Legal Disclosure

The San Francisco Exchange Company (SFX) Audit & Disclosure Statement

THE SAN FRANCISCO EXCHANGE COMPANY REPORT OF KEY OPERATING STATISTICS December 31, 2020 THE SAN FRANCISCO EXCHANGE COMPANY C O N T E N T S Page Report of Independent Accountants 1 Report of Key Operating Statistics 2 Notes to Report of Key Operating Statistics 3-4 REPORT OF INDEPENDENT ACCOUNTANTS Board of Directors The San Francisco Exchange Company San Francisco, California We have examined the accompanying report of key operating statistics of the San Francisco Exchange Company, as of and for the year ended December 31, 2020. The Company’s management is responsible for the report of key operating statistics. Our responsibility is to express an opinion based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the report of key operating statistics is in accordance with the criteria, in all material respects. An examination involves performing procedures to obtain evidence about the report of key operating statistics. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement in the report of key operating statistics, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. In our opinion, the report referred to above presents, in all material respects, the key operating statistics of the San Francisco Exchange Company as of and for the year ended December 31, 2020, in conformity with the timeshare exchange regulations for the states of Florida and Hawaii. May 20, 2020 San Bernardino, California -1- KENNEDY & KENNEDY Certified Public Accountants Members of the American Institute of Certified Public Accountants and of the California Society of Certified Public Accountants 1700 North E Street, Suite 201 • San Bernardino, CA 92405 • (909) 886-5048 • (909) 882-3852 15476 West Sand Street • Victorville, CA 92392 • (760) 951-2570 THE SAN FRANCISCO EXCHANGE COMPANY REPORT OF KEY OPERATING STATISTICS December 31, 2020 The number of purchasers or owners currently enrolled and eligible to participate in the exchange program 301,998 The number of accommodations and facilities or properties that have current affiliation agreements with The San Francisco Exchange Co. None The percentage of exchanges properly applied for that were confirmed 82.21% The number of exchanges confirmed by the exchange program 4,872 The number of timeshare periods for which The San Francisco Exchange Co. has an outstanding obligation to provide an exchange in the future 1,379 The above listed percentage of confirmed exchanges is a summary of the exchange requests entered with the exchange program between January 1, 2020 and December 31, 2020. This does not represent a purchaser's probability of being confirmed to any specific choice or range of choices, since availability at individual locations may vary. See Accompanying Notes to Report of Key Operating Statistics. -2- THE SAN FRANCISCO EXCHANGE COMPANY NOTES TO REPORT OF KEY OPERATING STATISTICS December 31, 2020.

NOTE 1 – DESCRIPTION OF COMPANY: The San Francisco Exchange Company (SFX) is a California corporation. SFX offers reciprocal exchange services for owners of resort timeshare or other vacation ownership interests throughout the world. Timeshare weeks are deposited into an exchange pool within our computer network. These units are various sizes, typically studios, one and two-bedroom suites for various dates of the year in different locations. To make an exchange you are required to deposit your week into this pool, and you will have up to two years past the check-in date of the week you deposited in which to redeem an exchange at another property that may be available in the system. SFX headquarters are located at: 1350 Old Bayshore Hwy. Suite 520 Burlingame, CA 94010. 510-749-3700. The following are the corporate officers of SFX: Mel Grant – CEO, Brad McDonald - President. Neither SFX, nor any of its officers or directors has any beneficial interest in any resort development participating in the SFX Exchange Program.

NOTE 2 – ENROLLMENT POLICY: To participate in the Program, one is required to become an SFX Member. An SFX Membership is voluntary and not required as part of any timeshare purchase one may be considering. Owners of any qualified timeshare interest receive complimentary Gold memberships in SFX, or they may choose Diamond membership which requires an annual fee. As of January 2021, Diamond membership fees are: 1 year:$349. 3 year: $399. 5 year: $599. 10 year: $799.

NOTE 3 – DEPOSIT A WEEK: To deposit a week into the vacation bank, the Member contacts their reservations department at their home resort and reserve a qualified week. The Member then logins to their SFX account and deposits that week into the Vacation Bank. Thousands of other Members are doing the same thing. They are reserving a week at their home resort and depositing it too, thus relinquishing their time to other Members for them to use for an exchange. This is how space is created for exchanges.

NOTE 4 – REQUEST A VACATION EXCHANGE: The most important rule is “Flexibility” on both travel weeks and/or locations. The more flexible the Member is, the greater the possibility for results. What do we mean by Flexibility?

NOTE 5 – PROPERLY APPLIED FOR EXCHANGE REQUEST: A properly applied for exchange request occurs when the requirements listed below have been satisfied. The exchange is not considered to be properly applied for as long as any of these criteria have not been met. • An exchange request is received by SFX. • The exchange request is from a member of SFX. • The member must have a current membership in SFX and be in compliance with all terms and conditions governing SFX membership. • The member must be current with all financial obligations (maintenance fees and assessments, special assessments, property taxes, note payments, etc.) to their home resort through the week being relinquished to SFX in conjunction with either an exchange request or the deposit of a week in SFX exchange system. • The member must have a confirmed reservation for a specific interval at the home resort prior to requesting an exchange or depositing a week. • A properly submitted request must have a choice of three alternative locations and travel dates. The idea being if one choice is completely booked, another choice may be available for the member's vacation. If the member submits just one location, and/or just one week for travel, and perhaps name just one resort only that the member will accept when there may be four or five equally beautiful resorts in the same area, we consider those as Member imposed restrictions which may hamper the member's ability to be confirmed for a great vacation.

Another factor is timing. If the member wishes to travel in prime time, which is prime demand when most people want to travel, if possible try and have the request placed at least 9-12 months in advance. As with hotels or airlines, the further ahead the member books, the more likely space may be available.

Sometimes when the member places their request the space will be immediately available and we will book you. On other occasions your request may not be immediately available and we need to start a “search” for the week you are requesting. Every day, space is continuously being deposited by various sources, including Members and various other suppliers into the Vacation Bank. Our computers are continually searching the Vacation Bank looking for a “Match” to the member's request. Our goal is to send the member on a great vacation, so if there is not a perfect match to the member's request, our agents may offer the member a “near match”.

What is a “near match”? It could be the week before or after the member was requesting. It may be a larger or small unit than the member was requesting. It may be a different but equally as beautiful location. The member may or decline the offer. If the member declines a “near match” there are no penalties.

Anything that is less than the prescribed procedures above will be considered as an “incorrectly placed request”. However, we may still proceed in the search process for the member's requested exchange.

NOTE 6 – ACCOMMODATIONS AND FACILITIES: Accommodations and facilities at the reporting date include exchange service organizations which SFX may use to complete an exchange for a member.

NOTE 7 – EXCHANGE FEES: SFX members are charged a fee for each exchange confirmed by the company. The fee for domestic or international exchanges is $209 for Gold members and $149 for Diamond members. An exchange fee is a transaction fee charged when we confirm the Member for their exchange. The Member only pays for results. There are no exchange fees paid in advance. All fees are payable to SFX Preferred Resorts.

Both Membership and exchange fees will increase from time to time. There are various factors that are taken into consideration, the primary factor being operational costs. Other factors will be based on inflation and competition within the marketplace.

At this time, SFX has no affiliation agreements with resort developers; therefore we are unable to represent how many timeshare resort units are represented in the Program. The SFX Program is a consumer timeshare based system that acquires weekly deposits from its Member base, and not resort developers. At this time, SFX has over 300,000 registered Members. Not all Members participate every year; therefore it is not possible to predict potential availability. All exchange fulfillment is subject to availability with no guarantee of specifically requested locations or dates.

To effectuate an exchange, the following procedures are required: • Member must reserve a week at their home resort. The maintenance fee must be current for the use year reserved. • Member must then deposit their week into the SFX Program. This is done by logging into their SFX online account at www sfx-resorts.com. • After the Member's deposit has been verified, the Member will be notified by email they may now place a request for an exchange. Member will have up to two years past the check in date of the week deposited in which to redeem an exchange. Member may communicate via our website or directly with an agent. • When a comparable week that matches the request has been located, an agent will communicate with Member to discuss the resort and answer any questions they may have. Member will then be emailed a confirmation for their vacation exchange. • Diamond Members have the option of requesting first prior to depositing their week. In the event of a match for their exchange, the deposit of their home week will be required. However, those who request first have a lower priority than those who deposit first.

NOTE 8 – OUTSTANDING EXCHANGE OBLIGATION: Diamond members may deposit a timeshare period without requesting an exchange at the time of deposit. Gold members are required to deposit a timeshare period at the time they request an exchange. All members have 24 months from the date of the timeshare period deposit to complete the exchange. After the 24-month period, the member's request expires, and no exchange can then be completed.

NOTE 9 – UNCERTAINTIES: In 2020, domestic and international economies face uncertainty related to the impact of the COVID-19 disease. The Organization may be adversely affected by the economic results of this uncertainty. Management is currently evaluating these impacts and considering their effects on future operations.

NOTE 10 – SUBSEQUENT EVENTS: Management has evaluated subsequent events through June 1, 2020, the date when the Report of Key Operating Statistics was available for issuance.

Some Helpful Vacation Exchange Terminology…

Home Resort… Is the resort where the member owns their time. The member deposits their week from their home resort and requests an exchange to use another Member’s week while another guest will use the member's.

Deposit your week… To receive an exchange at another resort the member relinquish their occupancy rights to the week their own in a particular year to SFX, who will then assign their unit to another guest for their vacation. In return the member may request a week at another members resort. The member will have from the day we receive their deposit and up to two years past the check-in date of the week their deposited.

Place a request… Means the member is requesting SFX to search for a week at a different resort to where the member owns for a vacation exchange. We need to know several items including … Where the member would like to travel, when the member would like to travel and how many people in the party. All space is Subject to availability.

Search… This means what the member is requesting isn’t immediately available and we start a search to locate what the member is requesting for their exchange.

Match… A match means our computers have matched a week deposited to the member's vacation request criteria by dates, location etc. If we find an exact match for what the member asked us to find for their, an exchange fee is due and payable for services rendered.

Near match… Means we have located and offered the member a week that is close to what their requested, but not exact. It may be slightly different dates, and/or location, and/or unit size. In many instances Members accept near matches because they are great resorts in great locations and they can look forward to a vacation.

Guest name… is the name that will be on the confirmation. It may be the Member, or another party the member is sending as their Guest. The Member must inform us if another party will be using the exchange. If we are advised of their names at the time the request is placed, there is no additional charge. If the Member advises us after the week has been booked and a name change is needed, there will be an additional fee.