Consolidated Financial Statements and  Report of Independent Auditors   DLV/HHPI Summerlin, LLC     December 31, 2018
 Contents                                                                       Page  Report of Independent Auditors                                        1  Consolidated balance sheets at December 31, 2018 and 2017             3  Consolidated statements of operations for the years ended December 31, 2018,        2017 and 2016                                                       4  Consolidated statements of changes in members’ equity for the years ended     December 31, 2018, 2017 and 2016                                    5  Consolidated statements of cash flows for the years ended December 31, 2018,     2017 and 2016                                                       6  Notes to consolidated financial statements                            8
 Report of Independent Auditors    Members of DLV/HPPI Summerlin, LLC    We have audited the accompanying consolidated financial statements of DLV/HHPI Summerlin, LLC, which  comprise the consolidated balance sheet as of December 31, 2018, and the related consolidated statements of  operations, changes in members’ equity and cash flows for the year then ended, and the related notes to the  consolidated financial statements.    Management’s Responsibility for the Financial Statements    Management  is  responsible  for  the  preparation  and  fair  presentation  of  these  financial  statements  in  conformity with U.S. generally accepted accounting principles; this includes the design, implementation and  maintenance of internal control relevant to the preparation and fair presentation of financial statements that  are free of material misstatement, whether due to fraud or error.    Auditor’s Responsibility    Our responsibility is to express an opinion on these financial statements based on our audits. We conducted  our audits in accordance with auditing standards generally accepted in the United States. Those standards  require  that  we  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  financial  statements are free of material misstatement.    An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the  financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of  the risks of material misstatement of the financial statements, whether due to fraud or error. In making those  risk  assessments,  the  auditor  considers  internal  control  relevant  to  the  entity’s  preparation  and  fair  presentation  of  the  financial  statements  in  order  to  design  audit  procedures  that  are  appropriate  in  the  circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal  control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of  accounting policies used and the reasonableness of significant accounting estimates made by management,  as well as evaluating the overall presentation of the financial statements.     We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our  audit opinion.    Opinion    In  our  opinion,  the  financial  statements  referred  to  above  present  fairly,  in  all  material  respects,  the  consolidated financial position of DLV/HHPI Summerlin, LLC, at December 31, 2018, and the consolidated  results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted  accounting principles.                                                         1                 r
 Comparative Financial Statements  We have not audited, reviewed or compiled the consolidated balance sheet as of December 31, 2017, and the  related consolidated statements of operations, changes in members’ equity and cash flows for the years ended  December 31, 2017 and 2016, and the related notes to the consolidated financial statements, and, accordingly,  we express no opinion on them.    /s/ Ernst & Young LLP  Dallas, Texas  March 15, 2019                                               2
 DLV/HHPI SUMMERLIN, LLC                         CONSOLIDATED BALANCE SHEETS                               December 31, 2018 and 2017                                                               2018             2017                                                                     (unaudited)  ASSETS                                                                  Real estate under development                   $    76,469,496  $   67,598,683  Cash and cash equivalents                            57,156,394      30,763,669  Property and equipment, net                          22,693,090      20,318,602  Deferred costs                                       47,745,978      43,852,651  Restricted cash                                       3,042,286       3,003,207  Accounts receivable                                    198,954          180,136  Prepaid expenses and other assets                     4,642,113         787,629  Note receivable                                        400,000          400,000  Related party receivables                              582,924           33,725                                                                                  Total Assets                                    $   212,931,235  $  166,938,302    LIABILITIES AND MEMBERS’ EQUITY                                                                                                                                 Accounts payable                                $     3,531,480   $    4,794,314  Deferred revenue                                    110,847,098      102,960,657  Related party payables                                4,250,392        1,192,248  Special Improvement District bonds                     440,696          635,927  Customer real estate deposits                         1,662,000            -  Membership deposits                                  13,000,000        8,550,000  Line of credit                                        3,994,720            -  Capital lease obligations                              488,212          785,582                                                                                  Total Liabilities                                   138,214,598      118,918,728                                                                                  Commitments and Contingencies (see Note 15)                                                                                                                     MEMBERS’ EQUITY                                                                                                                                                 Members’ deficit                                    (27,098,402)     (17,098,402)  Accumulated earnings                                101,815,039       65,117,976                                                                                  Total Members’ Equity                                74,716,637       48,019,574                                                                                  Total Liabilities and Members’ Equity           $   212,931,235   $  166,938,302                    The accompanying notes are an integral part of these consolidated financial statements.                                                                                 3
 DLV/HHPI SUMMERLIN, LLC                   CONSOLIDATED STATEMENTS OF OPERATIONS                    For the Years Ended December 31, 2018, 2017 and 2016                                          2018             2017            2016                                                               (unaudited)     (unaudited)           REVENUES                                                                                                                                                    Real estate sales              $    99,904,340  $   58,016,446  $   79,813,897  Club operations                     2,654,701         569,372            -                                                                                Total Revenues                     102,559,041      58,585,818      79,813,897                                                                                COSTS & EXPENSES                                                                                                                                            Cost of real estate sales           37,795,633      19,342,117      22,738,900  Cost of club operations             10,544,113       4,626,353           -  Commissions, closing costs and fees  11,881,148      7,474,904       9,965,227  Selling, marketing and other expenses   3,484,453    3,280,873       3,521,255  Homeowners association subsidy        982,184            -               -  Depreciation                        1,109,429         592,764         200,498                                                                                Total Costs and Expenses            65,796,960      35,317,011      36,425,880                                                                                Operating Income                    36,762,081      23,268,807      43,388,017                                                                                Other (expense) income                (65,018)        (34,453)        112,939                                                                                Net Income                     $    36,697,063  $   23,234,354  $   43,500,956                                                                               The accompanying notes are an integral part of these consolidated financial statements.                                                                                 4
 DLV/HHPI SUMMERLIN, LLC           CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY                    For the Years Ended December 31, 2018, 2017 and 2016                                                        HHPI            Discovery         Total                                                                                                                       Balance at December 31, 2015                                                                       (unaudited)                    $    12,051,598   $     2,132,666 $    14,184,264                 Contributions                             -                 -               -                     Distributions                       (22,900,000)            -         (22,900,000)                Net income                           43,500,956             -          43,500,956                                                                                                                   Balance at December 31, 2016                                                                       (unaudited)                         32,652,554         2,132,666      34,785,220                 Contributions                             -                 -               -      Distributions                       (10,000,000)            -         (10,000,000)   Net income                           23,234,354             -          23,234,354                                                                                      Balance at December 31, 2017                                                        (unaudited)                         45,886,908         2,132,666      48,019,574                                                                                      Contributions                             -                 -               -      Distributions                       (10,000,000)            -         (10,000,000)   Net income                           36,697,063             -          36,697,063                                                                                      Balance at December 31, 2018    $    72,583,971   $     2,132,666 $    74,716,637                                                                                                                  The accompanying notes are an integral part of these consolidated financial statements.                                                                                 5
 DLV/HHPI SUMMERLIN, LLC                      CONSOLIDATED STATEMENTS OF CASH FLOWS                       For the Years Ended December 31, 2018, 2017 and 2016                                                                                         2018             2017             2016                                                                     (unaudited)      (unaudited)           Cash flows from operating activities                                                   Net income                          $  36,697,063   $   23,234,354  $    43,500,956     Depreciation                           1,109,429         592,764          200,498      Loss on asset disposal                    3,162            -                -    Effects of changes in operating assets                                                and liabilities:                                                                     Additions to real estate development  (43,468,660)    (30,776,776)     (58,977,015)     Cost of real estate sales             37,795,633       19,342,117       22,738,900     Deferred costs                         (1,129,053)        (71,596)     (13,116,696)     Accounts receivable                      (18,818)        (180,136)           -     Prepaid expenses and other assets      (3,854,484)       (567,682)       (144,629)     Accounts payable                       (3,008,155)     (4,500,706)      (6,715,409)     Deferred revenues                      7,886,441       (3,750,446)      66,667,178     Customer real estate deposits          1,662,000            -                -     Membership deposits                    4,450,000        8,550,000            -     Related party receivables and payables   281,689          (81,562)      1,439,031                                                                                          Net cash provided by operating                                                         activities                           38,406,247      11,790,331       55,592,814                                                                                       Cash flows from investing activities                                                    Development of property and equipment  (5,314,598)    (19,035,973)       (404,855)     Advance to related party                (300,000)           -                -                                                                                         Net cash used in investing activities   (5,614,598)    (19,035,973)       (404,855)                                                                                       Cash flows from financing activities                                                    Special Improvement District bonds                                                     payments                               (57,195)         (68,970)        (92,020)     Class B members subscription refunds        -          (1,740,000)       (450,000)     Capital lease obligations payments      (297,370)        (302,984)       (149,942)     Members’ capital distributions        (10,000,000)    (10,000,000)     (22,900,000)     Line of credit advances                3,994,720            -                -                                                                                        Net cash used in financing activities  (6,359,845)    (12,111,954)     (23,591,962)                                                                                       Net increase (decrease) in cash, cash                                                   equivalents, and restricted cash      26,431,804      (19,357,596)      31,595,997                                                                                                                                                                            Cash, cash equivalents, and restricted cash                                             beginning of period                    33,766,876      53,124,472       21,528,475                                                                                       Cash, cash equivalents, and restricted cash,                                            end of period                      $   60,198,680  $   33,766,876  $    53,124,472              The accompanying notes are an integral part of these consolidated financial statements.                                                                                     6
 DLV/HHPI SUMMERLIN, LLC               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)                       For the Years Ended December 31, 2018, 2017 and 2016                                                                                       2018             2017             2016                                                                     (unaudited)     (unaudited)            Supplemental disclosure of cash                                                       flow information:                                                                   Cash paid for interest, net of                                                     amount capitalized              $       22,722    $       4,550   $         -    Development of property and                                                       equipment included in accounts                                                      payable                         $     1,882,571   $         -     $         -    Special Improvement District bonds                                                   relieved from sale of land      $       138,036   $       78,954  $      355,335    Class B members subscriptions                                                     converted to lot deposits       $         -       $    1,657,500  $    37,986,425    Transfer of real estate and land                                                     development costs to property                                                     and equipment                   $     3,187,911   $    18,190,819 $         -    Property and equipment financed                                                   under capital lease obligations $         -       $         -     $    1,193,694    Sale of land in exchange for a                                                       note receivable                 $         -       $         -     $      400,000                                                                                                                                                                                    The accompanying notes are an integral part of these consolidated financial statements.                                                                                     7
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017    NOTE 1 – DESCRIPTION OF THE BUSINESS           Organization          DLV/HHPI Summerlin, LLC (the “Company”) was formed on June 13, 2014, under the laws of the State     of Delaware, in the United States of America (“US”).  On March 17, 2015, the limited liability company     agreement was amended changing the members of the Company to DLV Summerlin, LLC, a Delaware     limited  liability  company  (“Discovery”)  and  Howard  Hughes  Properties,  Inc.,  a  Nevada  corporation     (“HHPI”).  The Company is a joint venture, which wholly-owns certain entities incorporated under the laws     of  the  State  of  Delaware,  for  the  purpose of developing  and  operating a  luxury  golf  club  with  related     amenities and a residential community located in Summerlin, Nevada, a suburb of Las Vegas.   The golf club     and  residential  community  (hereinafter  collectively  referred  to  as  the  “Project”)  is  expected  to  have     approximately 260 dwellings on 555 acres which will be offered for sale as a mix of custom lots, detached     built product units, and multi-family built product units.            Under the terms of the Company’s limited liability agreement, HHPI contributed real estate to the joint     venture with a book value of $12,051,598, which is net of Special Improvement District bonds of $1,326,319.     The agreed upon fair market value of the real estate contributed is $125,430,000.  Discovery contributed     cash with a value of $3,750,000, a portion of which was used to fund land improvements.  Discovery is     required to fund up to $30,000,000 in capital contributions. Following the recording of the parcel map by     HHPI, the primary remaining major entitlement was a Site Development Plan (“SDP”) approval for the     Project’s overall development plan, residential plan, and golf course. The SDP approval was a condition     precedent to commencing construction, starting sales and formally executing the joint venture documents.       The approval of the SDP was obtained on March 17, 2015 and the operations of the Company commenced.          The consolidated financial statements as of December 31, 2018 and 2017 reflect the financial position of     the  Company  and  its  wholly-owned  subsidiary  Discovery  Property  Company,  LLC  (“DPC”)  after  the     consolidation of its wholly-owned subsidiaries Summit Club, LLC (the “Club”), DPC SPEC I, LLC and     DPC Clubhouse I, LLC.  The Club was formed on December 22, 2015, and began operations in March     2017.  DPC  SPEC  I, LLC was  formed  on  August  16,  2017.  DPC  Clubhouse  I, LLC  was  formed on     November 13, 2018.    NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES      Basis of presentation       The consolidated financial  statements  are  prepared  on  the  accrual  basis  in  accordance  with  accounting     principles generally accepted in the United States of America (“GAAP”) and include all of the accounts of     the  Company’s  wholly-owned  subsidiaries in  accordance with  the  provisions  and  guidance  included  in     Financial  Accounting  Standards  Board  (the  “FASB”)  Accounting  Standards  Codification  (“ASC”).  All     intercompany transactions and balances have been eliminated during consolidation.            Real estate under development      Real estate assets are stated at cost less any provisions for impairments.  Costs directly associated with the     acquisition and development of the Project including interest, real estate taxes, indirect costs incurred in     managing the development, legal and other costs clearly related to the Project are capitalized and presented     in the balance sheets within real estate under development.  Selling and marketing costs, which includes     advertising are expensed as incurred.                                                                                        8
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017    NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)     Real estate under development (continued)          The Company records impairment losses on its real estate under development when events or circumstances     indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by     those assets are less than the carrying amount of the assets.  In such a case, an impairment loss would be     recorded  to  adjust  the  carrying  amount  to  fair  value. Management  has  determined  that  there  were  no     impairment charges required for the years ended December 31, 2018, 2017 and 2016.          Revenue and cost recognition          Revenue and costs are recognized using the full-accrual method when title has passed to the buyer, required     payments are received, and other criteria for sale and profit recognition are satisfied.  When a sale does not     meet the criteria for full profit recognition, the sale or a portion of the profit thereon is deferred until such     requirements are met using the deposit, installment, percentage of completion, or cost recovery method, as     appropriate  under  the  circumstances.  In  situations  where  the  Company  has  sold  property  prior  to     completion  of  improvements,  revenues  are  recognized  using  the  percentage-of-completion  method  as     development and construction proceed, provided that cost and profit can reasonably be determined, with     the amount of unearned revenue reflected as deferred revenue and the amount of cost in excess of unearned     revenue as deferred costs on the accompanying balance sheets.          Cash and cash equivalents          Cash  and cash  equivalents are short-term, highly liquid investments that are both readily convertible to     known amounts of cash, and so near maturity that they present insignificant risk of changes in value because     of the associated interest rates. Cash and cash equivalent are comprised of cash on hand, current accounts     and fixed deposits with original contractual maturities of three months or less.          Property and equipment          Property  and  equipment consist  primarily  of land  improvements,  club  amenities, office  furnishings,     equipment and vehicles.  Property and equipment also includes assets leased under capital lease agreements.      In the case of property and equipment held under capital leases, the asset and the related obligations are     initially recorded at the amount equal to the present value of future minimum lease payments computed on     the basis of the interest rate implicit in the lease or the incremental borrowing rate.  Expenditures that     increase capacities or extend useful lives are capitalized. Routine maintenance, repairs, and renewal costs are     expensed as incurred.          Property and equipment are stated at cost, less accumulated depreciation and any provision for impairment.     Depreciation and amortization are provided for primarily on the straight-line method over the estimated     service lives of the assets.            Estimated service lives for fixed assets are as follows:                                                                                       Asset            Years                                Equipment         4 – 10                             Office Furnishings     7                                 Vehicles         5 – 10                             Amenity Buildings      40                               Golf course          15                                                                                     9
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017    NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)          Related party receivables          Related party receivables include shared office expense and club charges to sale agents and employees that     will be repaid from future commissions on lot closings or payroll.          Accounts and note receivable          The Company grants credit to customers that arise in the normal course of operations.  The receivable     accounts consist of amounts billed to customers and accruals for amounts not yet billed.  The Company     writes  off  accounts  when  management  believes  the  receivables  are  uncollectible  based  on  the  overall     creditworthiness of the customers and payment disputes.  An allowance is established based on reviews of     individual accounts, recent loss experience, current economic conditions, and other pertinent factors.  As     of December 31, 2018 and 2017, management deemed all accounts are collectible, thus no allowance was     recorded.          Deferred costs          Deferred costs include cost of lots sold plus closing and transfer fees and commissions paid on real estate sales.      Deferred costs are recognized on a percentage-of-completion basis as land sales are recognized.          Prepaid expenses and other assets          Prepaid expenses and other assets include prepayments of insurance and refundable cash bond deposits,     club inventory, supplies and vendor advances.  Prepaid expenses are amortized over the terms of the related     policies.  Inventory is stated at the lower of cost or market.          Accounts payable and related party payables          Accounts payable and related party payables include development expenditures, marketing expenses, club     operations and professional fees for the Project.          Customer real estate deposits          Customer real estate deposits consist of escrow funds received to hold a lot and funds received for     customer change orders on construction contracts.          Class B member subscriptions          Class B member subscriptions represents Class B member shares that are non-voting, non-transferable and     redeemable over the passage of time.  The shares entitle the holder to a pre-selected land lot within the     Project.  Members can elect to redeem all, but not less than all, of their Class B shares and have the Company     apply the proceeds to the purchase price due at closing under their real estate purchase agreement.  If a     member does not elect to execute their redemption rights, they will only be eligible to receive a distribution     upon liquidation of the Company.  Per the guidance of ASC 360-20, Real Estate Sales, since no transfer of     title occurs at the time the subscription is issued the Class B shares are accounted for under the deposit     method and recorded as a liability in the accompanying financial statements.  Per ASC 480, Distinguishing     Liabilities from Equity, the accounting guidance requires these to be treated as debt securities and not equity     securities due to the characteristics of the shares issued.                                                                                     10
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017    NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)          Leases          Leases entered into by the Company that do not transfer substantially all the risks and benefits of ownership     of the leased asset from the lessor are classified as operating leases. Operating lease payments are recognized     as an expense in the statement of operations on a straight-line basis over the lease term.          Assets acquired pursuant to finance leases that transfer to the Company substantially all the rewards and     risks of ownership are accounted for as leased property under capital leases. Payments to the lessors are     treated as having capital and interest elements. Lease costs are capitalized if they relate to the real estate held     for development or expensed if they relate to sales and marketing in the period to which they relate.           Income taxes          Federal, state and local income taxes have not been provided for in the accompanying financial statements     as the members are responsible for reporting their allocable share of the Company’s tax basis income, gains,     deductions, losses and credits on their tax return.  In accordance with ASC 740, Accounting for Uncertainty     in Income Taxes, the Company must determine whether a tax position meets the “more likely than not”     threshold based on the technical merits of the position.  Once a position meets the recognition threshold,     measurement  of  the  position  reported  in  the  financial statement  is  determined.   The Company has     determined no material unrecognized tax benefits or liabilities exist as of December 31, 2018 and 2017 and     no provision for income tax is required in the accompanying consolidated financial statements.  If applicable,     the Company recognizes interest and penalties related to underpayment of income taxes as income tax     expense.  The Company is not currently under exam by a taxing authority.  As of December 31, 2018 and     2017, the Company has no amounts related to accrued interest and penalties.  The Company does not     anticipate any significant changes to its tax positions over the next year.  Although the Company believes its     tax  returns  are  correct,  the  final  determination  of  tax  examinations  and  any  related  litigation could  be     different from what was reported on the returns.  Generally, the Company is currently open to audit under     the statute of limitations by the Internal Revenue Service as well as state taxing authorities for the years     ended December 31, 2015 through 2017.          Use of estimates          The process of preparing financial statements in conformity with accounting principles generally accepted     in the United States of America requires management to make significant estimates and assumptions that     affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the     date of the financial statements and the reported amounts of revenues and expenses during the reporting     period.  Actual  results  could  differ  from  those  estimates.  The  significant  areas  requiring  the  use  of     assumptions, judgments, and estimates relate to real estate under development and contingencies.          Fair Value of Financial Instruments          The  carrying  values  of  cash  and  cash  equivalents,  receivables,  accounts  payable,  and  other  assets  and     liabilities are reasonable estimates of their fair values because of the short maturities of these instruments.                                                                                                                    11
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017    NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)          Distributions of cash flow and allocation of net income (loss)          Distributions  of  cash are  made  in  accordance  with  the  terms  of  the  Company’s  Operating  Agreement     (Agreement).  There were $10,000,000, $10,000,00 and $22,900,000 of distributions made to HHPI during     each year ended December 31, 2018, 2017 and 2016, respectively.              In general, net income or loss of the Company shall be allocated to the members such that, the Member’s     Adjusted Capital Account is equal to the amount that the member would receive in a hypothetical liquidation     of the Company’s net assets at its recorded book value, as defined, at each balance sheet date.          Recent accounting pronouncements          In February 2016, the FASB issued ASU 2016-02, “Leases”.  ASU 2016-02, codified in ASC 842, amends     the existing accounting standards for lease accounting, including requiring lessees to recognize most leases     on their balance sheets and making targeted changes to lessor accounting.  ASU 2016-02 will be effective     for the Company on December 31, 2020.  Early adoption of ASU 2016-02 as of its issuance is permitted.      The new leases standard requires a modified retrospective approach for all leases existing at, or entered into     after,  the date  of the  initial  application,  with  an  option  to  use  certain  transition  relief.   Management  is     currently evaluating the impact  of adopting the new leases standard on  the accompanying consolidated     financial statements.          In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows - Restricted Cash”, which     requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash     equivalents in the statements of cash flows. The effective date of the standard is for fiscal periods, and     interim periods within those years, beginning after December 15, 2017. As required, the Company adopted     ASU 2016-18 retrospectively as of January 1, 2018.  The adoption did not have a material impact on the     Company’s consolidated statements of cash flows.          In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments.     The standard addresses how certain cash receipts and payments are presented and classified in the statements     of  cash  flows,  including  debt  extinguishment  costs,  distributions  from  equity  method  investees  and     contingent consideration payments made after a business combination. The effective date of this standard     is for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company     adopted this standard retrospectively, as of January 1, 2018. ASU 2016-15 had no impact on the Company's     presentation of operating, investing and financing activities related to certain cash receipts and payments on     its consolidated statements of cash flows.          In  May  2014,  the  FASB  issued  ASU  2014-09 “Revenues  from  Contracts  with  Customers  (Topic  606).” The     standard’s core principle is that a company will recognize revenue when it transfers promised goods or     services to customers in an amount that reflects the consideration to which the company expects to be     entitled in exchange for those goods or services. In doing so, companies will need to use more judgment     and  make  more  estimates than  under  current  guidance.  These  may  include  identifying  performance     obligations in the contract, estimating the amount of variable consideration to include in the transaction     price and allocating the transaction price to each separate performance obligation. The new standard will     become effective for the Company beginning on December 31, 2019.  Entities have the option of using     either a full retrospective or a modified approach to adopt the guidance in the ASU.  Management is currently     evaluating the impact of adopting the new revenue standard on the accompanying financial statements.                                                                                          12
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017    NOTE 3 - REAL ESTATE UNDER DEVELOPMENT                                                          2018            2017                                                                       (unaudited)                                                                                        Land cost, improvements, entitlements and designs $ 194,729,877 $ 146,394,484       Development administration, taxes and insurance   16,423,632       12,140,394                                                                                                                                         211,153,509     158,534,878                                                                                        Less: amenities placed in service                 (21,378,730)   (18,190,819)       Less: cost attributed to sales since inception (Note 5)  (113,305,283)  (72,745,376)                                                                                                                                   $      76,469,496 $    67,598,683    NOTE 4 – PROPERTY AND EQUIPMENT, NET       Property and equipment, net as of December 31, 2018 and 2017 consists of the following:                                                                                                                                           2018             2017                                                                       (unaudited)                                                                             Land improvements                           $     10,238,823 $    10,187,591       Amenity buildings                                  4,273,781      1,521,176       Golf course                                        6,343,621      6,343,621       Equipment                                           916,138         534,591       Office furnishings                                  943,860         685,146       Vehicles                                            625,077         550,738       Equipment and vehicles under capital lease          868,978         907,409                                                                                                                                         24,210,278      20,730,272                                                                                       Less: accumulated depreciation                    (1,517,188)      (411,670)                                                                                                                                   $     22,693,090 $    20,318,602                                                                                                                                                                                           13
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017    NOTE 5 – DEFERRED COSTS          Deferred costs at December 31, 2018 and 2017 and since inception consists of the following:                                                            2018            2017                                                                       (unaudited)                                                                             Transfers from real estate under development $  113,305,283 $     72,745,376       Commissions                                      16,421,206       11,453,928       Closing costs                                     1,543,481       1,023,308       Incentive fees                                   25,673,937       18,151,187                                                                                                                             156,943,907      103,373,799                                                                             Less cost realized up to December 31:                                  Cost of real estate sales                       (79,876,650)    (42,081,017)        Commissions, closing costs and incentive fees   (29,321,279)    (17,440,131)                                                                                                                         $    47,745,978 $     43,852,651    NOTE 6 – RESTRICTED CASH          On November 30, 2017, DPC SPEC I, LLC entered into a $7,500,000 revolving line of credit agreement     with First Security Bank of Nevada.  Under terms of the agreement, DPC was required to maintain a deposit     of $3,000,000 as a compensating balance, restricted as to use.  At December 31, 2018 and 2017, the funds     were held in a 12-month fixed term deposit account earning interest at 1.3%.  Interest earned during 2018     and 2017 was $39,079 and $3,207, respectively.      NOTE 7 – NOTE RECEIVABLE          In March 2018, DPC entered into a note agreement with a member for $5,000,000 in connection with the     sale of a custom lot.  The note requires annual principal installments of $1,000,000 beginning in March 2019     until paid in full.  The note is without interest and is secured by the lot.  The outstanding balance at December     31, 2018 is $5,000,000.  This sale did not meet the criteria for revenue recognition under the full accrual     method of accounting and is being accounted for under the deposit method of accounting.  Accordingly,     this note receivable has not been recorded in the consolidated balance sheet until the sale meets the criteria     for revenue recognition.          In July 2016, DPC entered into a note agreement with a member for $400,000 in connection with the sale     of a custom lot.  The note matures on or before July 22, 2019 without interest and is secured by the lot.  The     outstanding balance at December 31, 2018 and 2017 was $400,000.                                                                                                 14
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017    NOTE 8 – DEFERRED REVENUE       Deferred revenues at December 31, 2018 and 2017 and since inception consists of the following:                                                                 2018             2017                                                                       (unaudited)                                                                             Lots sold- Type 1                           $    95,425,000 $     89,325,000       Lots sold- Type 2                               120,242,500       78,742,500       Lots sold- Type 3                                82,600,000       66,800,000       Built product – Desert Villas                     3,750,000           -       Built product – Desert Bungalows                 28,279,281       2,376,000       Built product – Club Villas                       4,537,500           -       Built product – Golf Cottages                     2,000,000           -       Built product – Point Villas                     11,747,500       3,547,500                                                                                                                                       348,581,781      240,791,000                                                                                       Less: real estate sales recognized              (237,734,683)   (137,830,343)                                                                                                                                   $   110,847,098 $    102,960,657   NOTE 9 – RELATED PARTY TRANSACTIONS       On March 17, 2015, the Company and DPC entered into a Development Management Agreement with     DLV Summerlin Management, LLC (“DLVSM”).  Under the terms of the agreement, DLVSM agreed to     provide sales, marketing, administrative, and supervision services to the Project. DLVSM is entitled to an     initial monthly management fee of $125,000 during the first twenty-four (24) months of the Term.   In     addition,  DLVSM is entitled to  a base management  fee equal to  7.5% of the gross sales proceeds and     memberships.  For the years ended December 31, 2018, 2017 and 2016, the Company incurred development     management  fees of $7,522,750, $4,857,125 and  $15,044,063,  respectively.  These  fees  are  included  in     deferred  costs  in  the  accompanying  balance  sheets and  in  commissions,  closing  costs  and  fees  in  the     accompanying statements of operations.          DPC leases office space from an entity affiliated with HHPI (see Note 15).               In 2018, the Company entered into 17 construction contracts for approximately $44,000,000 with Discovery     Builders Nevada, LLC (DBN), an affiliate of Discovery, to construct residential homes.  In December 2016,     DBN was contracted to build five amenity buildings.  The amenity buildings were completed in 2017 and     placed in service.  Total payments made in 2018 and 2017 were $17,074,500 and $3,722,821, respectively,     and are included in real estate under development in the accompanying consolidated balance sheets.          In March 2018, DPC advanced $300,000 under a promissory note with a manager of the Club.  The note     requires annual payments of $50,000 beginning in March 2019.  The note bears interest at a fixed rate of     2.88%.  The note matures on or before March 31, 2024.  The outstanding balance at December 31, 2018 is     $300,000 and is included in related party receivables in the accompanying consolidated balance sheets.          In September 2018, DPC entered into a contract with a member of Discovery for $4,625,488 to construct     a residential home.  Total payments received under the contract in 2018 is $844,776 and is included in related     party payables in the accompanying consolidated balance sheets.                                                                                          15
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017    NOTE 9 – RELATED PARTY TRANSACTIONS (CONTINUED)          The  Summit  Community  Association (“Association”),  a  non-profit  corporation, is  responsible  for     maintaining, operating and governing the common-interest community of the Project.  Under terms of the     Association’s Declaration of Covenants, Conditions and Restrictions and Reservations of Easements, DPC     is  permitted  to subsidize shortfalls  of the  Association’s  operating  expenses  in  exchange  for  annual     assessments on unsold lots. During 2018, the shortfall subsidized to the Association was $982,184 and is     included in homeowners association subsidy in the accompanying consolidated statements of operations.          The following are the other related party transactions for the periods ended December 31, 2018 and 2017     which are included in real estate under development or selling and marketing expenses:                                                              2018             2017                                                                       (unaudited)                                                                             Discovery Land Ventures LLC – administrative expenses $ 220,891 $   103,097       Summit Club Realty LLC – commissions on closings  4,674,278        2,507,348       Discovery Design LLC – interior designer of office                             furnishings, built product and resort amenities      -              30,996       Denton House – design services                    1,266,590        1,238,320       Westman Development, LLC – charter flight services  167,251          95,936       Recover Life LLC – beverage inventory for club events  -              4,894       Various Discovery Affiliate Clubs – shared overhead  48,227            -       Shared Staffing Services – affiliated entity of DLVSM                          that provides labor services to the Project     9,974,615         8,418,007                                                                                     NOTE 10 – SPECIAL IMPROVEMENT DISTRICT BONDS       The  Summerlin  master  planned  community  uses  Special  Improvement  District  (SID)  bonds  to  finance     certain common infrastructure, including the infrastructure of the Project.   These bonds are issued by the     municipalities and, although unrated, are secured by the assessments on the land.   As of December 31, 2018,     the $440,696 balance of the bonds is related to the parcel of land contributed by HHPI which was transferred     to DPC as a result of the formation of the Company, as described in the “Organization” section above.      DPC pays the principal and interest on the bonds, and the interest portion is capitalized as a cost of the     project.  During 2018 and 2017, $138,036 and $78,954, respectively, of the outstanding bonds was relieved     and transferred to the lot owners in connection with lot sales.                                                                                                                   16
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017      NOTE 11 – CLASS B MEMBER SUBSCRIPTIONS       DPC  initiated  a  financing  program with outside  investors  in  order  to  fund  on-going  development     expenditures for the Project.  Outside investors contribute funds to DPC for a Class B interest  in  the     Company per terms of a Subscription Agreement.  The Class B interest is non-voting, non-transferable and     redeemable over the passage of time.           The Class B interest can be redeemed and the proceeds applied to the purchase of a specified lot at an agreed     upon amount.  The redemption timing is triggered by the recording date of a subdivision plat with respect     to lots and the offering plan date with respect to condominium units.   A member has up to 90 days from     the date of plat recording or offering plan to execute redemption and purchase a vacant lot.  During 2015,     twenty-five subscription agreements were issued accounting for $41,833,925 of Class B contributions to     DPC.  In 2017 one subscription agreement for $1,740,000 was refunded.  There are no unredeemed member     subscriptions at December 31, 2018 and 2017.   NOTE 12 – MEMBERSHIP DEPOSITS       DPC  began  selling refundable golf  memberships  at  Summit  Club  in  March  2017 for  the  purpose  of     permitting members the recreational use of the club facilities.  DPC will construct a golf course and all club     facilities in exchange for the golf memberships.  The Club is a non-equity membership club.  DPC currently     intends, but may limit the number available in any category at its sole discretion, to issue the following types     of memberships:                245 golf memberships           30 national golf memberships           100 social memberships          A total of twenty-nine and fifty-seven golf memberships were sold during 2018 and 2017 for $4,450,000 and     $8,550,000, respectively.  No national golf or social memberships have been sold.          DPC has the right to issue 6 honorary memberships and 15 charter memberships.  As of December 31,     2018, 2 honorary memberships have been granted.     NOTE 13 – LINE OF CREDIT       On November 30, 2017, DPC SPEC I, LLC entered into a loan agreement with First Security Bank of     Nevada for a $7,500,000 revolving line of credit for the development and construction of spec units within     the Project.  The loan is secured by estate lots 110, 111 and 112.  The loan matures November 30, 2019 with     an option to extend for an additional 12 months and accrues interest at 6%.  The outstanding balance due     at December 31, 2018 and 2017 was $3,994,720 and $0, respectively.  Interest paid during 2018 was $131,693.      No interest was paid during 2017.  The Company is in compliance with its covenants as of December 31,     2018 and 2017.                                                                                                    17
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017      NOTE 14 – CAPITAL LEASE OBLIGATION       The capital leases relate to the acquisition of golf equipment by the Club.  The future minimum lease payments     under the finance leases together with the present value of such payments for the year ending December 31     are as follows:                                                               2019                                        $      310,594       2020                                               192,078                                                                      Total minimum lease payments                       502,672                                                                      Less the amount representing interest              (14,460)                                                                      Present value of minimum lease payments     $      488,212                                                            The annual implicit interest rate ranges from 2.9% to 4.27%.     NOTE 15 – COMMITMENT AND CONTINGENCIES           In October 2018, DPC relocated to a different suite and entered into an amended 56-month operating lease     agreement for office space with The Shops at Summerlin LLC, an affiliate of HHPI.  Under terms of the     agreement, DPC may terminate the lease with 12-months’ notice.  The lease requires monthly payments of     $9,896.           In January 2017, the Club entered into a 48-month operating lease agreement for 62 golf carts.  The lease     requires monthly payments of $11,684 starting on April 1, 2017.          In March 2017, the Club entered into a 24-month operating lease for a tent for the golf cart fleet.  The lease     requires monthly payments of $3,020.          The  future  minimum  lease  payments  under  the non-cancelable operating leases  for  the  year  ending     December 31 are as follows:                                                                               2019                                      $      273,120            2020                                             266,870            2021                                             178,774            2022                                             136,000            2023                                              57,363                                                                         Total minimum lease payments              $      912,127                                                                  Rent expense totaled $311,000, $267,000 and $113,000 for the years ended December 31, 2018, 2017 and     2016, respectively.                                                                                              18
 DLV/HHPI SUMMERLIN, LLC                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         For the Years Ended December 31, 2018 and 2017        NOTE 16 – CONCENTRATION OF RISK       The Company places its cash and cash equivalents with a high quality financial institution.  Balances with     this institution regularly exceed Federal Deposit Insurance Corporation insured limits; however, to manage     the  related  credit  exposure,  the Company continually  monitors  the  credit  worthiness  of  the  financial     institution where it has deposits.    NOTE 17 – SUBSEQUENT EVENTS       The Company has evaluated subsequent events for potential recognition and disclosure through March 15,     2019, the date the financial statements were available to be issued.                                                                                         19