Comments on the conference call today?

We recorded the call, though the quality is not great.

I would love to hear anyone's thoughts about the conference call we had today. It was unfortunate that they could not announce the strike over; that is why I thought the call had been postponed, and may have been.

Overall, it was pretty much what I expected, other than the announcement that the deposits would be put into escrow in order to enable Red Frog to secure construction loans. I think this makes sense from a business perspective.

Mick @ Lot 83

Updated 7/23/07
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Since everyone is posting comments I thought it might be appropriate to post the outline/highlights as they appear on the Red Frog website here so as to give readers one place to look and evaluate comments.
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July 20th 2007 Conference Call

Here is the outline/highlights of the Conference Call where we shared a progress update on Red Frog Beach and a few issues we thought we should bring everyone up-to-speed on.
We included a few topics that clients have asked us to address and also included some additional information that you should find useful. As always, it is best to send questions about Red Frog Resort Management/HOA to Chris and any other questions to Scott.

ANAM

• After over two years of working on the Environmental Impact Study (EIS) required by the government of Panama, building phases 4-12 are approved to proceed. The Red Frog team is now ready to move forward with what the Panamanian government will allow. This is great news and we will be focused on moving these portions forward.
• Another important milestone that resulted from the ANAM approval was the approval last week of the Anti-Proyecto/Master Plan for building phases 4-12. This also entailed over two years of planning, engineering, and designing to be in full compliance with legal development requirements. This is a major milestone for the project because it secures the density plans for the additional units including a boutique hotel, grand marine village, grand marina, activity center, the canopy tour, walking trails, a 2nd logistics center, and total supporting infrastructure. Now with this approval and our environmental approval, we are nearly set to begin pre-construction activities in this area.
• Unfortunately, the Panamanian government did not approve plans for the golf course and the aquarium. This is disappointing to some of you and we understand that, but given the cards we have been dealt, we’re currently working on developing partnerships with other area developers to find a solution for our golf enthusiasts. This will take some time and we will keep you updated on these endeavors.
• We are considering other amenities in the original golf site that will add value and reflect our commitment to the environment, such as botanical gardens and nature trails.
• In this effort, we have narrowed our bids to 3 groups, all internationally recognized. The new vision is to be able to integrate the environment into the development, creating both a destination for tranquility and health, as well as education as we hope to integrate many of Panama’s indigenous flora into the garden plan. As soon as we have reached a decision, we will be sure to announce the chosen group to you all.
• Just as we have always planned, we are preserving more than 70 percent of the natural areas at Red Frog Beach. Looking at the island as a whole, the Red Frog footprint will remain relatively small (only 3%) in comparison with the island. This 70 percent natural area footprint (about 6%) meets both the government’s vision and the Red Frog Beach vision of what this special place should be.

FINANCES

• We have taken the opportunity during the last few months to bring in financial architects to look for ways to improve our financial structure. As the project continues to grow and mature and as our property appreciates, we need to meet the needs of our new buyers and the major recommendation was to start taking future deposits into escrow and use large institution financing to fund the project. So we have been perusing that initiative and we are down the road several months on this 6-12 month process with many interested financial institutions. We are pleased with the interest the financial community has in our project, especially since we do have completed homes and an impressive infrastructure as well as all of the important ANAM and Master Plan approvals,
• Along with that we have developed a relationship with a new international bank and just yesterday signed papers to close on a new deal with them to finance our construction. They bring us a higher line of credit and fewer restrictions than our previous Panamanian bank which will allow us to work faster.
• While the labor issues are important, keeping Red Frog’s finances stable and flexible is the most important.
• We, of course, want to return to regular construction schedule as quickly as possible and this financial restructing will help this to occur.

STRIKE

• As of now, we have not been able to reach a final agreement with the union. This continued delay is disappointing as we had hoped to announce the end of the strike on this call but rest assured that we are forging ahead as best we can with what we can do, and are still hard at work in these final moments at the bargaining table.
• Obviously, this strike has an impact on progress. We’d all like to see this development done, and we’re all impatient for our full workforce to be back on the job. But we want to protect your investment and the quality of work you expect. Our local legal and labor counsel is doing a great job protecting the interests of Red Frog Beach as a whole.
• Also, our teams of engineers and architects continue to remain hard at work preparing for Startup. We have recently completed many designs including the Beach Club.

RESORT MANAGEMENT

• We have had several hospitality companies approach us to express interest in providing resort management services to Red Frog Beach. One major hotel group has even gone so far as to deliver a Letter of Intent which we are presently considering. We understand the power of a brand but also want to make the rental process as profitable to you as possible. Suffice it to say, although we can’t tell you the names of the groups interested in managing the property, they are strong brands you would recognize and they have great track records. They are enthusiastic about what we have done so far and about our recent approvals and are interested in moving forward. We will let you know more about our findings as they happen.
• We have also been in talks with an International Marina management company who would manage our both of our marinas. They are excited about working with Red Frog because of the location, the deep water, the protected cove, minimal tidal change, the countless islands to explore and most of all -- no hurricanes.
• We have set in place an efficient reservation system to follow up and help prospect renters through the reservation process.
• We have improved communication with villa owners through monthly recaps with details on reservations, income and services performed on their villa.
• We keep implementing new services available for full time residents. Grocery delivery, maid service etc. We are also developing a wide range of services and activities for renters staying at the villas.
• The team keeps growing to attend the different needs such as maid services, client concierge, maintenance, boat drivers, pool cleaning, gardening, beach cleaning.
• We have invested in land and water transportation to improve service for both returning owners and villa renters.
• We have worked to protect unfinished villas and pools from the environment.
• We have started and are moving ahead with the condo selection process. We also continue to move strong with the villa options as well. Finalizing this information will help us move ahead faster once construction starts and client cooperation during this stage is greatly appreciated.
• The common areas for the condos are being developed; areas will include Bohio, Pools, Jacuzzi, Seating / Sun bathing Area, bathrooms, landscaping etc.
• We continue our quest of improving and focusing on the quality of our products: new window manufacturer for upcoming villas /condos, new materials for pool areas etc.
  We are also keenly focused on the quality of construction. We have hired new inspectors and new villa managers that will make sure the designs are being built in accordance to what was determined with you during the options process.

LAND DISPUTE AND LAWSUIT

• As you have probably heard by now, we filed suit in the U.S. District Court system in Houston to protect the legal rights of a small piece of land at Red Frog Beach. This legal action is in addition to the legal proceedings on file in Panama.
• We believe this course of action is prudent and necessary. As these cases wind their way through the legal channels we will keep you appraised of them as best we can.
• We feel confident that we will prevail and we will win this in the high courts.

PROPERTY TAXES

• We have had many, many questions about the laws of Panama and the property tax situation. First and foremost, our best advice is for you to have your own Panamanian legal counsel provide this information. Since we are not attorneys, we are not in a position to give legal advice.
• But we can explain the current process at Red Frog. As a large developer with a large project that is well known to government officials, we are essentially required to bring in a qualified appraiser (we are using the highly esteemed Panamericana de Avalous) who assigns a value to the land based on a simple formula of square meters times a specified rate. This is then given to Catastro (land use ministry) for their approval and then that becomes the assessed value of the land.
• To think that the government would overlook our project and the value that putting in all of the utilities as well as the forthcoming amenities is not reality based thinking. So while we do know the process, it is ultimately up to the government officials to assign the value. And at this point, we are told that we have been getting some of the lowest evaluations for beach property with our infrastructure and amenities in the entire country. But that can always change and that is why we ask you to seek your legal advice from qualified professionals.

CONCLUSION

• We are excited to see all of our plans coming together and it was exciting for me to recently see one of the newest amenity that is coming to Red Frog Beach. We have acquired in trade a beautiful and practically brand new 35 foot Silverton Motor Yacht that is on its way from Costa Rica as we make this announcement. This yacht will be available for paid charters so for those of you who have always dreamed of island hopping in a yacht, here is a great opportunity for you to do that.
• Once it is renamed and registered in Panama, we will be bringing it up to Bocas and it will be the first of many fine vessels to grace the marina at Red Frog which is expected to be completed by the end of the year.
• As we have continuing news regarding the project, we will be sure to keep you updated by email and on the website. Thank you to all of you great clients and as always, please feel free to contact us with any questions.

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