UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 2
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2005
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _____ to _______
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Commission file number 0-49978
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Island Residences Club, Inc.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 20-2443790
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1769-203 Jamestown Rd, Williamsburg, VA 23185
---------------------------------------------
(Address of principal executive offices) (Zip Code)
(757) 927-6848
--------------
(Registrant's telephone number, including area code)
P.O. Box 1947, Noosa Heads, Queensland, Australia C34567 (61-7) 5474-0492
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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.
[ ] Yes [ X] No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Outstanding at January 24, 2006
Common Stock, par value $0.0001 - 6,490,000
Transitional Small Business Disclosure Format (check one): [ ] Yes [X] No
EXPLANATORY NOTE
This Amendment No. 2 to our Form 10-QSB for the quarter ended March 31, 2005 is
being filed to amend and restate the items described below contained in the
company's quarterly report on Form 10-QSB for such period originally filed with
the Securities and Exchange Commission on May 13, 2005 and amended on August 11,
2005. In connection with comments from the Securities and Exchange Commission,
our board of directors concluded on October 21, 2005 that our previously issued
financial statements included in our Form 10-QSB for the quarter ended March 31,
2005 should no longer be relied upon. The facts underlying these conclusions are
as follows:
- - In the Form 10-QSB for the quarter ended March 31, 2005, the financial
statements filed were not reviewed by an independent auditor of the
Company.
- - In the Form 10-QSB for the quarter ended March 31, 2005, we failed to
provide disclosures relating to the Company's classification as a
development stage company under paragraph (11) of SFAS 7.
- - In the Form 10-QSB for the quarter ended March 31, 2005, we failed to
apply the accounting treatment required for investment in a related party
in relation to our acquisition of shares and vacation interest rights of PT
Island Concepts Indonesia.
After discussions with the independent auditors, the company's board of
directors determined that its Form 10-QSB for the quarter ended March 31, 2005
should be amended and restated to reflect the items described above. In
particular, this Amendment No. 2 amends the Form 10-QSB for the quarter ended
March 31, 2005 for the following purposes:
- - To include financial statements for the quarter ended March 31, 2005
that have been reviewed by the independent auditor of the Company;
- - To provide disclosures relating to the Company's classification as a
development stage company under paragraph (11) of SFAS 7; and
- - To apply the accounting treatment required for investment in a related
party in relation to our acquisition of shares and vacation interest rights
of PT Island Concepts Indonesia.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MARCH 31, 2005
(Unaudited)
ASSETS
(Restated)
Current assets:
Cash and cash equivalents $ -
Marketable securities 40,000
------------
Total assets $ 40,000
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to related party $ 18,370
------------
Total liabilities 18,370
------------
Stockholders' equity:
Preferred stock, $.0001 par value, 20,000,000 shares
authorized; no shares issued and outstanding -
Common stock, $.0001 par value, 100,000,000 shares
authorized; 6,240,000 shares issued and outstanding 624
Additional paid-in capital 39,600
Deficit accumulated during the development stage (18,594)
------------
Total stockholders' equity 21,630
------------
Total liabilities and stockholders' equity $ 40,000
============
-
<FN>
The accompanying notes form an integral part of these unaudited financial
statements
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2005 AND 2004 AND
FOR THE PERIOD FROM JULY 16, 2002 (INCEPTION) TO MARCH 31, 2005
(Unaudited)
(Restated)
For the period from
July 16, 2002
(inception) to
2005 2004 March 31, 2005
------------ ------------ ------------
(Restated) (Restated)
Net revenue $ - $ - $ -
Cost of revenue - - -
------------ ------------ ------------
Gross profit - - -
Selling, general and administrative
expenses 6,095 - 6,319
------------ ------------ ------------
Loss from operations before other expense
and provision for income taxes (6,095) - (6,319)
Other expense
Interest expense - - -
Loss before provision for income taxes (6,095) - (6,319)
Provision for income taxes - - -
------------ ------------ ------------
Net loss $ (6,095) $ - $ (6,319)
============ ============ ============
Loss per share - basic and diluted $ (0.00) $ - $ (0.00)
============ ============ ============
Weighted average number of shares -
basic and diluted 3,526,188 2,240,000 3,526,188
============ ============ ============
<FN>
The accompanying notes form an integral part of these unaudited financial
statements
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM JULY 16, 2002 (INCEPTION) TO MARCH 31, 2005
(Unaudited)
(Restated)
Deficit
accumulated
Additional during the Total
Common stock paid-in development stockholder's
-------------------------
Shares Amount capital stage equity (deficit)
------------ ------------ ------------ ------------ ------------
Balance at July 16, 2002 - $ - $ - $ - $ -
(inception)
Issuance of shares for services
at $0.0001 per share - July 16, 2002 1,240,000 124 - - 124
Net loss - - - (124) (124)
Balance at December 31, 2002 1,240,000 124 - (124) -
------------ ------------ ------------ ------------ ------------
Issuance of shares to convert
debt to equity
at $.0001 per share - Dec 31, 2003 1,000,000 100 - - 100
Net loss - - - (100) (100)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2003 2,240,000 224 - (224) -
Net loss - - - (12,275) (12,275)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2004 2,240,000 224 - (12,499) (12,275)
Issuance of shares for
vacation interest rights & marketable securities
at .0001 per shares - Mar 17, 2005 4,000,000 400 39,600 - 40,000
Net loss - - - (6,095) (6,095)
------------ ------------ ------------ ------------ ------------
Balance at March 31, 2005 (Restated) 6,240,000 $ 624 $ 39,600 $ (18,594) $ 21,630
============ ============ ============ ============ ============
<FN>
The accompanying notes form an integral part of these unaudited financial
statements
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2005 AND 2004 AND
FOR THE PERIOD FROM JULY 16, 2002 (INCEPTION) TO MARCH 31, 2005
(Unaudited)
(Restated)
For the period
from July 16, 2002
(inception) to
2005 2004 March 31, 2005
------------ ------------ ------------
(Restated) (Restated)
Cash flows from operating activities:
Net loss (6,095) - (6,319)
Adjustments to reconcile net loss to net
cash used in operating activities:
Issuance of common stock
in exchange for services - - 124
Issuance of common stock
to convert debt to equity - - 100
Increase in liabilities:
Due to related party 6,095 - 6,095
------------ ------------ ------------
Total adjustments 6,095 - 6,319
------------ ------------ ------------
Net cash used in operating activities - - -
------------ ------------ ------------
Net increase in cash and cash equivalents - - -
Cash and cash equivalents, beginning - - -
------------ ------------ ------------
Cash and cash equivalents, ending $ - $ - $ -
============ ============ ============
Supplemental disclosure of cash flow information:
Interest paid $ - $ - $ -
============ ============ ============
Income taxes paid $ - $ - $ -
============ ============ ============
<FN>
The accompanying notes form an integral part of these unaudited financial
statements
On March 17, 2005 the company issued 4,000,000 shares to Meridian Pacific
Investments HK Ltd for the transfer of 4,000,000 shares of PT Island Concepts
Indonesia Tbk valued at $40,000 and 4,000,000 rights valued at $0. The company
has recorded no value for the rights since they are acquired from a related
party whose basis was zero.
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Operations
Island Residences Club, Inc, formerly Island Investments, Inc., formerly Hengest
Investments, Inc (a development stage company)("the Company") was incorporated
in the State of Delaware on July 16, 2002 to serve as a vehicle to effect a
merger, exchange of capital stock, asset acquisition or other business
combination with a domestic or foreign private business.
On March 17, 2005, the Company began business operations, and all activity prior
to that date relates to the Company's formation and proposed fund raising.
On June 20, 2005, the board of directors resolved to change the company's fiscal
year end from December 31 to May 31, commencing May 31, 2005.
B. Basis of Presentation
The accompanying unaudited financial statements have been prepared by the
Company in accordance with generally accepted accounting principles in the
United States and pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements, prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to such rules and
regulations. The Company believes that the disclosures in these financial
statements are adequate and not misleading.
In the opinion of management, the unaudited financial statements contain all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the Company's financial position, results of operations and
cash flows. Operating results for the quarter ended March 31, 2005 are not
necessarily indicative of the results for any future period.
C. Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of three months or less from the date of purchase that are
readily convertible into cash to be cash equivalents.
D. Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States 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 reporting period. Actual results could differ from those estimates.
E. Income Taxes
The Company accounts for income taxes under the Financial Accounting
Standards Board of Financial Accounting No. 109, "Accounting for Income Taxes"
"Statement 109"). Under Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date. There were no current or deferred income tax expense or benefits due to
the Company not having any material operations for the period ended March 31,
2005.
F. Basic and diluted net loss per share
Net loss per share is calculated in accordance with Statement of
Financial Accounting Standards 128, Earnings per Share ("SFAS 128"). Basic net
loss per share is based upon the weighted average number of common shares
outstanding. Diluted net loss per share is based on the assumption that all
dilutive convertible shares, stock options and warrants were converted or
exercised. Dilution is computed by applying the treasury stock method. At March
31, 2005 there were no dilutive convertible shares, stock options or warrants.
I. Recent Pronouncements
In December 2004, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 123 (Revised), Share-Based Payment. This standard revises SFAS No.
123, APB Opinion No. 25 and related accounting interpretations, and eliminates
the use of the intrinsic value method for employee stock-based compensation.
SFAS No. 123 requires compensation costs related to share based payment
transactions to be recognized in the financial statements over the period that
an employee provides service in exchange for the award. Currently, the Company
uses the intrinsic value method of APB Opinion No. 25 to value share-based
options granted to employees and board members. This standard requires the
expensing of all share-based compensation, including options, using the fair
value based method. The effective date of this standard for the Company will be
January 1, 2006. Management is currently assessing the impact that this new
standard will have on the Company's financial statements.
In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the
Amortization Period for Leasehold Improvements ("EITF 05-6"). EITF 05-6 provides
guidance on determining the amortization period for leasehold improvements
acquired in a business combination or acquired subsequent to lease inception.
The guidance in EITF 05-6 will be applied prospectively and is effective for
periods beginning after June 29, 2005. EITF 05-6 is not expected to have a
material effect on its consolidated financial position or results of operations.
NOTE 2 - STOCKHOLDERS' EQUITY
A. Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred stock
at $.0001 par value, with such designations voting and other rights and
preference as may be determined from time to time by the Board of Directors.
As of March 31, 2005, no preferred stock has been issued.
B. Common Stock
The Company is authorized to issue 100,000,000 shares of common stock at
$.0001 par value.
On July 17, 2002 the Company issued 1,240,000 shares of its $.0001 par value
common stock to the founder of the Company for services of $124. The shares were
deemed to have been issued pursuant to an exemption provided by Section 4(2) of
the Act, which exempts from registration "transactions by an issuer not
involving any public offering."
On December 31, 2003 the Company issued an officer of the Company 1,000,000
shares of its $.0001 par value common stock for conversion of debt to equity of
$100. The shares were deemed to have been issued pursuant to an exemption
provided by Section 4(2) of the Act, which exempts from registration
"transactions by an issuer not involving any public offering."
On March 17, 2005 the company issued 4,000,000 shares to Meridian Pacific
Investments HK Ltd for the transfer of 4,000,000 shares of PT Island Concepts
Indonesia Tbk valued at $40,000 and 4,000,000 rights valued at $0. The company
recorded no value for the rights since they are acquired from a related party
whose basis was zero.
Island Residences Club, Inc ("IRCI"), Meridian Pacific Investments ("Meridian")
and PT Island Concepts, Indonesia Tbk ("Island Concepts") are related parties
with common ownership and officers before and after the transaction.
Specifically in respect to the following: IRCI is a Delaware Corporation that is
publicly reporting but is not publicly trading. Meridian is a Hong Kong company
that is privately owned. Island Concepts (www.islandconcepts.com) is an
Indonesian Company that is publicly trading on the Surabaya Stock Exchange in
Indonesia under the symbol ("ICON"). Graham Bristow is an officer and director
in all three companies. Graham Bristow, through direct and indirect ownership,
owns 100% of Meridian and approximately 80% of Island Concepts and 70% of IRCI.
C. Warrant and Options
There are no warrants or options outstanding to issue any additional
shares of common stock or preferred stock of the Company.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. Office
services are provided without charge by the officers and directors of the
Company. Such costs are immaterial to the financial statements and accordingly,
have not been reflected therein. The officers and directors of the Company are
involved in other business activities and may, in the future, become involved in
other business opportunities. If a specific business opportunity becomes
available, such person may face a conflict in selecting between the Company and
their other business interests. The Company has not formulated a policy for the
resolution of such conflicts.
Due to related party represents expenses paid by related parties on behalf of
the Company, which are non-interest bearing, unsecured, and due on demand. As of
March 31, 2005, the balance of due to related party amount to $18,370.
NOTE 4 - GOING CONCERN CONSIDERATION
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles in the United States, which
contemplates the continuation of the Company as a going concern. However, the
Company is in the development stage, and has no current sources of revenue.
Without realization of additional capital, it would be unlikely for the Company
to continue as a going concern.
The management's plans include the acquisition of a suitable business
venture to provide the opportunity for the Company to continue as a going
concern. However, there can be no assurance that management will be successful
in this endeavor.
NOTE 5 - RESTATEMENT
In the Form 10-QSB for the quarter ended March 31, 2005, the financial
statements filed were not reviewed by the independent auditor of the Company.
The Company also failed to provide disclosures relating to the Company's
classification as a development stage company under paragraph (11) of
SFAS 7. In addition, the Company failed to apply the accounting treatment
required for investment in a related party in relation to its acquisition of
shares and vacation interest rights of PT Island Concepts Indonesia.
Specifically, the Company issued 4,000,000 shares of its common stock in
exchange for 4,000,000 rights and 4,000,000 shares of Island Concepts Indonesia,
a related party. The Company recorded the rights at $10,000,000 and the shares
received at $40,000. Since the rights were acquired from a related party whose
basis was zero, the rights have now been recorded at zero value. The Company
also recorded expenses incurred for the year ended December 31, 2004 in the
three months ended March 31, 2005 amounting $12,275. Since the expenses were
incurred and related to the year ended December 31, 2004, these have now been
recorded in the financial statements for the year ended December 31, 2004.
The Company has restated its financial statements for the three months period
ended March 31, 2005 to reflect those changes.
The effect of the correction of the error is as follows:
AS
PREVIOUSLY AS
REPORTED RESTATED
---------------------------
BALANCE SHEET
As of March 31, 2005
Asset:
Cash and cash equivalents $ 40,224 $ -
Marketable securities $ - $ 40,000
Vacation interest rights $10,000,000 $ -
Total current assets $10,040,224 $ 40,000
Prepaid expense $ 320 $ -
Total other assets $ 320 $ -
Total assets $10,040,544 $ 40,000
Liabilities:
Due to related party $ 18,594 $ 18,370
Stockholders' equity:
Additional paid in capital $10,040,000 $ 39,600
Accummulated deficit $ (18,674) $ (18,594)
Total stockholders' equity $10,021,950 $ 21,630
Total liabilities and stockholders' equity $10,040,544 $ 40,000
STATEMENT OF OPERATIONS:
For the three months ended
March 31, 2005
--------------------------
Organization expense $ 12,275 $ -
General and administrative $ 6,319 $ 6,095
Total cost and expense $ 18,594 $ 6,095
Loss from operations $ (18,594) $ (6,095)
Loss before income tax $ (18,594) $ (6,095)
Net loss $ (18,594) $ (6,095)
Net loss per share:
Basic and diluted $ -
NOTE 6 - SUBSEQUENT EVENTS
On June 20, 2005, the Company entered into an Investment Agreement (the
"Agreement") with Dutchess Private Equities Fund II, LP (the "Investor"). This
Agreement provides that, following notice to the Investor, the Company may put
to the Investor up to $10,000,000 of its common stock for a purchase price equal
to 95% of the lowest closing bid price of its common stock during the five day
period following that notice. The number of shares that the Company is permitted
to put pursuant to the Agreement is either: (A) 200% of the average daily
volume of the common stock for the twenty trading days prior to the
applicable put notice date, multiplied by the average of the three daily closing
bid prices immediately preceding the put date; or (B) $100,000; provided
however, that the put amount can never exceed $1,000,000 with respect to any
single put.
In connection with this Agreement, the Company agreed to register the shares
issuable pursuant to the Agreement.
On June 20, 2005, the board of directors resolved to change the company's fiscal
year end from December 31 to May 31, commencing May 31, 2005.
Effective July 1, 2005, Island Residences Club, Inc. appointed James Rowbotham
as Chief Operating Officer and Vice President of Operations for the company for
a period of one-year. In connection with this appointment, Mr. Rowbotham will
receive 1,000 shares of common stock of the company per month, or an annual
total of 12,000 shares.
On November 16, 2005, the company entered into a Share Purchase Agreement with
Meridian Pacific Investments ("Meridian"), whereby the company will purchase
20.25 million shares and a warrant to purchase 24.25 million shares of PT Island
Concepts Indonesia ("ICON") (collectively, the "Shares"). In exchange for the
Shares, the company agreed to issue Meridian 6,000,000 shares of its restricted
common stock. Meridian is considered an affiliate of the company as it owns more
than 10% of the outstanding common stock and is controlled by Graham Bristow,
who is also the CEO of Island Residences Club.
On November 17, 2005, the company entered into a Share Exchange Agreement with
Angela Whichard, Inc. ("AWI"), whereby the company will exchange 1,600,000
shares of its common stock for 400,000 restricted shares of common stock of
Grand Sierra Resorts Corp., a Nevada Corp., owned by AWI. AWI has contracted to
purchase up to 51% of the outstanding common stock of Grand Sierra Resorts. In
connection with this agreement, AWI also granted the company the right to
purchase up to 51% of the total outstanding shares of Grand Sierra Resorts. This
option was subject to the execution of material definitive agreement(s) and
expired on December 1, 2005.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion should be read in conjunction with the information
contained in the financial statements of the Company and the Notes thereto
appearing elsewhere herein.
Results of Operations - Inception (July 16, 2002) through March 31, 2005
The Company is considered to be in the development stage as defined in Statement
of Financial Accounting Standards No. 7. There have been no operations since
inception until March 17, 2005. The company commenced limited operations for the
period March 17, 2005 through March 31, 2005.
The operations of Island Residences Clubs, Inc will include marketing and
selling the vacation stay entitlement rights in the form of vacation points
("Vacation Rights") The rights are issued as stay entitlements in the Bali
Island Villas in Seminyak, Bali. There is a minimum of 1,000 rights required to
be owned for a period of more than one year that entitles the owner of the
rights to 10 nights stay valued at $250 per night. These Villas have been
developed by and are operated by, PT Island Concepts Indonesia Tbk for The
Island Residences Club, PT Island Concepts Indonesia Tbk is working with the
company to (i) acquire, develop and operate other vacation ownership resorts,
(ii) providing financing to individual purchasers of Vacation Rights and (iii)
providing resort management and maintenance services to vacation ownership
resorts.
The company has not generated any revenue. General and administrative expenses
were $6,095.00 for the three months ended March 31, 2005 as compared to $0 at
the three months ended March 31, 2004. These expenses were the result of the
company commencing limited operations.
Liquidity and Capital Resources
The Company had no cash or cash equivalents as of March 31, 2005. At March 31,
2005, the company had current assets of $40,000 in the form of marketable
securities and $18,370 in current liabilities consisting of due to a related
party.
Our plan for meeting our liquidity needs may be affected by, but not limited to,
the following: demand for our product, our ability to enter into financing
agreements, the threat and/or effects on the travel and leisure industry of
future terrorist attacks and limitations on our ability to conduct marketing
activities, and other factors. Further, the Company is in the development stage,
and has no current sources of revenue. Without realization of additional
capital, it would be unlikely for the Company to continue as a going concern.
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This report contains various forward-looking statements that are based on the
Company's beliefs as well as assumptions made by and information currently
available to the Company. When used in this report, the words "believe,"
"expect," "anticipate," "estimate" and similar expressions are intended to
identify forward-looking statements. Such statements may include statements
regarding seeking business opportunities, payment of operating expenses, and the
like, and are subject to certain risks, uncertainties and assumptions which
could cause actual results to differ materially from projections or estimates
contained herein. Factors which could cause actual results to differ
materially include, among others, unanticipated delays or difficulties in
location of a suitable business acquisition candidate, unanticipated or
unexpected costs and expenses, competition and changes in market conditions,
lack of adequate management personnel and the like. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated
or projected. The Company cautions again placing undue reliance on
forward-looking statements all of that speak only as of the date made.
Item 3. Controls and Procedures.
The Company maintains a system of controls and procedures designed to provide
reasonable assurance as to the reliability of the financial statements and other
disclosures included in this report, as well as to safeguard assets from
unauthorized use or disposition. As of March 31, 2005, the Company's Chief
Executive Officer and Principal Financial Officer evaluated the effectiveness of
the design and operation of the Company's disclosure controls and procedures
with the assistance and participation of other members of management. Based upon
that evaluation, the Company's Chief Executive Officer and principal financial
officer concluded that the Company's disclosure controls and procedures are
effective for gathering, analyzing and disclosing the information the Company is
required to disclose in the reports it files under the Securities Exchange Act
of 1934 within the time periods specified in the SEC's rules and forms.
Subsequent to March 31, 2005, in connection with comments from the Securities
and Exchange Commission, our board of directors concluded on October 21, 2005
that our previously issued financial statements included in our Form 10-QSB for
the quarter ended March 31, 2005 should no longer be relied upon. The facts
underlying these conclusions are as follows:
- - In the Form 10-QSB for the quarter ended March 31, 2005, the financial
statements filed were not reviewed by the independent auditor of the
Company.
- - In the Form 10-QSB for the quarter ended March 31, 2005, we failed to
provide disclosures relating to the Company's classification as a
development stage company under paragraph (11) of SFAS 7.
- - In the Form 10-QSB for the quarter ended March 31, 2005, we failed to
apply the accounting treatment required for investment in a related party
in relation to our acquisition of shares and vacation interest rights of PT
Island Concepts Indonesia.
Management has taken action to address such deficiencies and will continue its
efforts to improve and strengthen its control processes and procedures.
Other than set forth above, there have been no other significant changes in the
Company's internal controls or in other factors which could significantly affect
internal controls subsequent to the date the Company carried out its evaluation.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
There are no legal proceedings against the Company and the Company is unaware
of such proceedings contemplated against it.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On March 17, 2005 the company issued 4,000,000 shares to Meridian Pacific
Investments HK Ltd for the transfer of 4,000,000 shares of PT Island Concepts
Indonesia Tbk valued at $40,000 and 4,000,000 rights valued at $0. The company
recorded no value for the rights since they are acquired from a related party
whose basis was zero. The shares were issued based upon the exemption from
registration found in Section 4(2) of the Securities Act.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Subsequent to March 31, 2005:
On June 20, 2005, the Company entered into an Investment Agreement (the
"Agreement") with Dutchess Private Equities Fund II, LP (the "Investor"). This
Agreement provides that, following notice to the Investor, the Company may put
to the Investor up to $10,000,000 of its common stock for a purchase price equal
to 95% of the lowest closing bid price of its common stock during the five day
period following that notice. The number of shares that the Company is permitted
to put pursuant to the Agreement is either: (A) 200% of the average daily
volume of the common stock for the twenty trading days prior to the
applicable put notice date, multiplied by the average of the three daily closing
bid prices immediately preceding the put date; or (B) $100,000; provided
however, that the put amount can never exceed $1,000,000 with respect to any
single put.
In connection with this Agreement, the Company agreed to register the shares
issuable pursuant to the Agreement.
On June 20, 2005, the board of directors resolved to change the company's fiscal
year end from December 31 to May 31, commencing May 31, 2005.
Effective July 1, 2005, Island Residences Club, Inc. appointed James Rowbotham
as Chief Operating Officer and Vice President of Operations for the company for
a period of one-year. In connection with this appointment, Mr. Rowbotham will
receive 1,000 shares of common stock of the company per month, or an annual
total of 12,000 shares.
On November 16, 2005, the company entered into a Share Purchase Agreement with
Meridian Pacific Investments ("Meridian"), whereby the company will purchase
20.25 million shares and a warrant to purchase 24.25 million shares of PT Island
Concepts Indonesia ("ICON") (collectively, the "Shares"). In exchange for the
Shares, the company agreed to issue Meridian 6,000,000 shares of its restricted
common stock. Meridian is considered an affiliate of the company as it owns more
than 10% of the outstanding common stock and is controlled by Graham Bristow,
who is also the CEO of Island Residences Club.
On November 17, 2005, the company entered into a Share Exchange Agreement with
Angela Whichard, Inc. ("AWI"), whereby the company will exchange 1,600,000
shares of its common stock for 400,000 restricted shares of common stock of
Grand Sierra Resorts Corp., a Nevada Corp., owned by AWI. AWI has contracted to
purchase up to 51% of the outstanding common stock of Grand Sierra Resorts. In
connection with this agreement, AWI also granted the company the right to
purchase up to 51% of the total outstanding shares of Grand Sierra Resorts. This
option was subject to the execution of material definitive agreement(s) and
expired on December 1, 2005.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit No. Description
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Exhibit 10.1 Agreement for the Purchase of Common Stock dated as of
March 17, 2005 between Meridian Pacific Investments HK Ltd. and Island
Residences Club, Inc. (filed with Form 8-K dated March 17, 2005 and
incorporated by reference herein)
Exhibit 31.1. Certification of Principal Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2. Certification of Principal Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1 Certification of Principal Executive Officer and
Principal Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Island Residences Club, Inc.
(Registrant)
By: /s/Graham J. Bristow
----------------------
Name: Graham J. Bristow
Title: President
Dated: January 27, 2006.