(3)
    
    
    2.1
    x
    
    
    2.3
    x
    
    
    1.7
    x
    
    
    1.6
    x
    
    
    1.3
    x
    
    
    1.6
    xNet Cash provided by (used in):Operating activities
    
    $
    45,086
    
    
    $
    87,793
    
    
    $
    66,001
    
    
    $
    29,215
    
    
    $
    15,107
    
    
    $
    51,893Investing activities
    
    
    (7,263
    )
    
    
    (4,250
    )
    
    
    (37,399
    )
    
    
    (940
    )
    
    
    (1,898
    )
    
    
    (38,357
    )Financing activities
    
    
    (60,024
    )
    
    
    (89,660
    )
    
    
    (18,271
    )
    
    
    (28,851
    )
    
    
    (22,091
    )
    
    
    (11,511
    )Other Operating Metrics:Number of branded resorts(4)
    
    
    56
    
    
    
    62
    
    
    
    70
    
    
    
    62
    
    
    
    69
    
    
    
    69Number of affiliated resorts(4)
    
    
    77
    
    
    
    99
    
    
    
    109
    
    
    
    99
    
    
    
    124
    
    
    
    124Total number of vacation interest sale transactions(5)
    
    
    27,144
    
    
    
    23,571
    
    
    
    22,719
    
    
    
    4,953
    
    
    
    4,204
    
    
    
    21,970Average vacation interest sale price per transaction(6)
    
    $
    10,950
    
    
    $
    9,712
    
    
    $
    9,526
    
    
    $
    9,838
    
    
    $
    9,991
    
    
    $
    9,544Total number of tours(7)
    
    
    150,912
    
    
    
    123,045
    
    
    
    130,801
    
    
    
    26,796
    
    
    
    29,004
    
    
    
    133,009Closing percentage(8)
    
    
    18.0
    %
    
    
    19.2
    %
    
    
    17.4
    %
    
    
    18.5
    %
    
    
    14.5
    %
    
    
    16.5
    %Members in THE Club
    
    
    153,918
    
    
    
    153,240
    
    
    
    148,298
    
    
    
    145,391
    
    
    
    157,088
    
    
    
    157,088
 
 
 As of
    
    
    As ofDecember 31,
    
    
    March 31,2010
    
    
    2011(Audited)
    
    
    (Unaudited)($ in thousands)Balance Sheet Data:Cash and cash equivalents
    
    $
    27,329
    
    
    $
    18,787Mortgages and contracts receivable, net
    
    
    245,287
    
    
    
    234,536Unsold vacation interests, net
    
    
    190,564
    
    
    
    199,724Total assets
    
    
    680,751
    
    
    
    701,325Senior secured notes, net of unamortized original issue discount
    
    
    414,722
    
    
    
    414,915Securitization notes and conduit facilities, net
    
    
    186,843
    
    
    
    172,344Total liabilities
    
    $
    807,998
    
    
    $
    833,093
 
 
 (1)
    
    We define Adjusted EBITDA as our net loss before provision (benefit)
for income taxes, plus: (i) corporate
 14




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interest expense; (ii)
depreciation and amortization; (iii) vacation interest cost of sales;
(iv) non-cash charges for change in estimated defaults on consumer
loans originated in prior periods; (v) impairments and other non-cash
write-offs; (vi) loss on extinguishment of debt; (vii) gain or loss on
the disposal of assets; (viii) amortization of loan origination costs; and
(ix) amortization of portfolio discount; lessnon-cash revenue outside
the ordinary course of business. Adjusted EBITDA is a non-GAAP
financial measure and should not be considered as an alternative to
net income, operating income or any other measure of financial
performance calculated and presented in accordance with generally
accepted accounting principles in the U.S. (GAAP). We
believe Adjusted EBITDA is useful to investors in evaluating our
operating performance for a variety reasons as described in
Managements Discussion and Analysis of Financial Condition and
Results of Operations  Presentation of Certain Financial Metrics.The following table presents a reconciliation of Adjusted EBITDA to net loss before
provision (benefit) for income taxes: 
 Three Months
    
    
    Twelve MonthsYear Ended
    
    
    Ended
    
    
    EndedDecember 31
    
    
    March 31
    
    
    March 31,2008
    
    
    2009
    
    
    2010
    
    
    2010
    
    
    2011
    
    
    2011(Audited)
    
    
    (Audited)
    
    
    (Audited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)($ in thousands)Loss before provision (benefit) for income taxes
    
    $
    (87,163
    )
    
    $
    (21,796
    )
    
    $
    (20,433
    )
    
    $
    (4,783
    )
    
    $
    (5,246
    )
    
    $
    (20,896
    )Plus: Corporate interest expense(a)
    
    
    50,563
    
    
    
    44,119
    
    
    
    48,959
    
    
    
    10,752
    
    
    
    14,317
    
    
    
    52,524Depreciation and amortization(b)
    
    
    16,687
    
    
    
    13,366
    
    
    
    11,939
    
    
    
    2,797
    
    
    
    3,170
    
    
    
    12,312Vacation interest cost of sales(c)
    
    
    67,551
    
    
    
    55,135
    
    
    
    39,730
    
    
    
    10,625
    
    
    
    67
    
    
    
    29,172Estimated defaults on consumer loans originated in prior periods(d)
    
    
    32,033
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairments and other write-offs(b)
    
    
    17,168
    
    
    
    1,125
    
    
    
    3,330
    
    
    
    
    
    
    
    83
    
    
    
    3,413Loss on  extinguishment of debt(b)
    
    
    
    
    
    
    10,903
    
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    1,081Gain on the disposal of assets(b)
    
    
    (1,007
    )
    
    
    (137
    )
    
    
    (1,923
    )
    
    
    (2
    )
    
    
    (9
    )
    
    
    (1,930
    )Amortization of loan origination costs(b)
    
    
    2,620
    
    
    
    3,878
    
    
    
    3,436
    
    
    
    836
    
    
    
    646
    
    
    
    3,246Amortization of portfolio discount(b)
    
    
    (767
    )
    
    
    (648
    )
    
    
    (430
    )
    
    
    (148
    )
    
    
    (89
    )
    
    
    (371
    )Less: Non-cash revenue(e)
    
    
    
    
    
    
    (2,886
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted
EBITDA  Consolidated(f)
    
    $
    97,685
    
    
    $
    103,059
    
    
    $
    85,689
    
    
    $
    20,077
    
    
    $
    12,939
    
    
    $
    78,551Adjusted EBITDA  Diamond Resorts Parent, LLC and
Restricted Subsidiaries(f)
    
    
    97,676
    
    
    
    108,381
    
    
    
    92,223
    
    
    
    20,128
    
    
    
    18,068
    
    
    
    90,163Adjusted EBITDA  Unrestricted Subsidiaries(f)
    
    
    9
    
    
    
    (5,322
    )
    
    
    (6,534
    )
    
    
    (51
    )
    
    
    (5,129
    )
    
    
    (11,612
    )
 
 
 (a)
    
    Excludes interest expense related to non-recourse indebtedness incurred by
our special purpose vehicles that is secured by our VOI consumer loans.(b)
    
    These items represent non-cash charges/revenues.(c)
    
    We record vacation interest cost of sales using the relative sales value
method in accordance with ASC 978, which requires us to make significant estimates
which are subject to significant uncertainty. In determining the appropriate amount of
costs using the relative sales value method, we rely on complex, multi-year financial
models that incorporate a variety of estimated inputs. These models are reviewed on a
regular basis, and the relevant estimates used in the models are revised based upon
historical results and managements new estimates. Small changes in any of the
numerous assumptions in the model can have a significant financial statement impact as
ASC 978 requires a retroactive adjustment back to the time of the Sunterra Corporation
acquisition in the current period. Much like depreciation or amortization, for us
vacation interest cost of sales is essentially a non-cash expense item.(d)
    
    Represents a one-time charge resulting from increased estimated defaults on
our consumer loans originated prior to 2008.(e)
    
    Consists of non-cash revenue outside the ordinary course of business,
including VOI sales revenue recognized upon the completion of construction of certain
units sold prior to the acquisition of Sunterra Corporation in April 2007.(f)
    
    For purposes of certain covenants governing the exchange notes, the Companys
financial performance, including Adjusted EBITDA, is measured with reference to the
Company and its Restricted Subsidiaries, and the performance of Unrestricted
Subsidiaries is not considered. Therefore, we believe that this presentation of
Adjusted EBITDA provides helpful information to investors in the exchange notes. See
Note 22 of our audited financial statements included elsewhere in this prospectus.
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To properly and prudently evaluate our business, we encourage you to review our GAAP
financial statements included elsewhere in this prospectus, and not to rely on any single
financial measure to evaluate our business.(2)
    
    For purposes of calculating this ratio, earnings
consist of earnings (loss) before provision (benefit) for income
taxes plus fixed charges, and fixed charges consist of
interest expense, including amortization of deferred financing costs
and amortization of original issue discount. See Selected
Consolidated Financial and Operating Data for more information.(3)
    
    This ratio is calculated as provided in the indenture governing the notes. See Description
of the Exchange Notes  Certain Definitions  Fixed Charge
Coverage Ratio. This ratio should not be viewed as a substitute
for the ratio of earnings to fixed charges presented herein.(4)
    
    As of the end of each period.(5)
    
    Represents the number of VOI sale transactions during the period presented.(6)
    
    Represents the average purchase price of VOIs sold during the period presented.(7)
    
    Represents the number of sales presentations at our sales centers during the period presented.(8)
    
    Represents the percentage of VOI sales closed relative to the total number of sales
presentations at our sales centers during the period presented.
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RISK FACTORS
 
  
 Risks Related to the Exchange Offer
 If you choose not to exchange your outstanding notes, the present transfer restrictions will remain
in force and the market price of your outstanding notes could decline.
   Certain persons who participate in the exchange offer must deliver a prospectus in connection with
resales of the exchange notes.
 Exxon Capital Holdings Corp Morgan Stanley & Co. Inc Shearman & Sterling
 Risks Related to Our Business
 Unfavorable general economic conditions have adversely affected our business and could result in
decreased demand for VOIs and our ability to obtain future financing.
 
  
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We have incurred net losses in the past and
may not experience positive net income in the future.
 
 
  
 We derive a substantial portion of our revenue through contracts with HOAs to manage resort
properties and with our Collections. The expiration, termination or renegotiation of these
management contracts could adversely affect our business and results of operations.
 
  
  Our business plan historically has depended on our ability to sell, securitize or borrow against
the consumer loans that we generate, and our liquidity, financial condition and results of
operations would be adversely impacted if we are unable to do so in the future.
  
  
 
  
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Our revenues are highly dependent on the travel industry and declines in or disruptions to the
travel industry, such as those caused by adverse economic conditions, terrorism and acts of God,
may adversely affect us.
  Our future success depends on our ability to market VOIs successfully and efficiently, including
sales of upgrades to our existing ownership base.
  If we experience a significant decline in our inventory of points available for sale, we may be
required to expend more capital to acquire or build new resorts, which would negatively impact our
financial condition and results of operations.
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A portion of our revenue is derived from our rental of resort units, and our future results may be
adversely impacted if we are unable to rent a sufficient number of available units at our resorts.
  The disruption of the use by our members of THE Club reservation system could result in customer
dissatisfaction and harm our reputation and business.
  We rely on external exchange program affiliations as important sources of sales prospects and
leads, and our loss of any such affiliations in the future may adversely impact our results of
operations.
  We are dependent on the managers of our affiliated resorts to ensure that those properties meet our
customers expectations.
 
  
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The resale market for VOIs could adversely affect our business.
  We are subject to certain risks associated with our development and management of resort
properties.
  
    
    the presence of construction defects or other structural or building damage at any of
our resorts, including resorts we may develop in the future;
    
    any noncompliance with or liabilities under applicable environmental, health or safety
regulations or requirements relating to our resorts;
    
    any damage resulting from natural disasters, such as hurricanes, earthquakes, fires,
floods and windstorms and from any increases in the frequency or severity of such
occurrences due to climate change;
    
    any losses arising from acts of war, civil unrest and terrorism; and
    
    claims by employees, members and their guests for injuries sustained on our resort
properties.
  Our credit underwriting standards may prove to be inadequate, and we could incur substantial losses
if the customers we finance default on their obligations. In addition, we rely on a third-party
lender to provide financing to purchasers of our VOIs in Europe, and the loss of this customer
financing source could harm our business.
 
  
 21




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Changes in interest rates may increase our borrowing costs and otherwise adversely affect our
business.
  Our international operations are subject to risks not generally applicable to our domestic
operations.
 
  
 
    
    exposure to local economic conditions;
    
    potential adverse changes in the diplomatic relations of foreign countries with the
United States;
    
    hostility from local populations;
 22




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##### Table of Contents




    
    restrictions and taxes on the withdrawal of foreign investment and earnings;
    
    the imposition of government policies and regulations against business and real estate
ownership by foreigners;
    
    foreign investment restrictions or requirements;
    
    limitations on our ability to legally enforce our contractual rights in foreign
countries;
    
    regulations restricting the sale of VOIs, as described in Business  Governmental
Regulation;
    
    foreign exchange restrictions and the impact of exchange rates on our business;
    
    conflicts in local laws with U.S. laws;
    
    withholding and other taxes on remittances and other payments by our subsidiaries; and
    
    changes in and application of foreign taxation structures, including value added taxes.
 Fluctuations in foreign currency exchange rates may affect our reported results of operations.
  Our industry is highly competitive and our business could be adversely affected by our inability to
compete effectively.
   We are subject to extensive regulation relating to the marketing and sale of vacation interests and
the servicing and collection of customer mortgages and loans.
  23




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24




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##### Table of Contents



We are a party to certain litigation matters and are subject to additional litigation risk.
 
  
    25




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Failure to maintain the security of personally identifiable information could adversely affect us.
  Our reputation and financial condition may be harmed by system failures and computer viruses.
  Our intellectual property rights are valuable, and our failure to protect those rights could
adversely affect our business.
  We are required to make a number of significant judgments in applying our accounting policies, and
our use of different estimates and assumptions in the application of these policies could result in
material changes to our reported financial condition and results of operations. In addition,
changes in accounting standards or their interpretation could significantly impact our reported
results of operations.
  26




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If we fail to maintain proper and effective internal controls, our ability to produce accurate and
timely financial statements could be impaired, which could harm our operating results, our ability
to operate our business and our reputation.
 
  
 
  
 To the extent we utilize unrestricted subsidiaries to pursue acquisitions and other growth
opportunities in the future, our consolidated financial statements may differ materially from the
financial position, results of operations and cash flows of us and our restricted subsidiaries for
purposes of determining our compliance with the indenture governing the notes.
 
  
 We are dependent upon our senior management.
  
  
 27




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Our growth strategy may not be successful and may divert our managements attention and consume
significant resources.
 
  
 Risks Related to the Exchange Notes
 Our substantial level of indebtedness could adversely affect us.
 
  
  
    
    our level of indebtedness could make it more difficult for us to satisfy our obligations
with respect to the exchange notes, including any repurchase obligations that may arise
thereunder;
    
    our ability to obtain additional financing for working capital, capital expenditures,
debt service requirements, restructuring, acquisitions or general corporate purposes may be
impaired, which could be exacerbated by further volatility in the credit markets;
    
    we must use a substantial portion of our cash flow from operations to pay interest on
our indebtedness, which will reduce the funds available to us for operations and other
purposes;
    
    our level of indebtedness could place us at a competitive disadvantage to competitors
that may have proportionately less debt;
    
    our flexibility in planning for, or reacting to, changes in our business and industry
may be limited; and
    
    our level of indebtedness makes us more vulnerable to economic downturns and adverse
developments in our business.
 28




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We may incur substantially more debt following this exchange offer, and any such future
indebtedness could increase the risks that we face.
  We may not be able to generate sufficient cash to service all of our indebtedness, including the
exchange notes, and may be forced to take other actions to satisfy our obligations under our
indebtedness, which may not be successful.
   Repayment of our debt, including required principal and interest payments on the exchange notes, is
dependent on cash flow generated by our subsidiaries.
  The terms of our debt covenants could limit how we conduct our business and our ability to raise
additional funds.
  
    
    incur additional indebtedness or issue certain preferred shares;
 29




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##### Table of Contents




    
    create liens on our assets;
    
    pay dividends or make other equity distributions;
    
    purchase or redeem equity interests or subordinated debt;
    
    make certain investments;
    
    sell assets;
    
    consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
and
    
    engage in transactions with affiliates.
  Claims of noteholders will be structurally subordinate to claims of creditors of all of our
non-guarantor subsidiaries, and, in addition, certain of our subsidiaries will not be subject to
the restrictive covenants in the indenture governing the notes.
   
  
  30




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The value of the collateral securing the exchange notes may not be sufficient to satisfy our
obligations under the exchange notes.
      We will in most cases have control over the collateral, and the sale of particular assets by us
could reduce the pool of assets securing the exchange notes and the guarantees.
  31




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There are circumstances other than repayment or discharge of the exchange notes under which the
collateral securing the exchange notes and guarantees will be released automatically, without your
consent or the consent of the trustee.
  
    
    to enable the sale, transfer or other disposal of such collateral in a transaction not
prohibited under the indenture, including the sale of any entity in its entirety that owns
or holds such collateral; and
    
    with respect to collateral held by a guarantor, upon the release of such guarantor from
its guarantee.
   The exchange notes and the guarantees will not be secured by liens on our inventory of intervals or
consumer loans.
 
  
 
  
  32




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There are certain other categories of our property that are also excluded from the collateral.
  Rights of holders of the exchange notes in the collateral may be adversely affected by the failure
to perfect security interests in the collateral.
  The pledge of the capital stock and other securities of our subsidiaries that secure the exchange
notes will automatically be released from the lien on them and no longer constitute collateral for
so long as the pledge of such capital stock or such other securities would require the filing of
separate financial statements with the SEC for that subsidiary.
  33




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If we default on our obligations to pay our other indebtedness, we may not be able to make payments
on the exchange notes.
  We may not be able to satisfy our obligations to holders of the exchange notes upon a change of
control.
  The collateral is subject to casualty risks and potential environmental liabilities.
  Any future pledge of collateral or guarantee might be avoidable in bankruptcy.
  34




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In the event of our bankruptcy, the ability of the holders of the exchange notes to realize upon
the collateral will be subject to certain bankruptcy law limitations.
   Federal and state fraudulent transfer laws may permit a court to void the guarantees, and, if that
occurs, you may not receive any payments on the exchange notes.
  
    
    the guarantor was insolvent or rendered insolvent by reason of the incurrence of the
indebtedness;
    
    the guarantor was left with an unreasonably small amount of capital to carry on its
business; or
    
    the guarantor intended to, or believed that it would, incur debts beyond its ability to
pay as they mature.
   
    
    the sum of its debts, including contingent liabilities, was greater than the fair
saleable value of all its assets;
    
    the present fair saleable value of its assets was less than the amount that would be
required to pay its probable liability on its existing debts and liabilities, including
contingent liabilities, as they become absolute and mature; or
    
    it could not pay its debts as they become due.
 35




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Because each guarantors liability under its guarantee may be reduced to zero, avoided or released
under certain circumstances, you may not receive any payments from some or all of the guarantors.
  In the event of a bankruptcy of us or any of the guarantors, holders of the exchange notes may be
deemed to have an unsecured claim to the extent that our obligations in respect of the exchange
notes exceed the fair market value of the collateral securing the exchange notes.
  Your ability to transfer the exchange notes may be limited by the absence of an active trading
market, and there is no assurance that any active trading market will develop for the exchange
notes and you may not be able to sell them quickly or at the price you paid.
  36




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Changes in our credit rating could adversely affect the market price or liquidity of the exchange
notes.
  37




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USE OF PROCEEDS
  38




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##### Table of Contents



CAPITALIZATION
 
  
  
 As ofMarch 31, 2011($ in thousands)Cash and cash equivalents
    
    $
    18,787Debt:$425 million principal amount of senior secured notes
offered hereby (net of unamortized original issue
discount of $10.3 million)
    
    $
    414,915Securitization notes and conduit facilities (1)
    
    
    172,344Notes payable (2)
    
    
    26,625Total debt
    
    
    613,884Total member capital (deficit)
    
    
    (230,760
    )Total capitalization
    
    $
    383,124
 
 
 (1)
    
    Consists of certain non-recourse indebtedness related to our consumer
financing business incurred by our special purpose vehicles. See
Description of Other Indebtedness for additional information.(2)
    
    Consists primarily of (a) the ILXA Inventory Loan and
the  Tempus Acquisition
Loan described in Description of Other Indebtedness and (b) financed premiums on certain insurance policies under
unsecured notes. For additional information, see Description of Other Indebtedness. 
  
 39




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##### Table of Contents



SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
 
  
    40




---



##### Table of Contents



Predecessor
    

    
    CompanyYear
    
    
    October 1,Ended
    
    
    2008
    

    
    April 27-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Three Months EndedSeptember 30,
    
    
    April 20,
    

    
    December 31,
    
    
    Year Ended December 31,
    
    
    March 31,2008
    
    
    2007
    

    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2010
    
    
    2011(Unaudited)
    
    
    (Unaudited)
    

    
    (Audited)
    
    
    (Audited)
    
    
    (Audited)
    
    
    (Audited)
    
    
    (Unaudited)
    
    
    (Unaudited)($ in thousands)Statement of Operations Data:Total revenues
    
    $
    406,865
    
    
    $
    226,479
    
    
    
    $
    263,969
    
    
    $
    402,414
    
    
    $
    410,961
    
    
    $
    370,825
    
    
    $
    87,538
    
    
    $
    87,532Total costs and expenses
    
    
    396,656
    
    
    
    230,500
    
    
    
    
    309,595
    
    
    
    489,577
    
    
    
    432,757
    
    
    
    391,258
    
    
    
    92,321
    
    
    
    92,778Income (loss) before provision (benefit) for
income taxes, discontinued operations and
cumulative effect of change in
accounting principle
    
    
    10,209
    
    
    
    (4,021
    )
    
    
    
    (45,626
    )
    
    
    (87,163
    )
    
    
    (21,796
    )
    
    
    (20,433
    )
    
    
    (4,783
    )
    
    
    (5,246
    )Provision (benefit) for income taxes
    
    
    4,534
    
    
    
    (3,061
    )
    
    
    
    1,594
    
    
    
    1,809
    
    
    
    (799
    )
    
    
    (1,274
    )
    
    
    705
    
    
    
    1,473Income (loss) before discontinued operations and
cumulative effect of change in
accounting principle
    
    
    5,675
    
    
    
    (960
    )
    
    
    
    (47,220
    )
    
    
    (88,972
    )
    
    
    (20,997
    )
    
    
    (19,159
    )
    
    
    (5,488
    )
    
    
    (6,719
    )Loss on discontinued operations
    
    
    
    
    
    
    (2,559
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cumulative effect of change in accounting principle
    
    
    (21,010
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (15,335
    )
    
    $
    (3,519
    )
    
    
    $
    (47,220
    )
    
    $
    (88,972
    )
    
    $
    (20,997
    )
    
    $
    (19,159
    )
    
    $
    (5,488
    )
    
    $
    (6,719
    )Ratio of Earnings to Fixed Charges:Ratio of earning to fixed charges(1)
    
    
    1.4
    x
    
    
    0.6
    x
    
    
    
    0.2
    x
    
    
    (0.2)x
    
    
    
    0.7
    x
    
    
    0.7
    x
    
    
    0.7
    x
    
    
    0.7
    x
 
 
 Predecessor
    
    
    
    CompanyAs of
    
    
    As of
    
    

    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    As ofSeptember 30,
    
    
    April 26,
    
    
    
    As of December 31,
    
    
    March 31,2006
    
    
    2007
    
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011(Unaudited)
    
    
    (Unaudited)
    
    
    
    (Audited)
    
    
    (Audited)
    
    
    (Audited)
    
    
    (Audited)
    
    
    (Unaudited)($ in thousands)Balance Sheet Data:Mortgages and contracts receivable,
net
    
    $
    236,522
    
    
    $
    240,469
    
    
    
    $
    325,254
    
    
    $
    300,795
    
    
    $
    263,556
    
    
    $
    245,287
    
    
    $
    234,536Unsold vacation interests, net
    
    
    226,442
    
    
    
    215,759
    
    
    
    
    246,639
    
    
    
    218,116
    
    
    
    203,225
    
    
    
    190,564
    
    
    
    199,724Total assets
    
    
    666,292
    
    
    
    759,356
    
    
    
    
    891,129
    
    
    
    749,318
    
    
    
    672,118
    
    
    
    680,751
    
    
    
    701,325Borrowings under line of credit
agreements
    
    
    175,343
    
    
    
    196,858
    
    
    
    
    412,250
    
    
    
    389,000
    
    
    
    393,954
    
    
    
    
    
    
    
    Securitization notes and conduit
facilities
    
    
    83,542
    
    
    
    69,113
    
    
    
    
    316,557
    
    
    
    291,965
    
    
    
    222,913
    
    
    
    186,843
    
    
    
    172,344Convertible bonds(2)
    
    
    95,000
    
    
    
    95,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Senior secured notes, net of
unamortized original issue discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    414,722
    
    
    
    414,915Total liabilities
    
    $
    464,241
    
    
    $
    486,271
    
    
    
    $
    867,986
    
    
    $
    837,066
    
    
    $
    775,979
    
    
    $
    807,998
    
    
    $
    833,093
 
 
 (1)
    
    For purposes of calculating this ratio, earnings
consist of earnings (loss) before provision (benefit) for income
taxes plus fixed charges, and fixed charges consist of
interest expense, including amortization of deferred financing costs
and amortization of original issue discount.
For the years ended December 31, 2007, 2008, 2009 and 2010, and the three months ended March 31, 2010 and 2011, our earnings were insufficient to cover fixed charges,
and the amount of additional earnings needed to cover fixed charges for such periods were $47.4 million, $87.5
million, $21.8 million, $20.4 million, $4.8 million and $5.2 million, respectively.(2)
    
    Convertible bonds that were issued in March 2004. These bonds were
repaid in full in connection with the acquisition of Sunterra
Corporation. 41




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 You should read the following discussion in conjunction with Selected Consolidated
Financial and Operating Data and our consolidated financial statements and other financial
information included elsewhere in this prospectus. The statements in this discussion regarding
market conditions and outlook, our expectations regarding our future performance, liquidity and
capital resources and other non-historical statements are subject to numerous risks and
uncertainties, including, but not limited to, the risks and uncertainties described under
Cautionary Statement Regarding Forward-Looking Statements and Risk Factors. Our actual results
may differ materially from those contained in or implied by any forward-looking statements.
 Overview
 
  
 Optimization of Operations
   
    
    improving selling and marketing efficiencies through the reduction in the use of certain sales
incentives
such as the payment of first year maintainance fees on behalf of the VOI purchasers and the issuance of travel vouchers and entertainment tickets;
 
    
    maximizing our fee-for-service revenue, primarily in our hospitality and management
services business;
 
    
    closing certain low margin sales centers; and
 
    
    reducing head count in our sales force and related staffing at the corporate level.
  
    
    implementing incentive programs to increase cash sales;
 
    
    increasing interest rates on new consumer loans; and
 
    
    tightening credit requirements.
  42




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##### Table of Contents



Critical Accounting Policies and Use of Estimates
   Vacation Interest Sales Revenue Recognition.
 
 Vacation Interest Cost of Sales.
 
 43




---



##### Table of Contents



Mortgages and Contracts Receivable and Allowance for Loan and Contract Losses.
     
 Unsold Vacation Interests, Net.
 
 
  
 
  
 
 
 Income Taxes.
  44




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##### Table of Contents



Segment Reporting
    Key Revenue and Expense Items
 
 Vacation
Interest Revenue, Net.
 
 Management, Member and Other Services Revenue.
 
    
    Management fee revenues are recognized in accordance with the terms of our
management contracts. We collect management fees from our HOAs and Collections under
our management agreements, which are recognized ratably throughout the year as earned.
All of these revenues are allocated to our Hospitality and Management Services business
segment. The management fees we earn are included in establishing HOA and Collections operating budgets which, in turn, are used to establish the annual maintenance
fees owed directly by each owner of VOIs.
 
    
    We charge an annual fee for membership in THE Club, our internal exchange,
reservation and membership service organization. In addition to annual dues associated
with THE Club, we earn revenue associated with customer conversions into THE Club, which
involve the payment of a one-time fee by interval owners who wish to retain their
intervals but also participate in THE Club. We also earn revenue through our provision
of travel-related services and other affinity programs. All of these revenues are
allocated to our Hospitality and Management Services business segment.
 
    
    Other services revenue includes (i) collection fees paid by owners when they
bring their accounts current after collection efforts have been made by us on behalf of
HOAs; (ii) travel services revenue from our European travel operations, which we
discontinued during the second quarter of 2008; (iii) reservation protection plan
revenue, which is an optional fee paid by customers when making a reservation to protect
their points should they need to cancel their reservation; (iv) closing costs on sales
of VOIs; (v) revenue associated with certain sales incentives given to customers as
motivation to purchase a VOI, which is recorded upon recognition of the related VOI
sales revenue; and (vi) late/impound fees assessed on delinquent consumer loans.
Revenues associated with items (i), (ii) and (iii) above are allocated to our
Hospitality and Management Services business segment, and revenues associated with items
(iv), (v) and (vi) above are allocated to our Vacation Interest Sales and Financing
business segment.
 Consolidated
Resort Operations Revenue
 
    
    For our properties located in the Caribbean, we provide services
traditionally administered by an HOA. Consolidated resort operations revenue includes
the maintenance fees billed to owners and the Collections by our St. Maarten
HOAs, which are recognized ratably over the year. In addition, these HOAs also bill the
owners for capital project assessments to repair and replace the amenities of these
resorts, as well as special assessments to reserve the out-of-pocket deductibles for
hurricanes and other natural disasters. These assessments are deferred until
refurbishment activity occurs, at which time the amounts collected are recognized as a
direct reduction to refurbishment expense in consolidated resort operations expense. All
operating revenues and expenses associated with these
 45




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##### Table of Contents



properties are consolidated within our financial statements, except for
intercompany transactions, such as maintenance fees for our owned inventory and
management fees, which are eliminated.
 
    
    Food and beverage revenue at certain resorts whose
restaurants we manage
directly;
 
    
    Greens fees, equipment rental and operation of food services at the golf courses
owned and managed by us at certain resorts;
 
    
    Revenue from providing cable, telephone, and technology services to HOAs; and
 
    
    Other incidental revenues generated at the resorts including, but not limited to,
retail and gift shops, activity fees for arts and crafts, sport equipment rental, and
safe rental.
 Interest Revenue.
 Vacation
Interest Cost of Sales.
 Advertising, Sales and Marketing Costs.
 Vacation Interest Carrying Cost, Net.
  Management,
Member and Other Services Expense
 46




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##### Table of Contents



Consolidated
Resort Operations Expense.
 
 Loan Portfolio Expense.
 
 General and Administrative Expense.
 Depreciation and Amortization.
 Interest Expense.
 47




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Factors That May Affect Our Future Financial Presentation
 
  
 
  
 Presentation of Certain Financial Metrics
 
 Adjusted EBITDA.
 
 
 
  
    
    it and similar non-GAAP measures are widely used by investors and securities analysts
to measure a companys operating performance without regard to items that can vary
substantially from company to company depending upon financing and accounting methods,
book values of assets, capital structures and the methods by which assets were acquired;
 
    
    by comparing Adjusted EBITDA in different historical periods, we can evaluate our
operating results without the additional variations of interest income (expense), income
tax provision (benefit), depreciation and amortization expense and the vacation interest
cost of sales expense; and
 48




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##### Table of Contents




    
    several of the financial covenants governing the exchange notes and 2008 conduit
facility, including the limitation on our ability to incur additional indebtedness, are
determined by reference to our EBITDA as defined in the notes, which definition
approximates Adjusted EBITDA as presented here.
  
  
 
 Three Months
    
    
    Twelve MonthsYear Ended
    
    
    Ended
    
    
    EndedDecember 31
    
    
    March 31,
    
    
    March 31,2008
    
    
    2009
    
    
    2010
    
    
    2010
    
    
    2011
    
    
    2011(Audited)
    
    
    (Audited)
    
    
    (Audited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)($ in thousands)Loss before provision (benefit) for income taxes
    
    $
    (87,163
    )
    
    $
    (21,796
    )
    
    $
    (20,433
    )
    
    $
    (4,783
    )
    
    $
    (5,246
    )
    
    $
    (20,896
    )Plus: Corporate interest expense(a)
    
    
    50,563
    
    
    
    44,119
    
    
    
    48,959
    
    
    
    10,752
    
    
    
    14,317
    
    
    
    52,524Depreciation and amortization(b)
    
    
    16,687
    
    
    
    13,366
    
    
    
    11,939
    
    
    
    2,797
    
    
    
    3,170
    
    
    
    12,312Vocation interest cost of sales(c)
    
    
    67,551
    
    
    
    55,135
    
    
    
    39,730
    
    
    
    10,625
    
    
    
    67
    
    
    
    29,172Estimated defaults on consumer loans originated in prior periods(d)
    
    
    32,033
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairments and other write-offs(b)
    
    
    17,168
    
    
    
    1,125
    
    
    
    3,330
    
    
    
    
    
    
    
    83
    
    
    
    3,413Loss on extinguishment of debt(b)
    
    
    
    
    
    
    10,903
    
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    1,081Gain on the disposal of assets(b)
    
    
    (1,007
    )
    
    
    (137
    )
    
    
    (1,923
    )
    
    
    (2
    )
    
    
    (9
    )
    
    
    (1,930
    )Amortization of loan origination costs(b)
    
    
    2,620
    
    
    
    3,878
    
    
    
    3,436
    
    
    
    836
    
    
    
    646
    
    
    
    3,246Amortization of portfolio discount(b)
    
    
    767
    
    
    
    (648
    )
    
    
    (430
    )
    
    
    (148
    )
    
    
    (89
    )
    
    
    (371
    )Less: Non-cash revenue(e)
    
    
    
    
    
    
    (2,886
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted EBITDAConsolidated(f)
    
    $
    97,685
    
    
    $
    103,059
    
    
    $
    85,689
    
    
    $
    20,077
    
    
    $
    12,939
    
    
    $
    78,551Adjusted EBITDADiamond Resorts Parent, LLC and Restricted Subsidiaries(f)
    
    
    97,676
    
    
    
    108,381
    
    
    
    92,223
    
    
    
    20,128
    
    
    
    18,068
    
    
    
    90,163Adjusted EBITDAUnrestricted Subsidiaries(f)
    
    
    9
    
    
    
    (5,322
    )
    
    
    (6,534
    )
    
    
    (51
    )
    
    
    (5,129
    )
    
    
    (11,612
    )
 
 
 (a)
    
    Excludes interest expense related to non-recourse indebtedness incurred by
our special purpose vehicles that is secured by our VOI consumer loans.(b)
    
    These items represent non-cash charges/revenues.(c)
    
    We record vacation interest cost of sales using the relative sales value
method in accordance with ASC 978, which requires us to make significant estimates
which are subject to significant uncertainty. In determining the appropriate amount of
costs using the relative sales value method, we rely on complex, multi-year financial
models that incorporate a variety of estimated inputs. These models are reviewed on a
regular basis, and the relevant estimates used in the models are revised based upon
historical results and managements new estimates. Small changes in any of the
numerous assumptions in the model can have a significant financial statement impact as
ASC 978 requires a retroactive adjustment back to the time of the Sunterra Corporation
acquisition in the current period. Much like depreciation or amortization, for us
vacation interest cost of sales is essentially a non-cash expense item.(d)
    
    Represents a one-time charge resulting from increased estimated defaults on
our consumer loans originated prior to 2008.(e)
    
    Consists of non-cash revenue outside the ordinary course of business,
including VOI sales revenue recognized upon the completion of construction of certain
units sold prior to the acquisition of Sunterra Corporation in April 2007.(f)
    
    For purposes of certain covenants governing the exchange notes, the Companys
financial performance, including Adjusted EBITDA, is measured with reference to the
Company and its Restricted Subsidiaries, and the performance of Unrestricted
Subsidiaries is not considered. Therefore, we believe that this presentation of
Adjusted EBITDA provides helpful information to investors in the exchange notes. See
Note 22 of our audited financial statements included elsewhere in this prospectus. 
  
    
    Adjusted EBITDA does not reflect our cash expenditures or future requirements for
capital expenditures or VOI inventory;
 
    
    Adjusted EBITDA does not reflect changes in, or cash requirements for, our working
capital needs;
 
    
    Adjusted EBITDA does not reflect cash requirements for income taxes;
 
    
    Adjusted EBITDA does not reflect interest expense for our corporate indebtedness;
 
 
    
    Although depreciation and amortization are non-cash charges, the assets being
depreciated or amortized will often have to be replaced in the future, and Adjusted EBITDA
does not reflect any cash requirements for these replacements;
 
 
 
    
    Although vacation interest cost of sales is also a non-cash item, we may in the future be
required to develop or acquire new resort properties to replenish VOI inventory, and Adjusted
EBITDA does not reflect any cash requirements for these expenditures; and
 
 
    
    Other companies in our industry may calculate Adjusted EBITDA differently than we do,
limiting its usefulness as a comparative measure.
  
 
 49




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##### Table of Contents



Results of Operations
  
 Comparison of the Three Months Ended March 31, 2011 to the Three Months Ended March 31, 2010
(Unaudited)
 (In thousands)
 Three Months Ended March 31, 2011
    
    
    Three Months Ended March 31, 2010Hospitality
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Hospitality
    
    
    Vacationand
    
    
    Vacation
    
    
    
    
    
    
    
    
    
    
    and
    
    
    Interest SalesManagement
    
    
    Interest Sales
    
    
    Corporate
    
    
    
    
    
    
    Management
    
    
    and
    
    
    CorporateServices
    
    
    and Financing
    
    
    and Other
    
    
    Total
    
    
    Services
    
    
    Financing
    
    
    and Other
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    
    
    
    $
    41,933
    
    
    $
    
    
    
    $
    41,933
    
    
    $
    
    
    
    $
    48,082
    
    
    $
    
    
    
    $
    48,082Provision for uncollectible
Vacation Interest sales revenue
    
    
    
    
    
    
    (2,990
    )
    
    
    
    
    
    
    (2,990
    )
    
    
    
    
    
    
    (1,622
    )
    
    
    
    
    
    
    (1,622
    )Vacation Interest, net
    
    
    
    
    
    
    38,943
    
    
    
    
    
    
    
    38,943
    
    
    
    
    
    
    
    46,460
    
    
    
    
    
    
    
    46,460Management, member and other
services
    
    
    29,643
    
    
    
    2,142
    
    
    
    
    
    
    
    31,785
    
    
    
    21,991
    
    
    
    2,734
    
    
    
    
    
    
    
    24,725Consolidated resort operations
    
    
    6,946
    
    
    
    
    
    
    
    
    
    
    
    6,946
    
    
    
    6,501
    
    
    
    
    
    
    
    
    
    
    
    6,501Interest
    
    
    
    
    
    
    9,415
    
    
    
    414
    
    
    
    9,829
    
    
    
    
    
    
    
    9,794
    
    
    
    22
    
    
    
    9,816Gain on mortgage repurchase
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    36Total revenues
    
    
    36,589
    
    
    
    50,529
    
    
    
    414
    
    
    
    87,532
    
    
    
    28,492
    
    
    
    59,024
    
    
    
    22
    
    
    
    87,538Costs and Expenses:Vacation Interest cost of sales
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    10,625
    
    
    
    
    
    
    
    10,625Advertising, sales and marketing
    
    
    
    
    
    
    28,436
    
    
    
    
    
    
    
    28,436
    
    
    
    
    
    
    
    25,465
    
    
    
    
    
    
    
    25,465Vacation Interest carrying cost,
net
    
    
    
    
    
    
    8,560
    
    
    
    
    
    
    
    8,560
    
    
    
    
    
    
    
    7,435
    
    
    
    
    
    
    
    7,435Management, member and other
services
    
    
    6,005
    
    
    
    255
    
    
    
    
    
    
    
    6,260
    
    
    
    6,057
    
    
    
    465
    
    
    
    
    
    
    
    6,522Consolidated resort operations
    
    
    6,168
    
    
    
    
    
    
    
    
    
    
    
    6,168
    
    
    
    5,877
    
    
    
    
    
    
    
    
    
    
    
    5,877Loan portfolio
    
    
    179
    
    
    
    2,439
    
    
    
    
    
    
    
    2,618
    
    
    
    252
    
    
    
    2,351
    
    
    
    
    
    
    
    2,603General and administrative
    
    
    
    
    
    
    
    
    
    
    19,053
    
    
    
    19,053
    
    
    
    
    
    
    
    
    
    
    
    15,320
    
    
    
    15,320Gain on disposal of assets
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    3,170
    
    
    
    3,170
    
    
    
    
    
    
    
    
    
    
    
    2,797
    
    
    
    2,797Interest
    
    
    
    
    
    
    4,055
    
    
    
    14,317
    
    
    
    18,372
    
    
    
    
    
    
    
    4,927
    
    
    
    10,752
    
    
    
    15,679Impairments and other write-offs
    
    
    
    
    
    
    
    
    
    
    83
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    12,352
    
    
    
    43,812
    
    
    
    36,614
    
    
    
    92,778
    
    
    
    12,186
    
    
    
    51,268
    
    
    
    28,867
    
    
    
    92,321Income (loss) before provision
for income taxes
    
    
    24,237
    
    
    
    6,717
    
    
    
    (36,200
    )
    
    
    (5,246
    )
    
    
    16,306
    
    
    
    7,756
    
    
    
    (28,845
    )
    
    
    (4,783
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    1,473
    
    
    
    1,473
    
    
    
    
    
    
    
    
    
    
    
    705
    
    
    
    705Net income (loss)
    
    $
    24,237
    
    
    $
    6,717
    
    
    $
    (37,673
    )
    
    $
    (6,719
    )
    
    $
    16,306
    
    
    $
    7,756
    
    
    $
    (29,550
    )
    
    $
    (5,488
    )Adjusted EBITDA  Diamond
Resorts Parent, LLC and
Restricted Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    18,068
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    20,128Adjusted EBITDA 
Unrestricted Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,129
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51
    )Adjusted EBITDA 
Consolidated
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12,939
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    20,077
 
 50




---



##### Table of Contents



Revenues
  Vacation Interest, Net.
    Management, Member and Other Services .
  51




---



##### Table of Contents



Consolidated Resort Operations
 Interest Revenue .
 Costs and Expenses
  Vacation Interest Cost of Sales .
  Advertising, Sales and Marketing .
 Vacation Interest Carrying Cost, Net .
 52




---



##### Table of Contents



Management, Member and Other Services Expense.
  
  
 Consolidated Resort Operations Expense.
 Loan Portfolio Expense .
 General and Administrative Expense .
 Depreciation and Amortization .
 Interest Expense .
 53




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##### Table of Contents



Comparison of the Year Ended December 31, 2010 to the Year Ended December 31, 2009
 (In thousands)
 
 Year Ended December 31, 2010
    
    
    Year Ended December 31, 2009Hospitality
    
    
    Vacation
    
    
    
    
    
    
    
    
    
    
    Hospitality
    
    
    Vacationand
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    and
    
    
    InterestManagement
    
    
    Sales and
    
    
    Corporate
    
    
    
    
    
    
    Management
    
    
    Sales and
    
    
    CorporateServices
    
    
    Financing
    
    
    and Other
    
    
    Total
    
    
    Services
    
    
    Financing
    
    
    and Other
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    
    
    
    $
    214,764
    
    
    $
    
    
    
    $
    214,764
    
    
    $
    
    
    
    $
    248,643
    
    
    $
    
    
    
    $
    248,643Provision for uncollectible
Vacation Interest sales revenue
    
    
    
    
    
    
    (12,655
    )
    
    
    
    
    
    
    (12,655
    )
    
    
    
    
    
    
    (14,153
    )
    
    
    
    
    
    
    (14,153
    )Vacation Interest, net
    
    
    
    
    
    
    202,109
    
    
    
    
    
    
    
    202,109
    
    
    
    
    
    
    
    234,490
    
    
    
    
    
    
    
    234,490Management, member and other
services
    
    
    91,156
    
    
    
    11,495
    
    
    
    
    
    
    
    102,651
    
    
    
    93,431
    
    
    
    14,772
    
    
    
    
    
    
    
    108,203Consolidated resort operations
    
    
    26,547
    
    
    
    
    
    
    
    
    
    
    
    26,547
    
    
    
    23,814
    
    
    
    
    
    
    
    
    
    
    
    23,814Interest
    
    
    
    
    
    
    39,150
    
    
    
    177
    
    
    
    39,327
    
    
    
    
    
    
    
    43,200
    
    
    
    972
    
    
    
    44,172Gain on mortgage repurchase
    
    
    
    
    
    
    191
    
    
    
    
    
    
    
    191
    
    
    
    
    
    
    
    282
    
    
    
    
    
    
    
    282Total revenues
    
    
    117,703
    
    
    
    252,945
    
    
    
    177
    
    
    
    370,825
    
    
    
    117,245
    
    
    
    292,744
    
    
    
    972
    
    
    
    410,961Costs and Expenses:Vacation Interest cost of sales
    
    
    
    
    
    
    39,730
    
    
    
    
    
    
    
    39,730
    
    
    
    
    
    
    
    55,135
    
    
    
    
    
    
    
    55,135Advertising, sales and marketing
    
    
    
    
    
    
    114,029
    
    
    
    
    
    
    
    114,029
    
    
    
    
    
    
    
    116,098
    
    
    
    
    
    
    
    116,098Vacation Interest carrying
cost, net
    
    
    
    
    
    
    29,821
    
    
    
    
    
    
    
    29,821
    
    
    
    
    
    
    
    32,992
    
    
    
    
    
    
    
    32,992Management, member and other
services
    
    
    21,916
    
    
    
    1,730
    
    
    
    
    
    
    
    23,646
    
    
    
    26,449
    
    
    
    4,714
    
    
    
    
    
    
    
    31,163Consolidated resort operations
    
    
    23,972
    
    
    
    
    
    
    
    
    
    
    
    23,972
    
    
    
    22,456
    
    
    
    
    
    
    
    
    
    
    
    22,456Loan portfolio
    
    
    1,025
    
    
    
    9,541
    
    
    
    
    
    
    
    10,566
    
    
    
    954
    
    
    
    8,881
    
    
    
    
    
    
    
    9,835General and administrative
    
    
    
    
    
    
    
    
    
    
    67,905
    
    
    
    67,905
    
    
    
    
    
    
    
    
    
    
    
    71,306
    
    
    
    71,306Gain on disposal of assets
    
    
    
    
    
    
    
    
    
    
    (1,923
    )
    
    
    (1,923
    )
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    (137
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    11,939
    
    
    
    11,939
    
    
    
    
    
    
    
    
    
    
    
    13,366
    
    
    
    13,366Interest, net of capitalized
interest
    
    
    
    
    
    
    18,203
    
    
    
    48,959
    
    
    
    67,162
    
    
    
    
    
    
    
    24,396
    
    
    
    44,119
    
    
    
    68,515Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    1,081
    
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    10,903
    
    
    
    10,903
 
 54




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##### Table of Contents



Year Ended December 31, 2010
    
    
    Year Ended December 31, 2009Hospitality
    
    
    Vacation
    
    
    
    
    
    
    
    
    
    
    Hospitality
    
    
    Vacationand
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    and
    
    
    InterestManagement
    
    
    Sales and
    
    
    Corporate
    
    
    
    
    
    
    Management
    
    
    Sales and
    
    
    CorporateServices
    
    
    Financing
    
    
    and Other
    
    
    Total
    
    
    Services
    
    
    Financing
    
    
    and Other
    
    
    TotalImpairments and other write-offs
    
    
    
    
    
    
    
    
    
    
    3,330
    
    
    
    3,330
    
    
    
    
    
    
    
    
    
    
    
    1,125
    
    
    
    1,125Total costs and expenses
    
    
    46,913
    
    
    
    213,054
    
    
    
    131,291
    
    
    
    391,258
    
    
    
    49,859
    
    
    
    242,216
    
    
    
    140,682
    
    
    
    432,757Income
(loss) before (benefit) for
income taxes
    
    
    70,790
    
    
    
    39,891
    
    
    
    (131,114
    )
    
    
    (20,433
    )
    
    
    67,386
    
    
    
    50,528
    
    
    
    (139,710
    )
    
    
    (21,796
    )Benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    (1,274
    )
    
    
    (1,274
    )
    
    
    
    
    
    
    
    
    
    
    (799
    )
    
    
    (799
    )Net income (loss)
    
    $
    70,790
    
    
    $
    39,891
    
    
    $
    (129,840
    )
    
    $
    (19,159
    )
    
    $
    67,386
    
    
    $
    50,528
    
    
    $
    (138,911
    )
    
    $
    (20,997
    )Adjusted EBITDA  Diamond
Resorts Parent, LLC and
Restricted Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    92,223
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    108,381Adjusted EBITDA 
Unrestricted Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (6,534
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,322)Adjusted
EBITDA  Consolidated
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    85,689
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    103,059
 
 Revenues
  Vacation
Interest, Net.
 
  
  55




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##### Table of Contents



Management, Member and Other Services .
  
  
 Consolidated Resort Operations
 Interest Revenue .
 56




---



##### Table of Contents



Costs and Expenses
  
 Vacation Interest Cost of Sales .
 
 
 Advertising, Sales and Marketing .
 
 
 Vacation Interest Carrying Cost, Net .
 
 Management, Member and Other Services Expense.
  
  
 Consolidated
Resort Operations Expense.
 Loan Portfolio Expense .
 57




---



##### Table of Contents



General and Administrative Expense .
 
 Gain on disposal of assets .
 
 Depreciation and Amortization .
 Interest Expense, Net of Capitalized Interest .
 Loss on Extinguishment of Debt.
 Impairments and Other Write-offs
 58




---



##### Table of Contents



Comparison of the Year Ended December 31, 2009 to the Year Ended December 31, 2008
 (In thousands)
 Year ended December 31, 2009
    
    
    Year ended December 31, 2008Hospitality
    
    
    Vacation
    
    
    
    
    
    
    
    
    
    
    Hospitality
    
    
    Vacationand
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    and
    
    
    InterestManagement
    
    
    Sales and
    
    
    Corporate
    
    
    
    
    
    
    Management
    
    
    Sales and
    
    
    CorporateServices
    
    
    Financing
    
    
    and Other
    
    
    Total
    
    
    Services
    
    
    Financing
    
    
    and Other
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    
    
    
    $
    248,643
    
    
    $
    
    
    
    $
    248,643
    
    
    $
    
    
    
    $
    285,442
    
    
    $
    
    
    
    $
    285,442Provision for uncollectible
Vacation Interest sales revenue
    
    
    
    
    
    
    (14,153
    )
    
    
    
    
    
    
    (14,153
    )
    
    
    
    
    
    
    (51,166
    )
    
    
    
    
    
    
    (51,166
    )Vacation Interest, net
    
    
    
    
    
    
    234,490
    
    
    
    
    
    
    
    234,490
    
    
    
    
    
    
    
    234,276
    
    
    
    
    
    
    
    234,276Management, member and other
services
    
    
    93,431
    
    
    
    14,772
    
    
    
    
    
    
    
    108,203
    
    
    
    76,570
    
    
    
    16,671
    
    
    
    
    
    
    
    93,241Consolidated resort operations
    
    
    23,814
    
    
    
    
    
    
    
    
    
    
    
    23,814
    
    
    
    21,006
    
    
    
    
    
    
    
    
    
    
    
    21,006Interest
    
    
    
    
    
    
    43,200
    
    
    
    972
    
    
    
    44,172
    
    
    
    1,812
    
    
    
    49,979
    
    
    
    1,835
    
    
    
    53,626Gain on mortgage repurchase
    
    
    
    
    
    
    282
    
    
    
    
    
    
    
    282
    
    
    
    
    
    
    
    265
    
    
    
    
    
    
    
    265Total revenues
    
    
    117,245
    
    
    
    292,744
    
    
    
    972
    
    
    
    410,961
    
    
    
    99,388
    
    
    
    301,191
    
    
    
    1,835
    
    
    
    402,414Costs and Expenses:Vacation Interest cost of sales
    
    
    
    
    
    
    55,135
    
    
    
    
    
    
    
    55,135
    
    
    
    
    
    
    
    67,551
    
    
    
    
    
    
    
    67,551Advertising, sales and
marketing
    
    
    
    
    
    
    116,098
    
    
    
    
    
    
    
    116,098
    
    
    
    
    
    
    
    148,565
    
    
    
    
    
    
    
    148,565Vacation Interest carrying
cost, net
    
    
    
    
    
    
    32,992
    
    
    
    
    
    
    
    32,992
    
    
    
    
    
    
    
    22,831
    
    
    
    
    
    
    
    22,831Management, member and other
services
    
    
    26,449
    
    
    
    4,714
    
    
    
    
    
    
    
    31,163
    
    
    
    28,747
    
    
    
    6,599
    
    
    
    
    
    
    
    35,346Consolidated resort operations
    
    
    22,456
    
    
    
    
    
    
    
    
    
    
    
    22,456
    
    
    
    23,685
    
    
    
    
    
    
    
    
    
    
    
    23,685Loan portfolio
    
    
    954
    
    
    
    8,881
    
    
    
    
    
    
    
    9,835
    
    
    
    661
    
    
    
    8,092
    
    
    
    
    
    
    
    8,753General and administrative
    
    
    
    
    
    
    
    
    
    
    71,306
    
    
    
    71,306
    
    
    
    
    
    
    
    
    
    
    
    78,618
    
    
    
    78,618Gain on disposal of assets
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    (1,007
    )
    
    
    (1,007
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    13,366
    
    
    
    13,366
    
    
    
    
    
    
    
    
    
    
    
    16,687
    
    
    
    16,687Interest, net of capitalized
interest
    
    
    
    
    
    
    24,396
    
    
    
    44,119
    
    
    
    68,515
    
    
    
    
    
    
    
    20,817
    
    
    
    50,563
    
    
    
    71,380Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    10,903
    
    
    
    10,903
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairments and other
write-offs
    
    
    
    
    
    
    
    
    
    
    1,125
    
    
    
    1,125
    
    
    
    
    
    
    
    
    
    
    
    17,168
    
    
    
    17,168Total costs and expenses
    
    
    49,859
    
    
    
    242,216
    
    
    
    140,682
    
    
    
    432,757
    
    
    
    53,093
    
    
    
    274,455
    
    
    
    162,029
    
    
    
    489,577Income (loss) before (benefit) provision
for income taxes
    
    
    67,386
    
    
    
    50,528
    
    
    
    (139,710
    )
    
    
    (21,796
    )
    
    
    46,295
    
    
    
    26,736
    
    
    
    (160,194
    )
    
    
    (87,163
    )(Benefit) provision for income
taxes
    
    
    
    
    
    
    
    
    
    
    (799
    )
    
    
    (799
    )
    
    
    
    
    
    
    
    
    
    
    1,809
    
    
    
    1,809Net income (loss)
    
    $
    67,386
    
    
    $
    50,528
    
    
    $
    (138,911
    )
    
    $
    (20,997
    )
    
    $
    46,295
    
    
    $
    26,736
    
    
    $
    (162,003
    )
    
    $
    (88,972
    )Adjusted
EBITDA  Diamond Resorts Parent, LLC and Restricted Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    108,381
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    97,676Adjusted
EBITDA  Unrestricted Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,322
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    9Adjusted
EBITDA  Consolidated
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    103,059
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    97,685
 59




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##### Table of Contents



Revenues
  Vacation
Interest, Net
 
 
   Management, Member and Other Services
 60




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##### Table of Contents



Consolidated
Resort Operations
 Interest Revenue .
    Costs and Expenses
  61




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##### Table of Contents



Vacation Interest Cost of Sales
 
 Advertising, Sales and Marketing
 
 Vacation Interest Carrying Cost, Net
 Management, Member and Other Services Expense
  
  
 Consolidated
Resort Operations Expense.
 Loan Portfolio Expense
 General and Administrative Expense
 62




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Depreciation and Amortization
 
 Interest Expense, Net of Capitalized Interest
 Loss on Extinguishment of Debt
 Impairments and Other Write-offs .
 63




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Liquidity and Capital Resources
 Overview.
   
  
 
  
  
  
 
  
 
 Cash Flow From Operating Activities.
 
 64




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##### Table of Contents



Cash Flow From Investing Activities.
 
  
 
 Cash Flow From Financing Activities.
 
 
  
 
 Senior Secured Notes.
 
 First and Second Lien Facilities
 
  
 Conduit Facilities and 2009 Securitization .
  65




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Sunterra SPE 2004-LLC .
 Polo Towers Lines of Credit and Securitization Notes Payable.
  66




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Quorum Facility.
 
 
  
 
 Tempus
Acquisition Loan.
 
  
  
 ILXA Receivables Loan and Inventory Loan.
 
 Notes
Payable.
 
 
 2011-1
Securitization.
 
 67




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##### Table of Contents



DecemberMarch 31, 2011
    
    
    31, 2010WeightedAveragePrincipal
    
    
    Interest
    
    
    
    
    
    
    PrincipalBalance
    
    
    Rate
    
    
    Maturity
    
    
    BalanceSenior Secured Notes
    
    $
    425,000
    
    
    
    12.0
    %
    
    
    8/15/18
    
    
    $
    425,000Original issue discount related to Senior Secured Notes
    
    
    (10,085
    )
    
    
    
    
    
    
    
    
    
    
    (10,278
    )Diamond Resorts Owners Trust Series 2009-1*
    
    
    110,788
    
    
    
    9.5
    %
    
    
    3/20/26
    
    
    
    121,843Original issue discount related to Diamond Resorts
Owners Trust Series 2009-1
    
    
    (885
    )
    
    
    
    
    
    
    
    
    
    
    (899
    )2008 Conduit Facility*
    
    
    37,387
    
    
    
    5.5
    %
    
    
    8/30/11
    
    
    
    39,467ILXA Inventory Loan*
    
    
    18,539
    
    
    
    7.5
    %
    
    
    8/31/15
    
    
    
    18,541Quorum Facility*
    
    
    15,680
    
    
    
    8.0
    %
    
    
    4/30/12
    
    
    
    12,942ILXA Receivables Loan*
    
    
    9,374
    
    
    
    10.0
    %
    
    
    8/31/15
    
    
    
    10,292Tempus Acquisition Loan
    
    
    4,100
    
    
    
    10.0
    %
    
    Less than one year
        
    
    3,300Polo Towers Lines of Credit
    
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    2,060Notes payable-insurance policies
    
    
    3,938
    
    
    
    3.3
    %
    
    Various
       
    
    1,366Polo Towers Securitization Notes Payable
    
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    1,138Notes payable-other
    
    
    48
    
    
    
    3.8
    %
    
    Various
        
    
    66Total borrowings
    
    $
    613,884
    
    
    
    
    
    
    
    
    
    
    $
    624,838
 
 
 
  
 
 Future Capital Requirements .
 
 
  
 Deferred Taxes .
  
 Off-Balance Sheet Financing Arrangements .
 
 68




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##### Table of Contents



Contractual Obligations.
 
 Less than
    
    
    1-3
    
    
    3-5
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsSenior
secured notes, including interest payable
    
    $
    813,875
    
    
    $
    51,000
    
    
    $
    102,000
    
    
    $
    102,000
    
    
    $
    558,875Securitization notes payable, including
interest payable
    
    
    169,913
    
    
    
    73,066
    
    
    
    73,023
    
    
    
    23,824
    
    
    
    Conduit facilities, including interest payable
    
    
    40,914
    
    
    
    40,914
    
    
    
    
    
    
    
    
    
    
    
    Notes payable , including interest payable (1)
    
    
    25,943
    
    
    
    10,120
    
    
    
    10,241
    
    
    
    5,582
    
    
    
    Purchase obligations
    
    
    283
    
    
    
    283
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    38,794
    
    
    
    7,480
    
    
    
    10,451
    
    
    
    9,150
    
    
    
    11,713Total
    
    $
    1,089,722
    
    
    $
    182,863
    
    
    $
    195,715
    
    
    $
    140,556
    
    
    $
    570,588
 
 (1)
    
    Assumes certain estimates for payments and cancellations on collateralized outstanding mortgage receivables. Inflation.
 Interest Rate Risk.
   Foreign Currency Translation Risk.
 Information Regarding Geographic Areas of Operation.
 69




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For the Three Months EndedFor the Years Ended December 31,
    
    
    March 31,2008
    
    
    2009
    
    
    2010
    
    
    2010
    
    
    2011RevenueNorth America
    
    $
    348,129
    
    
    $
    359,790
    
    
    $
    325,710
    
    
    $
    77,904
    
    
    $
    78,510Europe
    
    
    54,285
    
    
    
    51,171
    
    
    
    45,115
    
    
    
    9,634
    
    
    
    9,022Total Revenues
    
    $
    402,414
    
    
    $
    410,961
    
    
    $
    370,825
    
    
    $
    87,538
    
    
    $
    87,532
 
 
 As ofAs of December 31,
    
    
    March 31,2008
    
    
    2009
    
    
    2010
    
    
    2011Mortgages and contracts receivable, netNorth America
    
    $
    300,364
    
    
    $
    263,007
    
    
    $
    244,541
    
    
    $
    233,707Europe
    
    
    431
    
    
    
    549
    
    
    
    746
    
    
    
    829Total mortgages and contracts receivable, net
    
    $
    300,795
    
    
    $
    263,556
    
    
    $
    245,287
    
    
    $
    234,536Unsold Vacation Interest, netNorth America
    
    $
    193,088
    
    
    $
    174,675
    
    
    $
    174,642
    
    
    $
    177,303Europe
    
    
    25,028
    
    
    
    28,550
    
    
    
    15,922
    
    
    
    22,421Total unsold vacation interest, net
    
    $
    218,116
    
    
    $
    203,225
    
    
    $
    190,564
    
    
    $
    199,724Property and equipment, netNorth America
    
    $
    21,864
    
    
    $
    19,794
    
    
    $
    24,248
    
    
    $
    29,873Europe
    
    
    6,648
    
    
    
    5,914
    
    
    
    4,849
    
    
    
    5,308Total property and equipment, net
    
    $
    28,512
    
    
    $
    25,708
    
    
    $
    29,097
    
    
    $
    35,181Intangible assets, netNorth America
    
    $
    40,287
    
    
    $
    35,664
    
    
    $
    40,926
    
    
    $
    39,682Europe
    
    
    7,665
    
    
    
    6,969
    
    
    
    4,787
    
    
    
    4,765Total intangible assets, net
    
    $
    47,952
    
    
    $
    42,633
    
    
    $
    45,713
    
    
    $
    44,447Total long-term assets, netNorth America
    
    $
    555,603
    
    
    $
    493,140
    
    
    $
    484,357
    
    
    $
    480,565Europe
    
    
    39,772
    
    
    
    41,982
    
    
    
    26,304
    
    
    
    33,323Total long-term assets, net
    
    $
    595,375
    
    
    $
    535,122
    
    
    $
    510,661
    
    
    $
    513,888
 
 70




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New Accounting Pronouncements
   
  
 
  
 
  
 71




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72




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##### Table of Contents



BUSINESS
 Company Overview
 
  
 
  
 
 
    
    Hospitality and Management Services.We manage 68 branded resort properties, which are
located in the continental United States, Hawaii, Mexico, the Caribbean and Europe. We
also manage five multi-resort trusts or similar arrangements, which
we refer to as our Collections. Each Collection holds real estate in our resort properties
underlying the VOIs that we sell. As manager of our branded resorts and our Collections, we
provide billing services, account collections, accounting and treasury functions and
information technology services. In addition, for our branded resorts we also provide an
online reservation system and customer service contact center, operate the front desks and
amenities and furnish housekeeping, maintenance and human resources services. Our
management contracts typically have an initial term of three to five years with automatic
renewals and are structured on a cost-plus basis, thereby providing us with a recurring and
stable revenue stream. In addition, we earn recurring fees by operating THE Club, our
points-based exchange and member services program that enables our members to vacation at
any of the 203 destinations in our network.
 
 
 
    
    Marketing and Sales of VOIs.We market and sell VOIs in our resort network. We
generate sales prospects by utilizing a variety of marketing programs, including targeted
mailings, telemarketing, gift certificates, presentations at our resorts targeted to
current members, guests and renters, overnight mini-vacation packages and various
destination-specific marketing efforts. We close substantially all of our VOI sales
following presentations at our sales centers, which we refer to as
tours. Currently, we sell our VOIs only in the form of points, which can be
utilized for vacations for varying lengths of stay at any resort in our network. In the
past, we also sold VOIs in the form of deeded intervals, which provide the right to
vacation at a particular resort for a specified length of time, but we no longer sell
intervals because we believe that points offer our members greater choice and flexibility
in planning their vacations. The number of points required to stay at one of our resorts
varies according to the resort, the type and size of accommodation, the season and the
length of stay. In 2010, the average cost to purchase points equivalent to a one-week
vacation at one of our resorts was $17,965.
 
 
 
    
    Consumer Financing of VOIs.We provide loans to eligible customers who purchase VOIs
through our U.S. sales centers and choose to finance their purchase. These loans are
collateralized by the underlying VOI and bear interest at a fixed rate. Our consumer
finance servicing operations include underwriting, collection
and servicing of our consumer loan portfolio. The liquidity to support our consumer
finance program is provided through conduit and securitization financings.
 
 Our Market
 
  
 73




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##### Table of Contents



*
    
    A change in ARDAs definition of the study population resulted in a
decrease in the number of resorts included in the ARDA study from 2004
to 2005, which also resulted in a decrease in the number of vacation
ownership week equivalents. This change focused ARDAs analysis on
traditional VOIs, including intervals and points, by removing
non-comparable entities such as fractionals, non-equity clubs, private
residence clubs and vacation clubs. Prior years were not restated to
give effect to this change. Source: Historical timeshare industry research conducted by Ragatz
Associates, American Economic Group and Ernst & Young on behalf of the
ARDA International Foundation, as of December 31, 2010. 
  
  
 
 Source: Historical timeshare industry research conducted by Ragatz Associates,
American Economic Group and Ernst & Young on behalf of the ARDA International
Foundation, as of December 31, 2010. 
  
 
  
 74




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##### Table of Contents



Competitive Strengths
  
 Stable cash flow from hospitality and management services.
 
 Capital-light business model.
 Flexible points-based vacation ownership structure.
 High customer satisfaction drives significant repeat customers.
 75




---



##### Table of Contents



High-quality loan originations and reduced reliance on receivables financing.
 
 Strong management team.
 
    
    implementing a new focus on service and hospitality to provide our members a premium
experience;
 
    
    introducing the Diamond Resorts International brand throughout our network of managed
resorts;
 
    
    renegotiating our hospitality management contracts to provide improved cost recovery;
 
    
    implementing a capital-light business model that does not require capital-intensive
acquisitions, development or construction;
 
    
    responding quickly to the credit crisis by substantially increasing our percentage of
all-cash sales, thereby reducing our dependence on the receivables financing market; and
 
 
    
    adjusting our marketing and sales efforts by closing certain low margin sales centers,
eliminating certain incentive programs and implementing a new sales commission
structure.
 
 Business Strategies
  Capitalizing on current industry dynamics to grow fee-based services.
 76




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##### Table of Contents



Diversify and increase revenue through new business initiatives.
 
    
    Expanding THE Club by adding new affiliated resorts, thereby increasing its value to our
members and driving more potential customers to our resorts. Through new and expanded
affiliation agreements, we have launched 89 new resort destinations worldwide since the
beginning of 2007.
 
    
    Entering into marketing arrangements with third parties whereby we offer their products
and services to our member base. We currently offer our members the opportunity to
purchase products and services (such as consumer electronics, home appliances and identity
theft protection services) at discounted prices using our global purchasing platform, and
we receive a percentage of the related sales revenue from those transactions. We intend to
expand these initiatives in the future to enhance the value proposition to our membership
base and increase our revenue.
 
    
    Pursuing management contracts and other services arrangements with resorts that we do
not currently manage. For example, we may seek to leverage our affiliate resort network to
identify and enter into new management contracts for these resorts. In addition, we intend
to pursue discussions with vacation ownership and hotel operators to provide a suite of
services, including billing and collections, purchasing, rental management and other
services.
 
    
    Expanding programs to incentivize our members to refer their friends and family.As a
result of our large ownership base, high levels of customer satisfaction and brand
recognition, we believe there is an opportunity to grow revenues by referrals from our
existing members.
 
    
    Strengthening our brand. Since the acquisition of Sunterra Corporation in 2007, we have
deployed the Diamond Resorts International brand across our managed resorts. Our goal is to
associate our brand with a premium hospitality experience that offers simplicity, choice
and comfort to our members. In pursuit of that goal, we will continue to take steps to
improve our members experience, including improving our reservations system and customer
service contact center, upgrading amenities in many of our resort units and common areas,
and increasing the quality and variety of vacation experiences available through THE
 77




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Our Customers
  
  
 Our Resort Network
 
  
 
  
 
  
   
  
  Branded and Managed Resorts
 NORTH AMERICA AND THE CARIBBEAN
 Resort
    
    Location
    
    UnitsScottsdale Villa Mirage
    
    Scottsdale, Arizona
    
    
    154Located 25 minutes from the Phoenix airport, this 154 unit resort has a heated outdoor
pool, childrens pool, whirlpools, tennis courts, playground, fitness center and games
room to provide for guests and families of all ages.Scottsdale Links Resort
    
    Scottsdale, Arizona
    
    
    217This 217 unit resort with one-, two- and three-bedroom accommodations is located
between the TPC Desert Golf
 78




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##### Table of Contents



Resort
    
    Location
    
    UnitsCourse and the McDowell Mountains in Scottsdale, within
easy reach of Phoenix. With a spa, fitness center, outdoor heated pool and spacious
units, this resort is ideal for families making it a base for exploring the area.Sedona Summit
    
    Sedona, Arizona
    
    
    278Sedona Summit is located four miles from Sedona town centre, and within easy reach of
Grand Canyon National Park. The 278 units are spread across 39 two-story buildings
with six pools and whirlpools located throughout the resort complex.The Ridge on Sedona Golf Resort
    
    Sedona, Arizona
    
    
    175Situated 15 minutes away from Sedona town center, The Ridge on Sedona Golf Resort has
175 units surrounding five whirlpools and pools with a fitness center, games room and
clubhouse.Lake Tahoe Vacation Resort
    
    South Lake Tahoe, California
    
    
    181Located on the edge of Lake Tahoe, Americas largest alpine lake and only a mile away
from the Heavenly Mountain Resort base lodge, Lake Tahoe Vacation Resort is ideally
placed for a winter skiing vacation as well as for summer activities such as hiking,
horseback riding and water sports. The resort has 181 units with both indoor and
outdoor pools and hot tubs, fitness center and game room.Flamingo Beach Resort
    
    St. Maarten, Caribbean
    
    
    208Located on the Dutch side of St. Maarten, this resort is situated on a private
beachfront with 208 studio and one-bedroom units. The resort offers a restaurant and
snack bar, as well as an outdoor pool and tennis courts.Royal Palm Beach Resort
    
    St. Maarten, Caribbean
    
    
    140Located on the Dutch side of the island, all 140 of the one-, two- and three-bedroom
units at this resort face the beach and have balconies or terraces. Facilities at the
resort include a restaurant, swimming pool and poolside bar, gym and beauty salon.Daytona Beach Regency
    
    Daytona Beach, Florida
    
    
    87This resort is situated on beachfront of the world famous Daytona Beach. Close to the
Speedway attractions, it provides 87, one- and two-bedroom units, indoor and outdoor
pools with slides and hot tubs, poolside bar, fitness center, volleyball courts and
games room.Grand Beach
    
    Orlando, Florida
    
    
    192Located minutes from Floridas Walt Disney World, SeaWorld and Universal Studios, this
192 unit resort is located on the edge of Lake Bryan. All units contain three bedrooms,
three bathrooms, and fully-equipped kitchens, which provide spacious family
accommodations, as well as an outdoor pool, whirlpool, childrens pool, playground,
game room and fitness center.The Point at Poipu
    
    Kauai, Hawaii
    
    
    215Located on the island of Kauai, this resort offers 215 units with lush garden or ocean
views across Shipwreck Beach to every suite. The resort has an outdoor beach entry
pool as well as a childrens pool, hot tub, fitness center, spa and sauna.Kaanapali Beach Club
    
    Maui, Hawaii
    
    
    411With 411 units in a 12 story building, Kaanapali Beach Club is located on the beach
front of Mauis famous North Shore. The resort has a newly opened restaurant and pool
bar, newly refurbished pools, as well as a fitness center, spa, sauna, hair salon and
gift shop.The Suites at Fall Creek
    
    Branson, Missouri
    
    
    214This resort offers 214 units, many with lake views over Lake Taneycomo. Ten minutes
away from Branson town center, the resort is ideally located to explore this
destination, while providing a selection of amenities onsite, including a fitness
center, basketball courts, boating, fishing, indoor and outdoor pools, hot tubs, mini
golf, playground, shuffle board and tennis courts.Desert Paradise Resort
    
    Las Vegas, Nevada
    
    
    142This Las Vegas resort is tucked away from The Strip but provides a good base to explore
the area. The resort has 142
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Resort
    
    Location
    
    Unitsunits across two-story buildings, all with balconies or
terraces. It also has two central pool areas equipped with hot tubs and childrens
pools, as well as barbeque areas and a fitness center.Polo Towers Suites
    
    Las Vegas, Nevada
    
    
    300This resort is located in the heart of the Las Vegas Strip and shares facilities with
Polo Towers Villas. With 300 units, the resort offers a new and comprehensive fitness
center, and two outdoor pool areas including a roof top pool.Polo Towers Villas
    
    Las Vegas, Nevada
    
    
    208This resort has 208 units and shares facilities with Polo Towers Suites, including a
new fitness center, outdoor pools and spa.Villas de Santa Fe
    
    Santa Fe, New Mexico
    
    
    105This resort is situated in Santa Fe, halfway between Taos and Albuquerque. With 105
one- and two-bedroom units, the resort offers a base to explore the surrounding area,
which is rich in culture, as well as providing a heated outdoor pool and hot tub,
fitness center, game room and clubhouse.Bent Creek Golf Village
    
    Gatlinburg, Tennessee
    
    
    47A combination of 47 one- and two- bedroom units and cabins make up Bent Creek Golf
Village situated amid a Gary Player golf course. Located 11 miles away from the center
of Gatlinburg and the Great Smoky Mountains National Park, this resort offers indoor
and outdoor heated pools, fitness center, games room, and volleyball and basketball
courts.Greensprings Vacation Resort
    
    Williamsburg, Virginia
    
    
    147Offering 147, two- and four- bedroom units this resort is ideally placed to explore the
historical town of Colonial Williamsburg as well as the areas theme parks. The resort
is equipped with indoor and outdoor pools, hot tubs, a fitness center, playgrounds,
sauna and tennis, volleyball and basketball courts.The Historic Powhatan Resort
    
    Williamsburg, Virginia
    
    
    443Amid 256 acres of woodland and located a short drive to Colonial Williamsburg and the
areas theme parks, this resort offers one-, two- and three-bedroom accommodations
totaling 443 units. Amenities include indoor and outdoor pools and hot tubs, two
restaurants open for breakfast, lunch and dinner and a gift shop.Bell Rock Inn and Suites
    
    Sedona, Arizona
    
    
    85Framed by extraordinary views along the Red Rock Scenic Byway with its sandstone
formations and rich red landscape of Arizonas backcountry, this resort is set amid the
natural beauty of Sedona and provides easy access to the sights, sounds and wonder of
the Coconino National Forest. In addition to a laid-back and friendly ambience, the
resort offers a poolside barbeque and in-suite fireplaces.Los Abrigados Resort & Spa
    
    Sedona, Arizona
    
    
    193Nestled against the banks of the famous Oak Creek in Sedona, Arizona, and rests upon
twenty-two acres filled with winding walkways, cascading fountains and shady nooks in
the foothills of Arizonas Red Rock Country, this resort is within walking distance to
many restaurants, galleries, shops and hiking trails. From the scenic and quaint Oak
Creek to the stunning red rock formations and new age energy of Sedona, Los Abrigados
Resort & Spa provides a comfortable, quiet and relaxing selection of accommodation
styles with easy access to many outdoor adventure and activities.Kohls Ranch Lodge
    
    Payson, Arizona
    
    
    66Located on the Banks of Tonto Creek in the largest Ponderosa Pine Forest in the world,
Kohls Ranch Lodge is historically famous for its western hospitality. Situated at the
base of the Mogollon Rim in the area that author Zane Grey made famous with his popular
adventures of the Old West, the friendly and casual atmosphere of Kohls Ranch Lodge
makes each stay an inviting experience where guests can enjoy a classic stay in
Arizonas back country.PVC at The Roundhouse
    
    Pine Top, Arizona
    
    
    20Nestled in eastern Arizonas White Mountains where Pinetop-Lakesides motto is
Celebrate the Seasons and where guests can enjoy year-round adventures, The log-sided
mountain homes at this resort feature fireplaces, jetted spa, large fully equipped
kitchens, covered porches and private yards and are a perfect getaway for family cabin
fun. After a day of outdoor play, guests can look forward to a relaxing master suite
spa retreat.
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Resort
    
    Location
    
    UnitsVarsity Club of America  Tucson
    
    Tucson, Arizona
    
    
    59This resort provides all-suite guest accommodations with convenient proximity to the
University of Arizona and a number of golf courses, including a variety of municipal
and championship style luxurious courses. Tucson affords travelers an oasis under the
Sonoran Sun. Affectionately known as Old Pueblo, Tucson is built upon a deep Native
American, Spanish, Mexican and Old West foundation and the Varsity Clubs of
America-Tucson affords a relaxing getaway whether traveling for business, game day,
family and friends, or just a little down time.The Historic Crags Lodge
    
    Estes Park, Colorado
    
    
    33Nestled quietly on the north shoulder of Prospect Mountain, The Historic Crags Lodge
offers breathtaking and majestic views of the Continental Divide to the west and a
birds eye view of downtown Estes Park to the east. The Historic Crags Lodge is
everything you would imagine from a quiet Colorado mountain retreat. The Historic
Crags Lodge is set high amid the mountain pines of the Colorado Rockies and boasts
comfortable guest suites complete with dining and group services suitable for families,
couples, weddings and conferences, all within easy access of the Estes Park Aerial
Tramway and the spectacular Rocky Mountain National Park.Varsity Club of America  South Bend
    
    Mishawaka, Indiana
    
    
    86Located in Mishawaka, Indiana, this all-suite hotel offers unique and convenient
accommodations in the heart of a college town. With its close proximity and easy access
to the University of Notre Dame, the Varsity Clubs of America  South Bend provides
comfortable guest suites, indoor and outdoor swimming pools, a spacious indoor
billiards parlor and plenty of outdoor barbeque grills for game days and family fun.
The South Bend/Mishawaka area boasts a variety of enriching and entertaining
attractions from outdoor recreation and sports to museums, nightlife and shopping.Sea of Cortez Beach Club
    
    Sonora, Mexico
    
    
    24The Sea of Cortez, with its laid back seaside havens dotted along the coast, provides a
soothing escape in any season. Stroll pristine soft sand beaches that hug the deep blue
waters of the Sea of Cortez along the Baja coast and enjoy the Sea of Cortez Beach
Club. Oceanfront, the Sea of Cortez Beach Club offers luxurious suites with private
patios or balconies and is the perfect starting point to soak in the sunshine filled
days of the Baja surf. Water sport excitement abounds with spectacular diving and
snorkeling adventures, calm open sea kayaking, deep sea fishing or taking it slow with
a relaxing poolside escape, whale and dolphin sightings or long and lazy beach strolls.Marquis Villa **
    
    Palm Springs, California
    
    
    101Located in the heart of Palm Springs with a spectacular mountain setting at the base of
the beautiful San Jacinto Mountains in Palm Springs, California, Marquis Villas Resort
provides elegantly furnished, oversized accommodations satisfying the most
discriminating travelers expectations with fully equipped kitchens and private patios
or balconies.North America and Caribbean Subtotal
    
    
    
    
    4,531
 EUROPE
 Resort
    
    Location
    
    UnitsThe Alpine Club
    
    Schladming, Austria
    
    
    69Overlooking the town of Schladming, this resort is located amidst stunning scenery one hour from Salzburg,
Austria and two and a half hours from Munich, Germany. With accommodation choices across 69 units The Alpine Club
also offers a sauna and solarium, tennis, badminton and game room.Alvechurch Marina *
    
    Alvechurch, England
    
    
    2With three-, four- and six-berth canal boats based at this marina in Worcestershire, there are many round trip
routes through the Black Country that can be followed. As a unique way to see the English countryside, visits to
Birmingham city center, Worcester Cathedral, historic houses and theme parks can also be incorporated into a
vacation itinerary.Anderton Marina *
    
    Cheshire, England
    
    
    3
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Resort
    
    Location
    
    UnitsAnderton Marina is based on the Trent and Mersey canals and has three boats available. From this location routes
include a journey to the old city of Chester as well as Middlewich.Gayton Marina *
    
    Cheshire, England
    
    
    3Four- and six-berth canal boats are available to navigate through Warwick to Warwick Castle or the university
city of Chester. Whichever route is taken, these boats provide the easiest access to the rolling English
countryside in the midlands.Woodford Bridge Country Club
    
    Devon, England
    
    
    103Originally an old coaching inn from the 15th century this resort in Devon has 103 units, the majority of which
have either a terrace or balcony. With a heated indoor pool and whirlpool and a restaurant and bar onsite, this
resort offers a base to explore the Devonshire countryside with Dartmoor and Exmoor, which are short drives away
along with the well known Eden Project.Blackwater Marina *
    
    Ellesmere, England
    
    
    2This marina is located in Shropshire in the heart of the English countryside and has one four-berth and one
six-berth canal boat based there. Numerous itineraries include visits to Wales, Chirk Castle, and navigating
across Chirk Viaduct standing over 70 feet above the ground.Broome Park Golf and Country Club
    
    Kent, England
    
    
    14The resort is located on the grounds of a Grade I listed manor house in the county of Kent and is 15 minutes from
the historic city of Canterbury, famous for its cathedral and historic buildings. With 14 two-bedroom lodges,
this resort offers an 18 hole golf course onsite, as well as a restaurant and bar in the mansion house. Other
resort amenities include a newly constructed gym, indoor pool, solarium, sauna and squash courts, as well as
tennis courts and croquet. The resort is 10 minutes away from the coast and the cliffs of Dover and provides
easy access to the Euro Star train.Pine Lake Resort
    
    Lancashire, England
    
    
    124Based on the edge of the Lake District and the Lune Valley, this resort is surrounded by superb English
countryside and based around a lake. The resort is made up of 124 Scandinavian style two-bedroom lodges and a
selection of studio apartments with a central reception building that includes the restaurant, bar, entertainment
and meeting rooms, with a separate indoor heated pool and whirlpool.Thurnham Hall
    
    Lancaster, England
    
    
    51With 51 accommodation choices located either in the 12th century mansion house or in buildings within the 30 acre
grounds, this resort is offers a large indoor swimming pool and state of the art fitness center. The restaurant
is located in the old mansion house along with a members lounge and a restored chapel house providing huge
fireplaces and original exposed stone walls.Thurnham Hall Tarnbrook
    
    Lancaster, England
    
    
    10This building is located within the grounds of Thurnham Hall and shares the amenities there. It is a newly built
building with 10 spacious two-bedroom apartments.Cromer Country Club
    
    Norfolk, England
    
    
    85This resort has 85 units, all with balconies or terraces that provide views over the gardens and woodlands. This
resort is less than one mile from the sea and marina in Cromer, and includes an indoor heated pool and whirlpool,
a gym, spa, sauna, steam room, badminton courts and a game room.Wychnor Park Country Club
    
    Staffordshire, England
    
    
    44This resort is situated within the 55 acre estate of Wychnor Park which dates from the time of Queen Anne in the
17th century. The main mansion house is a grade II listed building and houses some of the 44 units that are
available, most of which have a terrace or balcony. The resort has a restaurant and member lounge bar, as well
as a heated indoor pool, sauna, solarium and spa.Worcester Marina *
    
    Worcester, England
    
    
    2Based at the southern end of the Worcester Birmingham canal, two four- and six-berth canal boats are available
for
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Resort
    
    Location
    
    Unitsitineraries that include Worcester Cathedral, the Royal Worcester Porcelain factory and the home of
Shakespeare: Stratford-upon-Avon.La Manoir des Deux Amants
    
    Connelles, France
    
    
    35Set amid the stunning landscaped parkland in the heart of Normandy countryside, the resort is one and a half
hours from Paris and 100 kilometers from Le Havre. The resort offers 35 units situated on the banks of the
famous River Seine and includes an onsite restaurant, a leisure centre and an indoor swimming pool.Le Résidence Normande
    
    Connelles, France
    
    
    14This resort has 14 units and is situated next to Le Manoir des Deux Amants and shares its facilities.Le Club Mougins
    
    Mougins, France
    
    
    58Located 10 minutes from the beautiful beaches of Cannes and a half hour from Nice on the French Riviera, this
resort has 58 units and a restaurant and bar and lounge onsite, as well as an outdoor pool, gymnasium and sauna.Royal Regency
    
    Paris, France
    
    
    51Located 20 minutes from the centre of Paris on the Metro Line, this resort is ideally suited to exploring this
beautiful European city. The resort has 51 units.Palazzo Catalani
    
    Soriano, Italy
    
    
    20This resort is a hideaway in the Italian countryside. Located in the medieval village of Soriano nel Cimino, this
17th century building perched on the top of a hill and now housing 20 units was once the mansion of a nobleman.
The onsite restaurant specializes in Italian cuisine and features a bar and lounge.Dangan Lodge Cottages
    
    Ennis, Ireland
    
    
    6Converted from an original farmhouse and associated farm buildings, this small resort of six units provides
unusual, but traditional, Irish accommodations with exposed stone walls, solid fuel stoves and inglenook
fireplaces.East Clare Golf Village
    
    Bodyke, Ireland
    
    
    51With 51 two-bedroom units, this recently constructed resort is located next to East Clare Golf course in County
Clare, Ireland, approximately one hour outside of Shannon. The resort provides a great base to explore the
neighbouring countryside and tourist attractions of Bunnratty Castle and the Cliffs of Moher.Fishermans Lodge
    
    Scarriff, Ireland
    
    
    6Located on the edge of the shores of Lough Derg in County Clare, the largest lake in Ireland, this resort is made
up of six split level open plan studio units with spiral staircases to the upper floor.Diamond Suites on Malta
    
    St Julians, Malta
    
    
    46Located within the luxury five-star Intercontinental Malta Hotel, this resort offers 46 accommodation choices,
most with balconies or terraces. The resort is situated in St Georges Bay in St Julians and is less than five
miles from the capital of Valletta.Vilar Do Golf
    
    Loulé, Portugal
    
    
    61Located on the southern coast of Portugal, this resort has 61, one- and two-bedroom units situated around a golf
course all with balconies or terraces. Located two kilometers from the beach in the Algarve, the resort amenities
include indoor and outdoor pools, gymnasium, sauna, badminton, basketball, volleyball, game room and an onsite
restaurant as well as a poolside bar and grill.The Kenmore Club
    
    Perthshire, Scotland
    
    
    58With 58 cottage style units located on the shores of Loch Tay, this is a special resort at the heart of the
Scottish
 
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Resort
    
    Location
    
    Unitshighlands, with easy access to explore the local whisky distilleries, 90-minute drive from Dundee and
less than two hours from the historic city of Edinburgh.Garden Lago
    
    Majorca, Spain
    
    
    85Situated at the north of the island of Majorca, this resort offers 85 accommodation choices in two- and
three-bedroom units. It is located one kilometer from the beach and includes an outdoor pool and whirlpool,
gymnasium and sauna, onsite restaurant as well as many amenities nearby.White Sands Beach Club
    
    Menorca, Spain
    
    
    77This resort has 77 units on a beachfront location built up into the hillside situated on the island of Menorca.
With a central infinity edge pool and convenient snack bar restaurant onsite, this destination is a relaxing
place to vacation and is available 44 weeks of the year, but is closed during the winter season.White Sands Country Club
    
    Menorca, Spain
    
    
    51Built in a traditional Spanish style, this resort has 51 units, all with balconies or terraces many of which
surround a central pool area. This resort is available 42 weeks of the year, but closed during the winter season.Cala Blanca
    
    Gran Canaria, Spain
    
    
    93Situated on Gran Canaria in the Canary Islands this resort provides 93, one- and two-bedroom units. Built on a
beautiful hillside every room has a seaview and a sunny balcony or terrace. The resort is located 10 minutes
away from Puerto de Mogan (known as Canarian Little Venice) and includes an outdoor pool and pool bar and grill,
as well as an onsite restaurant.Club del Carmen
    
    Lanzarote, Spain
    
    
    66Located on Puerto del Carmen, this resort is perfectly situated two minutes from the beaches of Playa Grande and
Playa Chica. With 66 units, this resort offers an outdoor pool and poolside bar, extensive sun terraces and
rooftop deck and onsite restaurant.Jardines del Sol
    
    Lanzarote, Spain
    
    
    48Situated on the southern tip of Lanzarote near Playa Blanca, this resort has been built in the style of a Spanish
pueblo blanco or white village. Offering 48 two-bedroom bungalows, this resort also provides an onsite restaurant
and outdoor pool.Royal Sunset Beach Club
    
    Tenerife, Spain
    
    
    126Located conveniently close to Playa de las Americas abundant shops, restaurants and nightlife, this resort has a
range of facilities situated in sub-tropical gardens and a beautifully landscaped outdoor pool. This resort has
126 units with a private clubhouse with a bar, lounge, restaurant, gymnasium, squash courts and sauna.Royal Tenerife Country Club
    
    Tenerife, Spain
    
    
    77Set amid the greens of the challenging Golf del Sur course, with a focal point of a central landscaped swimming
pool and the beach six kilometers away, the resort includes 77 one- and two-bedroom units, tennis courts, a gym,
restaurant and supermarket.Santa Barbara Golf & Ocean Club
    
    Tenerife, Spain
    
    
    279This resort exhibits Moorish inspired architecture and includes 279 units, most of which have a sea view. The
resort amenities include a central pool and whirlpool, two onsite restaurants, a poolside bar and grill,
gymnasium, sauna, spa and solarium.Sunset Bay Club
    
    Tenerife, Spain
    
    
    206This village-style resort of 206 units is situated at Torviscas on the outskirts of Playa de las Americas, and is
a 10 minute walk from the beach. It has two outdoor pools and a childrens pool, and there are several local
shops and restaurants on the property.Sunset Harbour Club
    
    Tenerife, Spain
    
    
    124This resort has been built in the traditional style of an Andalusian pueblo blanco or white village. Situated on
the
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Resort
    
    Location
    
    Unitsoutskirts of Playa de las Americas, this resort is located near nightlife and many local restaurants and
bars. The resort has 124 units, including studio, one- and two-bedroom accommodation choices.Sunset View Club
    
    Tenerife, Spain
    
    
    52With panoramic views of the ocean and a backdrop of the snow capped Mount Teide volcano, this resort offers 52
one-and two-bedroom units, with easy access to the golf courses of the Golf del Sur and numerous local shops and
restaurants.Los Amigos Beach Club
    
    Costa del Sol, Spain
    
    
    140This resort has 140 units and is situated 300 meters from the beach. It is a short drive to the beautiful cities
of Malaga, Marbella, Granada and Seville. Amenities include two outdoor and one indoor swimming pools, tennis
courts, mini-golf, as well as two restaurants onsite, a supermarket and a gift shop.Royal Oasis Club at Benal Beach
    
    Costa del Sol, Spain
    
    
    108Built around one of the largest privately owned outdoor swimming pool complexes in Europe, this resort includes
108 units and is located 200 meters from the beach. In addition, the resort has an indoor swimming pool, fitness
center and sauna.Royal Oasis Club at Pueblo Quinta
    
    Costa del Sol, Spain
    
    
    58This resort is situated in lush gardens and contrasts with the hotel blocks of the Costa del Sol, with 58 one-
and two-bedroom units, many of which have balconies or terraces. This resort also offers a central outdoor pool,
indoor pool, gym and onsite restaurant.Sahara Sunset
    
    Costa del Sol, Spain
    
    
    150Styled with Moorish architecture, this resort offers 150 units, all with a balcony or terrace. With a feature
landscaped pool, this resort also features an additional outdoor pool, an indoor pool, an onsite restaurant, and
newly constructed gym, sauna, spa and steamroom.Europe Subtotal
    
    
    
    
    2,658Total Branded and Managed Resorts
    
    
    
    
    7,189
 
 
 *
    
    Denotes canal boat marinas; number of units denotes number of boats managed. Affiliated Resorts
 NORTH AMERICA AND CARIBBEAN
 
 Resort
    
    LocationLondon Bridge Resort
    
    Lake Havasu City, ArizonaThe Roundhouse Resort
    
    Pinetop, ArizonaSedona Springs Resort
    
    Sedona, ArizonaVillas at Poco Diablo
    
    Sedona, ArizonaVillas of Sedona
    
    Sedona, ArizonaScottsdale Camelback
    
    Scottsdale, ArizonaMountain Retreat
    
    Arnold, ArizonaSan Luis Bay Inn
    
    Avila Beach, CaliforniaGrand Pacific at Carlsbad Seapointe Resort
    
    Carlsbad, CaliforniaGrand Pacific at Carlsbad Inn Beach Resort
    
    Carlsbad, California
 
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##### Table of Contents



Resort
    
    LocationGrand Pacific Palisades Resort and Hotel
    
    Palisades, CaliforniaRVCs Cimarron Golf Resort, Palm Springs
    
    Cathedral City, CaliforniaGrand Pacific at Coronado Beach Resort
    
    Coronado, CaliforniaGrand Pacific at RiverPointe Napa Valley
    
    Napa, CaliforniaGrand Pacific at Red Wolf Lodge
    
    Olympic Valley, CaliforniaOasis Resort
    
    Palm Springs, CaliforniaLodge at Lake Tahoe
    
    South Lake Tahoe, CaliforniaTahoe Beach and Ski Club
    
    South Lake Tahoe, CaliforniaThe Village at Steamboat Springs
    
    Steamboat Springs, ColoradoClock Tower
    
    Whistler, British Columbia, CanadaRVC at Whiski Jack
    
    Whistler, British Columbia, CanadaLifestyle at Crown Residences
    
    Puerto Plata, Dominican RepublicLifestyle at Presidential Suites
    
    Puerto Plata, Dominican RepublicCoconut Mallory Resort and Marina
    
    Key West, FloridaPolynesian Isles
    
    Kissimmee, FloridaWestgate at South Beach
    
    Miami Beach, FloridaCoconut Palms Beach Resort
    
    New Smyrna Beach, FloridaOcean Beach Club
    
    New Smyrna Beach, FloridaOcean Sands Beach Club
    
    New Smyrna Beach, FloridaSea Villas
    
    New Smyrna Beach, FloridaCypress Pointe Resort and Grande Villas
    
    Orlando, FloridaSea Mountain
    
    Big Island, HawaiiSea Village
    
    Big Island, HawaiiGrand Pacific at Alii Kai Resort
    
    Kauai, HawaiiKapaa Shore
    
    Kauai, HawaiiPono Kai
    
    Kauai, HawaiiRVC at Kona Reef
    
    Kona, HawaiiPapakea Resort
    
    Maui, HawaiiValley Isle
    
    Maui, HawaiiFairway Villa
    
    Oahu, HawaiiRoyal Kuhio
    
    Oahu, HawaiiElkhorn Resort
    
    Sun Valley, IdahoGrand Palladium Jamaica Resort and Spa
    
    Lucea, JamaicaEdgewater Beach Resort
    
    Dennis Port, MassachusettsBeachside Village Resort
    
    Falmouth, MassachusettsCove at Yarmouth
    
    Yarmouth, MassachusettsRVCs Villa Vera, Acapulco
    
    Acapulco, MexicoCabo Villas Beach Resort
    
    Cabo San Lucas, MexicoEl Dorado Royale
    
    Cancun, Mexico
 
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##### Table of Contents



Resort
    
    LocationRVCs Club Regina Cancun
    
    Cancun, MexicoRVCs Villa Vera Puerto Isla Mujeres
    
    Isla Mujeres, MexicoRVCs Club Regina Los Cabos
    
    San Jose del Cabo, MexicoRVCs Las Cupúlas Oaxaca
    
    Oaxaca, MexicoRVCs Villa Vera Oaxaca
    
    Oaxaca, MexicoRVCs Club Regina Puerto Vallarta
    
    Puerto Vallarta, MexicoEl Dorado Seaside Suites
    
    Riviera, MexicoGrand Palladium Kantenah Resort and Spa
    
    Riviera Maya, MexicoGrand Palladium Riviera Resort and Spa
    
    Riviera Maya, MexicoRVCs Villa Vera Puerto Mio, Zihuatanejo
    
    Zihuatenajo, MexicoThe Carriage House
    
    Las Vegas, NevadaKingsbury of Tahoe
    
    Stateline, NevadaThe Ridge Pointe
    
    Stateline, NevadaVillage of Loon Mountain
    
    Lincoln, New HampshireThe Valley Inn at Waterville Valley
    
    Waterville Valley, New HampshireGreat Wolf Lodge Charlotte-Concord
    
    Concord, North CarolinaGreat Wolf Lodge Cincinnati-Mason
    
    Mason, OhioEmbarcadero
    
    Newport, OregonThe Pines at Sunriver
    
    Sunriver, OregonIsland Links Resort
    
    Hilton Head Island, South CarolinaRoyal Dunes
    
    Hilton Head Island, South CarolinaEllington at Wachesaw Plantation
    
    Murrells Inlet, South CarolinaGatlinburg Town Square
    
    Gatlinburg, TennesseeGatlinburg Town Village
    
    Gatlinburg, TennesseeMountain Meadows
    
    Pigeon Forge, TennesseeGreat Wolf Lodge Grapevine
    
    Grapevine, TexasVillas on Lake at Lake Conroe
    
    Montgomery, TexasRVCs The Miners Club
    
    Park City, UtahRVCs Sandcastle, Birch Bay
    
    Birch Bay, WashingtonGreat Wolf Lodge Grand Mound
    
    Grand Mound, WashingtonBlackbird Lodge
    
    Leavenworth, WashingtonPoint Brown
    
    Ocean Shores, WashingtonGreat Wolf Lodge Wisconsin Dells
    
    Wisconsin Dells, Wisconsin
 
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EUROPE AND AFRICA
 
 Resort
    
    LocationHoliday Club Siesta
    
    AustriaHoliday Club Schloesslhof
    
    AustriaMondiHoliday Hotel Grundlsee
    
    AustriaMondiHoliday Hotel Bellevue
    
    AustriaHapimag Prague
    
    Prague, Czech RepublicBroome Park Mansion House
    
    Kent, EnglandBurnside Park
    
    Bowness-on-Windermere, EnglandStouts Hill
    
    Uley, EnglandMondiHoliday Hotel Oberstaufen
    
    GermanyMondiHoliday Hotel Mitterfels
    
    GermanyHapimag Damnoni
    
    Crete, GreeceHapimag Budapest
    
    Budapest, HungaryHoliday Club Breitenbergerhof
    
    ItalyMondiHoliday Hotel Tirolensis
    
    ItalyHapimag Palmeraie Marrakech
    
    Marrakech, MoroccoGålå Fjellgrend
    
    Gudbrandsdalen, NorwayPestana Alvor Park
    
    Alvor, PortugalPestana Grand
    
    Funchal, PortugalPestana Miramir
    
    Funchal, PortugalPestana Porches
    
    Porches, PortugalThe Peninsula
    
    Cape Town, South AfricaAvalon Springs
    
    Montagu, Garden Route, South AfricaWilderness Dunes
    
    Wilderness, Garden Route, South AfricaBreakers Resort
    
    KwaZulu-Natal, South AfricaChampagne Sports Resorts
    
    Kwazulu-Natal, South AfricaJackalberry Ridge
    
    Mpumalanga, South AfricaHapimag Mas Nou
    
    Girona, SpainCala de Mar
    
    Majorca, SpainBlajfell Village
    
    Kabdalis, SwedenHapimag Bodrum  Sea Garden Village
    
    Yaliciftlik, TurkeyAlpenClub Schliersee
    
    GermanyBellbrae Country Club
    
    Victoria, AustraliaMt Martha Valley Resort
    
    Victoria, AustraliaTamarind Sands
    
    New South Wales, Australia
 
 ASIA AND AUSTRALIA
 Resort
    
    LocationBeach House Seaside Resort
    
    Coolangatta, AustraliaVacation Village Resort
    
    Port Macquarie, AustraliaTiki Village International Resort
    
    Surfers Paradise, AustraliaRoyal Bali Beach Club at Candidasa
    
    Bali, Indonesia
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##### Table of Contents



Resort
    
    LocationRoyal Bali Beach Club at Jimbaran Bay
    
    Bali, IndonesiaRoyal Goan Beach Club at MonteRio
    
    Goa, IndiaRoyal Goan Beach Club at Royal Palms
    
    Goa, IndiaRoyal Goan Beach Club at Haathi Mahal
    
    Goa, IndiaRoyal Bella Vista Country Club at Chiang Mai
    
    Chiang Mai, ThailandAbsolute at Q Signature Samui Spa and Resort
    
    Koh Samui, ThailandMTC at View Talay Holidays
    
    Pattaya, ThailandAbsolute at Nirvana Place
    
    Pattaya, ThailandAbsolute Bangla Suites
    
    Phuket, ThailandAbsolute Sea Pearl Beach Resort
    
    Phuket, ThailandRoyal Lighthouse Villas at Boat Lagoon
    
    Phuket, Thailand
 CRUISE SHIPS
 
 Our Flexible Points-Based Vacation Ownership System and THE Club
 
 Our Points-Based System.
 
 
  
 
  
 
  
 THE Club.
 
  
  89




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Operation and Management of the Collections
 
  
 
  
   Interval Ownership
 
  
 90




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.
 
  Recovery of VOIs
  
  
 
  
 
  
 Our Services
 
 Hospitality and Management Services.
 
 91




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##### Table of Contents



HOAs.
   Collections.
   
 Sales and
Marketing of VOIs.
 
 92




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##### Table of Contents




    
    our existing member base;
    
    participants in third-party vacation ownership exchange programs, such as Interval
International or RCI, who stay at our resorts;
    
    renters who stay at our resorts;
    
    member referrals;
    
    off property contacts who are solicited from the premises of
hospitality, entertainment, gaming and retail locations; and
    
    other people who we target through the various marketing programs described above.
   
 Consumer Financing of VOIs.
 
 93




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Competition
  
  
  94




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Governmental Regulation
       95




---



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96




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Seasonality
  Insurance
  Intellectual Property
 ® ® ® ® ®
 Environmental Matters
   97




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Company Owned and Leased Property
  
    
    our global corporate headquarters located in Las Vegas, Nevada, which is approximately
80,000 square feet;
    
    our European headquarters located in Lancaster, United Kingdom, which is approximately 32,400 square feet;
    
    a telemarketing call center located in Wakefield, United Kingdom, which is approximately
6,200 square feet;
    
    an off-site sales center in Lanzarote, Canary Islands, Spain, which is approximately
1,600 square feet; and
    
    an administrative office in Mougin, France, which is approximately 1,200 square feet.
  Employees
 
  
 Company History
  98




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Legal Proceedings
    99




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MANAGEMENT
 Managers and Executive Officers
  
 Name
    
    Age
    
    Principal PositionStephen J. Cloobeck
    
    
    49
    
    
    Chief Executive Officer and Chairman of the BoardDavid F. Palmer
    
    
    49
    
    
    President, Chief Financial Officer and ManagerLowell D. Kraff
    
    
    50
    
    
    ManagerB. Scott Minerd
    
    
    52
    
    
    ManagerZachary Warren
    
    
    38
    
    
    Manager
 
 Stephen J. Cloobeck
 David F. Palmer
 Lowell D. Kraff
 100




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B. Scott Minerd
 Zachary D. Warren
 Audit Committee Matters
  Board of Manager Compensation
  Executive Officer Compensation
   101




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##### Table of Contents



SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  
 
    
    each of its managers;
    
    each of its named executive officers;
    
    each person or group known to us to beneficially own 5% or more of such units; and
    
    all of its executive officers and managers as a group.
  Amount and Nature ofBeneficial Ownership of
    
    Percentage of Common UnitsBeneficial Owner
    
    Common Units
    
    Outstanding(1)Managers and Executive OfficersStephen J. Cloobeck(2)
    
    
    788.0
    
    
    
    70.7
    %David F. Palmer(3)
    
    
    
    
    
    
    Lowell D. Kraff(4)
    
    
    
    
    
    
    B. Scott Minerd(5)
    
    
    
    
    
    
    Zachary Warren(6)
    
    
    
    
    
    
    All managers and executive officers as a group
    
    
    788.0
    
    
    
    70.7
    %5% Beneficial OwnersCloobeck Diamond Parent, LLC(2)
    
    
    788.0
    
    
    
    70.7
    %DRP Holdco, LLC(7)
    
    
    269.3
    
    
    
    24.2
    %
 
 (1)
    
    Represents the percentage of total voting power and the
percentage ownership of common equity units beneficially owned by
each identified unitholder and all managers and executive
officers as a group. As of June 1, 2010, there were 1,115.1
common equity units outstanding.(2)
    
    Mr. Cloobeck controls two entities which hold 100% of the
outstanding voting securities of Cloobeck Diamond Parent, LLC, a
Nevada limited liability company, or CDP, and a majority of the
outstanding non-voting equity securities (which have the same
economic rights as the voting securities). Mr. Cloobeck and
certain trusts, of which Mr. Cloobeck is trustee, beneficially
own all outstanding equity interests in such entities. As a
result, Mr. Cloobeck has sole power to vote and dispose of all
common units of Diamond Resorts Parent, LLC held by CDP.(3)
    
    Mr. Palmer holds equity interests in Trivergance Diamond
Holdings, LLC, a Delaware limited liability company, or TDH,
which in turn holds non-voting equity interests in CDP. Mr.
Palmer also directly holds non-voting equity interests in CDP.
Although Mr. Palmer does not beneficially own the common equity
units of Diamond Resorts Parent, LLC held by CDP (see Note 2
above), by virtue of his ownership of equity interests of CDP and
TDH, Mr. Palmer will receive economic benefits relating to up to
10.0% of Diamond Resorts Parent, LLC pursuant to the respective
operating agreements of CDP and TDH.(4)
    
    Mr. Kraff holds equity interests in TDH, which in turn holds
non-voting interests in CDP. Although Mr. Kraff 102




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does not
beneficially own the common units of Diamond Resorts Parent, LLC
held by CDP (see Note 2 above), by virtue of his ownership of
equity interests of TDH, Mr. Kraff receives economic benefits
relating to approximately 4.0% of Diamond Resorts Parent, LLC
pursuant to the respective operating agreements of CDP and TDH.(5)
    
    Mr. Minerd is a managing partner of Guggenheim Partners. Clients
of and funds managed by affiliates of Guggenheim Partners
beneficially own 269.3 of the common units, as well as all of the
outstanding preferred units, of Diamond Resorts Parent, LLC. See
Note 7 below.(6)
    
    Mr. Warren is a managing director of Guggenheim Partners. Clients
of and funds managed by affiliates of Guggenheim Partners
beneficially own 269.3 of the common units, as well as all of the
outstanding preferred units, of Diamond Resorts Parent, LLC. See
Note 7 below.(7)
    
    The address for DRP Holdco, LLC, or DRP, is 135 East 57th Street,
New York, NY 10022. DRP is an investment vehicle managed by an
affiliate of Guggenheim, and has members that are clients of
affiliates of Guggenheim. In addition to the 269.3 common units
held by DRP, DRP is also the beneficial owner of outstanding
preferred units of Diamond Resorts Parent, LLC, which have an
initial face value of $75 million. The preferred units have a
priority return of 16.5% per annum, compounded quarterly, as well
as a liquidation preference with respect to the common units.
The preferred units do not provide to the holder any
participation or conversion rights. 103




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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 Asset Contribution Agreement
  DR Management HOA Executive Oversight, Consulting and Services Agreement
  Trivergance Services Agreement
  Praesumo Engagement Agreements
  104




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HM&C Management Services Agreement
     Settlement Payment
  Guggenheim Relationship
 
  
 105




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DESCRIPTION OF OTHER INDEBTEDNESS
   Securitization and Other Receivables Transactions
 
 2008 Conduit Facility and Diamond Resorts Owners Trust Series 2009-1
 
    106




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2011-1
Securitization
 
 Loan Sale Facility
 ILXA Receivables Loan and Inventory Loan
   Tempus Acquisition Loan
 
  
 Other Notes Payable
  Borrowing Restrictions and Limitations
  107




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108




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THE EXCHANGE OFFER
 Purpose and Effect of the Exchange Offer
                109




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110




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
    
    you are not our affiliate or an affiliate of any guarantor within the meaning of Rule
405 of the Securities Act;
    
    you have no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of the exchange notes in violation
of the provisions of the Securities Act;
    
    you are not engaged in, and do not intend to engage in, a distribution of the exchange
notes; and
    
    you are acquiring the exchange notes in the ordinary course of your business.
  Resale of Exchange Notes
  
    
    you are not our affiliate or an affiliate of any guarantor within the meaning of Rule
405 under the Securities Act;
    
    you do not have an arrangement or understanding with any person to participate in a
distribution of the exchange notes;
    
    you are not engaged in, and do not intend to engage in, a distribution of the exchange
notes; and
    
    you are acquiring the exchange notes in the ordinary course of your business.
  
    
    you cannot rely on the position of the SEC set forth in Morgan Stanley & Co.
Incorporated(available June 5, 1991) and Exxon Capital Holdings Corporation(available May
13, 1988), as interpreted in the SECs letter to Shearman & Sterling, dated July 2, 1993,
or similar no-action letters; and
    
    in the absence of an exception from the position stated immediately above, you must
comply with the registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the exchange notes.
  111




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Terms of the Exchange Offer
       Expiration Date, Extensions and Amendments
   112




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
    
    to delay accepting for exchange any outstanding notes (only in the case that we amend or
extend the exchange offer);
    
    to extend the exchange offer or to terminate the exchange offer and refuse to accept
outstanding notes not previously accepted if any of the conditions set forth below under
Conditions to the Exchange Offer have not been satisfied, by giving oral or written
notice of such delay, extension or termination to the exchange agent; and
    
    subject to the terms of the registration rights agreement, to amend the terms of the
exchange offer in any manner. In the event of a material change in the exchange offer,
including the waiver of a material condition, we will extend the offer period, if
necessary, so that at least five business days remain in such offer period following notice
of the material change.
 
  
  Conditions to the Exchange Offer
  
    
    the exchange offer or the making of any exchange by a holder violates any applicable law
or interpretation of the SEC; or
    
    any action or proceeding has been instituted or threatened in writing in any court or by
or before any governmental agency with respect to the exchange offer that, in our judgment,
would reasonably be expected to impair our ability to proceed with the exchange offer.In addition, we will not be obligated to accept for exchange the outstanding notes of
any holder that has not made to us:
    
    the representations described under Purpose and Effect of the Exchange Offer,
Procedures for Tendering Outstanding Notes and Plan of Distribution; or
    
    any other representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to make available to us an appropriate form for registration
of the exchange notes under the Securities Act.
 
  
 113




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Procedures for Tendering Outstanding Notes
  
    
    complete, sign and date the letter of transmittal, or a facsimile of the letter of
transmittal, have the signature(s) on the letter of transmittal guaranteed if required by
the letter of transmittal and mail; or
    
    deliver such letter of transmittal or facsimile thereof to the exchange agent at the
address set forth below under Exchange Agent prior to the expiration date; or
    
    comply with DTCs Automated Tender Offer Program procedures described below.In addition, either:
    
    the exchange agent must receive certificates for the outstanding notes along with the
letter of transmittal prior to the expiration date;
    
    the exchange agent must receive a timely confirmation of book-entry transfer of the
outstanding notes into the exchange agents account at DTC according to the procedures for
book-entry transfer described below or a properly transmitted agents message prior to the
expiration date; or
    
    you must comply with the guaranteed delivery procedures described below.
    114




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
    
    make appropriate arrangements to register ownership of the outstanding notes in your
name; or
    
    obtain a properly completed bond power from the registered holder of outstanding notes.
   
    
    by a registered holder of the outstanding notes who has not completed the box entitled
Special Registration Instructions or Special Delivery Instructions on the letter of
transmittal; or
 
    
    for the account of an eligible guarantor institution.
    
    
    DTC has received an express acknowledgment from a participant in its Automated Tender
Offer Program that is tendering outstanding notes that are the subject of the book-entry
confirmation;
    
    the participant has received and agrees to be bound by the terms of the letter of
transmittal, or in the case of an agents message relating to guaranteed delivery, that
such participant has received and agrees to be bound by the notice of guaranteed delivery;
and
    
    we may enforce that agreement against such participant. DTC is referred to herein as a
book-entry transfer facility.
 115




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Acceptance of Exchange Notes
  
    
    outstanding notes or a timely book-entry confirmation of such outstanding notes into the
exchange agents account at the book-entry transfer facility; and
    
    a properly completed and duly executed letter of transmittal and all other required
documents or a properly transmitted agents message.
  
    
    you are not our affiliate or an affiliate of any guarantor within the meaning of Rule
405 under the Securities Act;
    
    you do not have an arrangement or understanding with any person or entity to participate
in a distribution of the exchange notes; and
    
    you are acquiring the exchange notes in the ordinary course of your business.
    Book-Entry Delivery Procedures
  116




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Guaranteed Delivery Procedures
  
    
    the tender is made through an eligible guarantor institution;
    
    prior to the expiration date, the exchange agent receives from such eligible guarantor
institution either a properly completed and duly executed notice of guaranteed delivery, by
facsimile transmission, mail, or hand delivery or a properly transmitted agents message
and notice of guaranteed delivery, that (1) sets forth your name and address, the
certificate number(s) of such outstanding notes and the principal amount of outstanding
notes tendered; (2) states that the tender is being made thereby; and (3) guarantees that,
within three New York Stock Exchange trading days after the expiration date, the letter of
transmittal, or facsimile thereof, together with the outstanding notes or a book-entry
confirmation, and any other documents required by the letter of transmittal, will be
deposited by the eligible guarantor institution with the exchange agent; and
    
    the exchange agent receives the properly completed and executed letter of transmittal or
facsimile thereof, as well as certificate(s) representing all tendered outstanding notes in
proper form for transfer or a book-entry confirmation of transfer of the outstanding notes
into the exchange agents account at DTC and all other documents required by the letter of
transmittal within three New York Stock Exchange trading days after the expiration date.
  Withdrawal Rights
   
    
    the exchange agent must receive a written notice, which may be by telegram, telex,
facsimile or letter, of withdrawal at its address set forth below under Exchange Agent;
or
    
    you must comply with the appropriate procedures of DTCs Automated Tender Offer Program
system.Any notice of withdrawal must:
    
    specify the name of the person who tendered the outstanding notes to be withdrawn;
 117




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
    
    identify the outstanding notes to be withdrawn, including the certificate numbers and
principal amount of the outstanding notes; and
    
    where certificates for outstanding notes have been transmitted, specify the name in
which such outstanding notes were registered, if different from that of the withdrawing
holder.
  
    
    the serial numbers of the particular certificates to be withdrawn; and
    
    a signed notice of withdrawal with signatures guaranteed by an eligible institution
unless you are an eligible guarantor institution.
  Exchange Agent
  By Regular, Registered or
Certified Mail, Overnight Courier
or Hand Delivery:
Wells Fargo Bank,
National Association 
608 2nd Avenue South, 12th Floor
MAC: N9303-121
Minneapolis, MN 55402
Attn: Bondholder Communications
Telephone: 800-344-5128
    
    By Facsimile Transmission
(eligible institutions only):
866-969-1290Telephone Inquiries:
800-344-5128
  Fees and Expenses
  118




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Accounting Treatment
  Transfer Taxes
  
    
    certificates representing outstanding notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name of, any
person other than the registered holder of outstanding notes tendered;
    
    tendered outstanding notes are registered in the name of any person other than the
person signing the letter of transmittal; or
    
    a transfer tax is imposed for any reason other than the exchange of outstanding notes
under the exchange offer.
   Consequences of Failure to Exchange
  
    
    as set forth in the legend printed on the outstanding notes as a consequence of the
issuance of the outstanding notes pursuant to the exemption from, or in transactions not
subject to, the registration requirements of the Securities Act and applicable state
securities laws; and
    
    as otherwise set forth in the offering memorandum distributed in connection with the
private offering of the outstanding notes.
  119




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120




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DESCRIPTION OF THE EXCHANGE NOTES
 General
 we us our Issuer Company
   Brief Description of the Notes and the Note Guarantees
 The Notes:
    
    will be senior obligations of the Issuer;
    
    will be secured by a first-priority security interest in the Collateral owned by the
Issuer;
    
    will be guaranteed on a senior secured basis by the Company, the Intermediate Holdco and
each Subsidiary Guarantor;
    
    will rank senior in right of payment to any future Subordinated Obligations of the
Issuer;
    
    will be effectively subordinated to any existing and future Indebtedness of the Issuer
that is secured with property or assets that do not constitute the Collateral to the extent
of the value of the assets securing such Indebtedness;
    
    will be effectively subordinated to any existing and future Indebtedness of Subsidiaries
of the Issuer that are not Guarantors (including obligations under
the 2008 Conduit Facility,
the Quorum Facility, and the DROT 2009 Notes); and
    
    will be subject to registration with the SEC pursuant to the Registration Rights
Agreement.The Guarantee of the Notes by each Guarantor:
    
    will be a senior obligation of such Guarantor;
    
    will be secured by a first priority security interest in the Collateral owned by such
Guarantor;
    
    will rank senior in right of payment to any future Subordinated Obligations of such
Guarantor; and
 121




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
    
    will be effectively subordinated to any existing and future Indebtedness of such
Guarantor that is secured with property or assets that do not constitute Collateral to the
extent of the value of the assets securing such Indebtedness.
 Principal, Maturity and Interest
 Additional Notes
  provided however
 Optional Redemption
 Redemption Date
  Year
    
    Percentage2014
    
    
    106.000
    %2015
    
    
    103.000
    %2016 and thereafter
    
    
    100.000
    %
  122




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provided however
  Selection and Notice
 provided however provided however
 Mandatory Redemption; Offers to Purchase; Open Market Purchases
  Ranking
 pari passu
   123




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Collateral
 Description of Collateral
 Collateral
   UCC
        Excluded Property
    provided, however,
 124




---



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provided,
however
  
  
  
  
  After-Acquired Property
  Security Documents
   125




---



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first
 second pro rata
 third
 Pari Passu Intercreditor Arrangements
 pari passu Pari Passu Indebtedness Pari Passu Intercreditor Agreement
 126




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Authorized Representative
   Applicable Authorized
Representative pari passu Larger Holder
Event Applicable Authorized Agent Date pari passu Major
Non-Controlling Authorized Representative
 Non-Controlling Authorized Representative Enforcement Date provided, however,
  127




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Junior Lien Intercreditor Arrangements
 Junior Lien Indebtedness Junior Lien Intercreditor Agreement Intercreditor Agreement
  Certain Limitations on the Collateral
  128




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Further Assurances
  Limitation on Collateral Consisting of Subsidiary Securities
   129




---



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Impairment of Security Interest
  Certain Bankruptcy Limitations
  DIP Financing
 pari passu
 130




---



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Release
         Notes Guarantees
  131




---



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provided however
        Change of Control
 Change of Control Offer Change of
Control Payment
  Change of Control Payment Date
 132




---



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133




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Offer to Purchase with Excess Cash Flow
 Offer Date Excess Cash Flow Offer Amount Excess Cash Flow Offer provided, however provided further,
   Offer to Purchase with Proceeds of Certain Equity Offerings
 Public Offering Offer Date Public Offering Offer Amount Public
 134




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Offering Offer
   Certain Covenants
 Incurrence of Indebtedness
 incur provided however pro forma Ratio Indebtedness
 Permitted Indebtedness
 Credit Facility Indebtedness
     provided however
 135




---



##### Table of Contents



provided however
    provided however
  provided however
  provided however
 136




---



##### Table of Contents



provided however
   provided however
 provided however
 Restricted Payments
  pro rata
 137




---



##### Table of Contents



Restricted Payments
     plus
 plus
 provided however plus
 138




---



##### Table of Contents



provided however
  provided however
 provided however
 provided however
 provided however
 provided however
 provided however provided further however
 139




---



##### Table of Contents



provided however provided
further however
 provided however provided further however
 Company Holder
   provided, however, provided further, however
 provided however
  Asset Sales
  140




---



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provided however
 pro forma
        141




---



##### Table of Contents



pro rata
  Impairment of Security Interest
 provided however
  Liens
  provided however
  142




---



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Sale/Leaseback Transactions
     Dividend and Other Payment Restrictions Affecting Subsidiaries
          provided however
  143




---



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provided however
   provided however
   provided however
 144




---



##### Table of Contents



Merger, Consolidation or Sale of All or Substantially All Assets
     pro forma pro forma
    145




---



##### Table of Contents



pro forma
         provided however
 146




---



##### Table of Contents



Transactions with Affiliates
 Affiliate Transaction
   provided, however, Special Unrestricted Subsidiary
        147




---



##### Table of Contents



provided, however
 Additional Guarantors
  mutatis mutandis
    Business Activities
  Reports
  148




---



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Events of Default and Remedies
        149




---



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No Personal Liability of Directors, Officers, Employees and Stockholders
  150




---



##### Table of Contents



Defeasance
 Legal Defeasance
     Covenant Defeasance
       151




---



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Transfer and Exchange
  Amendments and Waivers
           152




---



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provided however
 153




---



##### Table of Contents



Satisfaction and Discharge
       Concerning the Trustee
  154




---



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Book-Entry, Delivery and Form
   Depositary Procedures
      155




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Except as described below, owners of an interest in the Global Notes will not have Notes
registered in their names, will not receive physical delivery of Notes in certificated form and
will not be considered the registered owners or Holders thereof under the Indenture for any
purpose.
  (1)
    
    any aspect of DTCs records or any Participants or Indirect Participants
records relating to or payments made on account of beneficial ownership interests in
the Global Notes or for maintaining, supervising or reviewing any of DTCs records or
any Participants or Indirect Participants records relating to the beneficial
ownership interests in the Global Notes; or(2)
    
    any other matter relating to the actions and practices of DTC or any of its Participants
or Indirect Participants.
     Exchange of Global Notes for Certificated Notes
  156




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(1)
    
    DTC (a) notifies the Issuer that it is unwilling or unable to continue as
depositary for the Global Notes or (b) has ceased to be a clearing agency registered
under the Exchange Act and, in each case, a successor depositary is not appointed;(2)
    
    the Issuer, at its option, notifies the Trustee in writing that it elects to
cause the issuance of the Certificated Notes; or(3)
    
    there has occurred and is continuing a Default with respect to the Notes.
  Exchange of Global Notes for Certificated Notes
  Certain Definitions
  2008 Conduit Facility
 Acquired Indebtedness
 Adjusted EBITDA
 plus
 plus
 plus
 157




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plus
 plus
 plus
 
 plus
 
 plus
 plus
 less
 
 less
 
 less
   
 Affiliate
 
 Applicable Premium
  plus plus
 Applicable Senior Indebtedness
 158




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Asset Sale
            159




---



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Attributable Debt provided however
 Average Life
   Banking Product Obligations
 Board of Directors
 Business Day
 Capital Expenditures
 Capital Lease Obligation
 Capital Stock
 Cash Equivalents
  160




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Change of Control
     161




---



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Collateral Agent
 Company
 Company Equity Plan
 Concurrent Equity Transaction
 Consolidated Change in Working Capital less plus less less plus plus less
 Consolidated Interest Expense
  provided however
  162




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provided however
      provided however
 Consolidated Net Income provided, however,
      provided, however,
 Credit Facility
 163




---



##### Table of Contents



DROT 2009 Notes
 Default
 Designated Non-cash Consideration
 Disqualified Stock
    provided however
   provided however
 Equity Interests
 Excess Cash Flow
 less
 164




---



##### Table of Contents



provided that less
 less
 less
 plus
 provided less
 provided plus
 plus
  Exchange Notes
 Fair Market Value provided however
 Fixed Charge Coverage Ratio
 165




---



##### Table of Contents



provided however
 pro forma
 pro forma
  pro forma
 pro forma
 pro forma pro forma pro forma pro forma
 166




---



##### Table of Contents



pro forma
 Foreign Subsidiary
 GAAP
 Guarantee
 Guarantor
     Guggenheim
 Hedging Obligations
 Holder
 ILXA Inventory Loan
 ILXA Receivables Loan
 Indebtedness
    167




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provided however
 provided however
 Independent Qualified Party provided however
 Initial Purchasers
 Intermediate Holdco
 Investment
 168




---



##### Table of Contents



provided however
  Issue Date
 Lien provided however
 Moody s
 Net Cash Proceeds
   169




---



##### Table of Contents



provided however
 Nonrecourse Indebtedness
    provided, however,
 Notes Guarantee
 Notes Obligations
 Obligations
 Offering Circular
 Officer
 Officers Certificate
 170




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Permitted Collateral Liens
    provided however
    provided however
   provided however
 Permitted Future Secured Creditors
 Permitted Future Secured Indebtedness
 Permitted Holder
 171




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Permitted Investments
             Permitted Liens
 172




---



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provided however
           provided however
 173




---



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provided however
    provided however
 provided however
     Permitted Securitization disposition
    174




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##### Table of Contents



Person
 Points
 Polo Towers Lines of Credit and Securitization Notes Payable
 Preferred Stock
 Qualified Equity Interests
     Quorum Facility
 Refinance Refinanced Refinancing
 Refinancing Indebtedness provided however
     175




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provided further however
 Registration Rights Agreement
 Related Business
 Replacement Assets
 Restricted Subsidiary provided however
 S&P
 Sale/Leaseback Transaction
 SEC
 Secured Debt Ratio pro forma pro forma
 Secured Indebtedness
 Secured Obligations
 Securities Act
 Securitization
 Security Agreement
 176




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##### Table of Contents



Security Documents
 Significant Subsidiary
 Special Purpose Subsidiary
 Standard Securitization Undertakings
 Stated Maturity
 Subordinated Obligation
 Subsidiary
 Subsidiary Guarantor
 Sunterra SPE 2004 Notes
 Tempus
Acquisition Loan
 Timeshare Loans
 Total Indebtedness
 177




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##### Table of Contents



Treasury Rate provided however
 Trust Monies
     Unrestricted Subsidiary provided however
 provided however
   pro forma
 provided however
    178




---



##### Table of Contents



U.S. Dollar Equivalent The Wall
Street Journal
 Vacation Interests
 Voting Stock
 Wholly-Owned Restricted Subsidiary
 179




---



##### Table of Contents



CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
   180




---



##### Table of Contents



CERTAIN ERISA CONSIDERATIONS
  General Fiduciary Matters
   Prohibited Transaction Laws
     181




---



##### Table of Contents



182




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##### Table of Contents



PLAN OF DISTRIBUTION
 
  
   183




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##### Table of Contents



LEGAL MATTERS
  
 EXPERTS
  
 WHERE YOU CAN FIND ADDITIONAL INFORMATION
  
 184




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 INDEX TO FINANCIAL STATEMENTS
 
 PAGENUMBERAudited Consolidated Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Financial Statements:Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    F-3Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008
    
    
    F-4Consolidated Statements of Member Capital (Deficit) and Comprehensive Income (Loss) for
the years ended December 31, 2010, 2009 and 2008
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
    
    
    F-6Notes to the Consolidated Financial Statements
    
    
    F-9Unaudited Consolidated Financial Statements:Unaudited Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    
    F-65Unaudited Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010
    
    
    F-66Unaudited Consolidated Statements of Member Capital (Deficit) and Comprehensive Income (Loss)
for the three months ended March 31, 2011 and 2010
    
    
    F-67Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010
    
    
    F-68Notes to  Unaudited Consolidated Financial Statements
    
    
    F-70
 
 F-1




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DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 Report of Independent Registered Public Accounting Firm
 
     
 
 
 F-2




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 31, 2010 and 2009
 (In thousands, except share data)
 
 2010
    
    
    2009ASSETSCash and cash equivalents
    
    $
    27,329
    
    
    $
    17,186Cash in escrow and restricted cash
    
    
    30,048
    
    
    
    40,544Mortgages and contracts receivable, net of allowance of $55,151 and $60,911, respectively
    
    
    245,287
    
    
    
    263,556Due from related parties, net
    
    
    20,958
    
    
    
    15,378Other receivables, net
    
    
    35,980
    
    
    
    33,884Income tax receivable
    
    
    10
    
    
    
    1,176Prepaid expenses and other assets, net
    
    
    46,248
    
    
    
    28,828Unsold Vacation Interests, net
    
    
    190,564
    
    
    
    203,225Property and equipment, net
    
    
    29,097
    
    
    
    25,708Assets held for sale
    
    
    9,517
    
    
    
    Intangible assets, net
    
    
    45,713
    
    
    
    42,633Total assets
    
    $
    680,751
    
    
    $
    672,118LIABILITIES AND MEMBER CAPITAL (DEFICIT)Accounts payable
    
    $
    7,655
    
    
    $
    10,956Due to related parties, net
    
    
    36,251
    
    
    
    36,695Accrued liabilities
    
    
    67,533
    
    
    
    48,914Income taxes payable
    
    
    3,936
    
    
    
    441Deferred income taxes
    
    
    
    
    
    
    389Deferred revenues
    
    
    67,706
    
    
    
    59,461Senior secured notes, net of unamortized original issue discount of $10,278 and $0, respectively
    
    
    414,722
    
    
    
    Borrowings under line of credit agreements
    
    
    
    
    
    
    393,954Securitization notes and conduit facilities, net
    
    
    186,843
    
    
    
    222,913Derivative liabilities
    
    
    79
    
    
    
    464Notes payable
    
    
    23,273
    
    
    
    1,792Total liabilities
    
    
    807,998
    
    
    
    775,979Commitments and contingenciesRedeemable preferred units (1,000 shares authorized, issued and outstanding)
    
    
    84,502
    
    
    
    103,528Member capital (deficit):Member capital (authorized 1,090 common units, no par value; issued 1,090 and 1,000 common
units, respectively)
    
    
    7,335
    
    
    
    7,335Accumulated deficit
    
    
    (201,338
    )
    
    
    (198,317
    )Accumulated other comprehensive loss
    
    
    (17,746
    )
    
    
    (16,407
    )Total member capital (deficit)
    
    
    (211,749
    )
    
    
    (207,389
    )Total liabilities and member capital (deficit)
    
    $
    680,751
    
    
    $
    672,118
 
 
 F-3




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the years ended December 31, 2010, 2009 and 2008
 (In thousands)
 
 2010
    
    
    2009
    
    
    2008Revenues:Vacation Interest sales
    
    $
    214,764
    
    
    $
    248,643
    
    
    $
    285,442Provision
for uncollectible Vacation Interest sales revenue
    
    
    (12,655
    )
    
    
    (14,153
    )
    
    
    (51,166
    )Vacation Interest, net
    
    
    202,109
    
    
    
    234,490
    
    
    
    234,276Management, member and other services
    
    
    102,651
    
    
    
    108,203
    
    
    
    93,241Consolidated resort operations
    
    
    26,547
    
    
    
    23,814
    
    
    
    21,006Interest
    
    
    39,327
    
    
    
    44,172
    
    
    
    53,626Gain on mortgage repurchase
    
    
    191
    
    
    
    282
    
    
    
    265Total revenues
    
    
    370,825
    
    
    
    410,961
    
    
    
    402,414Costs and Expenses:Vacation Interest cost of sales
    
    
    39,730
    
    
    
    55,135
    
    
    
    67,551Advertising, sales and marketing
    
    
    114,029
    
    
    
    116,098
    
    
    
    148,565Vacation Interest carrying cost, net
    
    
    29,821
    
    
    
    32,992
    
    
    
    22,831Management, member and other services
    
    
    23,646
    
    
    
    31,163
    
    
    
    35,346Consolidated resort operations
    
    
    23,972
    
    
    
    22,456
    
    
    
    23,685Loan portfolio
    
    
    10,566
    
    
    
    9,835
    
    
    
    8,753General and administrative
    
    
    67,905
    
    
    
    71,306
    
    
    
    78,618Gain on disposal of assets
    
    
    (1,923
    )
    
    
    (137
    )
    
    
    (1,007
    )Depreciation and amortization
    
    
    11,939
    
    
    
    13,366
    
    
    
    16,687Interest, net of capitalized interest of $0, $0 and $352, respectively
    
    
    67,162
    
    
    
    68,515
    
    
    
    71,380Loss on extinguishment of debt
    
    
    1,081
    
    
    
    10,903
    
    
    
    Impairments and other write-offs
    
    
    3,330
    
    
    
    1,125
    
    
    
    17,168Total costs and expenses
    
    
    391,258
    
    
    
    432,757
    
    
    
    489,577Loss before (benefit) provision for income taxes
    
    
    (20,433
    )
    
    
    (21,796
    )
    
    
    (87,163
    )(Benefit) provision for income taxes
    
    
    (1,274
    )
    
    
    (799
    )
    
    
    1,809Net loss
    
    $
    (19,159
    )
    
    $
    (20,997
    )
    
    $
    (88,972
    )
 
 
 F-4




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF MEMBER CAPITAL (DEFICIT)
AND COMPREHENSIVE INCOME (LOSS)
 For the years ended December 31, 2010, 2009 and 2008
 ($ in thousands)
 Temporary Member Capital
    
    

Permanent Member CapitalAccumulated
    
    
    TotalPreferred Redeemable
    
    
    Common
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    MemberUnits
    
    
    Units
    
    
    Member
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Capital
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    (Deficit)
    
    
    LossBalance at December 31, 2007
    
    
    1,000
    
    
    $
    72,047
    
    
    
    1,000
    
    
    $
    7,149
    
    
    $
    (56,867
    )
    
    $
    814
    
    
    $
    (48,904
    )Net loss for the year ended December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,972
    )
    
    
    
    
    
    
    (88,972
    )
    
    $
    (88,972
    )Other comprehensive loss:Currency translation adjustments, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,917
    )
    
    
    (21,917
    )
    
    
    (21,917
    )Priority returns and redemption premiums
    
    
    
    
    
    
    13,051
    
    
    
    
    
    
    
    
    
    
    
    (13,051
    )
    
    
    
    
    
    
    (13,051
    )Balance at December 31, 2008
    
    
    1,000
    
    
    
    85,098
    
    
    
    1,000
    
    
    
    7,149
    
    
    $
    (158,890
    )
    
    
    (21,103
    )
    
    
    (172,844
    )Comprehensive loss for the year ended December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (110,889
    )Second Lien warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186
    
    
    
    
    
    
    
    
    
    
    
    186Net loss for the year ended December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,997
    )
    
    
    
    
    
    
    (20,997
    )
    
    $
    (20,997
    )Other comprehensive income:Currency translation adjustments, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,696
    
    
    
    4,696
    
    
    
    4,696Priority returns and redemption premiums
    
    
    
    
    
    
    18,430
    
    
    
    
    
    
    
    
    
    
    
    (18,430
    )
    
    
    
    
    
    
    (18,430
    )Balance at December 31, 2009
    
    
    1,000
    
    
    
    103,528
    
    
    
    1,000
    
    
    
    7,335
    
    
    
    (198,317
    )
    
    
    (16,407
    )
    
    
    (207,389
    )Comprehensive loss for the year ended December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (16,301
    )Guggenheim equity investment
    
    
    1,000
    
    
    
    75,000
    
    
    
    269.3Repurchase of equity previously held by another minority institutional investor
    
    
    (1,000
    )
    
    
    (111,680
    )
    
    
    (179.3
    )
    
    
    
    
    
    
    36,680
    
    
    
    
    
    
    
    36,680Costs related to issuance of common and preferred units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,888
    )
    
    
    
    
    
    
    (2,888
    )Net loss for the year ended December 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,159
    )
    
    
    
    
    
    
    (19,159
    )
    
    $
    (19,159
    )Other comprehensive loss:Currency translation adjustments, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,339
    )
    
    
    (1,339
    )
    
    
    (1,339
    )Priority returns and redemption premiums
    
    
    
    
    
    
    17,654
    
    
    
    
    
    
    
    
    
    
    
    (17,654
    )
    
    
    
    
    
    
    (17,654
    )Balance at December 31, 2010
    
    
    1,000
    
    
    $
    84,502
    
    
    
    1,090
    
    
    $
    7,335
    
    
    $
    (201,338
    )
    
    $
    (17,746
    )
    
    $
    (211,749
    )Comprehensive loss for the year ended December 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (20,498
    )
 
 F-5




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the years ended December 31, 2010, 2009 and 2008
 (In thousands)
 
 2010
    
    
    2009
    
    
    2008Operating activities:Net loss
    
    $
    (19,159
    )
    
    $
    (20,997
    )
    
    $
    (88,972
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    11,939
    
    
    
    13,366
    
    
    
    16,687Provision
for uncollectible Vacation Interest sales revenue
    
    
    12,655
    
    
    
    14,153
    
    
    
    51,166Amortization of capitalized financing costs and original issue discount
    
    
    2,521
    
    
    
    1,989
    
    
    
    8,860Amortization of capitalized loan origination costs and portfolio discount
    
    
    3,007
    
    
    
    3,230
    
    
    
    1,853Loss (gain) on foreign currency exchange
    
    
    42
    
    
    
    182
    
    
    
    (487
    )Gain on disposal of assets
    
    
    (1,923
    )
    
    
    (137
    )
    
    
    (1,007
    )Gain on mortgage repurchase
    
    
    (191
    )
    
    
    (282
    )
    
    
    (265
    )Loss on extinguishment of debt
    
    
    1,081
    
    
    
    10,903
    
    
    
    Deferred income taxes
    
    
    (377
    )
    
    
    7
    
    
    
    (566
    )Unrealized (gain) loss on derivative instruments
    
    
    (314
    )
    
    
    (3,885
    )
    
    
    4,032Impairments and other write-offs
    
    
    3,330
    
    
    
    1,125
    
    
    
    17,168Changes in operating assets and liabilities excluding acquisitions:Mortgages and contracts receivable
    
    
    12,190
    
    
    
    19,495
    
    
    
    (29,235
    )Due from related parties, net
    
    
    (5,776
    )
    
    
    8,968
    
    
    
    22,625Other receivables, net
    
    
    3,041
    
    
    
    1,657
    
    
    
    (1,077
    )Prepaid expenses and other assets, net
    
    
    (115
    )
    
    
    2,516
    
    
    
    1,871Unsold Vacation Interests, net
    
    
    10,308
    
    
    
    19,236
    
    
    
    20,731Accounts payable
    
    
    (3,224
    )
    
    
    2,518
    
    
    
    (11,799
    )Due to related parties, net
    
    
    5,255
    
    
    
    7,589
    
    
    
    19,567Accrued liabilities
    
    
    18,447
    
    
    
    5,306
    
    
    
    (6,944
    )Income taxes payable (receivable)
    
    
    4,632
    
    
    
    (1,925
    )
    
    
    2,085Deferred revenues
    
    
    8,632
    
    
    
    2,779
    
    
    
    18,793Net cash provided by operating activities
    
    
    66,001
    
    
    
    87,793
    
    
    
    45,086Investing activities:Property and equipment capital expenditures
    
    
    (5,553
    )
    
    
    (4,672
    )
    
    
    (13,861
    )Purchase of assets from ILX Resorts, Inc.
    
    
    (30,722
    )
    
    
    
    
    
    
    Disbursement of Tempus Acquisition note receivable
    
    
    (3,005
    )
    
    
    
    
    
    
    Acquisition of Sunterra Corporation
    
    
    
    
    
    
    
    
    
    
    (2,910
    )Intangible assets acquired by Diamond Europe
    
    
    
    
    
    
    
    
    
    
    (1,358
    )Proceeds from sale of assets
    
    
    1,881
    
    
    
    422
    
    
    
    10,866Net cash used in investing activities
    
    $
    (37,399
    )
    
    $
    (4,250
    )
    
    $
    (7,263
    )
 
 
 F-6




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS  Continued  For the years ended December 31, 2010, 2009 and 2008
(In thousands)
 
 2010
    
    
    2009
    
    
    2008Financing activities:Changes in cash in escrow and restricted cash
    
    $
    10,526
    
    
    $
    8,455
    
    
    $
    (445
    )Proceeds from issuance of Senior Secured Notes, net of original issue discount
of $10,570, $0 and $0, respectively
    
    
    414,430
    
    
    
    
    
    
    
    Proceeds
from issuance of  Quorum Facility
    
    
    16,697
    
    
    
    
    
    
    
    Proceeds from issuance of Tempus Acquisition Loan
    
    
    3,300
    
    
    
    
    
    
    
    Proceeds from issuance of Diamond Resorts Owners Trust 2009-1
    
    
    
    
    
    
    181,012
    
    
    
    Proceeds from issuance of 2008 Conduit Facility
    
    
    25,533
    
    
    
    29,033
    
    
    
    16,520Proceeds from issuance of 2007 Conduit Facility
    
    
    
    
    
    
    
    
    
    
    32,669Proceeds from issuance of ILXA Receivables Loan
    
    
    11,870
    
    
    
    
    
    
    
    Proceeds from issuance of ILXA Inventory Loan
    
    
    17,513
    
    
    
    
    
    
    
    Proceeds from issuance of First and Second Lien Facilities
    
    
    
    
    
    
    
    
    
    
    23,500Payments on  Quorum Facility
    
    
    (3,755
    )
    
    
    
    
    
    
    Payments on Diamond Resorts Owners Trust 2009-1
    
    
    (47,855
    )
    
    
    (12,303
    )
    
    
    Payments on 2008 Conduit Facility
    
    
    (4,307
    )
    
    
    (192,469
    )
    
    
    (34,572
    )Payments on 2007 Conduit Facility
    
    
    
    
    
    
    (51,153
    )
    
    
    (8,296
    )Payments on ILXA Receivables Loan
    
    
    (1,578
    )
    
    
    
    
    
    
    Payments on First and Second Lien Facilities
    
    
    (397,609
    )
    
    
    (1,139
    )
    
    
    (46,750
    )Payments on Polo Towers lines of credit  and securitization notes
    
    
    (11,009
    )
    
    
    (9,955
    )
    
    
    (12,530
    )Payment on 2004 Securitization Notes
    
    
    (21,722
    )
    
    
    (13,251
    )
    
    
    (18,383
    )Payments on notes payable
    
    
    (8,221
    )
    
    
    (9,638
    )
    
    
    (7,962
    )Payments of debt issuance costs
    
    
    (19,125
    )
    
    
    (9,428
    )
    
    
    (3,775
    )Proceeds from Guggenheim equity investment
    
    
    75,000
    
    
    
    
    
    
    
    Repurchase of equity previously held by another minority institutional investor
    
    
    (75,000
    )
    
    
    
    
    
    
    Payments of costs related to issuance of common and preferred units
    
    
    (2,888
    )
    
    
    
    
    
    
    Payments for derivative instrument
    
    
    (71
    )
    
    
    (8,824
    )
    
    
    Net cash used in financing activities
    
    
    (18,271
    )
    
    
    (89,660
    )
    
    
    (60,024
    )Net increase (decrease) in cash and cash equivalents
    
    
    10,331
    
    
    
    (6,117
    )
    
    
    (22,201
    )Effect of changes in exchange rates on cash and cash equivalents
    
    
    (188
    )
    
    
    596
    
    
    
    (4,295
    )Cash and cash equivalents, beginning of period
    
    
    17,186
    
    
    
    22,707
    
    
    
    49,203Cash and cash equivalents, end of period
    
    $
    27,329
    
    
    $
    17,186
    
    
    $
    22,707
 
 
 F-7




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS  Continued  For the years ended December 31, 2010, 2009 and 2008
(In thousands)
 2010
    
    
    2009
    
    
    2008SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    44,633
    
    
    $
    63,297
    
    
    $
    58,735Cash paid for taxes, net of tax refunds
    
    $
    (5,514
    )
    
    $
    1,239
    
    
    $
    (482
    )SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Priority returns and redemption premiums on preferred units
    
    $
    17,654
    
    
    $
    18,430
    
    
    $
    13,051Insurance premiums financed through issuance of note payable
    
    $
    7,897
    
    
    $
    8,573
    
    
    $
    7,416Assets held for sale reclassified to unsold Vacation Interests
    
    $
    
    
    
    $
    4,220
    
    
    $
    Unsold Vacation Interests reclassified to assets held for sale
    
    $
    10,064
    
    
    $
    
    
    
    $
    Property and equipment reclassified to assets to be disposed
but not actively marketed (prepaid expenses and other assets)
    
    $
    588
    
    
    $
    
    
    
    $
    Management contracts reclassified to assets held for sale
    
    $
    587
    
    
    $
    
    
    
    $
    Proceeds from issuance of ILXA Inventory Loan in transit
    
    $
    1,028
    
    
    $
    
    
    
    $
    Purchase of assets from ILX Resorts, Inc.:Fair value of assets acquired
    
    $
    34,876
    
    
    $
    
    
    
    $
    Cash paid
    
    
    (30,722
    )
    
    
    
    
    
    
    Liabilities assumed
    
    $
    4,154
    
    
    $
    
    
    
    $
    
 
 F-8




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   Continued
 
 Note 1Background, Business and Basis of Presentation
 Business and Background
  
 ® ®
 
  
    
    Hospitality and Management Services.The Company manages 68 branded resort
properties, which are located in the continental United States, Hawaii, the Caribbean and
Europe. The Company also manages five multi-resort trusts or similar arrangements (the Collections). Each
Collection holds real estate in the Companys resort properties underlying the Vacation
Interests that the Company sells. As manager of the Companys branded resorts and
Collections, it provides billing services, account collections, accounting and treasury
functions and information technology services. In addition, for branded resorts, the
Company also provides an online reservation system and customer service contact center,
operates the front desks and amenities and furnishes housekeeping, maintenance and human
resources services. Management contracts typically have an initial term of three to five
years with automatic renewals and are structured on a cost-plus basis, thereby providing
the Company with a recurring and stable revenue stream. In addition, the Company earns
recurring fees by operating THE Club, the points-based exchange and member services program
that enables members to vacation at any of the 203 destinations in the Companys network. These
items are included in management, member and other services revenue and expense in the
accompanying consolidated statements of operations.In addition, the Company serves as the homeowners association (HOA) for its two resorts in St. Maarten and earns
maintenance fees and incurs operating expenses at these two resorts. At certain resorts,
the Company also operates golf courses, food and beverage venues, retail shops, a campground
and a marina and earns incidental revenue and incurs operating expense. Finally, the
Company provides cable, telephone, and technology services to HOAs. These items are
included in consolidated resort operations revenue and expense in the accompanying
consolidated statements of operations.
    
    Marketing and Sales of Vacation Interests.The Company markets and sells
Vacation Interests in its resort network. Sales prospects are generated by utilizing a
variety of marketing programs. Currently, the Company sells Vacation Interests only in the
form of points, which can be utilized for vacations for varying lengths of stay at any
resort in its network. In the past, the Company also sold Vacation Interests in the
 
 F-9




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 form of deeded intervals, which provide the right to vacation at a particular resort for a
specified length of time.
    
    Consumer Financing of Vacation Interests. The Company provides loans to
eligible customers who purchase Vacation Interests through sales centers and choose to
finance their purchase. These loans are collateralized by the underlying Vacation Interests
and bear interest at a fixed rate. The Companys consumer finance servicing operations  include underwriting, collection and servicing of its consumer
loan portfolio.
 Basis of Presentation
  
 
 
  
 Reclassifications
  Liquidity
  F-10




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
  
 Note 2Summary of Significant Accounting Policies
 
 Principles of Consolidation
 
 
 Use of Estimates
 
 
  
 Vacation Interest Sales Revenue Recognition
 F-11




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Management, Member and Other Services Revenue Recognition
 
    
    Management fee revenues are recognized in accordance with the terms of the Companys
management contracts. The Company collects maintenance fees from the HOAs and Collections
under the Companys management agreements, which are recognized ratably throughout the year
as earned.
    
    The Company charges an annual fee for membership in THE Club, an internal exchange,
reservation and membership service organization. In addition to annual dues associated with
THE Club, the Company earns revenue associated with customer conversions into THE Club,
which involve the payment of a one-time fee by interval owners who wish to retain their
intervals but also participate in THE Club. The Company also earns revenue through the
Companys travel-related services and other affinity programs.
    
    Other services revenue includes (1) closing costs on sales of Vacation Interests; (2)
collection fees paid by owners when they bring their accounts current after collection
efforts have been made by the Company on behalf of HOAs; (3) reservation protection plan
revenue, which is an optional fee paid by customers when making a reservation to protect
their points should they need to cancel their reservation; (4) travel services revenue from
the Companys European travel operations, which the Company discontinued during the second
quarter of 2008; (5) revenue associated with certain sales incentives given to customers as
motivation to purchase a Vacation Interest, which is recorded upon recognition of the
related Vacation Interest sales revenue; and (6) late/impound fees assessed on delinquent
customer accounts.
 Consolidated Resort Operations Revenue Recognition
 
    
    For the Companys properties located in the Caribbean, the Company provides services
traditionally administered by an HOA. Consolidated resort operations revenue includes the
maintenance fees billed to owners and the Collections by the Companys St. Maarten HOAs,
which are recognized ratably over the year. In addition, these HOAs also bill the owners
for capital project assessments to repair and replace the amenities of these resorts, as
well as special assessments to reserve the out-of-pocket deductibles for hurricanes and
other natural disasters. These assessments are deferred until refurbishment activity
occurs, at which time the amounts collected are recognized as a direct reduction to
refurbishment expense in consolidated resort operations expense. All operating revenues and
expenses associated with these properties are consolidated within the Companys financial
statements, except for intercompany transactions, such as maintenance fees for the
Companys owned inventory and management fees, which are eliminated.
    
    Food and beverage revenue at certain resorts whose restaurants the Company manages
directly;
    
    Greens fees, equipment rental and operation of food services at the golf courses owned
and managed by the Company at certain resorts;
    
    Revenue from providing cable, telephone, and technology services to HOAs; and
    
    Other incidental revenues generated at the resorts including, but not limited to, retail
and gift shops, activity fees for arts and crafts, sport equipment rental, and safe rental.
 Interest Revenue
 F-12




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
  
 Vacation Interest Cost of Sales 
  Advertising, Sales and Marketing Costs 
 Vacation Interest Carrying Cost, net 
  Management,
Member and Other Services Expenses 
   F-13




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Consolidated Resort Operations Expenses
 Loan Portfolio Expenses 
 General and Administrative Expenses 
 Income Taxes 
  
  
 Foreign Currency Translation 
 F-14




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Other Comprehensive Income 
 Cash and Cash Equivalents 
 Cash in Escrow and Restricted Cash 
 Mortgages and Contracts Receivable and Allowance for Loan and Contract Losses 
     Due from Related Parties, Net and Due to Related Parties, Net 
 Assets Held for Sale
 F-15




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
  
 
 Unsold Vacation Interests, Net
 
 
  
 
  
 
  
 Recently Adopted Accounting Pronouncements
   Improving
Disclosures about Fair Value Measurements
 F-16




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Amendments to Certain Recognition and
Disclosure Requirements,
 
 Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses
 
 
 IntangiblesGoodwill and Other (Topic 350):
When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative
Carrying Amounts
 
 
 Business Combinations (Topic 805): Disclosure
of Supplementary Pro Forma Information for Business Combinations
 
 
 Receivables (Topic 310): Deferral of the
Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20
 
 F-17




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Note 3Concentrations of Risk
 Credit Risk
  
 Availability of Funding Sources
 
 Geographic Concentration
 Interest Rate Risk
    F-18




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
   Note 4Cash in Escrow and Restricted Cash
  2010
    
    
    2009Securitization and conduit collection and reserve cash
    
    $
    14,040
    
    
    $
    26,953Escrow
    
    
    4,615
    
    
    
    5,152Bonds and deposits
    
    
    2,229
    
    
    
    5,025Rental trust
    
    
    3,717
    
    
    
    2,023Collected on behalf of HOAs and other
    
    
    5,447
    
    
    
    1,391Total cash in escrow and restricted cash
    
    $
    30,048
    
    
    $
    40,544
 Note 5Mortgages and Contracts Receivable and Allowance for Loan and Contract Losses
      F-19




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
    2010
    
    
    2009Mortgages and contracts receivable, acquired 
April 27, 2007 Merger
    
    $
    71,200
    
    
    $
    106,682Mortgages and contracts receivable, contributed
    
    
    11,125
    
    
    
    18,672Mortgages and contracts receivable, originated
    
    
    198,959
    
    
    
    191,478Mortgages and contracts receivable, purchased
(unrestricted subsidiaries)
    
    
    12,043
    
    
    
    Mortgages and contracts receivable, gross
    
    
    293,327
    
    
    
    316,832Allowance for Loan and Contract Losses
    
    
    (51,551
    )
    
    
    (60,911
    )Allowance for Loan and Contract Losses
(unrestricted subsidiaries)
    
    
    (3,600
    )
    
    
    Deferred profit on Vacation Interest transactions
    
    
    (2,349
    )
    
    
    (2,693
    )Deferred loan and contract origination costs,
net of accumulated amortization
    
    
    2,823
    
    
    
    3,672Inventory value of defaulted mortgages that were
previously contributed and acquired
    
    
    7,439
    
    
    
    7,888Discount on mortgages and contracts receivable,
net of accumulated amortization
    
    
    (802
    )
    
    
    (1,232
    )Mortgages and contracts receivable, net
    
    $
    245,287
    
    
    $
    263,556
     2011
    
    $
    47,2052012
    
    
    44,1412013
    
    
    40,7852014
    
    
    37,123
 F-20




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 2015
    
    
    34,0752016 and thereafter
    
    
    89,998$
    293,327
 
  
 
 2010
    
    
    2009Balance, beginning of period
    
    $
    60,911
    
    
    $
    71,467Provision on purchased loans
    
    
    
    
    
    
    57Provision on purchased loans (unrestricted subsidiaries)
    
    
    4,414
    
    
    
    Provision for uncollectible Vacation Interest sales revenue
    
    
    12,367
    
    
    
    10,214Mortgages and contracts receivable charged off
    
    
    (25,837
    )
    
    
    (28,518
    )Mortgages and contracts receivable charged off
(unrestricted subsidiaries)
    
    
    (814
    )
    
    
    Recoveries
    
    
    4,169
    
    
    
    7,505Effect of translation rate
    
    
    (59
    )
    
    
    186Balance, end of period
    
    $
    55,151
    
    
    $
    60,911
 
 
  
 
  
 
 Diamond
    
    
    UnrestrictedResorts
    
    
    SubsidiariesMortgages and
    
    
    Mortgages andFICO Scores
    
    
    Contracts
    
    
    Contracts
    
    
    Total>799
    
    
    $
    17,055
    
    
    $
    90
    
    
    $
    17,145700  799
    
    
    
    123,558
    
    
    
    2,888
    
    
    
    126,446600   699
    
    
    
    96,087
    
    
    
    3,977
    
    
    
    100,064<600
    
    
    
    38,373
    
    
    
    2,128
    
    
    
    40,501No FICO Scores
    
    
    
    6,211
    
    
    
    2,960
    
    
    
    9,171$
    281,284
    
    
    $
    12,043
    
    
    $
    293,327
 
 
  
 Note 6Transactions with Related Parties
 Due from Related Parties, Net and Due to Related Parties, Net
  F-21




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
    
 2010
    
    
    2009Amounts due from HOAs
    
    $
    19,941
    
    
    $
    14,871Amounts due from  trusts
    
    
    1,017
    
    
    
    507Total due from related parties, net
    
    $
    20,958
    
    
    $
    15,378
 
  
 2010
    
    
    2009Amounts owed to HOAs
    
    $
    30,377
    
    
    $
    27,565Amounts owed to  trusts
    
    
    5,874
    
    
    
    4,630Other
    
    
    
    
    
    
    4,500Total due to related parties, net
    
    $
    36,251
    
    
    $
    36,695
 
 Inventory Recovery Agreements
   F-22




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
     Management Services
  
  
 Allocation of Expenses
  2010
    
    2009
    
    2008Reduction of
management, member, and other services expenses
    
    $
    6,701
    
    
    $
    5,222
    
    
    $
    4,696Reduction of general and administrative expenses
    
    
    24,065
    
    
    
    19,245
    
    
    
    9,947Total allocation of expenses
    
    $
    30,766
    
    
    $
    24,467
    
    
    $
    14,643
 Note 7Other Receivables, Net
  2010
    
    
    2009THE Club dues receivable
    
    $
    29,534
    
    
    $
    26,076Mortgage interest receivable
    
    
    3,651
    
    
    
    3,925Rental receivables and other resort
management-related receivables
    
    
    2,893
    
    
    
    2,686THE Club conversion receivable
    
    
    1,409
    
    
    
    2,101Owner maintenance fee receivable
    
    
    2,097
    
    
    
    1,647
 F-23




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 2010
    
    
    2009Mini-vacations and sampler program receivables
    
    
    1,060
    
    
    
    976Insurance claims receivable
    
    
    533
    
    
    
    598Tempus Note Receivable
    
    
    3,005
    
    
    
    Proceeds from ILXA Inventory Loan in transit
    
    
    1,028
    
    
    
    Other receivables
    
    
    2,970
    
    
    
    3,884Total other receivables, gross
    
    
    48,180
    
    
    
    41,893Provision for doubtful accounts
    
    
    (12,200
    )
    
    
    (8,009
    )Total other receivables, net
    
    $
    35,980
    
    
    $
    33,884
 
  
 Note 8Prepaid Expenses and Other Assets, Net
  
 Prepaid and unamortized
maintenance fees
 
 Deferred commissions
 Vacation Interest purchases in transit
 Prepaid rent
  
 2010
    
    
    2009Debt issuance costs, net
    
    $
    24,098
    
    
    $
    8,227Prepaid and unamortized maintenance fees
    
    
    5,663
    
    
    
    6,035Other inventory/consumables
    
    
    3,019
    
    
    
    2,543Prepaid insurance
    
    
    2,061
    
    
    
    2,461Deferred commissions
    
    
    2,494
    
    
    
    2,334Assets to be disposed (not actively marketed)
    
    
    2,169
    
    
    
    1,628Deposits and advances
    
    
    2,457
    
    
    
    1,462Vacation Interest purchases in transit
    
    
    1,099
    
    
    
    1,384Prepaid rent
    
    
    255
    
    
    
    254Prepaid sales and marketing costs
    
    
    239
    
    
    
    232Other
    
    
    2,694
    
    
    
    2,268Total prepaid expenses and other assets, net
    
    $
    46,248
    
    
    $
    28,828
 
 F-24




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  
  
 Note 9Unsold Vacation Interests, Net
  2010
    
    
    2009Completed unsold Vacation Interests, net
    
    $
    157,491
    
    
    $
    170,443Undeveloped land
    
    
    32,159
    
    
    
    31,970Vacation Interest construction in progress
    
    
    914
    
    
    
    812Unsold Vacation Interests, net
    
    $
    190,564
    
    
    $
    203,225
 
  
 Note 10Property and Equipment, Net
  
  
  2010
    
    
    2009Land and improvements
    
    $
    4,021
    
    
    $
    1,140Buildings and leasehold improvements
    
    
    18,468
    
    
    
    16,800Furniture and office equipment
    
    
    8,674
    
    
    
    7,714Computer software
    
    
    9,110
    
    
    
    6,972Computer equipment
    
    
    4,776
    
    
    
    4,290Construction in progress
    
    
    433
    
    
    
    610Property and equipment, gross
    
    
    45,482
    
    
    
    37,526Less accumulated depreciation
    
    
    (16,385
    )
    
    
    (11,818
    )Property and equipment, net
    
    $
    29,097
    
    
    $
    25,708
  Note 11Intangible Assets, Net
  F-25




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Gross Carrying
    
    
    Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    ValueManagement contracts
    
    $
    48,700
    
    
    $
    (9,239
    )
    
    $
    39,461Member relationships
    
    
    26,953
    
    
    
    (21,753
    )
    
    
    5,200Distributor relationships and other
    
    
    1,227
    
    
    
    (175
    )
    
    
    1,052$
    76,880
    
    
    $
    (31,167
    )
    
    $
    45,713
  Gross Carrying
    
    
    Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    ValueManagement contracts
    
    $
    42,745
    
    
    $
    (6,690
    )
    
    $
    36,055Member relationships
    
    
    25,923
    
    
    
    (19,839
    )
    
    
    6,084Distributor relationships and other
    
    
    626
    
    
    
    (132
    )
    
    
    494$
    69,294
    
    
    $
    (26,661
    )
    
    $
    42,633
 
 
 
   Note 12Borrowings
 Senior Secured Notes
    F-26




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
    First and Second Lien Facilities
   .
   F-27




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
     Conduit Facilities and 2009 Securitization
    F-28




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
      Covenant Issues Affecting First and Second Lien Facilities and 2007 and 2008 Conduit Facilities
  F-29




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
   Sunterra SPE 2004 LLC
     F-30




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
  
 Polo Towers Lines of Credit and Securitization Notes Payable
   
  
 
  
   Quorum Facility
 
  
 F-31




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  ILXA Receivables Loan and Inventory Loan
    Tempus Acquisition Note Payable
 
  
  Notes Payable
   F-32




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  December 31,December 31, 2010
    
    2009WeightedAveragePrincipal
    
    
    Interest
    
    
    
    
    PrincipalBalance
    
    
    Rate
    
    
    Maturity
    
    BalanceSenior Secured Notes
    
    $
    425,000
    
    
    
    12.0
    %
    
    8/15/18
    
    $
    Unamortized original issue discount related to Senior
Secured Notes
    
    
    (10,278
    )
    
    
    
    
    
    
    
    
    First and Second Lien Facilities
    
    
    
    
    
    
    
    
    
    
    
    
    393,9542008 Conduit Facility
    
    
    39,467
    
    
    
    5.5
    %
    
    8/30/11
    
    
    18,241Diamond Resorts Owners Trust Series 2009-1
    
    
    121,843
    
    
    
    9.5
    %
    
    3/20/26
    
    
    169,698Unamortized original issue discount related to
Diamond Resorts Owners Trust Series
2009-1
    
    
    (899
    )
    
    
    
    
    
    
    
    
    (954
    )2004 Securitization Notes
    
    
    
    
    
    
    
    
    
    
    
    
    21,721Quorum Facility
    
    
    12,942
    
    
    
    8.0
    %
    
    4/30/12
    
    
    Polo Towers Lines of Credit
    
    
    2,060
    
    
    
    4.8
    %
    
    12/31/12
    
    
    9,591Polo Towers Securitization Notes Payable
    
    
    1,138
    
    
    
    7.4
    %
    
    1/20/13
    
    
    4,616ILXA Receivables Loan
    
    
    10,292
    
    
    
    10.0
    %
    
    8/31/15
    
    
    ILXA Inventory Loan
    
    
    18,541
    
    
    
    7.5
    %
    
    8/31/15
    
    
    Tempus Acquisition Loan
    
    
    3,300
    
    
    
    10.0
    %
    
    Less than one year
    
    
    Notes payable-insurance policies
    
    
    1,366
    
    
    
    3.7
    %
    
    Various
    
    
    1,232Notes payable-other
    
    
    66
    
    
    
    3.4
    %
    
    Various
    
    
    560Total borrowings
    
    $
    624,838
    
    
    
    
    
    
    
    
    $
    618,659
 Derivative Instruments
    F-33




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
    Borrowing Restrictions and Limitations
   Due in the year ending December 31:
 2011
    
    $
    110,3492012
    
    
    47,6702013
    
    
    25,3892014
    
    
    19,1262015
    
    
    8,4812016 and thereafter
    
    
    425,000Total contractual obligations
    
    
    636,015Unamortized original issue discount, net
    
    
    (11,177
    )Total borrowings at December 31, 2010
    
    $
    624,838
  Capitalized Interest
  F-34




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Note 13Accrued Liabilities
  Accrued marketing expenses
 
 Accrued
liability related to business combinations
 
 Accrued exchange company fees
 Accrued contingent litigation liabilities
 Accrued operating lease liabilities
 Accrued call center cost
 Accrued construction costs
  
 2010
    
    
    2009Accrued interest
    
    $
    20,365
    
    
    $
    3,699Accrued payroll and related
    
    
    14,953
    
    
    
    13,599Accrued marketing expenses
    
    
    5,405
    
    
    
    6,080Accrued commissions
    
    
    4,787
    
    
    
    4,029Accrued other taxes
    
    
    3,299
    
    
    
    5,763Accrued liability related to business
combinations
    
    
    3,744
    
    
    
    Accrued exchange company fees
    
    
    1,206
    
    
    
    1,523Accrued contingent litigation liabilities
    
    
    2,642
    
    
    
    2,889Accrued operating lease liabilities
    
    
    2,046
    
    
    
    1,917Accrued insurance
    
    
    2,766
    
    
    
    1,475Accrued professional fees
    
    
    2,648
    
    
    
    2,708Accrued call center cost
    
    
    1,114
    
    
    
    1,196Accrued construction costs
    
    
    247
    
    
    
    1,050Other
    
    
    2,311
    
    
    
    2,986Total accrued liabilities
    
    $
    67,533
    
    
    $
    48,914
 
 Note 14Deferred Revenues
  F-35




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 THE Club deferred revenue
 
 Deferred maintenance and reserve fee revenue 
 Deferred mini-vacations and sampler programs revenue
 
 Deferred
 revenue from an exchange company
 
 F-36




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  
 2010
    
    
    2009THE Club deferred revenue
    
    $
    36,535
    
    
    $
    33,554Deferred maintenance and reserve fee revenue
    
    
    13,491
    
    
    
    11,759Deferred mini-vacations and sampler programs revenue
    
    
    11,465
    
    
    
    9,029Deferred revenue from an exchange company
    
    
    3,246
    
    
    
    3,742Other
    
    
    2,969
    
    
    
    1,377Total deferred revenues
    
    $
    67,706
    
    
    $
    59,461
 
 Note 15Employee Benefit Plans
     Note 16Income Taxes
  2010
    
    
    2009
    
    
    2008Current:Federal
    
    $
    268
    
    
    $
    (1,307
    )
    
    $
    891State
    
    
    210
    
    
    
    89
    
    
    
    249Foreign
    
    
    (1,752
    )
    
    
    419
    
    
    
    973Total
current (benefit) provision for income taxes
    
    
    (1,274
    )
    
    
    (799
    )
    
    
    2,113Deferred:Federal
    
    
    5,016
    
    
    
    (7,918
    )
    
    
    (34,972
    )State
    
    
    674
    
    
    
    (2,552
    )
    
    
    (2,696
    )Foreign
    
    
    (9,644
    )
    
    
    (4,387
    )
    
    
    (11,864
    )(3,954
    )
    
    
    (14,857
    )
    
    
    (49,532
    )Change in valuation allowance
    
    
    3,954
    
    
    
    14,857
    
    
    
    49,228Total deferred benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    (304
    )(Benefit) provision for income taxes
    
    $
    (1,274
    )
    
    $
    (799
    )
    
    $
    1,809
 F-37




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  2010
    
    
    2009
    
    
    2008Income tax benefit at U.S.
federal statutory rate of
35%
    
    $
    (1,333
    )
    
    $
    (7,032
    )
    
    $
    (30,507
    )State tax
provision (benefit),
net of federal tax effect
    
    
    574
    
    
    
    (647
    )
    
    
    (1,446
    )Income of pass-through
entities not taxed at
corporate level
    
    
    (138
    )
    
    
    (1,818
    )
    
    
    6,124Adjustment to NOL carry
forwards as a result of IRS
Examination
    
    
    
    
    
    
    
    
    
    
    (11,886
    )Tax impact of non-U.S.
disregarded entities
    
    
    (1,055
    )
    
    
    (1,216
    )
    
    
    (1,867
    )Differences between U.S. and
foreign jurisdictions
    
    
    (887
    )
    
    
    249
    
    
    
    719Foreign currency and rate
change adjustment
    
    
    (8,792
    )
    
    
    7
    
    
    
    (7,236
    )Meals and entertainment
    
    
    159
    
    
    
    
    
    
    
    Alternative minimum tax
    
    
    1,251
    
    
    
    
    
    
    
    Change in deferred tax asset
    
    
    5,016
    
    
    
    
    
    
    
    Other
    
    
    (23
    )
    
    
    (5,199
    )
    
    
    (1,320
    )Change in valuation allowance
    
    
    3,954
    
    
    
    14,857
    
    
    
    49,228(Benefit) provision for income taxes
    
    $
    (1,274
    )
    
    $
    (799
    )
    
    $
    1,809
  
 2010
    
    
    2009Allowance for losses
    
    $
    34,481
    
    
    $
    28,747Unsold Vacation Interests adjustments
    
    
    19,439
    
    
    
    17,580Net operating loss carryover
    
    
    115,171
    
    
    
    123,631Accruals, expenses and prepaid assets
    
    
    14,335
    
    
    
    15,268Other
    
    
    21,957
    
    
    
    19,662Total gross deferred tax assets
    
    
    205,383
    
    
    
    204,888Valuation allowance
    
    
    (108,990
    )
    
    
    (105,036
    )Total net deferred tax assets
    
    
    96,393
    
    
    
    99,852Installment sales
    
    
    91,971
    
    
    
    95,351Other
    
    
    4,422
    
    
    
    4,890Total deferred tax liabilities
    
    
    96,393
    
    
    
    100,241Net deferred tax liabilities
    
    $
    
    
    
    $
    389
 
 ValuationAllowanceBalance at January 1, 2008
    
    $
    40,951Additions  Increases
    
    
    58,363Deductions  Recoveries
    
    
    (9,135
    )Balance at December 31, 2008
    
    
    90,179Additions  Increases
    
    
    38,012Deductions  Recoveries
    
    
    (23,155
    )Balance at December 31, 2009
    
    
    105,036Additions  Increases
    
    
    13,487Deductions  Recoveries
    
    
    (9,533
    )Balance at December 31, 2010
    
    $
    108,990
   F-38




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
         Tax Jurisdiction
    
    Tax Years No Longer Subject to ExaminationUnited States
    
    2006 and priorUnited Kingdom
    
    2002 and priorSpain
    
    Generally 2005 and prior*
 F-39




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 *
    
    although several Spanish entities are subject to examination for 2001-2005 Note 17Commitments and Contingencies
 Lease Agreements
     Year Ending December 31
 2011
    
    $
    7,4802012
    
    
    5,4802013
    
    
    4,9712014
    
    
    4,6382015
    
    
    4,5122016 and thereafter
    
    
    11,713Total minimum lease payments
    
    $
    38,794
  Purchase Obligations
  Litigation and Other
   F-40




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  
  
  
  
 F-41




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 
   
  
 Note 18Fair Value Measurements
  
    
    Level 1: Quoted prices for identical instruments in active markets.
    
    Level 2: Quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and model-derived
valuations whose inputs or significant value drivers are observable.
    
    Level 3: Unobservable inputs used when little or no market data is available.
   F-42




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Derivative
    
    
    DerivativeAssets
    
    
    LiabilitiesBalance at December 31, 2007
    
    $
    36
    
    
    $
    9,177Total loss included in interest expense
    
    
    (25
    )
    
    
    4,007Balance at December 31, 2008
    
    
    11
    
    
    
    13,184Total (loss) gain included in interest expense
    
    
    (11
    )
    
    
    (3,896
    )Total cash paid
    
    
    
    
    
    
    (8,824
    )Balance at December 31, 2009
    
    
    
    
    
    
    464Cash paid for 2010 Cap
    
    
    71
    
    
    
    Total (loss)
gain included in interest
expense
    
    
    (71
    )
    
    
    (385
    )Balance at December 31, 2010
    
    $
    
    
    
    $
    79
 
  
   
  
 
  
    F-43




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
   
  
 Note 19  Preferred Units
  
  
     F-44




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
       Note 20Business Combination
  
  
 Consideration:Cash
    
    $
    30,722Fair value of total consideration transferred
    
    $
    30,722
 F-45




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Recognized amounts of identifiable assets and liabilities assumed
as of August 31, 2010:Cash in escrow and restricted cash
    
    $
    54Mortgages and contracts receivable
    
    
    9,802Other receivables
    
    
    184Prepaid expenses and other assets
    
    
    181Unsold Vacation Interests
    
    
    10,100Property and equipment
    
    
    5,705Intangible assets
    
    
    8,850Total assets
    
    
    34,876Current liabilities
    
    
    4,154Total identifiable net assets
    
    $
    30,722
  Weighted
    
    
    Estimated FairAverage
    
    
    Market ValueUseful Life in
    
    
    at August 31,Years
    
    
    2010Member relationships
    
    
    10
    
    
    $
    1,100Management contracts
    
    
    5
    
    
    
    7,120Trade name
    
    
    5
    
    
    
    600Domain name
    
    
    5
    
    
    
    30Total acquired intangible
assets
    
    
    
    
    
    $
    8,850
   Note 21Segment Reporting
 
  
  F-46




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  CONSOLIDATING STATEMENT OF OPERATIONS BY BUSINESS SEGMENT
For the year ended December 31, 2010
(In thousands)
 
 Hospitality and
    
    
    VacationManagement
    
    
    Interest Sales
    
    
    Corporate andServices
    
    
    and Financing
    
    
    Other
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    
    
    
    $
    214,764
    
    
    $
    
    
    
    $
    214,764Provision for uncollectible Vacation
Interest sales revenue
    
    
    
    
    
    
    (12,655
    )
    
    
    
    
    
    
    (12,655
    )Vacation Interest, net
    
    
    
    
    
    
    202,109
    
    
    
    
    
    
    
    202,109Management, member and other services
    
    
    91,156
    
    
    
    11,495
    
    
    
    
    
    
    
    102,651Consolidated resort operations
    
    
    26,547
    
    
    
    
    
    
    
    
    
    
    
    26,547Interest
    
    
    
    
    
    
    39,150
    
    
    
    177
    
    
    
    39,327Gain on mortgage repurchase
    
    
    
    
    
    
    191
    
    
    
    
    
    
    
    191Total revenues
    
    
    117,703
    
    
    
    252,945
    
    
    
    177
    
    
    
    370,825Costs and Expenses:Vacation Interest cost of sales
    
    
    
    
    
    
    39,730
    
    
    
    
    
    
    
    39,730Advertising, sales and marketing
    
    
    
    
    
    
    114,029
    
    
    
    
    
    
    
    114,029Vacation Interest carrying cost, net
    
    
    
    
    
    
    29,821
    
    
    
    
    
    
    
    29,821Management, member and other services
    
    
    21,916
    
    
    
    1,730
    
    
    
    
    
    
    
    23,646Consolidated resort operations
    
    
    23,972
    
    
    
    
    
    
    
    
    
    
    
    23,972Loan portfolio
    
    
    1,025
    
    
    
    9,541
    
    
    
    
    
    
    
    10,566General and administrative
    
    
    
    
    
    
    
    
    
    
    67,905
    
    
    
    67,905Gain on disposal of assets
    
    
    
    
    
    
    
    
    
    
    (1,923
    )
    
    
    (1,923
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    11,939
    
    
    
    11,939Interest
    
    
    
    
    
    
    18,203
    
    
    
    48,959
    
    
    
    67,162Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    1,081
    
    
    
    1,081Impairments and other write-offs
    
    
    
    
    
    
    
    
    
    
    3,330
    
    
    
    3,330Total costs and expenses
    
    
    46,913
    
    
    
    213,054
    
    
    
    131,291
    
    
    
    391,258Income (loss) before benefit for
income taxes
    
    
    70,790
    
    
    
    39,891
    
    
    
    (131,114
    )
    
    
    (20,433
    )Benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    (1,274
    )
    
    
    (1,274
    )Net income (loss)
    
    $
    70,790
    
    
    $
    39,891
    
    
    $
    (129,840
    )
    
    $
    (19,159
    )
 
 F-47




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING STATEMENT OF OPERATIONS BY BUSINESS SEGMENT
For the year ended December 31, 2009
(In thousands)
 
 Hospitality and
    
    
    VacationManagement
    
    
    Interest Sales
    
    
    Corporate andServices
    
    
    and Financing
    
    
    Other
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    
    
    
    $
    248,643
    
    
    $
    
    
    
    $
    248,643Provision for uncollectible Vacation
Interest sales revenue
    
    
    
    
    
    
    (14,153
    )
    
    
    
    
    
    
    (14,153
    )Vacation Interest, net
    
    
    
    
    
    
    234,490
    
    
    
    
    
    
    
    234,490Management, member and other services
    
    
    93,431
    
    
    
    14,772
    
    
    
    
    
    
    
    108,203Consolidated resort operations
    
    
    23,814
    
    
    
    
    
    
    
    
    
    
    
    23,814Interest
    
    
    
    
    
    
    43,200
    
    
    
    972
    
    
    
    44,172Gain on mortgage repurchase
    
    
    
    
    
    
    282
    
    
    
    
    
    
    
    282Total revenues
    
    
    117,245
    
    
    
    292,744
    
    
    
    972
    
    
    
    410,961Costs and Expenses:Vacation Interest cost of sales
    
    
    
    
    
    
    55,135
    
    
    
    
    
    
    
    55,135Advertising, sales and marketing
    
    
    
    
    
    
    116,098
    
    
    
    
    
    
    
    116,098Vacation Interest carrying cost, net
    
    
    
    
    
    
    32,992
    
    
    
    
    
    
    
    32,992Management, member and other services
    
    
    26,449
    
    
    
    4,714
    
    
    
    
    
    
    
    31,163Consolidated resort operations
    
    
    22,456
    
    
    
    
    
    
    
    
    
    
    
    22,456Loan portfolio
    
    
    954
    
    
    
    8,881
    
    
    
    
    
    
    
    9,835General and administrative
    
    
    
    
    
    
    
    
    
    
    71,306
    
    
    
    71,306Gain on disposal of assets
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    (137
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    13,366
    
    
    
    13,366Interest, net of capitalized interest
    
    
    
    
    
    
    24,396
    
    
    
    44,119
    
    
    
    68,515Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    10,903
    
    
    
    10,903Impairments and other write-offs
    
    
    
    
    
    
    
    
    
    
    1,125
    
    
    
    1,125Total costs and expenses
    
    
    49,859
    
    
    
    242,216
    
    
    
    140,682
    
    
    
    432,757Income (loss) before benefit for
income taxes
    
    
    67,386
    
    
    
    50,528
    
    
    
    (139,710
    )
    
    
    (21,796
    )Benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    (799
    )
    
    
    (799
    )Net income (loss)
    
    $
    67,386
    
    
    $
    50,528
    
    
    $
    (138,911
    )
    
    $
    (20,997
    )
 
 F-48




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING STATEMENT OF OPERATIONS BY BUSINESS SEGMENT
For the year ended December 31, 2008
(In thousands)
 
 Hospitality and
    
    
    Vacation InterestManagement
    
    
    Sales and
    
    
    Corporate andServices
    
    
    Financing
    
    
    Other
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    
    
    
    $
    285,442
    
    
    $
    
    
    
    $
    285,442Provision for uncollectible Vacation
Interest sales revenue
    
    
    
    
    
    
    (51,166
    )
    
    
    
    
    
    
    (51,166
    )Vacation Interest, net
    
    
    
    
    
    
    234,276
    
    
    
    
    
    
    
    234,276Management, member and other services
    
    
    76,570
    
    
    
    16,671
    
    
    
    
    
    
    
    93,241Consolidated resort operations
    
    
    21,006
    
    
    
    
    
    
    
    
    
    
    
    21,006Interest
    
    
    1,812
    
    
    
    49,979
    
    
    
    1,835
    
    
    
    53,626Gain on mortgage repurchase
    
    
    
    
    
    
    265
    
    
    
    
    
    
    
    265Total revenues
    
    
    99,388
    
    
    
    301,191
    
    
    
    1,835
    
    
    
    402,414Costs and Expenses:Vacation Interest cost of sales
    
    
    
    
    
    
    67,551
    
    
    
    
    
    
    
    67,551Advertising, sales and marketing
    
    
    
    
    
    
    148,565
    
    
    
    
    
    
    
    148,565Vacation Interest carrying cost, net
    
    
    
    
    
    
    22,831
    
    
    
    
    
    
    
    22,831Management, member and other services
    
    
    28,747
    
    
    
    6,599
    
    
    
    
    
    
    
    35,346Consolidated resort operations
    
    
    23,685
    
    
    
    
    
    
    
    
    
    
    
    23,685Loan portfolio
    
    
    661
    
    
    
    8,092
    
    
    
    
    
    
    
    8,753General and administrative
    
    
    
    
    
    
    
    
    
    
    78,618
    
    
    
    78,618Gain on disposal of assets
    
    
    
    
    
    
    
    
    
    
    (1,007
    )
    
    
    (1,007
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    16,687
    
    
    
    16,687Interest, net of capitalized interest
    
    
    
    
    
    
    20,817
    
    
    
    50,563
    
    
    
    71,380Impairments and other write-offs
    
    
    
    
    
    
    
    
    
    
    17,168
    
    
    
    17,168Total costs and expenses
    
    
    53,093
    
    
    
    274,455
    
    
    
    162,029
    
    
    
    489,577Income (loss) before provision for
income taxes
    
    
    46,295
    
    
    
    26,736
    
    
    
    (160,194
    )
    
    
    (87,163
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    1,809
    
    
    
    1,809Net income (loss)
    
    $
    46,295
    
    
    $
    26,736
    
    
    $
    (162,003
    )
    
    $
    (88,972
    )
 
 Note 22Consolidating Financial Statements
 
  
 F-49




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING BALANCE SHEET

December 31, 2010
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalASSETSCash and cash equivalents
    
    $
    27,163
    
    
    $
    166
    
    
    $
    
    
    
    $
    27,329Cash in escrow and restricted cash
    
    
    29,868
    
    
    
    180
    
    
    
    
    
    
    
    30,048Mortgages and contracts receivable, net
of allowance of $51,551, $3,600 and $0,
respectively
    
    
    236,846
    
    
    
    8,454
    
    
    
    (13
    )
    
    
    245,287Due from related parties, net
    
    
    20,789
    
    
    
    223
    
    
    
    (54
    )
    
    
    20,958Other receivables, net
    
    
    31,650
    
    
    
    4,330
    
    
    
    
    
    
    
    35,980Income tax receivable
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Prepaid expenses and other assets, net
    
    
    45,260
    
    
    
    1,038
    
    
    
    (50
    )
    
    
    46,248Investment
in subsidiaries
    
    
    
    
    
    
    1,624
    
    
    
    (1,624
    )
    
    
    Unsold Vacation Interests, net
    
    
    180,464
    
    
    
    10,100
    
    
    
    
    
    
    
    190,564Property and equipment, net
    
    
    23,468
    
    
    
    5,629
    
    
    
    
    
    
    
    29,097Assets held for sale
    
    
    9,517
    
    
    
    
    
    
    
    
    
    
    
    9,517Intangible assets, net
    
    
    37,411
    
    
    
    8,302
    
    
    
    
    
    
    
    45,713Total assets
    
    $
    642,446
    
    
    $
    40,046
    
    
    $
    (1,741
    )
    
    $
    680,751LIABILITIES AND MEMBER CAPITAL (DEFICIT)Accounts payable
    
    $
    7,409
    
    
    $
    246
    
    
    $
    
    
    
    $
    7,655Due to related parties, net
    
    
    29,197
    
    
    
    13,724
    
    
    
    (6,670
    )
    
    
    36,251Accrued liabilities
    
    
    62,367
    
    
    
    6,853
    
    
    
    (1,687
    )
    
    
    67,533Income taxes payable
    
    
    3,936
    
    
    
    
    
    
    
    
    
    
    
    3,936Deferred revenues
    
    
    67,706
    
    
    
    
    
    
    
    
    
    
    
    67,706Senior secured notes, net of
original issue discount of
$10,278, $0 and $0, respectively
    
    
    414,722
    
    
    
    
    
    
    
    
    
    
    
    414,722Securitization notes and conduit
facility, net
    
    
    176,551
    
    
    
    10,292
    
    
    
    
    
    
    
    186,843Derivative liabilities
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    79Notes payable
    
    
    1,432
    
    
    
    21,841
    
    
    
    
    
    
    
    23,273Total liabilities
    
    
    763,399
    
    
    
    52,956
    
    
    
    (8,357
    )
    
    
    807,998Redeemable preferred units
    
    
    84,502
    
    
    
    
    
    
    
    
    
    
    
    84,502Member capital
    
    
    7,335
    
    
    
    9,675
    
    
    
    (9,675
    )
    
    
    7,335Accumulated deficit
    
    
    (195,044
    )
    
    
    (22,197
    )
    
    
    15,903
    
    
    
    (201,338
    )Accumulated other comprehensive (loss) income
    
    
    (17,746
    )
    
    
    (388
    )
    
    
    388
    
    
    
    (17,746
    )Total member capital (deficit)
    
    
    (205,455
    )
    
    
    (12,910
    )
    
    
    6,616
    
    
    
    (211,749
    )Total liabilities and member
capital (deficit)
    
    $
    642,446
    
    
    $
    40,046
    
    
    $
    (1,741
    )
    
    $
    680,751
 
 
 
 
  F-50




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 2010
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    214,764
    
    
    $
    
    
    
    $
    
    
    
    $
    214,764Provision for uncollectible Vacation
Interest sales revenue
    
    
    (12,655
    )
    
    
    
    
    
    
    
    
    
    
    (12,655
    )Vacation Interest, net
    
    
    202,109
    
    
    
    
    
    
    
    
    
    
    
    202,109Management, member and other services
    
    
    102,630
    
    
    
    1,173
    
    
    
    (1,152
    )
    
    
    102,651Consolidated resort operations
    
    
    26,163
    
    
    
    384
    
    
    
    
    
    
    
    26,547Interest
    
    
    38,718
    
    
    
    609
    
    
    
    
    
    
    
    39,327Gain on mortgage repurchase
    
    
    191
    
    
    
    
    
    
    
    
    
    
    
    191Total revenues
    
    
    369,811
    
    
    
    2,166
    
    
    
    (1,152
    )
    
    
    370,825Costs and Expenses:Vacation Interest cost of sales
    
    
    39,730
    
    
    
    
    
    
    
    
    
    
    
    39,730Advertising, sales and marketing
    
    
    113,520
    
    
    
    509
    
    
    
    
    
    
    
    114,029Vacation Interest carrying cost, net
    
    
    30,226
    
    
    
    (405
    )
    
    
    
    
    
    
    29,821Management, member and other services
    
    
    23,339
    
    
    
    1,459
    
    
    
    (1,152
    )
    
    
    23,646Consolidated resort operations
    
    
    23,547
    
    
    
    425
    
    
    
    
    
    
    
    23,972Loan portfolio
    
    
    9,918
    
    
    
    648
    
    
    
    
    
    
    
    10,566General and administrative
    
    
    62,216
    
    
    
    5,689
    
    
    
    
    
    
    
    67,905Gain on disposal of assets
    
    
    (1,923
    )
    
    
    
    
    
    
    
    
    
    
    (1,923
    )Depreciation and amortization
    
    
    11,249
    
    
    
    690
    
    
    
    
    
    
    
    11,939Interest
    
    
    65,394
    
    
    
    1,768
    
    
    
    
    
    
    
    67,162Loss on extinguishment of debt
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    1,081Impairments and other write-offs
    
    
    3,330
    
    
    
    
    
    
    
    
    
    
    
    3,330Total costs and expenses
    
    
    381,627
    
    
    
    10,783
    
    
    
    (1,152
    )
    
    
    391,258Loss before benefit for income taxes
    
    
    (11,816
    )
    
    
    (8,617
    )
    
    
    
    
    
    
    (20,433
    )Benefit for income taxes
    
    
    (1,274
    )
    
    
    
    
    
    
    
    
    
    
    (1,274
    )Net loss
    
    $
    (10,542
    )
    
    $
    (8,617
    )
    
    $
    
    
    
    $
    (19,159
    )
 
 F-51




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2010
(In thousands)
 
 DiamondResorts Parent,LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalOperating activities:Net loss
    
    $
    (10,542
    )
    
    $
    (8,617
    )
    
    $
    
    
    
    $
    (19,159
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Depreciation and amortization
    
    
    11,249
    
    
    
    690
    
    
    
    
    
    
    
    11,939Provision for uncollectible Vacation Interest
sales revenue
    
    
    12,655
    
    
    
    
    
    
    
    
    
    
    
    12,655Amortization of capitalized financing costs
and original issue discounts
    
    
    2,465
    
    
    
    56
    
    
    
    
    
    
    
    2,521Amortization of capitalized loan origination
costs and portfolio discount
    
    
    3,007
    
    
    
    
    
    
    
    
    
    
    
    3,007Loss on foreign currency exchange
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    42Gain on disposal of assets
    
    
    (1,923
    )
    
    
    
    
    
    
    
    
    
    
    (1,923
    )Gain on mortgage repurchase
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    (191
    )Loss on extinguishment of debt
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    1,081Deferred income taxes
    
    
    (377
    )
    
    
    
    
    
    
    
    
    
    
    (377
    )Unrealized gain on derivative instruments
    
    
    (314
    )
    
    
    
    
    
    
    
    
    
    
    (314
    )Impairments and other write-offs
    
    
    3,330
    
    
    
    
    
    
    
    
    
    
    
    3,330Changes in operating assets and liabilities
excluding acquisitions:Mortgages and contracts receivable
    
    
    10,829
    
    
    
    1,369
    
    
    
    (8
    )
    
    
    12,190Due from related parties, net
    
    
    (5,737
    )
    
    
    (93
    )
    
    
    54
    
    
    
    (5,776
    )Other receivables, net
    
    
    3,154
    
    
    
    (113
    )
    
    
    
    
    
    
    3,041Prepaid expenses and other assets, net
    
    
    (190
    )
    
    
    24
    
    
    
    51
    
    
    
    (115
    )Unsold Vacation Interests, net
    
    
    10,308
    
    
    
    
    
    
    
    
    
    
    
    10,308Accounts payable
    
    
    (3,470
    )
    
    
    246
    
    
    
    
    
    
    
    (3,224
    )Due to related parties, net
    
    
    (3,893
    )
    
    
    9,099
    
    
    
    49
    
    
    
    5,255Accrued liabilities
    
    
    17,436
    
    
    
    1,157
    
    
    
    (146
    )
    
    
    18,447Income taxes payable (receivable)
    
    
    4,632
    
    
    
    
    
    
    
    
    
    
    
    4,632Deferred revenues
    
    
    8,632
    
    
    
    
    
    
    
    
    
    
    
    8,632Net cash provided by operating activities
    
    
    62,183
    
    
    
    3,818
    
    
    
    
    
    
    
    66,001Investing activities:Property and equipment capital expenditures
    
    
    (5,487
    )
    
    
    (66
    )
    
    
    
    
    
    
    (5,553
    )Purchase of assets from ILX Resorts, Inc.
    
    
    
    
    
    
    (30,722
    )
    
    
    
    
    
    
    (30,722
    )Disbursement of Tempus Acquisition note
receivable
    
    
    
    
    
    
    (3,005
    )
    
    
    
    
    
    
    (3,005
    )Proceeds from sale of assets
    
    
    1,881
    
    
    
    
    
    
    
    
    
    
    
    1,881Net cash used in investing activities
    
    $
    (3,606
    )
    
    $
    (33,793
    )
    
    $
    
    
    
    $
    (37,399
    )
 
 F-52




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF CASH FLOWS  Continued  Year Ended December 31, 2010
(In thousands)
 
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalFinancing activities:Changes in cash in escrow and restricted cash
    
    $
    10,652
    
    
    $
    (126
    )
    
    $
    
    
    
    $
    10,526Proceeds from issuance of Senior Secured Notes, net of
original issue discount of $10,570, $0 and $0,
respectively
    
    
    414,430
    
    
    
    
    
    
    
    
    
    
    
    414,430Proceeds from issuance of Quorum Facility
    
    
    16,697
    
    
    
    
    
    
    
    
    
    
    
    16,697Proceeds from issuance of Tempus Acquisition Loan
    
    
    
    
    
    
    3,300
    
    
    
    
    
    
    
    3,300Proceeds from issuance of 2008 Conduit Facility
    
    
    25,533
    
    
    
    
    
    
    
    
    
    
    
    25,533Proceeds from issuance of ILXA Receivables Loan
    
    
    
    
    
    
    11,870
    
    
    
    
    
    
    
    11,870Proceeds from issuance of ILXA Inventory Loan
    
    
    
    
    
    
    17,513
    
    
    
    
    
    
    
    17,513Payments on Quorum Facility
    
    
    (3,755
    )
    
    
    
    
    
    
    
    
    
    
    (3,755
    )Payments on Diamond Resorts Owners Trust 2009-1
    
    
    (47,855
    )
    
    
    
    
    
    
    
    
    
    
    (47,855
    )Payments on 2008 Conduit Facility
    
    
    (4,307
    )
    
    
    
    
    
    
    
    
    
    
    (4,307
    )Payments on ILXA Receivables Loan
    
    
    
    
    
    
    (1,578
    )
    
    
    
    
    
    
    (1,578
    )Payments on First and Second Lien Facilities
    
    
    (397,609
    )
    
    
    
    
    
    
    
    
    
    
    (397,609
    )Payments on Polo Towers lines of credit and
securitization notes
    
    
    (11,009
    )
    
    
    
    
    
    
    
    
    
    
    (11,009
    )Payments on 2004 Securitization Notes
    
    
    (21,722
    )
    
    
    
    
    
    
    
    
    
    
    (21,722
    )Payments on notes payable
    
    
    (8,221
    )
    
    
    
    
    
    
    
    
    
    
    (8,221
    )Payments of debt issuance costs
    
    
    (18,287
    )
    
    
    (838
    )
    
    
    
    
    
    
    (19,125
    )Proceeds from Guggenheim equity investment
    
    
    75,000
    
    
    
    
    
    
    
    
    
    
    
    75,000Repurchase of equity previously held by another
minority institutional investor
    
    
    (75,000
    )
    
    
    
    
    
    
    
    
    
    
    (75,000
    )Payments of costs related to issuance of common and
preferred units
    
    
    (2,888
    )
    
    
    
    
    
    
    
    
    
    
    (2,888
    )Payments for derivative instrument
    
    
    (71
    )
    
    
    
    
    
    
    
    
    
    
    (71
    )Net cash (used in) provided by financing activities
    
    
    (48,412
    )
    
    
    30,141
    
    
    
    
    
    
    
    (18,271
    )Net increase in cash and cash equivalents
    
    
    10,165
    
    
    
    166
    
    
    
    
    
    
    
    10,331Effect of changes in exchange rates on cash and cash
equivalents
    
    
    (188
    )
    
    
    
    
    
    
    
    
    
    
    (188
    )Cash and cash equivalents, beginning of period
    
    
    17,186
    
    
    
    
    
    
    
    
    
    
    
    17,186Cash and cash equivalents, end of period
    
    $
    27,163
    
    
    $
    166
    
    
    $
    
    
    
    $
    27,329
 
 F-53




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF CASH FLOWS  Continued  Year Ended December 31, 2010
(In thousands)
 DiamondResorts Parent,LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalSUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:Cash paid for interest
    
    $
    44,183
    
    
    $
    450
    
    
    $
    
    
    
    $
    44,633Cash tax refunds, net of cash paid for taxes
    
    $
    (5,514
    )
    
    $
    
    
    
    $
    
    
    
    $
    (5,514
    )SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:Priority returns and redemption premiums on
preferred units
    
    $
    17,654
    
    
    $
    
    
    
    $
    
    
    
    $
    17,654Insurance premiums financed through
issuance of note payable
    
    $
    7,897
    
    
    $
    
    
    
    $
    
    
    
    $
    7,897Unsold Vacation Interests reclassified to
assets held for sale
    
    $
    10,064
    
    
    $
    
    
    
    $
    
    
    
    $
    10,064Property and equipment reclassified to
assets to be disposed but not actively
marketed (prepaid expenses and other
assets)
    
    $
    588
    
    
    $
    
    
    
    $
    
    
    
    $
    588Management contracts (intangible assets)
reclassified to assets held for sale
    
    $
    587
    
    
    $
    
    
    
    $
    
    
    
    $
    587Proceeds from issuance of ILXA Inventory
Loan in transit
    
    $
    
    
    
    $
    1,028
    
    
    $
    
    
    
    $
    1,028Purchase of assets from ILX Resorts, Inc.:Fair value of assets acquired
    
    $
    
    
    
    $
    34,876
    
    
    
    
    
    
    $
    34,876Cash paid
    
    
    
    
    
    
    (30,722
    )
    
    
    
    
    
    
    (30,722
    )Liabilities assumed
    
    $
    
    
    
    $
    4,154
    
    
    $
    
    
    
    $
    4,154
 F-54




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING BALANCE SHEET
December 31, 2009
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalASSETSCash and cash equivalents
    
    $
    17,186
    
    
    $
    
    
    
    $
    
    
    
    $
    17,186Cash in escrow and restricted cash
    
    
    40,544
    
    
    
    
    
    
    
    
    
    
    
    40,544Mortgages and contracts receivable, net
of allowance of $60,911, $0 and $0,
respectively
    
    
    263,556
    
    
    
    21
    
    
    
    (21
    )
    
    
    263,556Due from related parties, net
    
    
    15,378
    
    
    
    
    
    
    
    
    
    
    
    15,378Other receivables, net
    
    
    33,884
    
    
    
    
    
    
    
    
    
    
    
    33,884Income tax receivable
    
    
    1,176
    
    
    
    
    
    
    
    
    
    
    
    1,176Prepaid expenses and other assets, net
    
    
    28,828
    
    
    
    
    
    
    
    
    
    
    
    28,828Investment in subsidiaries
    
    
    
    
    
    
    2,022
    
    
    
    (2,022
    )
    
    
    Unsold Vacation Interests, net
    
    
    203,225
    
    
    
    
    
    
    
    
    
    
    
    203,225Property and equipment, net
    
    
    25,708
    
    
    
    
    
    
    
    
    
    
    
    25,708Intangible assets, net
    
    
    42,633
    
    
    
    
    
    
    
    
    
    
    
    42,633Total assets
    
    $
    672,118
    
    
    $
    2,043
    
    
    $
    (2,043
    )
    
    $
    672,118LIABILITIES AND MEMBER CAPITAL (DEFICIT)Accounts payable
    
    $
    10,956
    
    
    $
    
    
    
    $
    
    
    
    $
    10,956Due to related parties, net
    
    
    36,695
    
    
    
    4,625
    
    
    
    (4,625
    )
    
    
    36,695Accrued liabilities
    
    
    48,914
    
    
    
    1,542
    
    
    
    (1,542
    )
    
    
    48,914Income taxes payable
    
    
    441
    
    
    
    
    
    
    
    
    
    
    
    441Deferred income taxes
    
    
    389
    
    
    
    
    
    
    
    
    
    
    
    389Deferred revenues
    
    
    59,461
    
    
    
    
    
    
    
    
    
    
    
    59,461Borrowings under line of credit
agreements
    
    
    393,954
    
    
    
    
    
    
    
    
    
    
    
    393,954Securitization notes and conduit
facility, net
    
    
    222,913
    
    
    
    
    
    
    
    
    
    
    
    222,913Derivative liabilities
    
    
    464
    
    
    
    
    
    
    
    
    
    
    
    464Notes payable
    
    
    1,792
    
    
    
    
    
    
    
    
    
    
    
    1,792Total liabilities
    
    
    775,979
    
    
    
    6,167
    
    
    
    (6,167
    )
    
    
    775,979Redeemable preferred units
    
    
    103,528
    
    
    
    
    
    
    
    
    
    
    
    103,528Member capital
    
    
    7,335
    
    
    
    9,675
    
    
    
    (9,675
    )
    
    
    7,335Accumulated deficit
    
    
    (198,317
    )
    
    
    (13,281
    )
    
    
    13,281
    
    
    
    (198,317
    )Accumulated other comprehensive loss
    
    
    (16,407
    )
    
    
    (518
    )
    
    
    518
    
    
    
    (16,407
    )Total member capital (deficit)
    
    
    (207,389
    )
    
    
    (4,124
    )
    
    
    4,124
    
    
    
    (207,389
    )Total liabilities and member
capital (deficit)
    
    $
    672,118
    
    
    $
    2,043
    
    
    $
    (2,043
    )
    
    $
    672,118
 
 
 
 F-55




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 2009
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    248,643
    
    
    $
    
    
    
    $
    
    
    
    $
    248,643Provision for uncollectible Vacation
Interest sales revenue
    
    
    (14,153
    )
    
    
    
    
    
    
    
    
    
    
    (14,153
    )Vacation Interest, net
    
    
    234,490
    
    
    
    
    
    
    
    
    
    
    
    234,490Management, member and other services
    
    
    108,203
    
    
    
    
    
    
    
    
    
    
    
    108,203Consolidated resort operations
    
    
    23,814
    
    
    
    
    
    
    
    
    
    
    
    23,814Interest
    
    
    44,167
    
    
    
    5
    
    
    
    
    
    
    
    44,172Gain on mortgage repurchase
    
    
    282
    
    
    
    
    
    
    
    
    
    
    
    282Total revenues
    
    
    410,956
    
    
    
    5
    
    
    
    
    
    
    
    410,961Costs and Expenses:Vacation Interest cost of sales
    
    
    55,135
    
    
    
    
    
    
    
    
    
    
    
    55,135Advertising, sales and marketing
    
    
    116,098
    
    
    
    
    
    
    
    
    
    
    
    116,098Vacation Interest carrying cost, net
    
    
    32,992
    
    
    
    
    
    
    
    
    
    
    
    32,992Management, member and other services
    
    
    31,163
    
    
    
    
    
    
    
    
    
    
    
    31,163Consolidated resort operations
    
    
    22,456
    
    
    
    
    
    
    
    
    
    
    
    22,456Loan portfolio
    
    
    9,835
    
    
    
    
    
    
    
    
    
    
    
    9,835General and administrative
    
    
    65,979
    
    
    
    5,327
    
    
    
    
    
    
    
    71,306Gain on disposal of assets
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    (137
    )Depreciation and amortization
    
    
    13,366
    
    
    
    
    
    
    
    
    
    
    
    13,366Interest
    
    
    68,191
    
    
    
    324
    
    
    
    
    
    
    
    68,515Loss on extinguishment of debt
    
    
    10,903
    
    
    
    
    
    
    
    
    
    
    
    10,903Impairments and other write-offs
    
    
    1,125
    
    
    
    
    
    
    
    
    
    
    
    1,125Total costs and expenses
    
    
    427,106
    
    
    
    5,651
    
    
    
    
    
    
    
    432,757Loss before benefit for income taxes
    
    
    (16,150
    )
    
    
    (5,646
    )
    
    
    
    
    
    
    (21,796
    )Benefit for income taxes
    
    
    (799
    )
    
    
    
    
    
    
    
    
    
    
    (799
    )Net loss
    
    $
    (15,351
    )
    
    $
    (5,646
    )
    
    $
    
    
    
    $
    (20,997
    )
 
 F-56




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2009
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalOperating activities:Net loss
    
    $
    (15,351
    )
    
    $
    (5,646
    )
    
    $
    
    
    
    $
    (20,997
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Depreciation and amortization
    
    
    13,366
    
    
    
    
    
    
    
    
    
    
    
    13,366Provision for uncollectible Vacation Interest
sales revenue
    
    
    14,153
    
    
    
    
    
    
    
    
    
    
    
    14,153Amortization of capitalized financing costs
and original issue discounts
    
    
    1,989
    
    
    
    
    
    
    
    
    
    
    
    1,989Amortization of capitalized loan origination
costs and portfolio discount
    
    
    3,230
    
    
    
    
    
    
    
    
    
    
    
    3,230Loss on foreign currency exchange
    
    
    182
    
    
    
    
    
    
    
    
    
    
    
    182Gain on disposal of assets
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    (137
    )Gain on mortgage repurchase
    
    
    (282
    )
    
    
    
    
    
    
    
    
    
    
    (282
    )Loss on extinguishment of debt
    
    
    10,903
    
    
    
    
    
    
    
    
    
    
    
    10,903Deferred income taxes
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    7Unrealized gain on derivative instruments
    
    
    (3,885
    )
    
    
    
    
    
    
    
    
    
    
    (3,885
    )Impairments and other write-offs
    
    
    1,125
    
    
    
    
    
    
    
    
    
    
    
    1,125Changes in operating assets and liabilities
excluding acquisitions:Mortgages and contracts receivable
    
    
    19,495
    
    
    
    18
    
    
    
    (18
    )
    
    
    19,495Due from related parties, net
    
    
    8,968
    
    
    
    
    
    
    
    
    
    
    
    8,968Other receivables, net
    
    
    1,657
    
    
    
    
    
    
    
    
    
    
    
    1,657Prepaid expenses and other assets, net
    
    
    2,516
    
    
    
    
    
    
    
    
    
    
    
    2,516Unsold Vacation Interests, net
    
    
    19,236
    
    
    
    
    
    
    
    
    
    
    
    19,236Accounts payable
    
    
    2,518
    
    
    
    
    
    
    
    
    
    
    
    2,518Due to related parties, net
    
    
    1,943
    
    
    
    4,086
    
    
    
    1,560
    
    
    
    7,589Accrued liabilities
    
    
    5,306
    
    
    
    1,542
    
    
    
    (1,542
    )
    
    
    5,306Income taxes payable (receivable)
    
    
    (1,925
    )
    
    
    
    
    
    
    
    
    
    
    (1,925
    )Deferred revenues
    
    
    2,779
    
    
    
    
    
    
    
    
    
    
    
    2,779Net cash provided by operating activities
    
    
    87,793
    
    
    
    
    
    
    
    
    
    
    
    87,793Investing activities:Property and equipment capital expenditures
    
    
    (4,672
    )
    
    
    
    
    
    
    
    
    
    
    (4,672
    )Proceeds from sale of assets
    
    
    422
    
    
    
    
    
    
    
    
    
    
    
    422Net cash used in investing activities
    
    $
    (4,250
    )
    
    $
    
    
    
    $
    
    
    
    $
    (4,250
    )
 
 F-57




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF CASH FLOWS  Continued  Year Ended December 31, 2009
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalFinancing activities:Changes in cash in escrow and restricted cash
    
    $
    8,455
    
    
    $
    
    
    
    $
    
    
    
    $
    8,455Proceeds from issuance of Diamond Resorts Owners
Trust 2009-1
    
    
    181,012
    
    
    
    
    
    
    
    
    
    
    
    181,012Proceeds from issuance of 2008 Conduit Facility
    
    
    29,033
    
    
    
    
    
    
    
    
    
    
    
    29,033Payments on Diamond Resorts Owners Trust 2009-1
    
    
    (12,303
    )
    
    
    
    
    
    
    
    
    
    
    (12,303
    )Payments on 2008 Conduit Facility
    
    
    (192,469
    )
    
    
    
    
    
    
    
    
    
    
    (192,469
    )Payments on 2007 Conduit Facility
    
    
    (51,153
    )
    
    
    
    
    
    
    
    
    
    
    (51,153
    )Payments on First and Second Lien Facilities
    
    
    (1,139
    )
    
    
    
    
    
    
    
    
    
    
    (1,139
    )Payments on Polo Towers lines of credit and
securitization notes
    
    
    (9,955
    )
    
    
    
    
    
    
    
    
    
    
    (9,955
    )Payment on 2004 Securitization Notes
    
    
    (13,251
    )
    
    
    
    
    
    
    
    
    
    
    (13,251
    )Payments on notes payable
    
    
    (9,638
    )
    
    
    
    
    
    
    
    
    
    
    (9,638
    )Payments of debt issuance costs
    
    
    (9,428
    )
    
    
    
    
    
    
    
    
    
    
    (9,428
    )Payments for derivative instrument
    
    
    (8,824
    )
    
    
    
    
    
    
    
    
    
    
    (8,824
    )Net cash used in financing activities
    
    
    (89,660
    )
    
    
    
    
    
    
    
    
    
    
    (89,660
    )Net decrease in cash and cash equivalents
    
    
    (6,117
    )
    
    
    
    
    
    
    
    
    
    
    (6,117
    )Effect of changes in exchange rates on cash and cash
equivalents
    
    
    596
    
    
    
    
    
    
    
    
    
    
    
    596Cash and cash equivalents, beginning of period
    
    
    22,707
    
    
    
    
    
    
    
    
    
    
    
    22,707Cash and cash equivalents, end of period
    
    $
    17,186
    
    
    $
    
    
    
    $
    
    
    
    $
    17,186SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    63,297
    
    
    $
    
    
    
    $
    
    
    
    $
    63,297Cash paid for taxes, net of tax refunds
    
    $
    1,239
    
    
    $
    
    
    
    $
    
    
    
    $
    1,239SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:Priority returns and redemption premiums on preferred units
    
    $
    18,430
    
    
    $
    
    
    
    $
    
    
    
    $
    18,430Insurance premiums financed through issuance of note payable
    
    $
    8,573
    
    
    $
    
    
    
    $
    
    
    
    $
    8,573Assets held for sale reclassified to unsold Vacation Interests
    
    $
    4,220
    
    
    $
    
    
    
    $
    
    
    
    $
    4,220
 F-58




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 2008
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    285,442
    
    
    $
    
    
    
    $
    
    
    
    $
    285,442Provision for uncollectible Vacation Interest sales revenue
    
    
    (51,166
    )
    
    
    
    
    
    
    
    
    
    
    (51,166
    )Vacation Interest, net
    
    
    234,276
    
    
    
    
    
    
    
    
    
    
    
    234,276Management, member and other services
    
    
    93,241
    
    
    
    
    
    
    
    
    
    
    
    93,241Consolidated resort operations
    
    
    21,006
    
    
    
    
    
    
    
    
    
    
    
    21,006Interest
    
    
    53,618
    
    
    
    8
    
    
    
    
    
    
    
    53,626Gain on mortgage repurchase
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    265Total revenues
    
    
    402,406
    
    
    
    8
    
    
    
    
    
    
    
    402,414Costs and Expenses:Vacation Interest cost of sales
    
    
    67,551
    
    
    
    
    
    
    
    
    
    
    
    67,551Advertising, sales and marketing
    
    
    148,565
    
    
    
    
    
    
    
    
    
    
    
    148,565Vacation Interest carrying cost, net
    
    
    22,831
    
    
    
    
    
    
    
    
    
    
    
    22,831Management, member and other services
    
    
    35,346
    
    
    
    
    
    
    
    
    
    
    
    35,346Consolidated resort operations
    
    
    23,685
    
    
    
    
    
    
    
    
    
    
    
    23,685Loan portfolio
    
    
    8,753
    
    
    
    
    
    
    
    
    
    
    
    8,753General and administrative
    
    
    78,618
    
    
    
    
    
    
    
    
    
    
    
    78,618Gain on disposal of assets
    
    
    (1,007
    )
    
    
    
    
    
    
    
    
    
    
    (1,007
    )Depreciation and amortization
    
    
    16,687
    
    
    
    
    
    
    
    
    
    
    
    16,687Interest
    
    
    71,321
    
    
    
    59
    
    
    
    
    
    
    
    71,380Impairments and other write-offs
    
    
    17,168
    
    
    
    
    
    
    
    
    
    
    
    17,168Total costs and expenses
    
    
    489,518
    
    
    
    59
    
    
    
    
    
    
    
    489,577Loss before provision for income taxes
    
    
    (87,112
    )
    
    
    (51
    )
    
    
    
    
    
    
    (87,163
    )Provision for income taxes
    
    
    1,809
    
    
    
    
    
    
    
    
    
    
    
    1,809Net loss
    
    $
    (88,921
    )
    
    $
    (51
    )
    
    $
    
    
    
    $
    (88,972
    )
 
 F-59




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2008
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalOperating activities:Net loss
    
    $
    (88,921
    )
    
    $
    (51
    )
    
    $
    
    
    
    $
    (88,972
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Depreciation and amortization
    
    
    16,687
    
    
    
    
    
    
    
    
    
    
    
    16,687Provision for uncollectible Vacation Interest
sales revenue
    
    
    51,166
    
    
    
    
    
    
    
    
    
    
    
    51,166Amortization of capitalized financing costs
and original issue discounts
    
    
    8,860
    
    
    
    
    
    
    
    
    
    
    
    8,860Amortization of capitalized loan origination
costs and portfolio discount
    
    
    1,853
    
    
    
    
    
    
    
    
    
    
    
    1,853Gain on foreign currency exchange
    
    
    (487
    )
    
    
    
    
    
    
    
    
    
    
    (487
    )Gain on disposal of assets
    
    
    (1,007
    )
    
    
    
    
    
    
    
    
    
    
    (1,007
    )Gain on mortgage repurchase
    
    
    (265
    )
    
    
    
    
    
    
    
    
    
    
    (265
    )Deferred income taxes
    
    
    (566
    )
    
    
    
    
    
    
    
    
    
    
    (566
    )Unrealized loss on derivative instruments
    
    
    4,032
    
    
    
    
    
    
    
    
    
    
    
    4,032Impairments and other write-offs
    
    
    17,168
    
    
    
    
    
    
    
    
    
    
    
    17,168Changes in operating assets and liabilities
excluding acquisitions:Mortgages and contracts receivable
    
    
    (29,234
    )
    
    
    46
    
    
    
    (47
    )
    
    
    (29,235
    )Due from related parties, net
    
    
    22,625
    
    
    
    
    
    
    
    
    
    
    
    22,625Other receivables, net
    
    
    (1,078
    )
    
    
    1
    
    
    
    
    
    
    
    (1,077
    )Prepaid expenses and other assets, net
    
    
    1,871
    
    
    
    
    
    
    
    
    
    
    
    1,871Unsold Vacation Interests, net
    
    
    20,731
    
    
    
    
    
    
    
    
    
    
    
    20,731Accounts payable
    
    
    (11,799
    )
    
    
    
    
    
    
    
    
    
    
    (11,799
    )Due to related parties, net
    
    
    19,516
    
    
    
    4
    
    
    
    47
    
    
    
    19,567Accrued liabilities
    
    
    (6,944
    )
    
    
    
    
    
    
    
    
    
    
    (6,944
    )Income taxes payable (receivable)
    
    
    2,085
    
    
    
    
    
    
    
    
    
    
    
    2,085Deferred revenues
    
    
    18,793
    
    
    
    
    
    
    
    
    
    
    
    18,793Net cash provided by operating activities
    
    
    45,086
    
    
    
    
    
    
    
    
    
    
    
    45,086Investing activities:Property and equipment capital expenditures
    
    
    (13,861
    )
    
    
    
    
    
    
    
    
    
    
    (13,861
    )Acquisition of Sunterra Corporation
    
    
    (2,910
    )
    
    
    
    
    
    
    
    
    
    
    (2,910
    )Intangible assets acquired by Diamond Europe
    
    
    (1,358
    )
    
    
    
    
    
    
    
    
    
    
    (1,358
    )Proceeds from sale of assets
    
    
    10,866
    
    
    
    
    
    
    
    
    
    
    
    10,866Net cash used in investing activities
    
    $
    (7,263
    )
    
    $
    
    
    
    $
    
    
    
    $
    (7,263
    )
 
 F-60




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
 CONSOLIDATING STATEMENT OF CASH FLOWS  Continued  Year Ended December 31, 2008
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalFinancing activities:Changes in cash in escrow and restricted cash
    
    $
    (445
    )
    
    $
    
    
    
    $
    
    
    
    $
    (445
    )Proceeds from issuance of 2008 Conduit Facility
    
    
    16,520
    
    
    
    
    
    
    
    
    
    
    
    16,520Proceeds from issuance of 2007 Conduit Facility
    
    
    32,669
    
    
    
    
    
    
    
    
    
    
    
    32,669Proceeds from issuance of First and Second Lien
Facilities
    
    
    23,500
    
    
    
    
    
    
    
    
    
    
    
    23,500Payments on 2008 Conduit Facility
    
    
    (34,572
    )
    
    
    
    
    
    
    
    
    
    
    (34,572
    )Payments on 2007 Conduit Facility
    
    
    (8,296
    )
    
    
    
    
    
    
    
    
    
    
    (8,296
    )Payments on First and Second Lien Facilities
    
    
    (46,750
    )
    
    
    
    
    
    
    
    
    
    
    (46,750
    )Payments on Polo Towers lines of credit and
securitization notes
    
    
    (12,530
    )
    
    
    
    
    
    
    
    
    
    
    (12,530
    )Payment on 2004 Securitization Notes
    
    
    (18,383
    )
    
    
    
    
    
    
    
    
    
    
    (18,383
    )Payments on notes payable
    
    
    (7,962
    )
    
    
    
    
    
    
    
    
    
    
    (7,962
    )Payments of debt issuance costs
    
    
    (3,775
    )
    
    
    
    
    
    
    
    
    
    
    (3,775
    )Net cash used in financing activities
    
    
    (60,024
    )
    
    
    
    
    
    
    
    
    
    
    (60,024
    )Net decrease in cash and cash equivalents
    
    
    (22,201
    )
    
    
    
    
    
    
    
    
    
    
    (22,201
    )Effect of changes in exchange rates on cash and cash
equivalents
    
    
    (4,295
    )
    
    
    
    
    
    
    
    
    
    
    (4,295
    )Cash and cash equivalents, beginning of period
    
    
    49,203
    
    
    
    
    
    
    
    
    
    
    
    49,203Cash and cash equivalents, end of period
    
    $
    22,707
    
    
    $
    
    
    
    $
    
    
    
    $
    22,707SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    58,735
    
    
    $
    
    
    
    $
    
    
    
    $
    58,735Cash tax refunds, net of cash paid for taxes
    
    $
    (482
    )
    
    $
    
    
    
    $
    
    
    
    $
    (482
    )SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:Priority returns and redemption premiums on
preferred units
    
    $
    13,051
    
    
    $
    
    
    
    $
    
    
    
    $
    13,051Insurance premiums financed through issuance of note
payable
    
    $
    7,416
    
    
    $
    
    
    
    $
    
    
    
    $
    7,416
 
 F-61




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Note 23Geographic Financial Information
 
  
 For the Years Ended December 31,2010
    
    
    2009
    
    
    2008RevenueNorth America
    
    $
    325,710
    
    
    $
    359,790
    
    
    $
    348,129Europe
    
    
    45,115
    
    
    
    51,171
    
    
    
    54,285Total Revenues
    
    $
    370,825
    
    
    $
    410,961
    
    
    $
    402,414
 As of December 31,2010
    
    
    2009Mortgages and contracts receivable, netNorth America
    
    $
    244,541
    
    
    $
    263,007Europe
    
    
    746
    
    
    
    549Total mortgages and contracts
receivable, net
    
    $
    245,287
    
    
    $
    263,556Unsold vacation interest, netNorth America
    
    $
    174,642
    
    
    $
    174,675Europe
    
    
    15,922
    
    
    
    28,550Total unsold vacation interest, net
    
    $
    190,564
    
    
    $
    203,225Property and equipment, netNorth America
    
    $
    24,248
    
    
    $
    19,794Europe
    
    
    4,849
    
    
    
    5,914Total property and equipment, net
    
    $
    29,097
    
    
    $
    25,708Intangible assets, netNorth America
    
    $
    40,926
    
    
    $
    35,664Europe
    
    
    4,787
    
    
    
    6,969Total intangible assets, net
    
    $
    45,713
    
    
    $
    42,633Total long-term assets, netNorth America
    
    $
    484,357
    
    
    $
    493,140Europe
    
    
    26,304
    
    
    
    41,982Total long-term assets, net
    
    $
    510,661
    
    
    $
    535,122
 Note 24Impairments and Other Write-offs
 F-62




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
   
 2010
    
    
    2009
    
    
    2008European resorts held for sale (lower of cost or net
realizable value)
    
    $
    2,319
    
    
    $
    
    
    
    $
    Write-down of an inventory recovery receivable related
to a terminated HOA management contract
    
    
    942
    
    
    
    
    
    
    
    Land held
for sale adjacent to a managed timeshare resort property (lower of
cost or net realizable value)
    
    
    
    
    
    
    
    
    
    
    6,984Unsold Vacation Interests at one resort
    
    
    
    
    
    
    
    
    
    
    3,122Abandoned construction project costs
    
    
    
    
    
    
    1,636
    
    
    
    Goodwill related to a call center acquisition in Europe
    
    
    
    
    
    
    
    
    
    
    873Slow moving consumables inventory
    
    
    
    
    
    
    138
    
    
    
    774Uncollectible notes receivable related to sale of a
resort in London, England (recovered)
    
    
    
    
    
    
    (649
    )
    
    
    596Abandoned merger and acquisition expenses
    
    
    
    
    
    
    
    
    
    
    4,699Other
    
    
    69
    
    
    
    
    
    
    
    120Total impairments and other write-offs
    
    $
    3,330
    
    
    $
    1,125
    
    
    $
    17,168
 
   
  
 Note 25Subsequent Events
   F-63




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
  
  
  
  
 F-64




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 
 
 
 CONSOLIDATED BALANCE SHEETS
March 31, 2011 and December 31, 2010
(In thousands, except share data)
 
 March 31,
    
    
    December 31,2011
    
    
    2010(Unaudited)
    
    
    (Audited)ASSETSCash and cash equivalents
    
    $
    18,787
    
    
    $
    27,329Cash in escrow and restricted cash
    
    
    36,200
    
    
    
    30,048Mortgages and contracts receivable, net of allowance of $52,992 and $55,151, respectively
    
    
    234,536
    
    
    
    245,287Due from related parties, net
    
    
    9,886
    
    
    
    20,958Other receivables, net
    
    
    22,308
    
    
    
    35,980Income tax receivable
    
    
    27
    
    
    
    10Prepaid expenses and other assets, net
    
    
    94,375
    
    
    
    46,248Unsold Vacation Interests, net
    
    
    199,724
    
    
    
    190,564Property and equipment, net
    
    
    35,181
    
    
    
    29,097Assets held for sale
    
    
    5,854
    
    
    
    9,517Intangible assets, net
    
    
    44,447
    
    
    
    45,713Total assets
    
    $
    701,325
    
    
    $
    680,751LIABILITIES AND MEMBER CAPITAL (DEFICIT)Accounts payable
    
    $
    10,721
    
    
    $
    7,655Due to related parties, net
    
    
    64,510
    
    
    
    36,251Accrued liabilities
    
    
    61,251
    
    
    
    67,533Income taxes payable
    
    
    5,088
    
    
    
    3,936Deferred revenues
    
    
    77,639
    
    
    
    67,706Senior secured notes, net of unamortized original issue discount of $10,085 and $10,278, respectively
    
    
    414,915
    
    
    
    414,722Securitization notes and conduit facilities, net
    
    
    172,344
    
    
    
    186,843Derivative liabilities
    
    
    
    
    
    
    79Notes payable
    
    
    26,625
    
    
    
    23,273Total liabilities
    
    
    833,093
    
    
    
    807,998Commitments and contingenciesRedeemable preferred units (1,133.33 and 1,000 shares authorized, issued and outstanding, respectively)
    
    
    98,992
    
    
    
    84,502Member capital (deficit):Member capital (authorized 1,115.1 common units, no par value; issued 1,115.1 and 1,090 common
units, respectively)
    
    
    7,190
    
    
    
    7,335Accumulated deficit
    
    
    (222,450
    )
    
    
    (201,338
    )Accumulated other comprehensive loss
    
    
    (15,500
    )
    
    
    (17,746
    )Total member capital (deficit)
    
    
    (230,760
    )
    
    
    (211,749
    )Total liabilities and member capital (deficit)
    
    $
    701,325
    
    
    $
    680,751
 
 F-65




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended March 31, 2011 and 2010
(Unaudited)
(In thousands)
 
 Three months
    
    
    Three monthsended
    
    
    endedMarch 31, 2011
    
    
    March 31, 2010Revenues:Vacation Interest sales
    
    $
    41,933
    
    
    $
    48,082Provision for uncollectible Vacation Interest sales revenue
    
    
    (2,990
    )
    
    
    (1,622
    )Vacation Interest, net
    
    
    38,943
    
    
    
    46,460Management, member and other services
    
    
    31,785
    
    
    
    24,725Consolidated resort operations
    
    
    6,946
    
    
    
    6,501Interest
    
    
    9,829
    
    
    
    9,816Gain on mortgage repurchase
    
    
    29
    
    
    
    36Total revenues
    
    
    87,532
    
    
    
    87,538Costs and Expenses:Vacation Interest cost of sales
    
    
    67
    
    
    
    10,625Advertising, sales and marketing
    
    
    28,436
    
    
    
    25,465Vacation Interest carrying cost, net
    
    
    8,560
    
    
    
    7,435Management, member and other services
    
    
    6,260
    
    
    
    6,522Consolidated resort operations
    
    
    6,168
    
    
    
    5,877Loan portfolio
    
    
    2,618
    
    
    
    2,603General and administrative
    
    
    19,053
    
    
    
    15,320Gain on disposal of assets
    
    
    (9
    )
    
    
    (2
    )Depreciation and amortization
    
    
    3,170
    
    
    
    2,797Interest
    
    
    18,372
    
    
    
    15,679Impairments and other write-offs
    
    
    83
    
    
    
    Total costs and expenses
    
    
    92,778
    
    
    
    92,321Loss before provision for income taxes
    
    
    (5,246
    )
    
    
    (4,783
    )Provision for income taxes
    
    
    1,473
    
    
    
    705Net loss
    
    $
    (6,719
    )
    
    $
    (5,488
    )
 
 
 F-66




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 
 
 CONSOLIDATED STATEMENTS OF MEMBER CAPITAL (DEFICIT)
AND COMPREHENSIVE INCOME (LOSS)
For the three months ended March 31, 2011 and 2010
(Unaudited)
($ in thousands)
 
 Temporary Capital

    
    
    Permanent CapitalMemberAccumulatedMember Preferred
    
    
    Common
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Total MemberRedeemable Units
    
    
    Units
    
    
    Member
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Capital
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    (Deficit)
    
    
    LossBalance at December 31, 2009
    
    
    1,000
    
    
    $
    103,528
    
    
    
    1,000
    
    
    $
    7,335
    
    
    $
    (198,317
    )
    
    $
    (16,407
    )
    
    $
    (207,389
    )Net loss for the three months ended March 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,488
    )
    
    
    
    
    
    
    (5,488
    )
    
    $
    (5,488
    )Other comprehensive loss:Currency translation adjustments, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,017
    )
    
    
    (2,017
    )
    
    
    (2,017
    )Priority returns and redemption premiums
    
    
    
    
    
    
    4,340
    
    
    
    
    
    
    
    
    
    
    
    (4,340
    )
    
    
    
    
    
    
    (4,340
    )Balance at March 31, 2010
    
    
    1,000
    
    
    $
    107,868
    
    
    
    1,000
    
    
    $
    7,335
    
    
    $
    (208,145
    )
    
    $
    (18,424
    )
    
    $
    (219,234
    )Comprehensive loss for the three months ended March 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (7,505
    )Balance at December 31, 2010
    
    
    1,000
    
    
    $
    84,502
    
    
    
    1,090
    
    
    $
    7,335
    
    
    $
    (201,338
    )
    
    $
    (17,746
    )
    
    $
    (211,749
    )Equity investment
    
    
    133.33
    
    
    
    10,151
    
    
    
    25.1Repurchase of a portion of outstanding warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97
    )
    
    
    (10,054
    )
    
    
    
    
    
    
    (10,151
    )Costs related to issuance of common and preferred units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48
    )
    
    
    
    
    
    
    
    
    
    
    (48
    )Net loss for
the three months ended March 31, 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,719
    )
    
    
    
    
    
    
    (6,719
    )
    
    $
    (6,719
    )Other comprehensive income:Currency translation adjustments, net of tax of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,246
    
    
    
    2,246
    
    
    
    2,246Priority returns and redemption premiums
    
    
    
    
    
    
    4,339
    
    
    
    
    
    
    
    
    
    
    
    (4,339
    )
    
    
    
    
    
    
    (4,339
    )Balance at March 31, 2011
    
    
    1,133.33
    
    
    $
    98,992
    
    
    
    1,115.1
    
    
    $
    7,190
    
    
    $
    (222,450
    )
    
    $
    (15,500
    )
    
    $
    (230,760
    )Comprehensive loss for the three months ended March 31, 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (4,473
    )
 
 
 F-67




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2011 and 2010
(Unaudited)
(In thousands)
 Three Months
    
    
    Three MonthsEnded March 31,
    
    
    Ended March 31,2011
    
    
    2010Operating activities:Net loss
    
    $
    (6,719
    )
    
    $
    (5,488
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    3,170
    
    
    
    2,797Provision for uncollectible Vacation Interest sales revenue
    
    
    2,990
    
    
    
    1,622Amortization of capitalized financing costs and original issue discounts
    
    
    1,118
    
    
    
    291Amortization of capitalized loan origination costs and portfolio discount
    
    
    557
    
    
    
    688(Gain) loss on foreign currency exchange
    
    
    (8
    )
    
    
    17Gain on disposal of assets
    
    
    (9
    )
    
    
    (2
    )Gain on mortgage repurchase
    
    
    (29
    )
    
    
    (36
    )Deferred income taxes
    
    
    
    
    
    
    (3
    )Unrealized gain on derivative instruments
    
    
    (79
    )
    
    
    (161
    )Gain on insurance settlement
    
    
    (3,535
    )
    
    
    Impairments and other write-offs
    
    
    83
    
    
    
    Changes in operating assets and liabilities excluding acquisitions:Mortgages and contracts receivable
    
    
    5,538
    
    
    
    6,060Due from related parties, net
    
    
    13,985
    
    
    
    8,791Other receivables, net
    
    
    14,458
    
    
    
    15,239Prepaid expenses and other assets, net
    
    
    (48,410
    )
    
    
    (34,974
    )Unsold Vacation Interests, net
    
    
    (5,262
    )
    
    
    4,120Accounts payable
    
    
    3,020
    
    
    
    (2,236
    )Due to related parties, net
    
    
    30,282
    
    
    
    13,060Accrued liabilities
    
    
    (6,487
    )
    
    
    4,189Income taxes payable
    
    
    1,002
    
    
    
    4,769Deferred revenues
    
    
    9,442
    
    
    
    10,472Net cash provided by operating activities
    
    
    15,107
    
    
    
    29,215Investing activities:Property and equipment capital expenditures
    
    
    (2,485
    )
    
    
    (942
    )Disbursement of Tempus Acquisition note receivable
    
    
    (863
    )
    
    
    Proceeds from sale of assets
    
    
    1,450
    
    
    
    2Net cash used in investing activities
    
    $
    (1,898
    )
    
    $
    (940
    )
 
 F-68




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  Continued  For the three months ended March 31, 2011 and 2010
(Unaudited)
(In thousands)
 Three Months
    
    
    Three MonthsEnded March 31,
    
    
    Ended March 31,2011
    
    
    2010Financing activities:Changes in cash in escrow and restricted cash
    
    $
    (6,113
    )
    
    $
    (7,794
    )Proceeds from issuance of Quorum Facility
    
    
    5,821
    
    
    
    Proceeds from issuance of Tempus Acquisition Loan
    
    
    800
    
    
    
    Proceeds from issuance of 2008 Conduit Facility
    
    
    1,488
    
    
    
    2,264Payments on Quorum Facility
    
    
    (3,083
    )
    
    
    Payments on Diamond Resorts Owners Trust 2009-1
    
    
    (11,055
    )
    
    
    (14,929
    )Payments on 2008 Conduit Facility
    
    
    (3,568
    )
    
    
    (503
    )Payments on ILXA Receivables and Inventory Loans
    
    
    (920
    )
    
    
    Payments on First and Second Lien Facilities
    
    
    
    
    
    
    (569
    )Payments on Polo Towers lines of credit and securitization notes
    
    
    (3,198
    )
    
    
    (2,722
    )Payments on 2004 Securitization Notes
    
    
    
    
    
    
    (2,360
    )Payments on notes payable
    
    
    (1,916
    )
    
    
    (2,143
    )Payments of debt issuance costs
    
    
    (299
    )
    
    
    (95
    )Proceeds from equity investment
    
    
    10,151
    
    
    
    Repurchase of a portion of outstanding warrants
    
    
    (10,151
    )
    
    
    Payments of costs related to issuance of common and preferred units
    
    
    (48
    )
    
    
    Net cash used in financing activities
    
    
    (22,091
    )
    
    
    (28,851
    )Net decrease in cash and cash equivalents
    
    
    (8,882
    )
    
    
    (576
    )Effect of changes in exchange rates on cash and cash equivalents
    
    
    340
    
    
    
    (354
    )Cash and cash equivalents, beginning of period
    
    
    27,329
    
    
    
    17,186Cash and cash equivalents, end of period
    
    $
    18,787
    
    
    $
    16,256SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    30,347
    
    
    $
    17,151Cash paid for taxes, net of tax refunds
    
    $
    488
    
    
    $
    (4,087
    )SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Priority returns and redemption premiums on preferred units
    
    $
    4,339
    
    
    $
    4,340Insurance premiums financed through issuance of note payable
    
    $
    4,469
    
    
    $
    4,794Assets held for sale reclassified to unsold Vacation Interests
    
    $
    3,086
    
    
    $
    
 
 F-69




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1Background, Business and Basis of Presentation
 Business and Background
  ® ®
  
    
    Hospitality and Management Services.The Company manages 68 branded resort properties,
which are located in the continental United States, Hawaii, the Caribbean and Europe. The
Company also manages five multi-resort trusts or similar arrangements (the Collections). Each Collection holds
real estate in the Companys resort properties underlying the Vacation Interests that the
Company sells. As manager of the Companys branded resorts and Collections, it provides
billing services, account collections, accounting and treasury functions and information
technology services. In addition, for branded resorts, the Company also provides an online
reservation system and customer service contact center, operates the front desks and
amenities and furnishes housekeeping, maintenance and human resources services. Management
contracts typically have an initial term of three to five years with automatic renewals and
are structured on a cost-plus basis, thereby providing the Company with a recurring and
stable revenue stream. In addition, the Company earns recurring fees by operating THE Club,
the points-based exchange and member services program that enables members to vacation at
any of the 193 resorts in the Companys network. These items are included in management,
member and other services revenue and expense in the accompanying consolidated statements
of operations.
 In addition, the Company serves as the homeowners association (HOA) for its two resorts
in St. Maarten and earns maintenance fees and incurs operating expenses at these two
resorts. At certain resorts, the Company also operates golf courses, food and beverage
venues, retail shops, a campground and a marina and earns incidental revenue and incurs
operating expense. Finally, the Company provides cable, telephone, and technology services
to HOAs. These items are included in consolidated resort operations revenue and expense in
the accompanying consolidated statements of operations.
 
    
    Marketing and Sales of Vacation Interests.The Company markets and sells Vacation
Interests in its resort network. Sales prospects are generated by utilizing a variety of
marketing programs. Currently, the Company sells Vacation Interests only in the form of
points, which can be utilized for vacations for varying lengths of stay at any resort in
its network. In the past, the Company also sold Vacation Interests in the
 F-70




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 form of deeded
intervals, which provide the right to vacation at a particular resort for a specified
length of time.
 
    
    Consumer Financing of Vacation Interests. The Company provides loans to eligible
customers who purchase Vacation Interests through sales centers and choose to finance their
purchase. These loans are collateralized by the underlying Vacation Interests and bear
interest at a fixed rate. The Companys consumer finance servicing operations include
underwriting, collection and servicing of its consumer loan portfolio.
 Basis of Presentation
                     
   F-71




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Reclassifications
  Liquidity
   Note 2Summary of Significant Accounting Policies
 Principles of Consolidation
 Use of Estimates
  F-72




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Recently Adopted Accounting Pronouncements
 Improving
Disclosures about Fair Value Measurements
 IntangiblesGoodwill and Other (Topic 350):
When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative
Carrying Amounts
 Business Combinations (Topic 805): Disclosure
of Supplementary Pro Forma Information for Business Combinations
 Receivables (Topic 310): A Creditors
Determination of Whether a Restructuring Is a Troubled Debt Restructuring
 F-73




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Note 3Cash in Escrow and Restricted Cash
  March 31,
    
    
    December 31,2011
    
    
    2010Securitization and conduit collection and reserve cash
    
    $
    10,798
    
    
    $
    14,040Collected on behalf of HOAs and other
    
    
    13,180
    
    
    
    5,447Escrow
    
    
    5,618
    
    
    
    4,615Rental trust
    
    
    4,337
    
    
    
    3,717Bonds and deposits
    
    
    2,267
    
    
    
    2,229Total cash in escrow and restricted cash
    
    $
    36,200
    
    
    $
    30,048
 Note 4Mortgages and Contracts Receivable and Allowance for Loan and Contract Losses
      F-74




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  March 31,
    
    
    December 31,2011
    
    
    2010Mortgages and contracts receivable, acquired  April 27, 2007 Merger
    
    $
    64,574
    
    
    $
    71,200Mortgages and contracts receivable, contributed
    
    
    9,741
    
    
    
    11,125Mortgages and contracts receivable, originated
    
    
    194,719
    
    
    
    198,959Mortgages and contracts receivable, purchased (unrestricted subsidiaries)
    
    
    10,372
    
    
    
    12,043Mortgages and contracts receivable, originated (unrestricted subsidiaries)
    
    
    245
    
    
    
    Mortgages and contracts receivable, gross
    
    
    279,651
    
    
    
    293,327Allowance for Loan and Contract Losses
    
    
    (48,476
    )
    
    
    (51,551
    )Allowance for Loan and Contract Losses (unrestricted subsidiaries)
    
    
    (4,516
    )
    
    
    (3,600
    )Deferred profit on Vacation Interest transactions
    
    
    (2,061
    )
    
    
    (2,349
    )Deferred loan and contract origination costs, net of accumulated amortization
    
    
    2,659
    
    
    
    2,823Inventory value of defaulted mortgages that were previously contributed and acquired
    
    
    7,992
    
    
    
    7,439Discount on mortgages and contracts receivable, net of accumulated amortization
    
    
    (713
    )
    
    
    (802
    )Mortgages and contracts receivable, net
    
    $
    234,536
    
    
    $
    245,287
    F-75




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2011
    
    
    March 31, 2010Balance, beginning of period
    
    $
    55,151
    
    
    $
    60,911Provision for uncollectible Vacation Interest sales revenue
    
    
    2,866
    
    
    
    1,424Provision for uncollectible Vacation Interest sales revenue  unrestricted subsidiaries
    
    
    73
    
    
    
    Mortgages and contracts receivable charged off
    
    
    (6,716
    )
    
    
    (6,112
    )Mortgages and contracts receivable charged off  unrestricted subsidiaries
    
    
    (817
    )
    
    
    Recoveries
    
    
    761
    
    
    
    694Increase in allowance based on final ILX appraisal  unrestricted subsidiaries
    
    
    1,660
    
    
    
    Effect of translation rate
    
    
    14
    
    
    
    (111
    )Balance, end of period
    
    $
    52,992
    
    
    $
    56,806
  Diamond
    
    
    UnrestrictedResorts
    
    
    SubsidiariesMortgages and
    
    
    Mortgages andFICO Scores
    
    Contracts
    
    
    Contracts
    
    
    Total>799
    
    $
    14,883
    
    
    $
    333
    
    
    $
    15,216700  799
    
    
    116,012
    
    
    
    3,066
    
    
    
    119,078600  699
    
    
    90,595
    
    
    
    3,892
    
    
    
    94,487<600
    
    
    41,487
    
    
    
    2,633
    
    
    
    44,120No FICO Scores
    
    
    6,057
    
    
    
    693
    
    
    
    6,750$
    269,034
    
    
    $
    10,617
    
    
    $
    279,651
  Diamond
    
    
    UnrestrictedResorts
    
    
    SubsidiariesMortgages and
    
    
    Mortgages andFICO Scores
    
    Contracts
    
    
    Contracts
    
    
    Total>799
    
    $
    17,055
    
    
    $
    90
    
    
    $
    17,145700  799
    
    
    123,558
    
    
    
    2,888
    
    
    
    126,446600  699
    
    
    96,087
    
    
    
    3,977
    
    
    
    100,064<600
    
    
    38,373
    
    
    
    2,128
    
    
    
    40,501No FICO Scores
    
    
    6,211
    
    
    
    2,960
    
    
    
    9,171$
    281,284
    
    
    $
    12,043
    
    
    $
    293,327
   F-76




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Note 5Transactions with Related Parties
 Due from Related Parties, Net and Due to Related Parties, Net
    March 31,
    
    
    December 31,2011
    
    
    2010Amounts due from HOAs
    
    $
    9,886
    
    
    $
    19,941Amounts due from trusts
    
    
    
    
    
    
    1,017Total due from related parties, net
    
    $
    9,886
    
    
    $
    20,958
  March 31,
    
    
    December 31,2011
    
    
    2010Amounts owed to HOAs
    
    $
    46,673
    
    
    $
    30,377Amounts owed to trusts
    
    
    17,837
    
    
    
    5,874Total due to related parties, net
    
    $
    64,510
    
    
    $
    36,251
 F-77




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Management Services
   Allocation of Expenses
  Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2011
    
    
    March 31, 2010Reduction of management, member and other services expenses
    
    $
    2,209
    
    
    $
    1,676Reduction of general and administrative expenses
    
    
    6,507
    
    
    
    6,021Total allocation of expenses
    
    $
    8,716
    
    
    $
    7,697
 Note 6Other Receivables, Net
  March 31,
    
    
    December 31,2011
    
    
    2010THE Club dues receivable
    
    $
    15,160
    
    
    $
    29,534Mortgage interest receivable
    
    
    3,403
    
    
    
    3,651Tempus Note Receivable
    
    
    3,868
    
    
    
    3,005Rental receivables and other resort management-related receivables
    
    
    3,403
    
    
    
    2,893Owner maintenance fee receivable
    
    
    4,386
    
    
    
    2,097THE Club conversion receivable
    
    
    1,147
    
    
    
    1,409Mini-vacations and sampler program receivables
    
    
    994
    
    
    
    1,060Proceeds from ILXA Inventory Loan in transit
    
    
    
    
    
    
    1,028Insurance claims receivable
    
    
    190
    
    
    
    533Other receivables
    
    
    2,291
    
    
    
    2,970Total other receivables, gross
    
    
    34,842
    
    
    
    48,180Provision for doubtful accounts
    
    
    (12,534
    )
    
    
    (12,200
    )Total other receivables, net
    
    $
    22,308
    
    
    $
    35,980
  F-78




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 
  
 Note 7Prepaid Expenses and Other Assets, Net
  Prepaid and unamortized maintenance fees
 Deferred commissions
 Vacation Interest purchases in transit
 Prepaid rent
 Unamortized exchange fees
  March 31,
    
    
    December 31,2011
    
    
    2010Debt issuance costs, net
    
    $
    23,486
    
    
    $
    24,098Prepaid and unamortized maintenance fees
    
    
    43,921
    
    
    
    5,663Other inventory/consumables
    
    
    3,061
    
    
    
    3,019Deferred commissions
    
    
    2,540
    
    
    
    2,494Deposits and advances
    
    
    2,156
    
    
    
    2,457Assets to be disposed (not actively marketed)
    
    
    2,256
    
    
    
    2,169Prepaid insurance
    
    
    4,037
    
    
    
    2,061Vacation Interest purchases in transit
    
    
    978
    
    
    
    1,099Prepaid rent
    
    
    498
    
    
    
    255Prepaid sales and marketing costs
    
    
    521
    
    
    
    239Unamortized exchange fees
    
    
    6,129
    
    
    
    Other
    
    
    4,792
    
    
    
    2,694Total prepaid expenses and other assets, net
    
    $
    94,375
    
    
    $
    46,248
  F-79




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Note 8Unsold Vacation Interests, Net
  March 31,
    
    
    December 31,2011
    
    
    2010Completed unsold Vacation Interests, net
    
    $
    166,175
    
    
    $
    157,491Undeveloped land
    
    
    32,477
    
    
    
    32,159Vacation Interest construction in progress
    
    
    1,072
    
    
    
    914Unsold Vacation Interests, net
    
    $
    199,724
    
    
    $
    190,564
     Note 9Property and Equipment, Net
   F-80




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  March 31,
    
    
    December 31,2011
    
    
    2010Land and improvements
    
    $
    7,322
    
    
    $
    4,021Buildings and leasehold improvements
    
    
    20,480
    
    
    
    18,468Furniture and office equipment
    
    
    10,001
    
    
    
    8,674Computer software
    
    
    9,898
    
    
    
    9,110Computer equipment
    
    
    4,959
    
    
    
    4,776Construction in progress
    
    
    688
    
    
    
    433Property and equipment, gross
    
    
    53,348
    
    
    
    45,482Less accumulated depreciation
    
    
    (18,167
    )
    
    
    (16,385
    )Property and equipment, net
    
    $
    35,181
    
    
    $
    29,097
   Note 10Intangible Assets, Net
  Gross Carrying
    
    
    Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    ValueManagement contracts
    
    $
    48,969
    
    
    $
    (10,300
    )
    
    $
    38,669Member relationships
    
    
    26,947
    
    
    
    (22,152
    )
    
    
    4,795Distributor relationships and other
    
    
    1,250
    
    
    
    (267
    )
    
    
    983$
    77,166
    
    
    $
    (32,719
    )
    
    $
    44,447
  Gross Carrying
    
    
    Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    ValueManagement contracts
    
    $
    48,700
    
    
    $
    (9,239
    )
    
    $
    39,461Member relationships
    
    
    26,953
    
    
    
    (21,753
    )
    
    
    5,200Distributor relationships and other
    
    
    1,227
    
    
    
    (175
    )
    
    
    1,052$
    76,880
    
    
    $
    (31,167
    )
    
    $
    45,713
 
  F-81




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
   Note 11Assets Held for Sale
  Note 12Borrowings
 Polo Towers Lines of Credit and Securitization Notes Payable.
   Notes Payable
  F-82




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  December 31,March 31, 2011
    
    
    2010WeightedAveragePrincipal
    
    
    Interest
    
    
    
    
    
    
    PrincipalBalance
    
    
    Rate
    
    
    Maturity
    
    
    BalanceSenior Secured Notes
    
    $
    425,000
    
    
    
    12.0
    %
    

    8/15/18
    
    
    $
    425,000Original issue discount related to Senior Secured Notes
    
    
    (10,085
    )
    
    
    
    
    
    
    
    
    
    
    (10,278
    )Diamond Resorts Owners Trust Series 2009-1
    
    
    110,788
    
    
    
    9.5
    %
    
   3/20/26
    
    
    
    121,843Original issue discount related to Diamond Resorts
Owners Trust Series 2009-1
    
    
    (885
    )
    
    
    
    
    
    
    
    
    
    
    (899
    )2008 Conduit Facility
    
    
    37,387
    
    
    
    5.5
    %
    

    8/30/11
    
    
    
    39,467ILXA Inventory Loan
    
    
    18,539
    
    
    
    7.5
    %
    
   8/31/15
    
    
    
    18,541Quorum Facility
    
    
    15,680
    
    
    
    8.0
    %
    
   4/30/12
    
    
    
    12,942ILXA Receivables Loan
    
    
    9,374
    
    
    
    10.0
    %
    
   8/31/15
    
    
    
    10,292Tempus Acquisition Loan
    
    
    4,100
    
    
    
    10.0
    %
    
    Less than one year
    
    
    3,300Polo Towers Lines of Credit
    
    
    
    
    
    
    N/A
    
    
   N/A

    
    
    2,060Notes payable-insurance policies
    
    
    3,938
    
    
    
    3.3
    %
    
    Various
    
    
    1,366Polo Towers Securitization Notes Payable
    
    
    
    
    
    
    N/A
    
    
   N/A

    
    
    1,138Notes payable-other
    
    
    48
    
    
    
    3.8
    %
    
    Various
    
    
    66Total borrowings
    
    $
    613,884
    
    
    
    
    
    
    
    
    
    
    $
    624,838
 Derivative Instruments
     F-83




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Borrowing Restrictions and Limitations
  Capitalized Interest
  Note 13Accrued Liabilities
  Accrued marketing expenses
 Accrued liability related to business combinations
 Accrued exchange company fees
 Accrued contingent litigation liabilities
 Accrued operating lease liabilities
 Accrued call center cost
 Accrued construction costs
 F-84




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  March 31,
    
    
    December 31,2011
    
    
    2010Accrued interest
    
    $
    7,351
    
    
    $
    20,365Accrued payroll and related
    
    
    13,004
    
    
    
    14,953Accrued marketing expenses
    
    
    5,737
    
    
    
    5,405Accrued commissions
    
    
    5,462
    
    
    
    4,787Accrued liability related to business combinations
    
    
    3,744
    
    
    
    3,744Accrued other taxes
    
    
    3,509
    
    
    
    3,299Accrued insurance
    
    
    2,750
    
    
    
    2,766Accrued professional fees
    
    
    2,767
    
    
    
    2,648Accrued contingent litigation liabilities
    
    
    2,713
    
    
    
    2,642Accrued operating lease liabilities
    
    
    2,063
    
    
    
    2,046Accrued exchange company fees
    
    
    8,451
    
    
    
    1,206Accrued call center cost
    
    
    1,024
    
    
    
    1,114Accrued construction costs
    
    
    242
    
    
    
    247Other
    
    
    2,434
    
    
    
    2,311Total accrued liabilities
    
    $
    61,251
    
    
    $
    67,533
 Note 14Deferred Revenues
  THE Club deferred revenue
 Deferred maintenance and reserve fee revenue 
 Deferred mini-vacations and sampler programs revenue
 Deferred revenue from an exchange company
 F-85




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  March 31,
    
    
    December 31,2011
    
    
    2010THE Club deferred revenue
    
    $
    27,176
    
    
    $
    36,535Deferred maintenance and reserve fee revenue
    
    
    29,631
    
    
    
    13,491Deferred mini-vacations and sampler programs revenue
    
    
    11,980
    
    
    
    11,465Deferred revenue from an exchange company
    
    
    3,166
    
    
    
    3,246Other
    
    
    5,686
    
    
    
    2,969Total deferred revenues
    
    $
    77,639
    
    
    $
    67,706
 Note 15Income Taxes
  Note 16Commitments and Contingencies
 Lease Agreements
   Purchase Obligations
  Litigation and Other
   F-86




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
       F-87




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Note 17Fair Value Measurements
  
    
    Level 1: Quoted prices for identical instruments in active markets.
 
    
    Level 2: Quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and model-derived
valuations whose inputs or significant value drivers are observable.
 
    
    Level 3: Unobservable inputs used when little or no market data is available.
    DerivativeLiabilitiesBalance at December 31, 2010
    
    $
    79Total gain included in interest expense
    
    
    (79
    )Balance at March 31, 2011
    
    $
    
    F-88




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
     Note 18  Preferred Units
       F-89




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
         F-90




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Note 19Business Combination
   Based on
    
    
    AdjustmentsPreliminary
    
    
    RecordedAppraisal as
    
    
    During thePreviously
    
    
    Quarter Ended
    
    
    Based on FinalReported
    
    
    March 31, 2011
    
    
    AppraisalConsideration:Cash
    
    $
    30,722
    
    
    $
    
    
    
    $
    30,722Fair value of total consideration transferred
    
    $
    30,722
    
    
    $
    
    
    
    $
    30,722Recognized amounts of identifiable assets
and liabilities assumed as of August 31,
2010:Cash in escrow and restricted cash
    
    $
    54
    
    
    $
    
    
    
    $
    54Mortgages and contracts receivable
    
    
    9,802
    
    
    
    (1,660
    )
    
    
    8,142Prepaid expenses and other assets
    
    
    365
    
    
    
    (31
    )
    
    
    334Unsold Vacation Interests
    
    
    10,100
    
    
    
    
    
    
    
    10,100Property and equipment
    
    
    5,705
    
    
    
    1,679
    
    
    
    7,384Intangible assets
    
    
    8,850
    
    
    
    (100
    )
    
    
    8,750Total assets
    
    
    34,876
    
    
    
    (112
    )
    
    
    34,764Current liabilities
    
    
    4,154
    
    
    
    (112
    )
    
    
    4,042Total identifiable net assets
    
    $
    30,722
    
    
    $
    
    
    
    $
    30,722
  Based on
    
    
    AdjustmentsWeighted
    
    
    Preliminary
    
    
    RecordedAverage
    
    
    Appraisal as
    
    
    During the
    
    
    Based onUseful Life
    
    
    Previously
    
    
    Quarter Ended
    
    
    Finalin Years
    
    
    Reported
    
    
    March 31, 2011
    
    
    AppraisalMember relationships
    
10
    
    
    $
    1,100
    
    
    $
    (100
    )
    
    $
    1,000Management contracts
    
5
    
    
    
    7,120
    
    
    
    
    
    
    
    7,120Trade name
    
5
    
    
    
    600
    
    
    
    
    
    
    
    600Domain name
    
5
    
    
    
    30
    
    
    
    
    
    
    
    30Total acquired intangible assets
    
    
    
    
    
    $
    8,850
    
    
    $
    (100
    )
    
    $
    8,750
   F-91




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  Note 20Segment Reporting
   F-92




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
  CONSOLIDATING STATEMENT OF OPERATIONS BY BUSINESS SEGMENT
For the three months ended March 31, 2011
(Unaudited)
(In thousands)
 
 Hospitality and
    
    
    VacationManagement
    
    
    Interest Sales
    
    
    Corporate andServices
    
    
    and Financing
    
    
    Other
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    
    
    
    $
    41,933
    
    
    $
    
    
    
    $
    41,933Provision for uncollectible Vacation Interest sales revenue
    
    
    
    
    
    
    (2,990
    )
    
    
    
    
    
    
    (2,990
    )Vacation Interest, net
    
    
    
    
    
    
    38,943
    
    
    
    
    
    
    
    38,943Management, member and other services
    
    
    29,643
    
    
    
    2,142
    
    
    
    
    
    
    
    31,785Consolidated resort operations
    
    
    6,946
    
    
    
    
    
    
    
    
    
    
    
    6,946Interest
    
    
    
    
    
    
    9,415
    
    
    
    414
    
    
    
    9,829Gain on mortgage repurchase
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    29Total revenues
    
    
    36,589
    
    
    
    50,529
    
    
    
    414
    
    
    
    87,532Costs and Expenses:Vacation Interest cost of sales
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    67Advertising, sales and marketing
    
    
    
    
    
    
    28,436
    
    
    
    
    
    
    
    28,436Vacation Interest carrying cost, net
    
    
    
    
    
    
    8,560
    
    
    
    
    
    
    
    8,560Management, member and other services
    
    
    6,005
    
    
    
    255
    
    
    
    
    
    
    
    6,260Consolidated resort operations
    
    
    6,168
    
    
    
    
    
    
    
    
    
    
    
    6,168Loan portfolio
    
    
    179
    
    
    
    2,439
    
    
    
    
    
    
    
    2,618General and administrative
    
    
    
    
    
    
    
    
    
    
    19,053
    
    
    
    19,053Gain on disposal of assets
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    3,170
    
    
    
    3,170Interest
    
    
    
    
    
    
    4,055
    
    
    
    14,317
    
    
    
    18,372Impairments and other write-offs
    
    
    
    
    
    
    
    
    
    
    83
    
    
    
    83Total costs and expenses
    
    
    12,352
    
    
    
    43,812
    
    
    
    36,614
    
    
    
    92,778Income (loss) before provision for income taxes
    
    
    24,237
    
    
    
    6,717
    
    
    
    (36,200
    )
    
    
    (5,246
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    1,473
    
    
    
    1,473Net income (loss)
    
    $
    24,237
    
    
    $
    6,717
    
    
    $
    (37,673
    )
    
    $
    (6,719
    )
 
 F-93




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING STATEMENT OF OPERATIONS BY BUSINESS SEGMENT
For the three months ended March 31, 2010
(Unaudited)
(In thousands)
 
 Hospitality and
    
    
    VacationManagement
    
    
    Interest Sales
    
    
    Corporate andServices
    
    
    and Financing
    
    
    Other
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    
    
    
    $
    48,082
    
    
    $
    
    
    
    $
    48,082Provision for uncollectible Vacation Interest sales revenue
    
    
    
    
    
    
    (1,622
    )
    
    
    
    
    
    
    (1,622
    )Vacation Interest, net
    
    
    
    
    
    
    46,460
    
    
    
    
    
    
    
    46,460Management, member and other services
    
    
    21,991
    
    
    
    2,734
    
    
    
    
    
    
    
    24,725Consolidated resort operations
    
    
    6,501
    
    
    
    
    
    
    
    
    
    
    
    6,501Interest
    
    
    
    
    
    
    9,794
    
    
    
    22
    
    
    
    9,816Gain on mortgage repurchase
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    36Total revenues
    
    
    28,492
    
    
    
    59,024
    
    
    
    22
    
    
    
    87,538Costs and Expenses:Vacation Interest cost of sales
    
    
    
    
    
    
    10,625
    
    
    
    
    
    
    
    10,625Advertising, sales and marketing
    
    
    
    
    
    
    25,465
    
    
    
    
    
    
    
    25,465Vacation Interest carrying cost, net
    
    
    
    
    
    
    7,435
    
    
    
    
    
    
    
    7,435Management, member and other services
    
    
    6,057
    
    
    
    465
    
    
    
    
    
    
    
    6,522Consolidated resort operations
    
    
    5,877
    
    
    
    
    
    
    
    
    
    
    
    5,877Loan portfolio
    
    
    252
    
    
    
    2,351
    
    
    
    
    
    
    
    2,603General and administrative
    
    
    
    
    
    
    
    
    
    
    15,320
    
    
    
    15,320Gain on disposal of assets
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    2,797
    
    
    
    2,797Interest, net of capitalized interest
    
    
    
    
    
    
    4,927
    
    
    
    10,752
    
    
    
    15,679Total costs and expenses
    
    
    12,186
    
    
    
    51,268
    
    
    
    28,867
    
    
    
    92,321Income (loss) before provision for income taxes
    
    
    16,306
    
    
    
    7,756
    
    
    
    (28,845
    )
    
    
    (4,783
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    705
    
    
    
    705Net income (loss)
    
    $
    16,306
    
    
    $
    7,756
    
    
    $
    (29,550
    )
    
    $
    (5,488
    )
 
 F-94




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Note 21Consolidating Financial Statements
  F-95




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING BALANCE SHEET
March 31, 2011
(Unaudited)
(In thousands)
 DiamondResortsParent, LLCand Restricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalASSETSCash and cash equivalents
    
    $
    18,485
    
    
    $
    302
    
    
    $
    
    
    
    $
    18,787Cash in escrow and restricted cash
    
    
    35,938
    
    
    
    262
    
    
    
    
    
    
    
    36,200Mortgages and contracts receivable, net of allowance of
$48,476, $4,516 and $0, respectively
    
    
    228,445
    
    
    
    6,100
    
    
    
    (9
    )
    
    
    234,536Due from related parties, net
    
    
    10,447
    
    
    
    (477
    )
    
    
    (84
    )
    
    
    9,886Other receivables, net
    
    
    18,085
    
    
    
    4,223
    
    
    
    
    
    
    
    22,308Income tax receivable
    
    
    27
    
    
    
    113
    
    
    
    (113
    )
    
    
    27Prepaid expenses and other assets, net
    
    
    88,422
    
    
    
    6,003
    
    
    
    (50
    )
    
    
    94,375Investment in subsidiaries
    
    
    
    
    
    
    1,662
    
    
    
    (1,662
    )
    
    
    Unsold Vacation Interests, net
    
    
    189,656
    
    
    
    10,068
    
    
    
    
    
    
    
    199,724Property and equipment, net
    
    
    28,055
    
    
    
    7,126
    
    
    
    
    
    
    
    35,181Assets held for sale
    
    
    5,854
    
    
    
    
    
    
    
    
    
    
    
    5,854Intangible assets, net
    
    
    36,665
    
    
    
    7,782
    
    
    
    
    
    
    
    44,447Total assets
    
    $
    660,079
    
    
    $
    43,164
    
    
    $
    (1,918
    )
    
    $
    701,325LIABILITIES AND MEMBER CAPITAL (DEFICIT)Accounts payable
    
    $
    10,601
    
    
    $
    120
    
    
    $
    
    
    
    $
    10,721Due to related parties, net
    
    
    47,921
    
    
    
    23,601
    
    
    
    (7,012
    )
    
    
    64,510Accrued liabilities
    
    
    56,539
    
    
    
    6,432
    
    
    
    (1,720
    )
    
    
    61,251Income taxes payable
    
    
    5,201
    
    
    
    
    
    
    
    (113
    )
    
    
    5,088Deferred revenues
    
    
    77,226
    
    
    
    413
    
    
    
    
    
    
    
    77,639Senior secured notes, net of original issue discount of
$10,085, $0 and $0, respectively
    
    
    414,915
    
    
    
    
    
    
    
    
    
    
    
    414,915Securitization notes and conduit facility, net
    
    
    162,970
    
    
    
    9,374
    
    
    
    
    
    
    
    172,344Notes payable
    
    
    3,986
    
    
    
    22,639
    
    
    
    
    
    
    
    26,625Total liabilities
    
    
    779,359
    
    
    
    62,579
    
    
    
    (8,845
    )
    
    
    833,093Redeemable preferred units
    
    
    98,992
    
    
    
    
    
    
    
    
    
    
    
    98,992Member capital
    
    
    7,190
    
    
    
    9,675
    
    
    
    (9,675
    )
    
    
    7,190Accumulated deficit
    
    
    (209,962
    )
    
    
    (28,793
    )
    
    
    16,305
    
    
    
    (222,450
    )Accumulated other comprehensive loss
    
    
    (15,500
    )
    
    
    (297
    )
    
    
    297
    
    
    
    (15,500
    )Total member capital (deficit)
    
    
    (218,272
    )
    
    
    (19,415
    )
    
    
    6,927
    
    
    
    (230,760
    )Total liabilities and member capital (deficit)
    
    $
    660,079
    
    
    $
    43,164
    
    
    $
    (1,918
    )
    
    $
    701,325
 F-96




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING BALANCE SHEET
December 31, 2010
(In thousands)
 DiamondResorts Parent,LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalASSETSCash and cash equivalents
    
    $
    27,163
    
    
    $
    166
    
    
    $
    
    
    
    $
    27,329Cash in escrow and restricted cash
    
    
    29,868
    
    
    
    180
    
    
    
    
    
    
    
    30,048Mortgages and contracts receivable, net of allowance of
$51,551, $3,600 and $0, respectively
    
    
    236,846
    
    
    
    8,454
    
    
    
    (13
    )
    
    
    245,287Due from related parties, net
    
    
    20,789
    
    
    
    223
    
    
    
    (54
    )
    
    
    20,958Other receivables, net
    
    
    31,650
    
    
    
    4,330
    
    
    
    
    
    
    
    35,980Income tax receivable
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Prepaid expenses and other assets, net
    
    
    45,260
    
    
    
    1,038
    
    
    
    (50
    )
    
    
    46,248Investment in subsidiaries
    
    
    
    
    
    
    1,624
    
    
    
    (1,624
    )
    
    
    Unsold Vacation Interests, net
    
    
    180,464
    
    
    
    10,100
    
    
    
    
    
    
    
    190,564Property and equipment, net
    
    
    23,468
    
    
    
    5,629
    
    
    
    
    
    
    
    29,097Assets held for sale
    
    
    9,517
    
    
    
    
    
    
    
    
    
    
    
    9,517Intangible assets, net
    
    
    37,411
    
    
    
    8,302
    
    
    
    
    
    
    
    45,713Total assets
    
    $
    642,446
    
    
    $
    40,046
    
    
    $
    (1,741
    )
    
    $
    680,751LIABILITIES AND MEMBER CAPITAL (DEFICIT)Accounts payable
    
    $
    7,409
    
    
    $
    246
    
    
    $
    
    
    
    $
    7,655Due to related parties, net
    
    
    29,197
    
    
    
    13,724
    
    
    
    (6,670
    )
    
    
    36,251Accrued liabilities
    
    
    62,367
    
    
    
    6,853
    
    
    
    (1,687
    )
    
    
    67,533Income taxes payable
    
    
    3,936
    
    
    
    
    
    
    
    
    
    
    
    3,936Deferred revenues
    
    
    67,706
    
    
    
    
    
    
    
    
    
    
    
    67,706Senior secured notes, net of original issue discount of
$10,278, $0 and $0, respectively
    
    
    414,722
    
    
    
    
    
    
    
    
    
    
    
    414,722Securitization notes and conduit facility, net
    
    
    176,551
    
    
    
    10,292
    
    
    
    
    
    
    
    186,843Derivative liabilities
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    79Notes payable
    
    
    1,432
    
    
    
    21,841
    
    
    
    
    
    
    
    23,273Total liabilities
    
    
    763,399
    
    
    
    52,956
    
    
    
    (8,357
    )
    
    
    807,998Redeemable preferred units
    
    
    84,502
    
    
    
    
    
    
    
    
    
    
    
    84,502Member capital
    
    
    7,335
    
    
    
    9,675
    
    
    
    (9,675
    )
    
    
    7,335Accumulated deficit
    
    
    (195,044
    )
    
    
    (22,197
    )
    
    
    15,903
    
    
    
    (201,338
    )Accumulated other comprehensive loss (income)
    
    
    (17,746
    )
    
    
    (388
    )
    
    
    388
    
    
    
    (17,746
    )Total member capital (deficit)
    
    
    (205,455
    )
    
    
    (12,910
    )
    
    
    6,616
    
    
    
    (211,749
    )Total liabilities and member capital (deficit)
    
    $
    642,446
    
    
    $
    40,046
    
    
    $
    (1,741
    )
    
    $
    680,751
 F-97




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2011
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    41,451
    
    
    $
    481
    
    
    $
    1
    
    
    $
    41,933Provision for uncollectible Vacation
Interest sales revenue
    
    
    (2,917
    )
    
    
    (73
    )
    
    
    
    
    
    
    (2,990
    )Vacation Interest, net
    
    
    38,534
    
    
    
    408
    
    
    
    1
    
    
    
    38,943Management, member and other services
    
    
    32,031
    
    
    
    765
    
    
    
    (1,011
    )
    
    
    31,785Consolidated resort operations
    
    
    6,784
    
    
    
    162
    
    
    
    
    
    
    
    6,946Interest
    
    
    9,376
    
    
    
    453
    
    
    
    
    
    
    
    9,829Gain on mortgage repurchase
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    29Total revenues
    
    
    86,754
    
    
    
    1,788
    
    
    
    (1,010
    )
    
    
    87,532Costs and Expenses:Vacation Interest cost of sales
    
    
    36
    
    
    
    31
    
    
    
    
    
    
    
    67Advertising, sales and marketing
    
    
    28,087
    
    
    
    379
    
    
    
    (30
    )
    
    
    28,436Vacation Interest carrying cost, net
    
    
    7,285
    
    
    
    1,470
    
    
    
    (195
    )
    
    
    8,560Management, member and other services
    
    
    5,518
    
    
    
    1,563
    
    
    
    (821
    )
    
    
    6,260Consolidated resort operations
    
    
    5,944
    
    
    
    224
    
    
    
    
    
    
    
    6,168Loan portfolio
    
    
    2,547
    
    
    
    71
    
    
    
    
    
    
    
    2,618General and administrative
    
    
    16,055
    
    
    
    2,964
    
    
    
    34
    
    
    
    19,053(Gain) loss on disposal of assets
    
    
    (137
    )
    
    
    128
    
    
    
    
    
    
    
    (9
    )Depreciation and amortization
    
    
    2,666
    
    
    
    504
    
    
    
    
    
    
    
    3,170Interest
    
    
    17,209
    
    
    
    1,163
    
    
    
    
    
    
    
    18,372Impairments and other write-offs
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    83Total costs and expenses
    
    
    85,293
    
    
    
    8,497
    
    
    
    (1,012
    )
    
    
    92,778Income (loss) before provision
(benefit) for income taxes
    
    
    1,461
    
    
    
    (6,709
    )
    
    
    2
    
    
    
    (5,246
    )Provision (benefit) for income taxes
    
    
    1,586
    
    
    
    (113
    )
    
    
    
    
    
    
    1,473Net (loss) income
    
    $
    (125
    )
    
    $
    (6,596
    )
    
    $
    2
    
    
    $
    (6,719
    )
 
 F-98




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2010
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalRevenues:Vacation Interest sales
    
    $
    48,082
    
    
    $
    
    
    
    $
    
    
    
    $
    48,082Provision for uncollectible Vacation
Interest sales revenue
    
    
    (1,622
    )
    
    
    
    
    
    
    
    
    
    
    (1,622
    )Vacation Interest, net
    
    
    46,460
    
    
    
    
    
    
    
    
    
    
    
    46,460Management, member and other services
    
    
    24,725
    
    
    
    
    
    
    
    
    
    
    
    24,725Consolidated resort operations
    
    
    6,501
    
    
    
    
    
    
    
    
    
    
    
    6,501Interest
    
    
    9,815
    
    
    
    1
    
    
    
    
    
    
    
    9,816Gain on mortgage repurchase
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    36Total revenues
    
    
    87,537
    
    
    
    1
    
    
    
    
    
    
    
    87,538Costs and Expenses:Vacation Interest cost of sales
    
    
    10,625
    
    
    
    
    
    
    
    
    
    
    
    10,625Advertising, sales and marketing
    
    
    25,465
    
    
    
    
    
    
    
    
    
    
    
    25,465Vacation Interest carrying cost, net
    
    
    7,435
    
    
    
    
    
    
    
    
    
    
    
    7,435Management, member and other services
    
    
    6,522
    
    
    
    
    
    
    
    
    
    
    
    6,522Consolidated resort operations
    
    
    5,877
    
    
    
    
    
    
    
    
    
    
    
    5,877Loan portfolio
    
    
    2,603
    
    
    
    
    
    
    
    
    
    
    
    2,603General and administrative
    
    
    15,268
    
    
    
    52
    
    
    
    
    
    
    
    15,320Gain on disposal of assets
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )Depreciation and amortization
    
    
    2,797
    
    
    
    
    
    
    
    
    
    
    
    2,797Interest
    
    
    15,679
    
    
    
    
    
    
    
    
    
    
    
    15,679Total costs and expenses
    
    
    92,269
    
    
    
    52
    
    
    
    
    
    
    
    92,321Loss before provision for income taxes
    
    
    (4,732
    )
    
    
    (51
    )
    
    
    
    
    
    
    (4,783
    )Provision for income taxes
    
    
    705
    
    
    
    
    
    
    
    
    
    
    
    705Net loss
    
    $
    (5,437
    )
    
    $
    (51
    )
    
    $
    
    
    
    $
    (5,488
    )
 
 F-99




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2011
(In thousands)
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalOperating activities:Net (loss) income
    
    $
    (125
    )
    
    $
    (6,596
    )
    
    $
    2
    
    
    $
    (6,719
    )Adjustments to reconcile net loss to net cash provided by
operating activities:Depreciation and amortization
    
    
    2,666
    
    
    
    504
    
    
    
    
    
    
    
    3,170Provision for uncollectible Vacation Interest sales revenue
    
    
    2,917
    
    
    
    73
    
    
    
    
    
    
    
    2,990Amortization of capitalized financing costs and original issue
discounts
    
    
    1,080
    
    
    
    38
    
    
    
    
    
    
    
    1,118Amortization of capitalized loan origination costs and
portfolio discount
    
    
    557
    
    
    
    
    
    
    
    
    
    
    
    557Loss on foreign currency exchange
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    (8
    )(Gain) loss on disposal of assets
    
    
    (137
    )
    
    
    128
    
    
    
    
    
    
    
    (9
    )Gain on mortgage repurchase
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    (29
    )Unrealized gain on derivative instruments
    
    
    (79
    )
    
    
    
    
    
    
    
    
    
    
    (79
    )Gain on insurance settlement
    
    
    (3,535
    )
    
    
    
    
    
    
    
    
    
    
    (3,535
    )Impairments and other write-offs
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    83Changes in operating assets and liabilities excluding acquisitions:Mortgages and contracts receivable
    
    
    4,921
    
    
    
    621
    
    
    
    (4
    )
    
    
    5,538Due from related parties, net
    
    
    13,255
    
    
    
    700
    
    
    
    30
    
    
    
    13,985Other receivables, net
    
    
    13,488
    
    
    
    970
    
    
    
    
    
    
    
    14,458Prepaid expenses and other assets, net
    
    
    (43,329
    )
    
    
    (5,081
    )
    
    
    
    
    
    
    (48,410
    )Unsold Vacation Interests, net
    
    
    (5,294
    )
    
    
    32
    
    
    
    
    
    
    
    (5,262
    )Accounts payable
    
    
    3,146
    
    
    
    (126
    )
    
    
    
    
    
    
    3,020Due to related parties, net
    
    
    20,309
    
    
    
    9,968
    
    
    
    5
    
    
    
    30,282Accrued liabilities
    
    
    (6,141
    )
    
    
    (313
    )
    
    
    (33
    )
    
    
    (6,487
    )Income taxes payable
    
    
    1,115
    
    
    
    (113
    )
    
    
    
    
    
    
    1,002Deferred revenues
    
    
    9,029
    
    
    
    413
    
    
    
    
    
    
    
    9,442Net cash provided by operating activities
    
    
    13,889
    
    
    
    1,218
    
    
    
    
    
    
    
    15,107Investing activities:Property and equipment capital expenditures
    
    
    (2,456
    )
    
    
    (29
    )
    
    
    
    
    
    
    (2,485
    )Disbursement of Tempus Acquisition note receivable
    
    
    
    
    
    
    (863
    )
    
    
    
    
    
    
    (863
    )Proceeds from sale of assets
    
    
    1,449
    
    
    
    1
    
    
    
    
    
    
    
    1,450Net cash used in investing activities
    
    $
    (1,007
    )
    
    $
    (891
    )
    
    $
    
    
    
    $
    (1,898
    )
 F-100




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING STATEMENT OF CASH FLOWS  Continued  Three Months Ended March 31, 2011
(In thousands)
 
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalFinancing activities:Changes in cash in escrow and restricted cash
    
    $
    (6,031
    )
    
    $
    (82
    )
    
    $
    
    
    
    $
    (6,113
    )Proceeds from issuance of Quorum Facility
    
    
    5,821
    
    
    
    
    
    
    
    
    
    
    
    5,821Proceeds from issuance of Tempus Acquisition Loan
    
    
    
    
    
    
    800
    
    
    
    
    
    
    
    800Proceeds from issuance of 2008 Conduit Facility
    
    
    1,488
    
    
    
    
    
    
    
    
    
    
    
    1,488Payments on Quorum Facility
    
    
    (3,083
    )
    
    
    
    
    
    
    
    
    
    
    (3,083
    )Payments on Diamond Resorts Owners Trust 2009-1
    
    
    (11,055
    )
    
    
    
    
    
    
    
    
    
    
    (11,055
    )Payments on 2008 Conduit Facility
    
    
    (3,568
    )
    
    
    
    
    
    
    
    
    
    
    (3,568
    )Payments on ILXA Receivables and Inventory Loans
    
    
    
    
    
    
    (920
    )
    
    
    
    
    
    
    (920
    )Payments on Polo Towers lines of credit and securitization notes
    
    
    (3,198
    )
    
    
    
    
    
    
    
    
    
    
    (3,198
    )Payments on notes payable
    
    
    (1,916
    )
    
    
    
    
    
    
    
    
    
    
    (1,916
    )Payments of debt issuance costs
    
    
    (310
    )
    
    
    11
    
    
    
    
    
    
    
    (299
    )Proceeds from equity investment
    
    
    10,151
    
    
    
    
    
    
    
    
    
    
    
    10,151Repurchase of certain outstanding warrants
    
    
    (10,151
    )
    
    
    
    
    
    
    
    
    
    
    (10,151
    )Payments of costs related to issuance of common and preferred units
    
    
    (48
    )
    
    
    
    
    
    
    
    
    
    
    (48
    )Net cash used in financing activities
    
    
    (21,900
    )
    
    
    (191
    )
    
    
    
    
    
    
    (22,091
    )Net (decrease) increase in cash and cash equivalents
    
    
    (9,018
    )
    
    
    136
    
    
    
    
    
    
    
    (8,882
    )Effect of changes in exchange rates on cash and cash equivalents
    
    
    340
    
    
    
    
    
    
    
    
    
    
    
    340Cash and cash equivalents, beginning of period
    
    
    27,163
    
    
    
    166
    
    
    
    
    
    
    
    27,329Cash and cash equivalents, end of period
    
    $
    18,485
    
    
    $
    302
    
    
    $
    
    
    
    $
    18,787SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    29,672
    
    
    $
    675
    
    
    $
    
    
    
    $
    30,347Cash paid for taxes, net of tax refunds
    
    $
    488
    
    
    $
    
    
    
    $
    
    
    
    $
    488SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Priority returns and redemption premiums on preferred units
    
    $
    4,339
    
    
    $
    
    
    
    $
    
    
    
    $
    4,339Insurance premiums financed through issuance of note payable
    
    $
    4,469
    
    
    $
    
    
    
    $
    
    
    
    $
    4,469Assets held for sale reclassified to unsold Vacation Interests
    
    $
    3,086
    
    

    $
    
    
    
    $
    
    
    
    $
    3,086
 
 F-101




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2010
(In thousands)
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalOperating activities:Net loss
    
    $
    (5,437
    )
    
    $
    (51
    )
    
    $
    
    
    
    $
    (5,488
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    2,797
    
    
    
    
    
    
    
    
    
    
    
    2,797Provision for uncollectible Vacation Interest sales revenue
    
    
    1,622
    
    
    
    
    
    
    
    
    
    
    
    1,622Amortization of capitalized financing costs and original issue discounts
    
    
    291
    
    
    
    
    
    
    
    
    
    
    
    291Amortization of capitalized loan origination costs and portfolio discount
    
    
    688
    
    
    
    
    
    
    
    
    
    
    
    688Loss on foreign currency exchange
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17Gain on disposal of assets
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )Gain on mortgage repurchase
    
    
    (36
    )
    
    
    
    
    
    
    
    
    
    
    (36
    )Deferred income taxes
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )Unrealized gain on derivative instruments
    
    
    (161
    )
    
    
    
    
    
    
    
    
    
    
    (161
    )Impairments and other write-offs
    
    
    
    
    
    
    
    
    
    
    Changes in operating assets and liabilities excluding acquisitions:Mortgages and contracts receivable
    
    
    6,060
    
    
    
    2
    
    
    
    (2
    )
    
    
    6,060Due from related parties, net
    
    
    8,791
    
    
    
    
    
    
    
    
    
    
    
    8,791Other receivables, net
    
    
    15,239
    
    
    
    
    
    
    
    
    
    
    
    15,239Prepaid expenses and other assets, net
    
    
    (34,974
    )
    
    
    
    
    
    
    
    
    
    
    (34,974
    )Unsold Vacation Interests, net
    
    
    4,120
    
    
    
    
    
    
    
    
    
    
    
    4,120Accounts payable
    
    
    (2,236
    )
    
    
    
    
    
    
    
    
    
    
    (2,236
    )Due to related parties, net
    
    
    13,009
    
    
    
    49
    
    
    
    2
    
    
    
    13,060Accrued liabilities
    
    
    4,189
    
    
    
    
    
    
    
    
    
    
    
    4,189Income taxes payable (receivable)
    
    
    4,769
    
    
    
    
    
    
    
    
    
    
    
    4,769Deferred revenues
    
    
    10,472
    
    
    
    
    
    
    
    
    
    
    
    10,472Net cash provided by operating activities
    
    
    29,215
    
    
    
    
    
    
    
    
    
    
    
    29,215Investing activities:Property and equipment capital expenditures
    
    
    (942
    )
    
    
    
    
    
    
    
    
    
    
    (942
    )Proceeds from sale of assets
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Net cash used in investing activities
    
    $
    (940
    )
    
    $
    
    
    
    $
    
    
    
    $
    (940
    )
 F-102




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 CONSOLIDATING STATEMENT OF CASH FLOWS  Continued  Three Months Ended March 31, 2010
(In thousands)
 Diamond ResortsParent, LLC andRestricted
    
    
    UnrestrictedSubsidiaries
    
    
    Subsidiaries
    
    
    Elimination
    
    
    TotalFinancing activities:Changes in cash in escrow and restricted cash
    
    $
    (7,794
    )
    
    $
    
    
    
    $
    
    
    
    $
    (7,794
    )Proceeds from issuance of 2008 Conduit Facility
    
    
    2,264
    
    
    
    
    
    
    
    
    
    
    
    2,264Payments on Diamond Resorts Owners Trust 2009-1
    
    
    (14,929
    )
    
    
    
    
    
    
    
    
    
    
    (14,929
    )Payments on 2008 Conduit Facility
    
    
    (503
    )
    
    
    
    
    
    
    
    
    
    
    (503
    )Payments on First and Second Lien Facilities
    
    
    (569
    )
    
    
    
    
    
    
    
    
    
    
    (569
    )Payments on Polo Towers lines of credit and securitization notes
    
    
    (2,722
    )
    
    
    
    
    
    
    
    
    
    
    (2,722
    )Payments on 2004 Securitization Notes
    
    
    (2,360
    )
    
    
    
    
    
    
    
    
    
    
    (2,360
    )Payments on notes payable
    
    
    (2,143
    )
    
    
    
    
    
    
    
    
    
    
    (2,143
    )Payments of debt issuance costs
    
    
    (95
    )
    
    
    
    
    
    
    
    
    
    
    (95
    )Net cash used in financing activities
    
    
    (28,851
    )
    
    
    
    
    
    
    
    
    
    
    (28,851
    )Net decrease in cash and cash equivalents
    
    
    (576
    )
    
    
    
    
    
    
    
    
    
    
    (576
    )Effect of changes in exchange rates on cash and cash equivalents
    
    
    (354
    )
    
    
    
    
    
    
    
    
    
    
    (354
    )Cash and cash equivalents, beginning of period
    
    
    17,186
    
    
    
    
    
    
    
    
    
    
    
    17,186Cash and cash equivalents, end of period
    
    $
    16,256
    
    
    $
    
    
    
    $
    
    
    
    $
    16,256SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    17,151
    
    
    $
    
    
    
    $
    
    
    
    $
    17,151Cash tax refunds, net of cash paid for taxes
    
    $
    (4,087
    )
    
    $
    
    
    
    $
    
    
    
    $
    (4,087
    )SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Priority returns and redemption premiums on preferred units
    
    $
    4,340
    
    
    $
    
    
    
    $
    
    
    
    $
    4,340Insurance premiums financed through issuance of note payable
    
    $
    4,794
    
    
    $
    
    
    
    $
    
    
    
    $
    4,794
 F-103




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##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Note 22Geographic Financial Information
 
  
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2011
    
    
    March 31, 2010RevenueNorth America
    
    $
    78,510
    
    
    $
    77,904Europe
    
    
    9,022
    
    
    
    9,634Total Revenues
    
    $
    87,532
    
    
    $
    87,538
 March 31,
    
    
    December 31,2011
    
    
    2010Mortgages and contracts receivable, netNorth America
    
    $
    233,707
    
    
    $
    244,541Europe
    
    
    829
    
    
    
    746Total mortgages and contracts receivable, net
    
    $
    234,536
    
    
    $
    245,287Unsold Vacation Interest, netNorth America
    
    $
    177,303
    
    
    $
    174,642Europe
    
    
    22,421
    
    
    
    15,922Total unsold Vacation Interest, net
    
    $
    199,724
    
    
    $
    190,564Property and equipment, netNorth America
    
    $
    29,873
    
    
    $
    24,248Europe
    
    
    5,308
    
    
    
    4,849Total property and equipment, net
    
    $
    35,181
    
    
    $
    29,097Intangible assets, netNorth America
    
    $
    39,682
    
    
    $
    40,926Europe
    
    
    4,765
    
    
    
    4,787Total intangible assets, net
    
    $
    44,447
    
    
    $
    45,713Total long-term assets, netNorth America
    
    $
    480,565
    
    
    $
    484,357Europe
    
    
    33,323
    
    
    
    26,304Total long-term assets, net
    
    $
    513,888
    
    
    $
    510,661
 F-104




---



##### Table of Contents



DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Note 23Subsequent Events
 
  
 F-105




---



##### Table of Contents



PROSPECTUS
Offer to exchange




---



##### Table of Contents



II. INFORMATION NOT REQUIRED IN PROSPECTUS
 Item 20. Indemnification of Directors and Officers
 Arizona Registrant
 Diamond Resorts Management, Inc., is incorporated under the laws of Arizona.
     California Registrants
 Resort Management International, Inc. and Diamond Resorts International Marketing, Inc. are
incorporated under the laws of California.
  II-1




---



##### Table of Contents



nolo contendere
 Lake Tahoe Resort Partners, LLC is a limited liability company organized under the laws of
California.
  II-2




---



##### Table of Contents



Delaware Registrants
 AKGI-St. Maarten N.V., Diamond Resorts Finance Holding Company, Diamond Resorts Developer and
Sales Holding Company, Diamond Resorts Management & Exchange Holding Company and Diamond Resorts
Centralized Services Company are incorporated under the laws of Delaware.
     II-3




---



##### Table of Contents



Cumberland Gate, LLC, Diamond Resorts California Collection Development, LLC, Diamond Resorts
Coral Sands Development, LLC, Diamond Resorts Cypress Pointe I Development, LLC, Diamond Resorts
Cypress Pointe II Development, LLC, Diamond Resorts Cypress Pointe III Development, LLC, Diamond
Resorts Fall Creek Development, LLC, Diamond Resorts Grand Beach I Development, LLC, Diamond
Resorts Grand Beach II Development, LLC, Diamond Resorts Greensprings Development, LLC, Diamond
Resorts Hilton Head Development, LLC, Diamond Resorts Mortgage Holdings, LLC, Diamond Resorts Poco
Diablo Development, LLC, Diamond Resorts Port Royal Development, LLC, Diamond Resorts Powhatan
Development, LLC, Diamond Resorts Residual Assets Development, LLC, Diamond Resorts Residual Assets
Finance, LLC, Diamond Resorts Residual Assets M&E, LLC, Diamond Resorts Ridge on Sedona
Development, LLC, Diamond Resorts Ridge Pointe Development, LLC, Diamond Resorts San Luis Bay
Development, LLC, Diamond Resorts Santa Fe Development, LLC, Diamond Resorts Sedona Springs
Development, LLC, Diamond Resorts Sedona Summit Development, LLC, Diamond Resorts St. Croix
Development, LLC, Diamond Resorts Steamboat Development, LLC, Diamond Resorts Tahoe Beach & Ski
Development, LLC, Diamond Resorts Hawaii Collection Development, LLC, Diamond Resorts U.S.
Collection Development, LLC, Diamond Resorts Villa Mirage Development, LLC, Diamond Resorts Villas
of Sedona Development, LLC, Diamond Resorts West Maui Development, LLC, Ginger Creek, LLC, Grand
Escapes, LLC, International Timeshares Marketing, LLC, Diamond Resorts Scottsdale Development, LLC,
Diamond Resorts Poipu Development, LLC, Diamond Resorts Palm Springs Development, LLC, Diamond
Resorts Las Vegas Development, LLC, Diamond Resorts Citrus Share Holding, LLC, Diamond Resorts Epic
Mortgage Holdings, LLC, and Diamond Resorts Daytona Development, LLC are limited liability
companies organized under the laws of Delaware.
   II-4




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##### Table of Contents



West Maui Resort Partners, L.P. is a limited partnership organized under the laws of Delaware.
  Florida Registrants
 Diamond Resorts International Club, Inc. and MMG Development Corp. are incorporated under the
laws of Florida.
   II-5




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##### Table of Contents



nolo contendere
 nolo contendere
 Hawaii Registrant
 Poipu Resort Partners, L.P. is a limited partnership organized under the laws of Hawaii.
   II-6




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##### Table of Contents



Missouri Registrants
 Foster Shores, LLC and Walsham Lake, LLC are limited liability companies organized under the
laws of Missouri.
  Nevada Registrants
 Diamond Resorts Financial Services, Inc., Resorts Development International, Inc. and George
Acquisition Subsidiary, Inc. are incorporated under the laws of Nevada.
    II-7




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##### Table of Contents



nolo
contendere
 Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, Chestnut Farms, LLC and Diamond
Resorts Polo Development, LLC are limited liability companies organized under the laws of Nevada.
    II-8




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##### Table of Contents



Washington Registrant
 Mazatlan Development Inc. is incorporated under the laws of Washington.
   II-9




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II-10




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##### Table of Contents



Item 21. Exhibits and Financial Statement Schedules.
 
 Exhibit
    
    Description2.1*
    
    Asset Purchase Agreement, dated as of August 31, 2010, by and between ILX Acquisition, Inc. and
ILX Resorts Incorporated and certain related entities identified therein. (Certain schedules were
omitted and registrant agrees to furnish supplementally a copy of such omitted schedules to the
Commission upon request)2.2*
    
    Securities Purchase Agreement, dated as of June 17, 2010, by and between Diamond Resorts Parent,
LLC and DRP Holdco, LLC (Certain schedules were omitted and registrant agrees to furnish
supplementally a copy of such omitted schedules to the Commission upon request)2.3*
    
    Securities Purchase Agreement, dated as of February 18, 2011, by and between Diamond Resorts
Parent, LLC and the purchasers named therein (Certain schedules were omitted and registrant agrees
to furnish supplementally a copy of such omitted schedules to the Commission upon request)3.1*
    
    Articles of Incorporation of Diamond Resorts Corporation, as amended (f/k/a Sunterra Corporation;
f/k/a Signature Resorts, Inc.; f/k/a KGK Resorts, Inc.)3.2**
    
    Second Amended and Restated Bylaws of Diamond Resorts Corporation, (f/k/a Sunterra
Corporation; f/k/a Signature Resorts, Inc.; f/k/a KGK Resorts, Inc.)3.3*
    
    Articles of Organization of Diamond Resorts Parent, LLC3.4*
    
    Third Amended and Restated Operating Agreement of Diamond Resorts Parent, LLC3.5*
    
    Articles of Organization of Diamond Resorts Holdings, LLC, as amended (f/k/a DR Resort Holdings,
LLC)3.6*
    
    Operating Agreement of Diamond Resorts Holdings, LLC (f/k/a DR Resort Holdings, LLC)3.7*
    
    Certificate of Incorporation of AKGI-St. Maarten N.V.3.8*
    
    Bylaws of AKGI-St. Maarten N.V.3.9*
    
    Articles of Organization of Chestnut Farms, LLC3.10*
    
    Limited Liability Company Agreement of Chestnut Farms, LLC3.11*
    
    Certificate of Formation of Cumberland Gate, LLC3.12*
    
    Limited Liability Company Agreement of Cumberland Gate, LLC3.13*
    
    Certificate of Formation of Diamond Resorts California Collection Development, LLC, as amended
(f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra Development II, LLC; f/k/a
Club Sunterra Development St. Maarten, LLC; f/k/a Sunterra Texas Development, LLC)3.14*
    
    First Amended and Restated Limited Liability Company Operating Agreement of Diamond Resorts
California Collection Development, LLC (f/k/a Club Sunterra Development California, LLC; f/k/a
Club Sunterra Development II, LLC; f/k/a Club Sunterra Development St. Maarten, LLC; f/k/a
Sunterra Texas Development, LLC)3.15*
    
    Certificate of Formation of Diamond Resorts Citrus Share Holding, LLC, as amended (f/k/a Sunterra
Citrus Share Holding, LLC; f/k/a Sunterra South Marketing, LLC)3.16*
    
    Limited Liability Company Agreement of Diamond Resorts Citrus Share Holding, LLC, as amended
(f/k/a Sunterra Citrus Share Holding, LLC; f/k/a Sunterra South Marketing, LLC)3.17*
    
    Certificate of Formation of Diamond Resorts Coral Sands Development, LLC, as amended (f/k/a
Sunterra Coral Sands Development, LLC)3.18*
    
    Limited Liability Company Agreement of Diamond Resorts Coral Sands Development, LLC (f/k/a
Sunterra Coral Sands Development, LLC)3.19*
    
    Certificate of Formation of Diamond Resorts Cypress Pointe I Development, LLC, as amended (f/k/a
Sunterra Cypress Pointe I Development, LLC)3.20*
    
    Limited Liability Company Agreement of Diamond Resorts Cypress Pointe I Development, LLC (f/k/a
Sunterra Cypress Pointe I Development, LLC)




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Exhibit
    
    Description3.21*
    
    Certificate of Formation of Diamond Resorts Cypress Pointe II Development, LLC, as amended (f/k/a
Sunterra Cypress Pointe II Development, LLC)3.22*
    
    Limited Liability Company Agreement of Diamond Resorts Cypress Pointe II Development, LLC (f/k/a
Sunterra Cypress Pointe II Development, LLC)3.23*
    
    Certificate of Formation of Diamond Resorts Cypress Pointe III Development, LLC, as amended (f/k/a
Sunterra Cypress Pointe III Development, LLC)3.24*
    
    Limited Liability Company Agreement of Diamond Resorts Cypress Pointe III Development, LLC (f/k/a
Sunterra Cypress Pointe III Development, LLC)3.25*
    
    Certificate of Formation of Diamond Resorts Daytona Development, LLC, as amended (f/k/a Sunterra
Daytona Development, LLC; f/k/a Sunterra Bent Creek Golf Course Development, LLC)3.26*
    
    Limited Liability Company Agreement of Diamond Resorts Daytona Development, LLC (f/k/a Sunterra
Daytona Development, LLC; f/k/a Sunterra Bent Creek Golf Course Development, LLC)3.27*
    
    Certificate of Incorporation of Diamond Resorts Centralized Services Company, as amended (f/k/a
Sunterra Centralized Services Company)3.28*
    
    Bylaws of Diamond Resorts Centralized Services Company (f/k/a Sunterra Centralized Services
Company)3.29*
    
    Certificate of Incorporation of Diamond Resorts Developer and Sales Holding Company, as amended
(f/k/a Sunterra Developer and Sales Holding Company; f/k/a Avcom International, Inc.; f/k/a
American Vacation Company, Inc.)3.30*
    
    Bylaws of Diamond Resorts Developer and Sales Holding Company (f/k/a Sunterra Developer and Sales
Holding Company; f/k/a Avcom International, Inc.; f/k/a American Vacation Company, Inc.)3.31*
    
    Certificate of Formation of Diamond Resorts Epic Mortgage Holdings, LLC, as amended (f/k/a
Sunterra Epic Mortgage Holdings, LLC; f/k/a Sunterra KGK Partners Finance, LLC)3.32*
    
    Limited Liability Company Agreement of Diamond Resorts Epic Mortgage Holdings, LLC (f/k/a Sunterra
Epic Mortgage Holdings, LLC; f/k/a Sunterra KGK Partners Finance, LLC)3.33*
    
    Certificate of Formation of Diamond Resorts Fall Creek Development, LLC, as amended (f/k/a
Sunterra Fall Creek Development, LLC)3.34*
    
    Limited Liability Company Agreement of Diamond Resorts Fall Creek Development, LLC (f/k/a
Sunterra Fall Creek Development, LLC)3.35*
    
    Certificate of Incorporation of Diamond Resorts Finance Holding Company, as amended (f/k/a
Sunterra Finance Holding Company)3.36*
    
    Bylaws of Diamond Resorts Finance Holding Company (f/k/a Sunterra Finance Holding Company)3.37*
    
    Articles of Incorporation of Diamond Resorts Financial Services, Inc., as amended (f/k/a Sunterra
Financial Services, Inc.)3.38*
    
    Bylaws of Diamond Resorts Financial Services, Inc. (f/k/a Sunterra Financial Services, Inc.)3.39*
    
    Certificate of Formation of Diamond Resorts Grand Beach I Development, LLC, as amended (f/k/a
Sunterra Grand Beach I Development, LLC)3.40*
    
    Limited Liability Company Agreement of Diamond Resorts Grand Beach I Development, LLC (f/k/a
Sunterra Grand Beach I Development, LLC)3.41*
    
    Certificate of Formation of Diamond Resorts Grand Beach II Development, LLC, as amended (f/k/a
Sunterra Grand Beach II Development, LLC)3.42*
    
    Limited Liability Company Agreement of Diamond Resorts Grand Beach II Development, LLC (f/k/a
Sunterra Grand Beach II Development, LLC)3.43*
    
    Certificate of Formation of Diamond Resorts Greensprings Development, LLC, as amended (f/k/a
Sunterra Greensprings Development, LLC)




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##### Table of Contents



Exhibit
    
    Description3.44*
    
    Limited Liability Company Agreement of Diamond Resorts Greensprings Development, LLC (f/k/a
Sunterra Greensprings Development, LLC)3.45*
    
    Certificate of Formation of Diamond Resorts Hawaii Collection Development, LLC, as amended (f/k/a
Club Sunterra Development Hawaii, LLC; f/k/a Club Sunterra Development III, LLC; f/k/a Club
Sunterra Development California, LLC; f/k/a Club Sunterra MergerClub, LLC; f/k/a Sunterra East
Marketing, LLC)3.46*
    
    Amended and Restated Limited Liability Company Agreement of Diamond Resorts Hawaii Collection
Development, LLC (f/k/a Club Sunterra Development Hawaii, LLC; f/k/a Club Sunterra Development
III, LLC; f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra MergerClub, LLC;
f/k/a Sunterra East Marketing, LLC)3.47*
    
    Certificate of Formation of Diamond Resorts Hilton Head Development, LLC, as amended (f/k/a
Sunterra Hilton Head Development, LLC; f/k/a Sunterra Bent Creek Village Development, LLC)3.48*
    
    Limited Liability Company Agreement of Diamond Resorts Hilton Head Development, LLC (f/k/a
Sunterra Hilton Head Development, LLC; f/k/a Sunterra Bent Creek Village Development, LLC)3.49*
    
    Articles of Incorporation of Diamond Resorts International Club, Inc., as amended (f/k/a Club
Sunterra, Inc.)3.50*
    
    Bylaws of Diamond Resorts International Club, Inc. (f/k/a Club Sunterra, Inc.)3.51*
    
    Articles of Incorporation of Diamond Resorts International Marketing, Inc., as amended (f/k/a
Resort Marketing International, Inc.)3.52*
    
    Bylaws of Diamond Resorts International Marketing, Inc., as amended (f/k/a Resort Marketing
International, Inc.)3.53*
    
    Certificate of Formation of Diamond Resorts Las Vegas Development, LLC, as amended (f/k/a Sunterra
Las Vegas Development, LLC; f/k/a Sunterra Polynesian Isles Development, LLC)3.54*
    
    Limited Liability Company Agreement of Diamond Resorts Las Vegas Development, LLC (f/k/a Sunterra
Las Vegas Development, LLC; f/k/a Sunterra Polynesian Isles Development, LLC)3.55*
    
    Certificate of Incorporation of Diamond Resorts Management & Exchange Holding Company, as amended
(f/k/a Sunterra Management and Exchange Holding Company)3.56*
    
    Bylaws of Diamond Resorts Management & Exchange Holding Company (f/k/a Sunterra Management and
Exchange Holding Company)3.57*
    
    Articles of Incorporation of Diamond Resorts Management, Inc., as amended (f/k/a Sunterra Resort
Management, Inc.; f/k/a RPM Management, Inc.)3.58*
    
    Bylaws of Diamond Resorts Management, Inc. (f/k/a Sunterra Resort Management, Inc.; f/k/a RPM
Management, Inc.)3.59*
    
    Certificate of Formation of Diamond Resorts Mortgage Holdings, LLC, as amended (f/k/a Sunterra
Mortgage Holdings, LLC)3.60*
    
    Limited Liability Company Agreement of Diamond Resorts Mortgage Holdings, LLC (f/k/a Sunterra
Mortgage Holdings, LLC)3.61*
    
    Certificate of Formation of Diamond Resorts Palm Springs Development, LLC, as amended (f/k/a
Sunterra Palm Springs Development, LLC; f/k/a Sunterra North Marketing, LLC)3.62*
    
    Limited Liability Company Agreement of Diamond Resorts Palm Springs Development, LLC, as amended
(f/k/a Sunterra Palm Springs Development, LLC; f/k/a Sunterra North Marketing, LLC)3.63*
    
    Certificate of Formation of Diamond Resorts Poco Diablo Development, LLC, as amended (f/k/a
Sunterra Poco Diablo Development, LLC)3.64*
    
    Limited Liability Company Agreement of Diamond Resorts Poco Diablo Development, LLC, as amended
(f/k/a Sunterra Poco Diablo Development, LLC)3.65*
    
    Certificate of Formation of Diamond Resorts Poipu Development, LLC, as amended (f/k/a Sunterra
Poipu Development, LLC; f/k/a Sunterra Lake Tahoe Development, LLC)




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##### Table of Contents



Exhibit
    
    Description3.66*
    
    Limited Liability Company Agreement of Diamond Resorts Poipu Development, LLC (f/k/a Sunterra
Poipu Development, LLC; f/k/a Sunterra Lake Tahoe Development, LLC)3.67*
    
    Articles of Organization of Diamond Resorts Polo Development, LLC, as amended (f/k/a Polo Sunterra
Development, LLC)3.68*
    
    Operating Agreement of Diamond Resorts Polo Development, LLC (f/k/a Polo Sunterra Development, LLC)3.69*
    
    Certificate of Formation of Diamond Resorts Port Royal Development, LLC, as amended (f/k/a
Sunterra Port Royal Development, LLC)3.70*
    
    Limited Liability Company Agreement of Diamond Resorts Port Royal Development, LLC (f/k/a Sunterra
Port Royal Development, LLC)3.71*
    
    Certificate of Formation of Diamond Resorts Powhatan Development, LLC, as amended (f/k/a Sunterra
Powhatan Development, LLC)3.72*
    
    Limited Liability Company Agreement of Diamond Resorts Powhatan Development, LLC (f/k/a Sunterra
Powhatan Development, LLC)3.73*
    
    Certificate of Formation of Diamond Resorts Residual Assets Development, LLC, as amended (f/k/a
Sunterra Residual Assets Development, LLC)3.74*
    
    Limited Liability Company Agreement of Diamond Resorts Residual Assets Development, LLC (f/k/a
Sunterra Residual Assets Development, LLC)3.75*
    
    Certificate of Formation of Diamond Resorts Residual Assets Finance, LLC, as amended (f/k/a
Sunterra Residual Assets Finance, LLC)3.76*
    
    Limited Liability Company Agreement of Diamond Resorts Residual Assets Finance, LLC (f/k/a
Sunterra Residual Assets Finance, LLC)3.77*
    
    Certificate of Formation of Diamond Resorts Residual Assets M&E, LLC, as amended (f/k/a Sunterra
Residual Assets M&E, LLC)3.78*
    
    Limited Liability Company Agreement of Diamond Resorts Residual Assets M&E, LLC (f/k/a Sunterra
Residual Assets M&E, LLC)3.79*
    
    Certificate of Formation of Diamond Resorts Ridge on Sedona Development, LLC, as amended (f/k/a
Sunterra Ridge on Sedona Development, LLC)3.80*
    
    Limited Liability Company Agreement of Diamond Resorts Ridge on Sedona Development, LLC, as
amended (f/k/a Sunterra Ridge on Sedona Development, LLC)3.81*
    
    Certificate of Formation of Diamond Resorts Ridge Pointe Development, LLC, as amended (f/k/a
Sunterra Ridge Pointe Development, LLC)3.82*
    
    Limited Liability Company Agreement of Diamond Resorts Ridge Pointe Development, LLC (f/k/a
Sunterra Ridge Pointe Development, LLC)3.83*
    
    Certificate of Formation of Diamond Resorts San Luis Bay Development, LLC, as amended (f/k/a
Sunterra San Luis Bay Development, LLC)3.84*
    
    Limited Liability Company Agreement of Diamond Resorts San Luis Bay Development, LLC (f/k/a
Sunterra San Luis Bay Development, LLC)3.85*
    
    Certificate of Formation of Diamond Resorts Santa Fe Development, LLC, as amended (f/k/a Sunterra
Santa Fe Development, LLC)3.86*
    
    Limited Liability Company Agreement of Diamond Resorts Santa Fe Development, LLC (f/k/a Sunterra
Santa Fe Development, LLC)3.87*
    
    Certificate of Formation of Diamond Resorts Scottsdale Development, LLC, as amended (f/k/a
Sunterra Scottsdale Development, LLC; f/k/a Sunterra Poipu GP Development, LLC)3.88*
    
    Limited Liability Company Agreement of Diamond Resorts Scottsdale Development, LLC (f/k/a Sunterra
Scottsdale Development, LLC; f/k/a Sunterra Poipu GP Development, LLC)




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Exhibit
    
    Description3.89*
    
    Certificate of Formation of Diamond Resorts Sedona Springs Development, LLC, as amended (f/k/a
Sunterra Sedona Springs Development, LLC)3.90*
    
    Limited Liability Company Agreement of Diamond Resorts Sedona Springs Development, LLC, as amended
(f/k/a Sunterra Sedona Springs Development, LLC)3.91*
    
    Certificate of Formation of Diamond Resorts Sedona Summit Development, LLC, as amended (f/k/a
Sunterra Sedona Summit Development, LLC)3.92*
    
    Limited Liability Company Agreement of Diamond Resorts Sedona Summit Development, LLC, as amended
(f/k/a Sunterra Sedona Summit Development, LLC)3.93*
    
    Certificate of Formation of Diamond Resorts St. Croix Development, LLC, as amended (f/k/a Sunterra
St. Croix Development, LLC)3.94*
    
    Limited Liability Company Agreement of Diamond Resorts St. Croix Development, LLC (f/k/a Sunterra
St. Croix Development, LLC)3.95*
    
    Certificate of Formation of Diamond Resorts Steamboat Development, LLC, as amended (f/k/a Sunterra
Steamboat Development, LLC)3.96*
    
    Limited Liability Company Agreement of Diamond Resorts Steamboat Development, LLC (f/k/a Sunterra
Steamboat Development, LLC)3.97*
    
    Certificate of Formation of Diamond Resorts Tahoe Beach & Ski Development, LLC, as amended (f/k/a
Sunterra Tahoe Beach & Ski Development, LLC)3.98*
    
    Limited Liability Company Agreement of Diamond Resorts Tahoe Beach & Ski Development, LLC (f/k/a
Sunterra Tahoe Beach & Ski Development, LLC)3.99*
    
    Certificate of Formation of Diamond Resorts U.S. Collection Development, LLC, as amended (f/k/a
Club Sunterra Development, LLC; f/k/a Club Sunterra, LLC)3.100*
    
    First Amended and Restated Limited Liability Company Operating Agreement of Diamond Resorts U.S.
Collection Development, LLC (f/k/a Club Sunterra Development, LLC; Club Sunterra, LLC)3.101*
    
    Certificate of Formation of Diamond Resorts Villa Mirage Development, LLC, as amended (f/k/a
Sunterra Villa Mirage Development, LLC)3.102*
    
    Limited Liability Company Agreement of Diamond Resorts Villa Mirage Development, LLC, as amended
(f/k/a Sunterra Villa Mirage Development, LLC)3.103*
    
    Certificate of Formation of Diamond Resorts Villas of Sedona Development, LLC, as amended (f/k/a
Sunterra Villas of Sedona Development, LLC)3.104*
    
    Limited Liability Company Agreement of Diamond Resorts Villas of Sedona Development, LLC, as
amended (f/k/a Sunterra Villas of Sedona Development, LLC)3.105*
    
    Certificate of Formation of Diamond Resorts West Maui Development, LLC, as amended (f/k/a Sunterra
West Maui Development, LLC; f/k/a Sunterra West Marketing, LLC)3.106*
    
    Limited Liability Company Agreement of Diamond Resorts West Maui Development, LLC, as amended
(f/k/a Sunterra West Maui Development, LLC; f/k/a Sunterra West Marketing, LLC)3.107*
    
    Articles of Organization of Foster Shores, LLC3.108*
    
    Limited Liability Company Agreement of Foster Shores, LLC3.109*
    
    Articles of Incorporation of George Acquisition Subsidiary, Inc.3.110*
    
    Bylaws of George Acquisition Subsidiary, Inc.3.111*
    
    Certificate of Formation of Ginger Creek, LLC3.112*
    
    Limited Liability Company Agreement of Ginger Creek, LLC3.113*
    
    Certificate of Formation of Grand Escapes, LLC3.114*
    
    Limited Liability Company Agreement of Grand Escapes, LLC3.115*
    
    Certificate of Formation of International Timeshares Marketing, LLC, as amended




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##### Table of Contents



Exhibit
    
    Description3.116*
    
    Limited Liability Company Agreement of International Timeshares Marketing, LLC, as amended3.117*
    
    Articles of Organization of Lake Tahoe Resort Partners, LLC3.118*
    
    Operating Agreement of Lake Tahoe Resort Partners, LLC, as amended3.119*
    
    Articles of Incorporation of Mazatlan Development, Inc., as amended (f/k/a Mazatlan Villas, Inc.)3.120*
    
    Bylaws of Mazatlan Development, Inc. (f/k/a Mazatlan Villas, Inc.)3.121*
    
    Articles of Incorporation of MMG Development Corp.3.122*
    
    Bylaws of MMG Development Corp.3.123*
    
    Certificate of Limited Partnership of Poipu Resort Partners, L.P., as amended (f/k/a Pointe Resort
Partners)3.124*
    
    Amended and Restated Agreement of Limited Partnership of Poipu Resort Partners, L.P. (f/k/a Pointe
Resort Partners)3.125*
    
    Articles of Incorporation of Resort Management International, Inc.3.126*
    
    Bylaws of Resort Management International, Inc., as amended3.127*
    
    Articles of Incorporation of Resorts Development International, Inc.3.128*
    
    Bylaws of Resorts Development International, Inc.3.129*
    
    Articles of Organization of Walsham Lake, LLC3.130*
    
    Limited Liability Company Agreement of Walsham Lake, LLC3.131*
    
    Second Amended and Restated Certificate of Limited Partnership of West Maui Resort Partners, L.P.,
as amended (f/k/a West Maui Partners, L.P.)3.132*
    
    Second Amended and Restated Agreement of Limited Partnership of West Maui Resort Partners, L.P.
(f/k/a West Maui Partners, L.P.)4.1*
    
    Indenture, dated as of August 13, 2010, among Diamond Resorts Corporation, Diamond Resorts Parent,
LLC, Diamond Resorts Holdings, LLC, the subsidiary guarantors named therein and Wells Fargo Bank,
National Association, as trustee4.2*
    
    Registration Rights Agreement, dated as of August 13, 2010, among Diamond Resorts Corporation,
Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, the subsidiary guarantors named
therein, Credit Suisse Securities (USA) LLC, as representative of the initial purchasers, Banc of
America Securities LLC, as representative of the initial purchasers, and Guggenheim Securities,
LLC, as representative of the initial purchasers4.3*
    
    Security Agreement, dated August 13, 2010, among Diamond Resorts Parent, LLC, Diamond Resorts
Holdings, LLC, Diamond Resorts Corporation, the subsidiary guarantors named therein and Wells
Fargo Bank, National Association, as collateral agent4.4*
    
    Form of 12.00% Senior Secured Notes due 2018 (included in Exhibit 4.1)5.1**
    
    Opinion of Katten Muchin Rosenman LLP5.2*
    
    Opinion of Ballard Spahr LLP5.3**
    
    Opinion of Holland & Knight LLP5.4*
    
    Opinion of Imanaka Kudo & Fujimoto5.5*
    
    Opinion of Summers Compton Wells PC10.1*
    
    Second Amended and Restated Sale Agreement, dated as of August 31, 2010, by and between Diamond
Resorts Depositor 2008 LLC and Diamond Resorts Issuer 2008 LLC, and acknowledged and agreed to by
Diamond Resorts Finance Holding Company10.2*
    
    Second Amended and Restated Purchase Agreement, dated as of August 31, 2010, by and between
Diamond Resorts Finance Holding Company and Diamond Resorts Depositor 2008 LLC




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##### Table of Contents



Exhibit
    
    Description10.3*
    
    Third Amended and Restated Indenture, dated as of August 31, 2010, by and among Diamond Resorts
Issuer 2008 LLC, Diamond Resorts Financial Services, Inc., Wells Fargo Bank, National Association
and Credit Suisse AG, Cayman Islands Branch10.4**
    
    Indenture, dated as of October 1, 2009, by and among Diamond Resorts Owner Trust 2009-1, Diamond
Resorts Financial Services, Inc. and Wells Fargo Bank, National Association10.5*
    
    Note Purchase Agreement, dated as of October 9, 2009, by and between Diamond Resorts Owner Trust
2009-1 and Diamond Resorts Corporation, and confirmed and accepted by Credit Suisse Securities
(USA) LLC10.6*
    
    Third Amended and Restated Securityholders Agreement, dated as of February 18, 2011, by and among
Diamond Resorts Parent, LLC and the other parties named therein10.7*
    
    Amended and Restated Registration Rights Agreement, dated as of June 17, 2010, by and among
Diamond Resorts Parent, LLC and the other parties named therein, as amended10.8*
    
    Receivables Loan and Security Agreement, dated as of August 31, 2010, by and between Textron
Financial Corporation and ILX Acquisition, Inc.10.9*
    
    Inventory Loan and Security Agreement, dated as of August 31, 2010, by and between Textron
Financial Corporation and ILX Acquisition, Inc.10.10**
    
    Loan Sale and Servicing Agreement, dated as of April 30, 2010, by and among DRI Quorum 2010 LLC,
Quorum Federal Credit Union, Diamond Resorts Financial Services, Inc. and Wells Fargo Bank,
National Association10.11*
    
    Purchase Agreement, dated as of April 30, 2010, by and between Diamond Resorts Finance Holding
Company and DRI Quorum 2010 LLC10.12**
    
    Credit and Security Agreement, dated as of November 23, 2010, by and among Tempus Acquisition,
LLC, the lenders from time to time party thereto and Guggenheim Corporate Funding, LLC10.13*
    
    Pledge Agreement, dated as of November 23, 2010, by and between Tempus Holdings, LLC and
Guggenheim Corporate Funding, LLC, as administrative agent for the lenders identified therein10.14*
    
    Guaranty, dated as of November 23, 2010, by Diamond Resorts Corporation, in favor of Guggenheim
Corporate Funding, LLC, as administrative agent for the lenders identified therein10.15*
    
    Lease, dated as of January 16, 2008, by and between H/MX Health Management Solutions, Inc. and
Diamond Resorts Corporation10.16*
    
    Terms of Engagement Agreement for Individual Independent Contractor, dated as of June 2009, by and
between Praesumo Partners, LLC and Diamond Resorts Centralized Services USA, LLC, as amended by
the Extension Agreement, effective as of June 1, 2010, by and
between Praesumo Partners, LLC and Diamond Resorts Centralized
Services Company, successor to
Diamond Resorts Centralized Services USA, LLC, and the Amendment to Extension Agreement, dated as
of January 1, 2011, by and between Praesumo Partners, LLC and Diamond Resorts Centralized
Services Company, successor to Diamond Resorts Centralized Services
USA, LLC10.17*
    
    Terms of Additional Engagement Agreement for Individual Independent Contractor, dated as of
January 1, 2011, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services
Company10.18**
    
    Homeowner Association Oversight, Consulting and Executive Management Services Agreement, dated as
of December 31, 2010, by and between Diamond Resorts Corporation and Hospitality Management and
Consulting Service, L.L.C.12.1*
    
    Statement of Computation of Ratio of Earnings to Fixed Charges21.1*
    
    Subsidiaries of Diamond Resorts Parent, LLC23.1**
    
    Consent of BDO USA, LLP23.2**
    
    Consent of Katten Muchin Rosenman LLP (included as part of its opinion filed as Exhibit 5.1 hereto)23.3*
    
    Consent of Ballard Spahr LLP (included as part of its opinion filed as Exhibit 5.2 hereto)23.4**
    
    Consent of Holland & Knight LLP (included as part of its opinion filed as Exhibit 5.3 hereto)




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##### Table of Contents



Exhibit
    
    Description23.5*
    
    Consent of Imanaka Kudo & Fujimoto LLP (included as part of its opinion filed as Exhibit 5.4
hereto)23.6*
    
    Consent of Summers Compton Wells PC LLP (included as part of its opinion filed as Exhibit 5.5
hereto)24.1*
    
    Powers of Attorney25.1*
    
    Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wells Fargo Bank,
National Association, with respect to the Indenture governing the 12.00% Senior Secured Notes due
201899.1*
    
    Form of Letter of Transmittal99.2**
    
    Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees99.3*
    
    Form of Letter to Clients99.4*
    
    Form of Notice of Guaranteed Delivery
 
 *
    
    Previously filed**
    
    Filed herewith
    
    Management contract or compensatory plan, contract or arrangement required to be filed as an
exhibit to the registration statement




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Item 22. Undertakings.
 (a)
    
    Each of the undersigned registrants hereby undertakes:
 (1)
    
    To file, during any period in which offers or sales are being made, a post-effective amendment to this registration
statement:
 (i)
    
    to include any prospectus required by section 10(a)(3) of the Securities Act of 1933;(ii)
    
    to reflect in the prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the Calculation of Registration Fee
table in the effective registration statement; and(iii)
    
    to include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such
information in the registration statement.
 (2)
    
    that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof;(3)
    
    to remove from registration by means of a post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering;(4)
    
    that, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included
in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made
in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was
made in the registration statement or prospectus that was part of the registration statement or made in any such document
immediately prior to such date of first use; and(5)
    
    that, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the
initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
 (i)
    
    any preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
 II-19




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(ii)
    
    any free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned registrant;(iii)
    
    the portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided by
or on behalf of the undersigned registrant; and(iv)
    
    any other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
 (b)
    
    Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.(c)
    
    Each of the undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the request.(d)
    
    Each of the undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became
effective.
 II-20




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SIGNATURES
 
 
 th
 
 DIAMOND RESORTS PARENT, LLCBy:
    /s/ David F. PalmerDavid F. PalmerPresident and Chief Financial Officer 
  
 
 Name
    
    Title
    
    Date*
    
    Chairman of the Board and Chief Executive Officer
    
    June 20, 2011Stephen J. Cloobeck
    
    (Principal Executive Officer)/s/ David F. Palmer
    
    President, Chief Financial Officer
    
    June 20, 2011David F. Palmer
    
    (Principal Financial Officer) and Manager*
    
    Chief Accounting Officer (Principal Accounting Officer) of
    
    June 20, 2011Lisa M. Gann
    
    Diamond Resorts Corporation, the subsidiary of Diamond
Resorts Parent, LLC*
    
    Manager
    
    June 20, 2011Lowell D. Kraff*
    
    Manager
    
    June 20, 2011B. Scott Minerd*
    
    Manager
    
    June 20, 2011Zachary Warren* By:
    
    /s/ David F. PalmerDavid F. Palmer

Attorney-in-fact
 
 S-1




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##### Table of Contents



SIGNATURES
 
 
 th
 
 DIAMOND RESORTS HOLDINGS, LLCBy:
    /s/ David F. PalmerDavid F. PalmerPresident and Chief Financial Officer 
  
 
 Name
    
    Title
    
    Date*
    
    Chairman of the Board and Chief Executive Officer
    
    June 20, 2011Stephen J. Cloobeck
    
    (Principal Executive Officer) and Sole Manager/s/ David F. Palmer
    
    President and Chief Financial Officer
    
    June 20, 2011David F. Palmer
    
    (Principal Financial Officer)*
    
    Chief Accounting Officer (Principal Accounting Officer) of
    
    June 20, 2011Lisa M. Gann
    
    Diamond Resorts Corporation, the subsidiary of Diamond
Resorts Parent, LLC* By:
    
    /s/ David F. PalmerDavid F. Palmer

Attorney-in-fact
 
 S-2




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SIGNATURES
 
 
 th
 
 
 DIAMOND RESORTS CORPORATIONBy:
    /s/ David F. PalmerDavid F. PalmerPresident and  Chief Financial Officer 
 
  
 
 Name
    
    Title
    
    Date*
    
    Chairman of the Board and Chief Executive Officer
(Principal Executive Officer) and Sole Director
    
    June 20, 2011Stephen J. Cloobeck/s/ David F. Palmer

David F. Palmer
    
    President and Chief Financial Officer
(Principal Financial Officer)
    
    June 20, 2011*

Lisa M. Gann
    
    Chief Accounting Officer
(Principal Accounting Officer)
    
    June 20, 2011
 *
    By:
    /s/ David F. PalmerDavid F. Palmer
Attorney-in-fact 
 S-3




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##### Table of Contents



SIGNATURES
 
 
 th
 
 REGISTRANTS (as listed on the attached Schedule I of Subsidiary Registrants, the Schedule I Registrants)By:
    *Stephen J. CloobeckChief Executive Officer 
  
 
 Name
    
    Title
    
    Date*

Stephen J. Cloobeck
    
    Chief Executive Officer (Principal Executive Officer) of each of the Schedule I Registrants,
and Sole Manager or Sole Director, as applicable, of each of the Schedule I Registrants
    
    June 20, 2011/s/ David F. Palmer

David F. Palmer
    
    Chief Financial Officer (Principal Financial Officer) of Diamond Resorts
Corporation, the indirect parent of each of the Schedule I Registrants
    
    June 20, 2011*

Lisa M. Gann
    
    Chief Accounting Officer (Principal Accounting Officer) of Diamond Resorts Corporation,
the indirect parent of each of the Schedule I Registrants
    
    June 20, 2011
 *
    By:
    /s/ David F. PalmerDavid F. PalmerAttorney-in-fact 
 S-4




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##### Table of Contents



SIGNATURES
 th
 
 
 DIAMOND RESORTS FINANCIAL SERVICES, INC.By:
    *David WomerPresident 
 
 
 
  
 
 Name
    
    Title
    
    Date*

David Womer
    
President (Principal Executive Officer) and Sole Director
    
    June 20, 2011/s/ David F. Palmer

David F. Palmer
    
    Chief Financial Officer (Principal Financial Officer) of
Diamond Resorts Corporation, the indirect parent of
Diamond Resorts Financial Services, Inc.
    
    June 20, 2011*

Lisa M. Gann
    
    Chief Accounting Officer (Principal Accounting Officer)
of Diamond Resorts Corporation, the indirect parent of
Diamond Resorts Financial Services, Inc.
    
    June 20, 2011
 *
    By:
    /s/ David F. PalmerDavid F. PalmerAttorney-in-fact 
 S-5




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##### Table of Contents



SIGNATURES
 
 
 th
 
 POIPU RESORT PARTNERS, L.P.By:
    Diamond Resorts Poipu Development, LLC, its general partnerBy:
    *Stephen J. CloobeckChief Executive Officer 
  
 
 Name
    
    Title
    
    Date*
    
    Chief Executive
Officer (Principal
Executive Officer)
of Diamond Resorts
Poipu Development,
LLC, the general
partner of Poipu
Resort Partners,
L.P.
    
    June 20, 2011Stephen J. Cloobeck/s/ David F. Palmer

David F. Palmer
    
    Chief Financial
Officer (Principal
Financial Officer)
of Diamond Resorts
Poipu Development,
LLC, the general
partner of Poipu
Resort Partners,
L.P.
    
    June 20, 2011*

Lisa M. Gann
    
    Chief Accounting
Officer (Principal
Accounting Officer)
of Diamond Resorts
Poipu Development,
LLC, the general
partner of Poipu
Resort Partners,
L.P.
    
    June 20, 2011
 *
    By:
    /s/ David F. PalmerDavid F. Palmer
Attorney-in-fact 
 S-6




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##### Table of Contents



SIGNATURES
 
 
 th
 
 WEST MAUI RESORT PARTNERS, L.P.By:
    Diamond Resorts West Maui Development, LLC, its general partnerBy:
    *Stephen J. CloobeckChief Executive Officer 
  
 
 Name
    
    Title
    
    Date*

Stephen J. Cloobeck
    
    Chief Executive
Officer (Principal
Executive Officer)
of Diamond Resorts
West Maui
Development, LLC,
the general partner
of West Maui
Resort Partners,
L.P.
    
    June 20, 2011/s/ David F. Palmer

David F. Palmer
    
    Chief Financial
Officer (Principal
Financial Officer)
of Diamond Resorts
West Maui
Development, LLC,
the general partner
of West Maui
Resort Partners,
L.P.
    
    June 20, 2011*

Lisa M. Gann
    
    Chief Accounting
Officer (Principal
Accounting Officer)
of Diamond Resorts
West Maui
Development, LLC,
the general partner
of West Maui
Resort Partners,
L.P.
    
    June 20, 2011
 *
    By:
    /s/ David F. PalmerDavid F. PalmerAttorney-in-fact 
 S-7




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SCHEDULE 1
  
 
                                   
 S-8




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##### Table of Contents



S-9




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EXHIBIT INDEX
 
 Exhibit
    
    Description2.1*
    
    Asset Purchase Agreement, dated as of August 31, 2010, by and between ILX Acquisition, Inc. and
ILX Resorts Incorporated and certain related entities identified therein. (Certain schedules were
omitted and registrant agrees to furnish supplementally a copy of such omitted schedules to the
Commission upon request)2.2*
    
    Securities Purchase Agreement, dated as of June 17, 2010, by and between Diamond Resorts Parent,
LLC and DRP Holdco, LLC (Certain schedules were omitted and registrant agrees to furnish
supplementally a copy of such omitted schedules to the Commission upon request)2.3*
    
    Securities Purchase Agreement, dated as of February 18, 2011, by and between Diamond Resorts
Parent, LLC and the purchasers named therein (Certain schedules were omitted and registrant agrees
to furnish supplementally a copy of such omitted schedules to the Commission upon request)3.1*
    
    Articles of Incorporation of Diamond Resorts Corporation, as amended (f/k/a Sunterra Corporation;
f/k/a Signature Resorts, Inc.; f/k/a KGK Resorts, Inc.)3.2**
    
    Second Amended and Restated Bylaws of Diamond Resorts Corporation, (f/k/a Sunterra
Corporation; f/k/a Signature Resorts, Inc.; f/k/a KGK Resorts, Inc.)3.3*
    
    Articles of Organization of Diamond Resorts Parent, LLC3.4*
    
    Third Amended and Restated Operating Agreement of Diamond Resorts Parent, LLC3.5*
    
    Articles of Organization of Diamond Resorts Holdings, LLC, as amended (f/k/a DR Resort Holdings,
LLC)3.6*
    
    Operating Agreement of Diamond Resorts Holdings, LLC (f/k/a DR Resort Holdings, LLC)3.7*
    
    Certificate of Incorporation of AKGI-St. Maarten N.V.3.8*
    
    Bylaws of AKGI-St. Maarten N.V.3.9*
    
    Articles of Organization of Chestnut Farms, LLC3.10*
    
    Limited Liability Company Agreement of Chestnut Farms, LLC3.11*
    
    Certificate of Formation of Cumberland Gate, LLC3.12*
    
    Limited Liability Company Agreement of Cumberland Gate, LLC3.13*
    
    Certificate of Formation of Diamond Resorts California Collection Development, LLC, as amended
(f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra Development II, LLC; f/k/a
Club Sunterra Development St. Maarten, LLC; f/k/a Sunterra Texas Development, LLC)3.14*
    
    First Amended and Restated Limited Liability Company Operating Agreement of Diamond Resorts
California Collection Development, LLC (f/k/a Club Sunterra Development California, LLC; f/k/a
Club Sunterra Development II, LLC; f/k/a Club Sunterra Development St. Maarten, LLC; f/k/a
Sunterra Texas Development, LLC)3.15*
    
    Certificate of Formation of Diamond Resorts Citrus Share Holding, LLC, as amended (f/k/a Sunterra
Citrus Share Holding, LLC; f/k/a Sunterra South Marketing, LLC)3.16*
    
    Limited Liability Company Agreement of Diamond Resorts Citrus Share Holding, LLC, as amended
(f/k/a Sunterra Citrus Share Holding, LLC; f/k/a Sunterra South Marketing, LLC)3.17*
    
    Certificate of Formation of Diamond Resorts Coral Sands Development, LLC, as amended (f/k/a
Sunterra Coral Sands Development, LLC)3.18*
    
    Limited Liability Company Agreement of Diamond Resorts Coral Sands Development, LLC (f/k/a
Sunterra Coral Sands Development, LLC)3.19*
    
    Certificate of Formation of Diamond Resorts Cypress Pointe I Development, LLC, as amended (f/k/a
Sunterra Cypress Pointe I Development, LLC)3.20*
    
    Limited Liability Company Agreement of Diamond Resorts Cypress Pointe I Development, LLC (f/k/a
Sunterra Cypress Pointe I Development, LLC)




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##### Table of Contents



Exhibit
    
    Description3.21*
    
    Certificate of Formation of Diamond Resorts Cypress Pointe II Development, LLC, as amended (f/k/a
Sunterra Cypress Pointe II Development, LLC)3.22*
    
    Limited Liability Company Agreement of Diamond Resorts Cypress Pointe II Development, LLC (f/k/a
Sunterra Cypress Pointe II Development, LLC)3.23*
    
    Certificate of Formation of Diamond Resorts Cypress Pointe III Development, LLC, as amended (f/k/a
Sunterra Cypress Pointe III Development, LLC)3.24*
    
    Limited Liability Company Agreement of Diamond Resorts Cypress Pointe III Development, LLC (f/k/a
Sunterra Cypress Pointe III Development, LLC)3.25*
    
    Certificate of Formation of Diamond Resorts Daytona Development, LLC, as amended (f/k/a Sunterra
Daytona Development, LLC; f/k/a Sunterra Bent Creek Golf Course Development, LLC)3.26*
    
    Limited Liability Company Agreement of Diamond Resorts Daytona Development, LLC (f/k/a Sunterra
Daytona Development, LLC; f/k/a Sunterra Bent Creek Golf Course Development, LLC)3.27*
    
    Certificate of Incorporation of Diamond Resorts Centralized Services Company, as amended (f/k/a
Sunterra Centralized Services Company)3.28*
    
    Bylaws of Diamond Resorts Centralized Services Company (f/k/a Sunterra Centralized Services
Company)3.29*
    
    Certificate of Incorporation of Diamond Resorts Developer and Sales Holding Company, as amended
(f/k/a Sunterra Developer and Sales Holding Company; f/k/a Avcom International, Inc.; f/k/a
American Vacation Company, Inc.)3.30*
    
    Bylaws of Diamond Resorts Developer and Sales Holding Company (f/k/a Sunterra Developer and Sales
Holding Company; f/k/a Avcom International, Inc.; f/k/a American Vacation Company, Inc.)3.31*
    
    Certificate of Formation of Diamond Resorts Epic Mortgage Holdings, LLC, as amended (f/k/a
Sunterra Epic Mortgage Holdings, LLC; f/k/a Sunterra KGK Partners Finance, LLC)3.32*
    
    Limited Liability Company Agreement of Diamond Resorts Epic Mortgage Holdings, LLC (f/k/a Sunterra
Epic Mortgage Holdings, LLC; f/k/a Sunterra KGK Partners Finance, LLC)3.33*
    
    Certificate of Formation of Diamond Resorts Fall Creek Development, LLC, as amended (f/k/a
Sunterra Fall Creek Development, LLC)3.34*
    
    Limited Liability Company Agreement of Diamond Resorts Fall Creek Development, LLC (f/k/a
Sunterra Fall Creek Development, LLC)3.35*
    
    Certificate of Incorporation of Diamond Resorts Finance Holding Company, as amended (f/k/a
Sunterra Finance Holding Company)3.36*
    
    Bylaws of Diamond Resorts Finance Holding Company (f/k/a Sunterra Finance Holding Company)3.37*
    
    Articles of Incorporation of Diamond Resorts Financial Services, Inc., as amended (f/k/a Sunterra
Financial Services, Inc.)3.38*
    
    Bylaws of Diamond Resorts Financial Services, Inc. (f/k/a Sunterra Financial Services, Inc.)3.39*
    
    Certificate of Formation of Diamond Resorts Grand Beach I Development, LLC, as amended (f/k/a
Sunterra Grand Beach I Development, LLC)3.40*
    
    Limited Liability Company Agreement of Diamond Resorts Grand Beach I Development, LLC (f/k/a
Sunterra Grand Beach I Development, LLC)3.41*
    
    Certificate of Formation of Diamond Resorts Grand Beach II Development, LLC, as amended (f/k/a
Sunterra Grand Beach II Development, LLC)3.42*
    
    Limited Liability Company Agreement of Diamond Resorts Grand Beach II Development, LLC (f/k/a
Sunterra Grand Beach II Development, LLC)3.43*
    
    Certificate of Formation of Diamond Resorts Greensprings Development, LLC, as amended (f/k/a
Sunterra Greensprings Development, LLC)




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##### Table of Contents



Exhibit
    
    Description3.44*
    
    Limited Liability Company Agreement of Diamond Resorts Greensprings Development, LLC (f/k/a
Sunterra Greensprings Development, LLC)3.45*
    
    Certificate of Formation of Diamond Resorts Hawaii Collection Development, LLC, as amended (f/k/a
Club Sunterra Development Hawaii, LLC; f/k/a Club Sunterra Development III, LLC; f/k/a Club
Sunterra Development California, LLC; f/k/a Club Sunterra MergerClub, LLC; f/k/a Sunterra East
Marketing, LLC)3.46*
    
    Amended and Restated Limited Liability Company Agreement of Diamond Resorts Hawaii Collection
Development, LLC (f/k/a Club Sunterra Development Hawaii, LLC; f/k/a Club Sunterra Development
III, LLC; f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra MergerClub, LLC;
f/k/a Sunterra East Marketing, LLC)3.47*
    
    Certificate of Formation of Diamond Resorts Hilton Head Development, LLC, as amended (f/k/a
Sunterra Hilton Head Development, LLC; f/k/a Sunterra Bent Creek Village Development, LLC)3.48*
    
    Limited Liability Company Agreement of Diamond Resorts Hilton Head Development, LLC (f/k/a
Sunterra Hilton Head Development, LLC; f/k/a Sunterra Bent Creek Village Development, LLC)3.49*
    
    Articles of Incorporation of Diamond Resorts International Club, Inc., as amended (f/k/a Club
Sunterra, Inc.)3.50*
    
    Bylaws of Diamond Resorts International Club, Inc. (f/k/a Club Sunterra, Inc.)3.51*
    
    Articles of Incorporation of Diamond Resorts International Marketing, Inc., as amended (f/k/a
Resort Marketing International, Inc.)3.52*
    
    Bylaws of Diamond Resorts International Marketing, Inc., as amended (f/k/a Resort Marketing
International, Inc.)3.53*
    
    Certificate of Formation of Diamond Resorts Las Vegas Development, LLC, as amended (f/k/a Sunterra
Las Vegas Development, LLC; f/k/a Sunterra Polynesian Isles Development, LLC)3.54*
    
    Limited Liability Company Agreement of Diamond Resorts Las Vegas Development, LLC (f/k/a Sunterra
Las Vegas Development, LLC; f/k/a Sunterra Polynesian Isles Development, LLC)3.55*
    
    Certificate of Incorporation of Diamond Resorts Management & Exchange Holding Company, as amended
(f/k/a Sunterra Management and Exchange Holding Company)3.56*
    
    Bylaws of Diamond Resorts Management & Exchange Holding Company (f/k/a Sunterra Management and
Exchange Holding Company)3.57*
    
    Articles of Incorporation of Diamond Resorts Management, Inc., as amended (f/k/a Sunterra Resort
Management, Inc.; f/k/a RPM Management, Inc.)3.58*
    
    Bylaws of Diamond Resorts Management, Inc. (f/k/a Sunterra Resort Management, Inc.; f/k/a RPM
Management, Inc.)3.59*
    
    Certificate of Formation of Diamond Resorts Mortgage Holdings, LLC, as amended (f/k/a Sunterra
Mortgage Holdings, LLC)3.60*
    
    Limited Liability Company Agreement of Diamond Resorts Mortgage Holdings, LLC (f/k/a Sunterra
Mortgage Holdings, LLC)3.61*
    
    Certificate of Formation of Diamond Resorts Palm Springs Development, LLC, as amended (f/k/a
Sunterra Palm Springs Development, LLC; f/k/a Sunterra North Marketing, LLC)3.62*
    
    Limited Liability Company Agreement of Diamond Resorts Palm Springs Development, LLC, as amended
(f/k/a Sunterra Palm Springs Development, LLC; f/k/a Sunterra North Marketing, LLC)3.63*
    
    Certificate of Formation of Diamond Resorts Poco Diablo Development, LLC, as amended (f/k/a
Sunterra Poco Diablo Development, LLC)3.64*
    
    Limited Liability Company Agreement of Diamond Resorts Poco Diablo Development, LLC, as amended
(f/k/a Sunterra Poco Diablo Development, LLC)3.65*
    
    Certificate of Formation of Diamond Resorts Poipu Development, LLC, as amended (f/k/a Sunterra
Poipu Development, LLC; f/k/a Sunterra Lake Tahoe Development, LLC)




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##### Table of Contents



Exhibit
    
    Description3.66*
    
    Limited Liability Company Agreement of Diamond Resorts Poipu Development, LLC (f/k/a Sunterra
Poipu Development, LLC; f/k/a Sunterra Lake Tahoe Development, LLC)3.67*
    
    Articles of Organization of Diamond Resorts Polo Development, LLC, as amended (f/k/a Polo Sunterra
Development, LLC)3.68*
    
    Operating Agreement of Diamond Resorts Polo Development, LLC (f/k/a Polo Sunterra Development, LLC)3.69*
    
    Certificate of Formation of Diamond Resorts Port Royal Development, LLC, as amended (f/k/a
Sunterra Port Royal Development, LLC)3.70*
    
    Limited Liability Company Agreement of Diamond Resorts Port Royal Development, LLC (f/k/a Sunterra
Port Royal Development, LLC)3.71*
    
    Certificate of Formation of Diamond Resorts Powhatan Development, LLC, as amended (f/k/a Sunterra
Powhatan Development, LLC)3.72*
    
    Limited Liability Company Agreement of Diamond Resorts Powhatan Development, LLC (f/k/a Sunterra
Powhatan Development, LLC)3.73*
    
    Certificate of Formation of Diamond Resorts Residual Assets Development, LLC, as amended (f/k/a
Sunterra Residual Assets Development, LLC)3.74*
    
    Limited Liability Company Agreement of Diamond Resorts Residual Assets Development, LLC (f/k/a
Sunterra Residual Assets Development, LLC)3.75*
    
    Certificate of Formation of Diamond Resorts Residual Assets Finance, LLC, as amended (f/k/a
Sunterra Residual Assets Finance, LLC)3.76*
    
    Limited Liability Company Agreement of Diamond Resorts Residual Assets Finance, LLC (f/k/a
Sunterra Residual Assets Finance, LLC)3.77*
    
    Certificate of Formation of Diamond Resorts Residual Assets M&E, LLC, as amended (f/k/a Sunterra
Residual Assets M&E, LLC)3.78*
    
    Limited Liability Company Agreement of Diamond Resorts Residual Assets M&E, LLC (f/k/a Sunterra
Residual Assets M&E, LLC)3.79*
    
    Certificate of Formation of Diamond Resorts Ridge on Sedona Development, LLC, as amended (f/k/a
Sunterra Ridge on Sedona Development, LLC)3.80*
    
    Limited Liability Company Agreement of Diamond Resorts Ridge on Sedona Development, LLC, as
amended (f/k/a Sunterra Ridge on Sedona Development, LLC)3.81*
    
    Certificate of Formation of Diamond Resorts Ridge Pointe Development, LLC, as amended (f/k/a
Sunterra Ridge Pointe Development, LLC)3.82*
    
    Limited Liability Company Agreement of Diamond Resorts Ridge Pointe Development, LLC (f/k/a
Sunterra Ridge Pointe Development, LLC)3.83*
    
    Certificate of Formation of Diamond Resorts San Luis Bay Development, LLC, as amended (f/k/a
Sunterra San Luis Bay Development, LLC)3.84*
    
    Limited Liability Company Agreement of Diamond Resorts San Luis Bay Development, LLC (f/k/a
Sunterra San Luis Bay Development, LLC)3.85*
    
    Certificate of Formation of Diamond Resorts Santa Fe Development, LLC, as amended (f/k/a Sunterra
Santa Fe Development, LLC)3.86*
    
    Limited Liability Company Agreement of Diamond Resorts Santa Fe Development, LLC (f/k/a Sunterra
Santa Fe Development, LLC)3.87*
    
    Certificate of Formation of Diamond Resorts Scottsdale Development, LLC, as amended (f/k/a
Sunterra Scottsdale Development, LLC; f/k/a Sunterra Poipu GP Development, LLC)3.88*
    
    Limited Liability Company Agreement of Diamond Resorts Scottsdale Development, LLC (f/k/a Sunterra
Scottsdale Development, LLC; f/k/a Sunterra Poipu GP Development, LLC)




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Exhibit
    
    Description3.89*
    
    Certificate of Formation of Diamond Resorts Sedona Springs Development, LLC, as amended (f/k/a
Sunterra Sedona Springs Development, LLC)3.90*
    
    Limited Liability Company Agreement of Diamond Resorts Sedona Springs Development, LLC, as amended
(f/k/a Sunterra Sedona Springs Development, LLC)3.91*
    
    Certificate of Formation of Diamond Resorts Sedona Summit Development, LLC, as amended (f/k/a
Sunterra Sedona Summit Development, LLC)3.92*
    
    Limited Liability Company Agreement of Diamond Resorts Sedona Summit Development, LLC, as amended
(f/k/a Sunterra Sedona Summit Development, LLC)3.93*
    
    Certificate of Formation of Diamond Resorts St. Croix Development, LLC, as amended (f/k/a Sunterra
St. Croix Development, LLC)3.94*
    
    Limited Liability Company Agreement of Diamond Resorts St. Croix Development, LLC (f/k/a Sunterra
St. Croix Development, LLC)3.95*
    
    Certificate of Formation of Diamond Resorts Steamboat Development, LLC, as amended (f/k/a Sunterra
Steamboat Development, LLC)3.96*
    
    Limited Liability Company Agreement of Diamond Resorts Steamboat Development, LLC (f/k/a Sunterra
Steamboat Development, LLC)3.97*
    
    Certificate of Formation of Diamond Resorts Tahoe Beach & Ski Development, LLC, as amended (f/k/a
Sunterra Tahoe Beach & Ski Development, LLC)3.98*
    
    Limited Liability Company Agreement of Diamond Resorts Tahoe Beach & Ski Development, LLC (f/k/a
Sunterra Tahoe Beach & Ski Development, LLC)3.99*
    
    Certificate of Formation of Diamond Resorts U.S. Collection Development, LLC, as amended (f/k/a
Club Sunterra Development, LLC; f/k/a Club Sunterra, LLC)3.100*
    
    First Amended and Restated Limited Liability Company Operating Agreement of Diamond Resorts U.S.
Collection Development, LLC (f/k/a Club Sunterra Development, LLC; Club Sunterra, LLC)3.101*
    
    Certificate of Formation of Diamond Resorts Villa Mirage Development, LLC, as amended (f/k/a
Sunterra Villa Mirage Development, LLC)3.102*
    
    Limited Liability Company Agreement of Diamond Resorts Villa Mirage Development, LLC, as amended
(f/k/a Sunterra Villa Mirage Development, LLC)3.103*
    
    Certificate of Formation of Diamond Resorts Villas of Sedona Development, LLC, as amended (f/k/a
Sunterra Villas of Sedona Development, LLC)3.104*
    
    Limited Liability Company Agreement of Diamond Resorts Villas of Sedona Development, LLC, as
amended (f/k/a Sunterra Villas of Sedona Development, LLC)3.105*
    
    Certificate of Formation of Diamond Resorts West Maui Development, LLC, as amended (f/k/a Sunterra
West Maui Development, LLC; f/k/a Sunterra West Marketing, LLC)3.106*
    
    Limited Liability Company Agreement of Diamond Resorts West Maui Development, LLC, as amended
(f/k/a Sunterra West Maui Development, LLC; f/k/a Sunterra West Marketing, LLC)3.107*
    
    Articles of Organization of Foster Shores, LLC3.108*
    
    Limited Liability Company Agreement of Foster Shores, LLC3.109*
    
    Articles of Incorporation of George Acquisition Subsidiary, Inc.3.110*
    
    Bylaws of George Acquisition Subsidiary, Inc.3.111*
    
    Certificate of Formation of Ginger Creek, LLC3.112*
    
    Limited Liability Company Agreement of Ginger Creek, LLC3.113*
    
    Certificate of Formation of Grand Escapes, LLC3.114*
    
    Limited Liability Company Agreement of Grand Escapes, LLC3.115*
    
    Certificate of Formation of International Timeshares Marketing, LLC, as amended




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Exhibit
    
    Description3.116*
    
    Limited Liability Company Agreement of International Timeshares Marketing, LLC, as amended3.117*
    
    Articles of Organization of Lake Tahoe Resort Partners, LLC3.118*
    
    Operating Agreement of Lake Tahoe Resort Partners, LLC, as amended3.119*
    
    Articles of Incorporation of Mazatlan Development, Inc., as amended (f/k/a Mazatlan Villas, Inc.)3.120*
    
    Bylaws of Mazatlan Development, Inc. (f/k/a Mazatlan Villas, Inc.)3.121*
    
    Articles of Incorporation of MMG Development Corp.3.122*
    
    Bylaws of MMG Development Corp.3.123*
    
    Certificate of Limited Partnership of Poipu Resort Partners, L.P., as amended (f/k/a Pointe Resort
Partners)3.124*
    
    Amended and Restated Agreement of Limited Partnership of Poipu Resort Partners, L.P. (f/k/a Pointe
Resort Partners)3.125*
    
    Articles of Incorporation of Resort Management International, Inc.3.126*
    
    Bylaws of Resort Management International, Inc., as amended3.127*
    
    Articles of Incorporation of Resorts Development International, Inc.3.128*
    
    Bylaws of Resorts Development International, Inc.3.129*
    
    Articles of Organization of Walsham Lake, LLC3.130*
    
    Limited Liability Company Agreement of Walsham Lake, LLC3.131*
    
    Second Amended and Restated Certificate of Limited Partnership of West Maui Resort Partners, L.P.,
as amended (f/k/a West Maui Partners, L.P.)3.132*
    
    Second Amended and Restated Agreement of Limited Partnership of West Maui Resort Partners, L.P.
(f/k/a West Maui Partners, L.P.)4.1*
    
    Indenture, dated as of August 13, 2010, among Diamond Resorts Corporation, Diamond Resorts Parent,
LLC, Diamond Resorts Holdings, LLC, the subsidiary guarantors named therein and Wells Fargo Bank,
National Association, as trustee4.2*
    
    Registration Rights Agreement, dated as of August 13, 2010, among Diamond Resorts Corporation,
Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, the subsidiary guarantors named
therein, Credit Suisse Securities (USA) LLC, as representative of the initial purchasers, Banc of
America Securities LLC, as representative of the initial purchasers, and Guggenheim Securities,
LLC, as representative of the initial purchasers4.3*
    
    Security Agreement, dated August 13, 2010, among Diamond Resorts Parent, LLC, Diamond Resorts
Holdings, LLC, Diamond Resorts Corporation, the subsidiary guarantors named therein and Wells
Fargo Bank, National Association, as collateral agent4.4*
    
    Form of 12.00% Senior Secured Notes due 2018 (included in Exhibit 4.1)5.1**
    
    Opinion of Katten Muchin Rosenman LLP5.2*
    
    Opinion of Ballard Spahr LLP5.3**
    
    Opinion of Holland & Knight LLP5.4*
    
    Opinion of Imanaka Kudo & Fujimoto5.5*
    
    Opinion of Summers Compton Wells PC10.1*
    
    Second Amended and Restated Sale Agreement, dated as of August 31, 2010, by and between Diamond
Resorts Depositor 2008 LLC and Diamond Resorts Issuer 2008 LLC, and acknowledged and agreed to by
Diamond Resorts Finance Holding Company10.2*
    
    Second Amended and Restated Purchase Agreement, dated as of August 31, 2010, by and between
Diamond Resorts Finance Holding Company and Diamond Resorts Depositor 2008 LLC




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##### Table of Contents



Exhibit
    
    Description10.3*
    
    Third Amended and Restated Indenture, dated as of August 31, 2010, by and among Diamond Resorts
Issuer 2008 LLC, Diamond Resorts Financial Services, Inc., Wells Fargo Bank, National Association
and Credit Suisse AG, Cayman Islands Branch10.4**
    
    Indenture, dated as of October 1, 2009, by and among Diamond Resorts Owner Trust 2009-1, Diamond
Resorts Financial Services, Inc. and Wells Fargo Bank, National Association10.5*
    
    Note Purchase Agreement, dated as of October 9, 2009, by and between Diamond Resorts Owner Trust
2009-1 and Diamond Resorts Corporation, and confirmed and accepted by Credit Suisse Securities
(USA) LLC10.6*
    
    Third Amended and Restated Securityholders Agreement, dated as of February 18, 2011, by and among
Diamond Resorts Parent, LLC and the other parties named therein10.7*
    
    Amended and Restated Registration Rights Agreement, dated as of June 17, 2010, by and among
Diamond Resorts Parent, LLC and the other parties named therein, as amended10.8*
    
    Receivables Loan and Security Agreement, dated as of August 31, 2010, by and between Textron
Financial Corporation and ILX Acquisition, Inc.10.9*
    
    Inventory Loan and Security Agreement, dated as of August 31, 2010, by and between Textron
Financial Corporation and ILX Acquisition, Inc.10.10**
    
    Loan Sale and Servicing Agreement, dated as of April 30, 2010, by and among DRI Quorum 2010 LLC,
Quorum Federal Credit Union, Diamond Resorts Financial Services, Inc. and Wells Fargo Bank,
National Association10.11*
    
    Purchase Agreement, dated as of April 30, 2010, by and between Diamond Resorts Finance Holding
Company and DRI Quorum 2010 LLC10.12**
    
    Credit and Security Agreement, dated as of November 23, 2010, by and among Tempus Acquisition,
LLC, the lenders from time to time party thereto and Guggenheim Corporate Funding, LLC10.13*
    
    Pledge Agreement, dated as of November 23, 2010, by and between Tempus Holdings, LLC and
Guggenheim Corporate Funding, LLC, as administrative agent for the lenders identified therein10.14*
    
    Guaranty, dated as of November 23, 2010, by Diamond Resorts Corporation, in favor of Guggenheim
Corporate Funding, LLC, as administrative agent for the lenders identified therein10.15*
    
    Lease, dated as of January 16, 2008, by and between H/MX Health Management Solutions, Inc. and
Diamond Resorts Corporation10.16*
    
    Terms of Engagement Agreement for Individual Independent Contractor, dated as of June 2009, by and
between Praesumo Partners, LLC and Diamond Resorts Centralized Services USA, LLC, as amended by
the Extension Agreement, effective as of June 1, 2010, by and
between Praesumo Partners, LLC and Diamond Resorts Centralized
Services Company, successor to
Diamond Resorts Centralized Services USA, LLC, and the Amendment to Extension Agreement, dated as
of January 1, 2011, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services
Company, successor to Diamond Resorts Centralized Services USA, LLC10.17*
    
    Terms of Additional Engagement Agreement for Individual Independent Contractor, dated as of
January 1, 2011, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services
Company10.18**
    
    Homeowner Association Oversight, Consulting and Executive Management Services Agreement, dated as
of December 31, 2010, by and between Diamond Resorts Corporation and Hospitality Management and
Consulting Service, L.L.C.12.1*
    
    Statement of Computation of Ratio of Earnings to Fixed Charges21.1*
    
    Subsidiaries of Diamond Resorts Parent, LLC23.1**
    
    Consent of BDO USA, LLP23.2**
    
    Consent of Katten Muchin Rosenman LLP (included as part of its opinion filed as Exhibit 5.1 hereto)23.3*
    
    Consent of Ballard Spahr LLP (included as part of its opinion filed as Exhibit 5.2 hereto)23.4**
    
    Consent of Holland & Knight LLP (included as part of its opinion filed as Exhibit 5.3 hereto)




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##### Table of Contents



Exhibit
    
    Description23.5*
    
    Consent of Imanaka Kudo & Fujimoto LLP (included as part of its opinion filed as Exhibit 5.4
hereto)23.6*
    
    Consent of Summers Compton Wells PC LLP (included as part of its opinion filed as Exhibit 5.5
hereto)24.1*
    
    Powers of Attorney25.1*
    
    Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wells Fargo Bank,
National Association, with respect to the Indenture governing the 12.00% Senior Secured Notes due
201899.1*
    
    Form of Letter of Transmittal99.2**
    
    Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees99.3*
    
    Form of Letter to Clients99.4*
    
    Form of Notice of Guaranteed Delivery
 
 *
    
    Previously filed**
    
    Filed herewith
    
    Management contract or compensatory plan, contract or arrangement required to be filed as an
exhibit to the registration statement