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, 2010
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.)
1802 North Carson Street, Suite 108, Carson City, Nevada 89701-1227
(Address of principal executive offices) (Zip Code)
702.685.9009
(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 has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-K (ss.229.405 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 [ ]
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.
9,021,000 common shares issued and outstanding as of September 30, 2010
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Our unaudited interim financial statements for the three month period ended
September 30, 2010 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)
ASSETS
September 30, June 30,
2010 2010
---------- ----------
(Unaudited) (Audited)
CURRENT ASSETS
Cash $ -- $ --
LAND 109,700 109,700
---------- ----------
TOTAL ASSTS $ 109,700 $ 109,700
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 1,820 $ 1,820
Loans from related party 175,570 148,824
---------- ----------
TOTAL CURRENT LIABILITIES 177,390 150,644
STOCKHOLDERS' EQUITY
Capital stock
Authorized 75,000,000 ordinary voting shares at $0.001 per share
Issued and outstanding:
9,021,000 common shares at par value 9,021 9,021
Additional paid in capital 1,030,979 1,030,979
---------- ----------
1,040,000 1,040,000
Deficit accumulated during the exploration stage (1,107,690) (1,080,944)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (67,690) (40,944)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 109,700 $ 109,700
========== ==========
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,
2010 2009 2010
------------ ------------ ------------
GENERAL AND ADMINISTRATIVE EXPENSES
Bank charges and interest $ -- $ 95 $ 823
Filing and transfer agent fees 347 -- 24,253
Professional fees 14,120 22,336 917,205
Mineral properties -- -- 14,500
Office expenses and other 6,574 2,720 26,760
Travel and entertainment 5,705 14,781 46,849
Write down of asset -- -- 77,300
------------ ------------ ------------
Total general and administrative expenses 26,746 39,932 1,107,690
------------ ------------ ------------
Net loss / (Recovery) $ (26,746) $ (39,932) $ (1,107,690)
============ ============ ============
EARNINGS PER SHARE - BASIC AND DILUTED $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE OUTSTANDING SHARES 9,021,000 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)
----------- -------- ---------- ---------- ----------- ----------
Debt relief 47,000 47,000 47,000
Subscribed for services $1.0 279,000 279 278,721 279,000 279,000
Subscribed for land $1.0 187,000 187 186,813 187,000 187,000
Subscribed for services $1.0 500,000 500 499,500 500,000 500,000
Net loss (1,008,006) (1,008,006)
----------- -------- ---------- ---------- ----------- ----------
Balance, June 30, 2010 9,021,000 $ 9,021 $1,030,979 $1,040,000 $(1,080,944) $ (40,944)
----------- -------- ---------- ---------- ----------- ----------
Net loss (26,746) (26,746)
----------- -------- ---------- ---------- ----------- ----------
Balance, September 30, 2010 9,021,000 $ 9,021 $1,030,979 $1,040,000 $(1,107,690) $ (67,690)
=========== ======== ========== ========== =========== ==========
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,
2010 2009 2010
------------ ------------ ------------
CASH DERIVED FROM (USED FOR) OPERATING ACTIVITIES
Net loss for the period $ (26,746) $ (39,932) $ (1,107,690)
Write down of asset -- -- 77,300
Shares issued for services -- -- 779,000
Adjustments to reconcile net loss to net cash -- -- --
Provided by (used in) operating activities -- -- --
Changes in operating assets and liabilities -- -- --
Accounts payable -- -- 1,820
------------ ------------ ------------
Net cash (used in) operating activities (26,746) (39,932) (249,570)
------------ ------------ ------------
FINANCING ACTIVITIES
Loans from related party 26,746 39,932 222,570
Shares subscribed for cash -- -- 27,000
------------ ------------ ------------
Net cash provided by financing activities 26,746 39,932 249,570
------------ ------------ ------------
INVESTING ACTIVITIES
Net cash used for investing activities -- -- --
------------ ------------ ------------
Cash increase during the period -- -- --
Cash beginning of the period -- 1,062 --
------------ ------------ ------------
Cash end of the period $ -- $ 1,062 $ --
============ ============ ============
Non-cash Investing and Financing Activities:
In fiscal year 2010 the Company issued 187,000 common shares for land valued at
$187,000, and a former officer contributed $47,000 in working capital loans to
paid in capital.
Cash paid for interest and income taxes:
Year ended June 30, 2010: None
Year ended June 30, 2009: None
6
WINCHESTER INTERNATIONAL RESORTS INC.
(Formerly named Sterling Exploration Inc.)
Notes to Financial Statements
September 30, 2010
(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. The Company is currently considering business opportunities in
resort development, mining exploration, and other areas as allowed by law.
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 $1,107,690 as at September 30, 2010 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 ASC 915, 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, 2010 a full deferred tax asset valuation allowance has
been provided and no deferred tax asset has been recorded.
7
Basic and Diluted Loss Per Share
The Company computes loss per share in accordance with ASC 105 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.
Fixed assets
Fixed assets are recorded at cost and depreciable assets are depreciated
under the straight line method over each item's estimated useful life.
Long-Lived Assets
In accordance with ASC 350, the Company regularly reviews the carrying
value of intangible and other long-lived assets for the existence of facts
or circumstances, both internally and externally, that may suggest
impairment. If impairment testing indicates a lack of recoverability, an
impairment loss is recognized by the Company if the carrying amount of a
long-lived asset exceeds its fair value.
Cash and cash equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less as cash equivalents.
Stock based compensation
The Company accounts for employee and non-employee stock awards under ASC
718, whereby equity instruments issued to employees for services are
recorded based on the fair value of the instrument issued and those issued
to non-employees are recorded based on the fair value of the consideration
received or the fair value of the equity instrument, whichever is more
reliably measurable.
2. 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 December 31, 2009
there were no outstanding stock options or warrants.
In March 2010, the Company issued 187,000 common shares to acquire a
building lot in Alberta, Canada at a contact price of $187,000. The Company
wrote down the property in 2010 to the assessed value of $109,700, taking a
write-down expense of $77,300. Title to the land has not yet been
transferred from the seller into the Company's name, although the Company
believes the transaction has been consummated.
The Company issued 500,000 common shares at $1.00 per for related party
services and issued 279,000 units at $1.00 per unit for services provided.
Each unit consists of one share of common stock and one. type "A" and one
type "B" warrant, exercisable by the holder anytime until December 31, 2011
at the price of $2.50 and $3.00 respectively. At the end of June 2010 the
Company had 466,000 A warrants and 466,000 B warrants outstanding. All
value in the unit issuances was allocated to the common stock as the
warrants were not in the money.
8
3. INCOME TAXES
As of June 30, 2010, the Company had net operating loss carry forwards of
approximately $930,000 that may be begin to expire in 2024. 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.
4. CONSULTING AGREEMENT
Starting from March 1, 2008, the Company entered into a 2-year Consulting
Agreement with Taggart Financial Trading Corp, ("Taggart"). Taggart, a
related party provides consulting services to assist the Company in
connection with certain aspects of the Projects. The Company has paid
Taggart the fees of $250,000 during the period ended June 30, 2010.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors", that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) 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.
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.
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 from
its members in exchange for shares of our company. Winchester International
Resorts is a company that has contracted to purchase certain land and buildings
located in Tunica County, Mississippi. This transaction did not complete and was
terminated on or around December 31, 2009.
Effective September 9, 2009, we 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 became effective with the
Over-the-Counter Bulletin Board at the opening for trading on September 14, 2009
under the stock symbol "WNCH". Our CUSIP number is 972817100.
10
Effective March 12, 2010, we entered into an agreement with Auctus Private
Equity Fund, LLC to raise up $10,000,000 through a drawdown equity financing
facility agreement. Under the terms of the agreement Auctus has agreed to
purchase from our company, up to $10,000,000 of our common stock. The agreement
expires 24 months after the effective date of the agreement.
On May 6, 2010, we entered into a share purchase agreement with David and Vickie
Chuchmuch, the shareholders of Factory Outlet Trailers Inc. Pursuant to the
terms of the share purchase agreement, we have agreed to acquire 51% of the
issued and outstanding shares of Factory Outlet Trailers' common stock in
consideration for the payment of CDN$4.4 million. The payments are to be made in
periodic installments with the final payment to occur on June 15, 2011. Factory
Outlet Trailers Inc. is in the trailer dealership business
On September 2, 2010, we entered into a merger agreement with Lake W Holdings
Inc. and its sole shareholder, Northstar Global GT. Lake W Holdings is a
Colorado corporation that holds certain mineral claims in Nevada and California.
The following is a brief description of certain of the terms and conditions of
the merger agreement that are material to us:
1. The resulting company's share structure shall be amended so as to
provide for both common stock and two classes of preferred stock, one
with super voting rights and the other with such rights and
restrictions as may be set by the board of directors. The super voting
preferred stock is to be issued on the effectiveness of the merger.
2. Our company will be re-domiciled to become a Wyoming corporation and
our name is to be changed Winchester Resources Inc.
3. Upon closing of the merger, current Lake W shareholders will own 90%
of the resulting company with our current shareholders owning the
remaining 10%.
4. Our current agreement for an acquisition of a 51% interest in Factory
Outlet Trailers, Inc. will be assigned/spun out into a newly
incorporated company, to be held pro-rata by our current shareholders.
Due to conditions precedent to closing, including those set out above, and the
risk that these conditions precedent will not be satisfied, there is no
assurance that we will complete the merger as contemplated in the merger
agreement. As at the date of this quarterly report, negotiations are ongoing.
EMPLOYEES
Currently our only employees are our directors and officers. We do not expect
any material changes in the number of employees over the next 12 month period.
We will outsource contract employment as needed.
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, 2010 AND 2009
The following summary of our results of operations should be read in conjunction
with our financial statements for the quarter ended September 30, 2010 which are
included herein.
Our operating results for the three months ended September 30, 2010 and 2009 are
summarized as follows:
11
Three Months Ended
September 30,
2010 2009
-------- --------
Revenue $ Nil $ Nil
Bank charges and interest $ Nil $ 95
Filing and transfer agent fees $ 347 $ Nil
Professional fees $ 14,120 $ 22,336
Office expenses $ 6,574 $ 2,720
Travel and entertainment $ 5,705 $ 14,781
Net Loss / (Recovery) $(26,746) $(39,932)
REVENUES
We did not earn any revenues during our three month period ended September 30,
2010.
GENERAL AND ADMINISTRATIVE EXPENSES
During the three months ended September 30, 2010, our general and administrative
expenses decreased over the three months ended September 30, 2009, primarily due
to reduced professional, travel and entertainment expenses.
LIQUIDITY AND FINANCIAL CONDITION
As of September 30, 2010, our total current assets were $109,700 and our total
current liabilities were $177,390 and we had a working capital of $(67,690). Our
financial statements report a net loss of $(26,746) for the three months ended
September 30, 2010, and a net loss of $1,107,690 for the period from August 18,
2003 (date of inception) to September 30, 2010.
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,
2010 2009
-------- --------
Net Cash (Used in) Operating Activities $(26,746) $(39,932)
Net Cash Used In Investing Activities $ Nil $ Nil
Net Cash Provided by Financing Activities $ 26,746 $ 39,932
INCREASE (DECREASE) IN CASH $ Nil $ Nil
We had cash in the amount of $Nil as of September 30, 2010 as compared to $1,062
as of September 30, 2010. We had a working capital deficit of $Nil as of
September 30, 2010 compared to working capital deficit of $1,062 as of September
30, 2009.
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.
12
INFLATION
The amounts presented in the financial statements do not provide for the effect
of inflation on our operations or financial position. The net operating losses
shown would be greater than reported if the effects of inflation were reflected
either by charging operations with amounts that represent replacement costs or
by using other inflation adjustments.
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
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.
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 ASC 915, 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, 2010 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 ASC 105 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.
13
The Company has no potential dilutive instruments and accordingly basic loss and
diluted loss per share are equal.
FIXED ASSETS
Fixed assets are recorded at cost and depreciable assets are depreciated under
the straight line method over each item's estimated useful life.
LONG-LIVED ASSETS
In accordance with ASC 350, the Company regularly reviews the carrying value of
intangible and other long-lived assets for the existence of facts or
circumstances, both internally and externally, that may suggest impairment. If
impairment testing indicates a lack of recoverability, an impairment loss is
recognized by the Company if the carrying amount of a long-lived asset exceeds
its fair value.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
STOCK BASED COMPENSATION
The Company accounts for employee and non-employee stock awards under ASC 718,
whereby equity instruments issued to employees for services are recorded based
on the fair value of the instrument issued and those issued to non-employees are
recorded based on the fair value of the consideration received or the fair value
of the equity instrument, whichever is more reliably measurable.
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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company", we are not required to provide the information
required by this Item.
14
ITEM 4. 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
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, 2010, the end of the 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, 2010 that have materially
or are reasonably likely to materially affect, our internal controls over
financial reporting.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered beneficial shareholder, is an adverse
party or has a material interest adverse to our interest.
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".
15
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. 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
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.
16
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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. [REMOVED AND RESERVED]
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)
(10) MATERIAL CONTRACTS
10.1 Drawdown Equity Financing Agreement (incorporated by reference from our
Current Report on Form 8-K filed on March 18, 2010)
10.2 Share Purchase Agreement between our company and David and Vickie
Chuchmuch dated May 6, 2010 (incorporated by reference from our Current
Report on Form 8-K, filed on May 12, 2010)
10.3 Agreement and Plan of Merger with Lake W Holdings Inc. and it sole
shareholder, Northstar Global dated September 2, 2010 (incorporated by
reference from our Current Report on Form 8-K, filed on September 9,
2010)
(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)
17
Exhibit
Number Description
- ------ -----------
(31) RULE 13A-14(A)/15D-14(A) CERTIFICATIONS
31.1* Section 302 Certifications under Sarbanes-Oxley Act of 2002 of Veryl
Norquay
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 Veryl
Norquay
32.2* Section 906 Certifications under Sarbanes-Oxley Act of 2002 of Andrew
Buchholz
- ----------
* Filed herewith.
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.
Date: November 22, 2010 /s/ "Veryl Norquay"
-----------------------------------------------
Veryl Norquay
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: November 22, 2010 /s/ "Andrew Buchholz"
-----------------------------------------------
Andrew Buchholz
Chief Financial Officer and Director
(Principal Financial Officer and Principal
Accounting Officer)
18