Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2009
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 000-144493
WINCHESTER INTERNATIONAL RESORTS INC.
(Exact name of registrant as specified in its charter)
Nevada N/A
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
61 Cimarron Meadows Cres., Okotoks, Alberta, Canada T1S 1T1
(Address of principal executive offices) (Zip Code)
403.995.4426
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [X] YES [ ] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
8,055,000 common shares issued and outstanding as of November 16, 2009
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our unaudited interim financial statements for the three month period ended
September 30, 2009 form part of this quarterly report. They are stated in United
States Dollars (US$) and are prepared in accordance with United States generally
accepted accounting principles.
2
WINCHESTER INTERNATIONAL RESORTS INC.
(Formerly named Sterling Exploration Inc.)
Balance Sheets
(An Exploration Stage Company)
(Expressed in US Dollars)
--------------------------------------------------------------------------------
September 30, June 30,
2009 2009
--------- ---------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 1,062 $ 1,062
--------- ---------
TOTAL ASSTS $ 1,062 $ 1,062
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ -- $ --
Loans from related party 86,932 47,000
--------- ---------
TOTAL CURRENT LIABILITIES 86,932 47,000
--------- ---------
STOCKHOLDERS' EQUITY
Capital stock
Authorized 75,000,000 ordinary voting shares at $0.001 per share
Issued and outstanding:
8,055,000 common shares at par value 8,055 8,055
Additional paid in capital 18,945 18,945
--------- ---------
27,000 27,000
Deficit accumulated during the exploration stage (112,870) (72,938)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (85,870) (45,938)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,062 $ 1,062
========= =========
Approved on behalf of the board
_______________________________, Director
_______________________________, Director
3
WINCHESTER INTERNATIONAL RESORTS INC.
(Formerly named Sterling Exploration Inc.)
Statements of Income
(An Exploration Stage Company)
(Expressed in US Dollars)
(Unaudited)
--------------------------------------------------------------------------------
Accumulated From
Three Months Three Months Inception Date of
Ended Ended August 18, 2003 to
September 30, September 30, September 30,
2009 2008 2009
----------- ----------- -----------
GENERAL AND ADMINISTRATIVE EXPENSES
Bank charges and interest $ 95 $ 98 $ 823
Filing and transfer agent fees -- 455 19.088
Professional fees 22,336 6,790 59,892
Mineral properties -- -- 14,500
Office expenses 2,720 220 3,786
Travel and entertainment 14,781 -- 14,781
----------- ----------- -----------
Total general and administrative expenses 39,932 7,563 112,870
----------- ----------- -----------
Net loss $ (39,932) $ (7,563) $ (112,870)
=========== =========== ===========
EARNINGS PER SHARE - BASIC AND DILUTED $ (0.00) $ (0.00)
=========== ===========
WEIGHTED AVERAGE OUTSTANDING SHARES 8,055,000 8,055,000
=========== ===========
4
WINCHESTER INTERNATIONAL RESORTS INC.
(Formerly named Sterling Exploration Inc.)
Statement of Stockholders' Equity
(An Exploration Stage Company)
(Expressed in US Dollars)
(Unaudited)
--------------------------------------------------------------------------------
Deficit
Accumulated Total
Price Number of Additional Total During the Stock-
Per Common Par Paid-in Capital Exploration holders'
Share Shares Value Capital Stock Stage Equity
----- ------ ----- ------- ----- ----- ------
Balance, August 18, 2003 -- $ -- $ -- $ -- $ -- $ --
September 5, 2003
Subscribed for cash $0.001 2,000,000 2,000 -- 2,000 -- 2,000
October 30, 2003
Subscribed for cash $0.001 1,500,000 1,500 -- 1,500 1,500
Comprehensive loss for the
period ended June 30, 2004 (80) (80)
----------- -------- -------- -------- --------- --------
Balance, June 30, 2004 3,500,000 3,500 -- 3,500 (80) 3,420
October 4, 2004
Subscribed for cash $0.001 3,000,000 3,000 -- 3,000 3,000
October 27, 2004
Subscribed for cash $0.01 1,050,000 1,050 9,450 10,500 10,500
December 7, 2004
Subscribed for cash $0.01 450,000 450 4,050 4,500 4,500
January 10, 2005
Subscribed for cash $0.1 15,000 15 1,485 1,500 1,500
January 27, 2005
Subscribed for cash $0.1 40,000 40 3,960 4,000 4,000
Net loss (7,547) (7,547)
----------- -------- -------- -------- --------- --------
Balance, June 30, 2005 8,055,000 8,055 18,945 27,000 (7,627) 19,373
Net loss (7,573) (7,573)
----------- -------- -------- -------- --------- --------
Balance, June 30, 2006 8,055,000 8,055 18,945 27,000 (15,200) 11,800
----------- -------- -------- -------- --------- --------
Net loss (8,409) (8,409)
----------- -------- -------- -------- --------- --------
Balance, June 30, 2007 8,055,000 8,055 18,945 27,000 (23,609) 3,391
Net loss (28,914) (28,914)
----------- -------- -------- -------- --------- --------
Balance, June 30, 2008 8,055,000 $ 8,055 $ 18,945 $ 27,000 $ (52,523) $(25,523)
----------- -------- -------- -------- --------- --------
Net loss (20,415) (20,415)
----------- -------- -------- -------- --------- --------
Balance, June 30, 2009 8,055,000 $ 8,055 $ 18,945 $ 27,000 $ (72,938) $(45,938)
----------- -------- -------- -------- --------- --------
Net loss (39,932) (39,932)
----------- -------- -------- -------- --------- --------
Balance, September 30, 2009 8,055,000 $ 8,055 $ 18,945 $ 27,000 $(112,870) $(85,870)
=========== ======== ======== ======== ========= ========
5
WINCHESTER INTERNATIONAL RESORTS INC.
(Formerly named Sterling Exploration Inc.)
Statements of Cash Flows
(An Exploration Stage Company)
(Expressed in US Dollars)
(Unaudited)
--------------------------------------------------------------------------------
Accumulated From
Three Months Three Months Inception Date of
Ended Ended August 18, 2003 to
September 30, September 30, September 30,
2009 2008 2009
--------- --------- ---------
CASH DERIVED FROM (USED FOR) OPERATING ACTIVITIES
Net loss for the period $ (39,932) $ (7,563) $(112,870)
Adjustments to reconcile net loss to net cash
Provided by (used in) operating activities
Changes in operating assets and liabilities
Accounts payable -- 1,139 --
--------- --------- ---------
Net cash (used in) operating activities (39,932) (8,702) (112,870)
--------- --------- ---------
FINANCING ACTIVITIES
Loans from related party 39,932 -- 86,932
Shares subscribed for cash -- -- 27,000
--------- --------- ---------
Net cash provided by financing activities 39,932 -- 113,932
--------- --------- ---------
INVESTING ACTIVITIES -- -- --
--------- --------- ---------
Net cash used for investing activities -- -- --
--------- --------- ---------
Cash increase during the period -- (8,702 1,062
Cash beginning of the period 1,062 10,616 --
--------- --------- ---------
Cash end of the period $ 1,062 $ 1,914 $ 1,062
========= ========= =========
6
WINCHESTER INTERNATIONAL RESORTS INC.
(Formerly named Sterling Exploration Inc.)
Notes to Financial Statements
September 30, 2009
(An Exploration Stage Company)
(Expressed in US Dollars)
(Unaudited)
--------------------------------------------------------------------------------
1. NATURE AND CONTINUANCE OF OPERATIONS
Winchester International Resorts Inc. ("the Company"), formerly named
Sterling Exploration Inc, was incorporated under the laws of State of
Nevada, U.S. on August 18, 2003, with an authorized capital of 75,000,000
common shares with a par value of $0.001. The Company's year end is the end
of June.
These financial statements have been prepared on a going concern basis
which assumes the Company will be able to realize its assets and discharge
its liabilities in the normal course of business for the foreseeable
future. The Company has incurred losses since inception resulting in an
accumulated deficit of $112,870 as at September 30, 2009 and further losses
are anticipated in the development of its business raising substantial
doubt about the Company's ability to continue as a going concern. The
ability to continue as a going concern is dependent upon the Company
generating profitable operations in the future and/or to obtain the
necessary financing to meet its obligations and repay its liabilities
arising from normal business operations when they come due. Management
intends to finance operating costs over the next twelve months with
existing cash on hand and loans from directors and or private placement of
common stock.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States of
America and are presented in US dollars.
Exploration Stage Company
The Company complies with the Financial Accounting Standards Board
Statement No. 7, its characterization of the Company as an exploration
stage enterprise.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make 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 period. Actual results could differ from those estimates.
The carrying value of cash and accounts payable and accrued liabilities
approximates their fair value because of the short maturity of these
instruments. Unless otherwise noted, it is management's opinion the Company
is not exposed to significant interest, currency or credit risks arising
from these financial instruments.
Income Taxes
The Company follows the liability method of accounting for income taxes.
Under this method, deferred income tax assets and liabilities are
recognized for the estimated tax consequences attributable to differences
between the financial statement carrying values and their respective income
tax basis (temporary differences). The effect on deferred income tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
At September 30, 2009, a full deferred tax asset valuation allowance has
been provided and no deferred tax asset has been recorded.
Basic and Diluted Loss Per Share
The Company computes loss per share in accordance with SFAS No. 128,
"Earnings per Share" which requires presentation of both basic and diluted
earnings per share on the face of the statement of operations. Basic loss
per share is computed by dividing net loss available to common shareholders
by the weighted average number of outstanding common shares during the
period. Diluted loss per share gives effect to all dilutive potential
common shares outstanding during the period. Dilutive loss per share
excludes all potential common shares if their effect is anti-dilutive.
The Company has no potential dilutive instruments and accordingly basic
loss and diluted loss per share are equal.
7
WINCHESTER INTERNATIONAL RESORTS INC.
(Formerly named Sterling Exploration Inc.)
Notes to Financial Statements
September 30, 2009
(An Exploration Stage Company)
(Expressed in US Dollars)
(Unaudited)
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-based Compensation
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment",
which replaced SFAS No. 123, "Accounting for Stock-Based Compensation" and
superseded APB Opinion No. 25, "Accounting for Stock Issued to Employees".
In January 2005, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 107, "Share-Based Payment", which
provides supplemental implementation guidance for SFAS No. 123R. SFAS No.
123R requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the financial statements based
on the grant date fair value of the award. SFAS No. 123R was to be
effective for interim or annual reporting periods beginning on or after
June 15, 2005, but in April 2005 the SEC issued a rule that will permit
most registrants to implement SFAS No. 123R at the beginning of their next
fiscal year, instead of the next reporting period as required by SFAS No.
123R. The pro-forma disclosures previously permitted under SFAS No. 123 no
longer will be an alternative to financial statement recognition. Under
SFAS No. 123R, the Company must determine the appropriate fair value model
to be used for valuing share-based payments, the amortization method for
compensation cost and the transition method to be used at date of adoption.
The transition methods include prospective and retroactive adoption
options. Under the retroactive options, prior periods may be restated
either as of the beginning of the year of adoption or for all periods
presented. The prospective method requires that compensation expense be
recorded for all unvested stock options and restricted stock at the
beginning of the first quarter of adoption of SFAS No. 123R, while the
retroactive methods would record compensation expense for all unvested
stock options and restricted stock beginning with the first period
restated. The Company adopted the modified prospective approach of SFAS No.
123R for the quarter beginning December 1, 2005. The Company did not record
any compensation expense for the period ended September 30, 2009 because
there were no stock options outstanding prior to the adoption or at
September 30, 2009.
Recent Accounting Pronouncements
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and
140", to simplify and make more consistent the accounting for certain
financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", to permit fair value
re-measurement for any hybrid financial instrument with an embedded
derivative that otherwise would require bifurcation, provided that the
whole instrument is accounted for on a fair value basis. SFAS No. 155
amends SFAS No. 140, "Accounting for the Impairment or Disposal of
Long-Lived Assets", to allow a qualifying special-purpose entity to hold a
derivative financial instrument that pertains to a beneficial interest
other than another derivative financial instrument. SFAS No. 155 applies to
all financial instruments acquired or issued after the beginning of an
entity's first fiscal year that begins after September 15, 2006, with
earlier application allowed. This standard is not expected to have a
significant effect on the Company's future reported financial position or
results of operations.
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". This statement requires all separately recognized servicing
assets and servicing liabilities be initially measured at fair value, if
practicable, and permits for subsequent measurement using either fair value
measurement with changes in fair value reflected in earnings or the
amortization and impairment requirements of Statement No. 140. The
subsequent measurement of separately recognized servicing assets and
servicing liabilities at fair value eliminates the necessity for entities
that manage the risks inherent in servicing assets and servicing
liabilities with derivatives to qualify for hedge accounting treatment and
eliminates the characterization of declines in fair value as impairments or
direct write-downs. SFAS No. 156 is effective for an entity's first fiscal
year beginning after September 15, 2006. This adoption of this statement is
not expected to have a significant effect on the Company's future reported
financial position or results of operations.
8
WINCHESTER INTERNATIONAL RESORTS INC.
(Formerly named Sterling Exploration Inc.)
Notes to Financial Statements
September 30, 2009
(An Exploration Stage Company)
(Expressed in US Dollars)
(Unaudited)
--------------------------------------------------------------------------------
3. MINERAL INTERESTS
On January 20, 2005, the Company entered into a mineral property purchase
agreement to acquire a 100% interest in one mineral claim located in one
mineral claim located in the Scadding Township, Sudbury Mining Division,
Ontario for total consideration of $7,000.
During the year ended September 30, 2006, exploration cost of $7,500 was
incurred for the mineral property.
4. COMMON STOCK
The total number of common shares authorized that may be issued by the
Company is 75,000,000 shares with a par value of one tenth of one cent
($0.001) per share and no other class of shares is authorized.
During the period ended June 30, 2005, the Company issued 8,055,000 shares
of common stock for total cash proceeds of $27,000. At September 30, 2009
there were no outstanding stock options or warrants.
5. INCOME TAXES
As of September 30, 2009, the Company had net operating loss carry forwards
of approximately $112,870 that may be available to reduce future years'
taxable income through 2027. Future tax benefits which may arise as a
result of these losses have not been recognized in these financial
statements, as their realization is determined not likely to occur and
accordingly, the Company has recorded a valuation allowance for the
deferred tax asset relating to these tax loss carry-forwards.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors", that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this quarterly report, particularly in
the section entitled "Risk Factors".
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars. All references to "CDN$" refer to Canadian
dollars and all references to "common shares" refer to the common shares in our
capital stock.
As used in this quarterly report, the terms "we", "us", "our company", mean
Winchester International Resorts Inc. a Nevada corporation, unless otherwise
indicated.
GENERAL OVERVIEW
We were incorporated in Nevada on August 18, 2003. To date, we have been a
company primarily engaged in the acquisition and exploration of natural resource
properties.
On January 20, 2005, we purchased the Railway Prospect property in Ontario
Canada, consisting of 633 acres, including within 16 unpatented mining claim
units, we purchased the property from Pilgrim Creek Mining Ltd.
Effective June 30, 2009, Andrew Buchholz and Veryl Norquay were elected
directors of our company and Simone Maria Anderson resigned as a director and
officer of our company.
Effective June 30, 2009, Veryl Norquay was appointed chief executive officer and
president and Andrew Buchholz was appointed chief financial officer.
Subsequent to our year ended June 30, 2009, based on information that we had
available to us, we determined that the Railway Prospect property did not, in
all likelihood, contain a commercially viable mineral deposit.
Our management has been analyzing the various alternatives available to our
company to ensure our survival and to preserve our shareholder's investment in
our common shares. This analysis has included sourcing additional forms of
financing to continue our business as is, or mergers and/or acquisitions. At
this stage in our operations, we believe either course is acceptable, as our
operations have not been profitable and our future prospects for our business
are not good without further financing.
10
On August 3, 2009, we presented an offer to purchase a 90% interest in
Winchester International Resorts, LLC a Mississippi limited liability company,
in order to effect a business combination of our two companies. It is
anticipated that the acquisition will be structured as a share exchange, whereby
we will purchase 90% of the memberships of Winchester International Resorts, LLC
from its members in exchange for shares of our company. Winchester International
Resorts, LLC is a company that is currently seeking to acquire lands and/or
buildings in Tunica County, Mississippi.
The acquisition contemplated by the offer is subject to the fulfillment of
certain conditions precedent, due diligence and the negotiation of a definitive
agreement.
Effective September 9, 2009, we have changed our name from "Sterling Exploration
Inc." to "Winchester International Resorts Inc.", by way of a merger with our
wholly owned subsidiary Winchester International Resorts Inc., which was formed
solely for the change of name. The name change becomes effective with the
Over-the-Counter Bulletin Board at the opening for trading on September 14, 2009
under the new stock symbol "WNCH". Our new CUSIP number is 972817100.
Effective November 9, 2009, Mr. Veryl Norquay resigned as the President, Chief
Executive Officer and a director of our company.
As a result of Mr. Norquay's resignation, on November 9, 2009, we appointed Mr.
Ronald L. Marquardt as the President, Chief Operating Officer and a director of
our company.
Our board of directors now consists of Ronald L. Marquardt and Andrew Buchholz.
EMPLOYEES
Our directors and officers act as employees of our company. We do not anticipate
any significant changes in the number of employees during the next 12 months.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not anticipate the purchase or sale of any plant or significant equipment
during the next 12 months.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
The following summary of our results of operations should be read in conjunction
with our financial statements for the quarter ended September 30, 2009 which are
included herein.
Our operating results for the three months ended September 30, 2009 and 2008 are
summarized as follows:
Three Months Ended
September 30,
2009 2008
-------- --------
Revenue $ Nil $ Nil
General and Administrative Expenses $ 39,932 $ 7,563
Net Loss $(39,932) $ (7,563)
REVENUES
We have not earned any revenues since our inception and we do not anticipate
earning revenues in the near future.
11
GENERAL AND ADMINISTRATIVE EXPENSES
Our general and administrative expenses for the three months ended September 30,
2009 and September 30, 2008 are outlined in the table below:
Three Months Ended
September 30,
2009 2008
-------- --------
Bank charges and interest $ 95 $ 98
Filing and transfer agent fees $ 0 $ 455
Professional fees $22,336 $6,790
Mineral properties $ 0 $ 0
Office expenses $ 2,720 $ 220
Travel and entertainment $14,781 $ 0
The increase in general and administrative expenses for the three months ended
September 30, 2009, compared to the same period in fiscal 2008, was mainly due
to an increase in professional fees, office expenses and travel and
entertainment expenses.
LIQUIDITY AND FINANCIAL CONDITION
As of September 30, 2009, our total assets were $1,062 and our total current
liabilities were $86,932 and we had a working capital deficit of $85,870. Our
financial statements report a net loss of $39,932 for the three months ended
September 30, 2009, and a net loss of $112,870 for the period from August 18,
2003 (date of inception) to September 30, 2009.
We have suffered recurring losses from operations. The continuation of our
company is dependent upon our company attaining and maintaining profitable
operations and raising additional capital as needed. In this regard we have
raised additional capital through equity offerings and loan transactions.
CASH FLOWS
At At
September 30, September 30,
2009 2008
-------- --------
Net Cash (Used in) Operating Activities $(39,932) $ (8,702)
Net Cash Used In Investing Activities $ 0 $ 0
Net Cash Provided by Financing Activities $ 39,932 $ 0
INCREASE (DECREASE) IN CASH $ 0 $ (8,702)
We had cash in the amount of $1,062 as of September 30, 2009 as compared to
$1,062 as of June 30, 2009. We had a working capital deficit of $85,870 as of
September 30, 2009 compared to working capital deficit of $45,938 as of June 30,
2008.
Our principal sources of funds have been from sales of our common stock.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
GOING CONCERN
The audited financial statements included with this annual report have been
prepared on the going concern basis which assumes that adequate sources of
financing will be obtained as required and that our assets will be realized and
liabilities settled in the ordinary course of business. Accordingly, the audited
12
financial statements do not include any adjustments related to the
recoverability of assets and classification of assets and liabilities that might
be necessary should we be unable to continue as a going concern.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to stockholders.
APPLICATION OF CRITICAL ACCOUNTING POLICIES [TO BE UPDATED]
Our financial statements have been prepared in accordance with generally
accepted accounting principles in the United States of America and are presented
in US dollars.
EXPLORATION STAGE COMPANY
The Company complies with the Financial Accounting Standards Board Statement No.
7, its characterization of the Company as an exploration stage enterprise.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make 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 period. Actual results
could differ from those estimates.
The carrying value of cash and accounts payable and accrued liabilities
approximates their fair value because of the short maturity of these
instruments. Unless otherwise noted, it is management's opinion the Company is
not exposed to significant interest, currency or credit risks arising from these
financial instruments.
INCOME TAXES
The Company follows the liability method of accounting for income taxes. Under
this method, deferred income tax assets and liabilities are recognized for the
estimated tax consequences attributable to differences between the financial
statement carrying values and their respective income tax basis (temporary
differences). The effect on deferred income tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
At September 30, 2009, a full deferred tax asset valuation allowance has been
provided and no deferred tax asset has been recorded.
BASIC AND DILUTED LOSS PER SHARE
The Company computes loss per share in accordance with SFAS No. 128, "Earnings
per Share" which requires presentation of both basic and diluted earnings per
share on the face of the statement of operations. Basic loss per share is
computed by dividing net loss available to common shareholders by the weighted
average number of outstanding common shares during the period. Diluted loss per
share gives effect to all dilutive potential common shares outstanding during
the period. Dilutive loss per share excludes all potential common shares if
their effect is anti-dilutive.
The Company has no potential dilutive instruments and accordingly basic loss and
diluted loss per share are equal.
13
STOCK-BASED COMPENSATION
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment", which
replaced SFAS No. 123, "Accounting for Stock-Based Compensation" and superseded
APB Opinion No. 25, "Accounting for Stock Issued to Employees". In January 2005,
the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin
("SAB") No. 107, "Share-Based Payment", which provides supplemental
implementation guidance for SFAS No. 123R. SFAS No. 123R requires all
share-based payments to employees, including grants of employee stock options,
to be recognized in the financial statements based on the grant date fair value
of the award. SFAS No. 123R was to be effective for interim or annual reporting
periods beginning on or after June 15, 2005, but in April 2005 the SEC issued a
rule that will permit most registrants to implement SFAS No. 123R at the
beginning of their next fiscal year, instead of the next reporting period as
required by SFAS No. 123R. The pro-forma disclosures previously permitted under
SFAS No. 123 no longer will be an alternative to financial statement
recognition. Under SFAS No. 123R, the Company must determine the appropriate
fair value model to be used for valuing share-based payments, the amortization
method for compensation cost and the transition method to be used at date of
adoption.
The transition methods include prospective and retroactive adoption options.
Under the retroactive options, prior periods may be restated either as of the
beginning of the year of adoption or for all periods presented. The prospective
method requires that compensation expense be recorded for all unvested stock
options and restricted stock at the beginning of the first quarter of adoption
of SFAS No. 123R, while the retroactive methods would record compensation
expense for all unvested stock options and restricted stock beginning with the
first period restated. The Company adopted the modified prospective approach of
SFAS No. 123R for the quarter beginning December 1, 2005. The Company did not
record any compensation expense for the period ended September 30, 2009 because
there were no stock options outstanding prior to the adoption or at September
30, 2009.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments-an amendment of FASB Statements No. 133 and 140", to
simplify and make more consistent the accounting for certain financial
instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", to permit fair value re-measurement for any
hybrid financial instrument with an embedded derivative that otherwise would
require bifurcation, provided that the whole instrument is accounted for on a
fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the
Impairment or Disposal of Long-Lived Assets", to allow a qualifying
special-purpose entity to hold a derivative financial instrument that pertains
to a beneficial interest other than another derivative financial instrument.
SFAS No. 155 applies to all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006,
with earlier application allowed. This standard is not expected to have a
significant effect on the Company's future reported financial position or
results of operations.
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities".
This statement requires all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable, and permits for
subsequent measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization and impairment requirements of
Statement No. 140. The subsequent measurement of separately recognized servicing
assets and servicing liabilities at fair value eliminates the necessity for
entities that manage the risks inherent in servicing assets and servicing
liabilities with derivatives to qualify for hedge accounting treatment and
eliminates the characterization of declines in fair value as impairments or
direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year
beginning after September 15, 2006. This adoption of this statement is not
expected to have a significant effect on the Company's future reported financial
position or results of operations.
ITEM 4T. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
14
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president (who is acting as our
principal executive officer) and our chief financial officer (who is acting as
our principal financial officer and principle accounting officer) to allow for
timely decisions regarding required disclosure.
As of September 30, 2009, the end of our first quarter covered by this report,
we carried out an evaluation, under the supervision and with the participation
of our president (who is acting as our principal executive officer) and our
chief financial officer (who is acting as our principal financial officer and
principle accounting officer), of the effectiveness of the design and operation
of our disclosure controls and procedures. Based on the foregoing, our president
(who is acting as our principal executive officer) and our chief financial
officer (who is acting as our principal financial officer and principle
accounting officer) concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this quarterly report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during the quarter ended September 30, 2009 that have materially
or are reasonably likely to materially affect, our internal controls over
financial reporting.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Other than as set out below, our company is not a party to any pending legal
proceeding and no legal proceeding is contemplated or threatened as of the date
of this quarterly report.
ITEM 1A. RISK FACTORS
Much of the information included in this quarterly report includes or is based
upon estimates, projections or other "forward looking statements". Such forward
looking statements include any projections and estimates made by us and our
management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other "forward looking statements" involve
various risks and uncertainties as outlined below. We caution the reader that
important factors in some cases have affected and, in the future, could
materially affect actual results and cause actual results to differ materially
from the results expressed in any such estimates, projections or other "forward
looking statements".
BECAUSE OUR AUDITORS HAVE ISSUED A GOING CONCERN OPINION, THERE IS SUBSTANTIAL
UNCERTAINTY WE WILL CONTINUE ACTIVITIES IN WHICH CASE YOU COULD LOSE YOUR
INVESTMENT.
Our auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an ongoing business for the next
twelve months. As such we may have to cease activities and you could lose your
investment.
OUR MANAGEMENT IS CURRENTLY SEEKING OUT POTENTIAL BUSINESS OPPORTUNITIES AND
THERE ARE NUMEROUS RISKS ASSOCIATED WITH ANY POTENTIAL BUSINESS OPPORTUNITY.
We intend to use reasonable efforts to acquire or complete potential business
opportunities that our management determines is in the best interests of our
shareholders. Such combinations will be accompanied by risks commonly
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encountered in acquisitions. Failure to manage and successfully integrate
acquisitions we make could harm our business, our strategy and our operating
results in a material way.
TRADING IN OUR COMMON SHARES ON THE OTC BULLETIN BOARD IS LIMITED AND SPORADIC
MAKING IT DIFFICULT FOR OUR SHAREHOLDERS TO SELL THEIR SHARES OR LIQUIDATE THEIR
INVESTMENTS.
Our common shares are currently listed for public trading on the OTC Bulletin
Board. The trading price of our common shares has been subject to wide
fluctuations. Trading prices of our common shares may fluctuate in response to a
number of factors, many of which will be beyond our control. The stock market
has generally experienced extreme price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of companies
with no current business operation. There can be no assurance that trading
prices and price earnings ratios previously experienced by our common shares
will be matched or maintained. These broad market and industry factors may
adversely affect the market price of our common shares, regardless of our
operating performance.
In the past, following periods of volatility in the market price of a company's
securities, securities class-action litigation has often been instituted. Such
litigation, if instituted, could result in substantial costs for us and a
diversion of management's attention and resources.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL
OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, OR FINRA, HAS ADOPTED SALES
PRACTICE REQUIREMENTS WHICH MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY AND
SELL OUR STOCK.
In addition to the "penny stock" rules described above, FINRA has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer's financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit
Number Description
------ -----------
(3) (I) ARTICLES OF INCORPORATION; AND (II) BYLAWS
3.1 Articles of Incorporation (incorporated by reference from our Form
SB-2 Registration Statement, filed on February 17, 2005)
3.2 Bylaws (incorporated by reference from our Form SB-2 Registration
Statement, filed on February 17, 2005)
3.3 Articles of Merger (incorporated by reference from our Current
Report on Form 8-K, filed on September 14, 2009)
(14) CODE OF ETHICS
14.1 Code of Ethics (incorporated by reference from our Annual Report on
Form 10-K, filed on October 1, 2009)
(31) RULE 13A-14(A)/15D-14(A) CERTIFICATIONS
31.1* Section 302 Certifications under Sarbanes-Oxley Act of 2002 of
Ronald L. Marquardt
31.2* Section 302 Certifications under Sarbanes-Oxley Act of 2002 of
Andrew Buchholz
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certifications under Sarbanes-Oxley Act of 2002 of
Ronald L. Marquardt
32.2* Section 906 Certifications under Sarbanes-Oxley Act of 2002 of
Andrew Buchholz
----------
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WINCHESTER INTERNATIONAL RESORTS INC.
/s/ Ronald L. Marquardt
--------------------------------------------------------------
Ronald L. Marquardt
President, Chief Operating Officer and Director
(Principal Executive Officer)
Date: November 16, 2009
/s/ Andrew Buchholz
--------------------------------------------------------------
Andrew Buchholz
Chief Financial Officer and Director
(Principal Financial Officer and Principal Accounting Officer)
Date: November 16, 2009
1