UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended August 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 small business issuer 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
--------------
(Issuer's telephone number, including area code)
(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
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
[ ] 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 March 13, 2006
Common Stock, par value $0.0001 - 6,490,000
EXPLANATORY NOTE: The Company inadvertently filed the 10QSB for the quarter
ended August 31, 2005 with the financial statements that were not reviewed by
the company's auditor. This amended 10QSB/A1 includes the financial statements
that were reviewed by the company's auditor.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AUGUST 31, 2005
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ -
Marketable securities 40,000
---------
Total assets 40,000
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Account payable $ 42,546
Due to related party 54,727
---------
Total liabilities 97,273
---------
STOCKHOLDERS' DEFICIT:
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 (97,497)
---------
Total stockholders' deficit (57,273)
---------
Total liabilities and stockholders' deficit $ 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 AUGUST 31, 2005 AND 2004 AND
FOR THE PERIOD FROM JULY 16, 2002 (INCEPTION) TO AUGUST 31, 2005
(UNAUDITED)
August 31,
2005 2004 2005
---------- ---------- ----------
NET REVENUE $ - $ - $ -
COST OF REVENUE - - -
---------- ---------- ----------
GROSS PROFIT - - -
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 76,025 - 97,497
---------- ---------- ----------
LOSS FROM OPERATIONS BEFORE OTHER EXPENSE
AND PROVISION FOR INCOME TAXES (76,025) - (97,497)
OTHER EXPENSE
Interest expense - - -
---------- ---------- ----------
LOSS BEFORE PROVISION FOR INCOME TAXES (76,025) - (97,497)
PROVISION FOR INCOME TAXES - - -
---------- ---------- ----------
NET LOSS $ (76,025) $ - $ (97,497)
========== ========== ==========
LOSS PER SHARE - BASIC AND DILUTED $ (0.01) $ - $ (0.02)
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES -
BASIC AND DILUTED 6,240,000 2,240,000 6,240,000
========== ========== ==========
<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 CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED AUGUST 31, 2005 AND 2004 AND
FOR THE PERIOD FROM JULY 16, 2002 (INCEPTION) TO AUGUST 31, 2005
(UNAUDITED)
August 31,
2005 2004 2005
---------- ---------- ----------
Cash flows from operating activities:
Net loss (76,025) - (97,497)
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:
Account payable 42,546 - 42,546
Due to related party 33,479 - 54,727
---------- ---------- ----------
Total adjustments 76,025 - 97,497
---------- ---------- ----------
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
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 AUGUST 31, 2005
Deficit
accumulated Total
Additional during the stockholder's
Common stock paid-in development equity
----------------------
Shares Amount capital stage (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 - - - (8,973) (8,973)
Balance at May 31, 2005 6,240,000 624 39,600 (21,472) 18,752
Net loss - - - (76,025) (76,025)
---------- ---------- ---------- ---------- ----------
Balance at August 31, 2005 6,240,000 $ 624 $ 39,600 $ (97,497) $ (57,273)
========== ========== ========== ========== ==========
<FN>
The accompanying notes form an integral part of these 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.
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 August 31, 2005 are not
necessarily indicative of 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 August 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 August
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 May 2005, the FASB issued SFAS No. 154, entitled Accounting Changes and Error
Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3. This
Statement replaces APB Opinion No. 20, Accounting Changes, and FASB Statement
No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes
the requirements for the accounting for and reporting of a change in accounting
principle. This Statement applies to all voluntary changes in accounting
principle. It also applies to changes required by an accounting pronouncement in
the unusual instance that the pronouncement does not include specific transition
provisions. Opinion 20 previously required that most voluntary changes in
accounting principle be recognized by including in net income of the period of
the change the cumulative effect of changing to the new accounting principle.
This Statement requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. This Statement defines retrospective application as the application of
a different accounting principle to prior accounting periods as if that
principle had always been used or as the adjustment of previously issued
financial statements to reflect a change in the reporting entity. This Statement
also redefines restatement as the revising of previously issued financial
statements to reflect the correction of an error. The adoption of SFAS 154 did
not impact the consolidated 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 - MARKETABLE SECURITIES
The Company's marketable securities are classified as available-for-sale and, as
such, are carried at fair value. All of the securities are comprised of shares
of common stock of the investee. Securities classified as available-for-sale may
be sold in response to changes in interest rates, liquidity needs, and for other
purposes.
The investment in marketable securities represents less than twenty percent
(20%) of the outstanding common stock and stock equivalents of the investee, and
is quoted on the Surabaya Stock Exchange ("ICON") in Indonesia. As such, each
investment is accounted for in accordance with the provisions of SFAS No. 115.
Unrealized holding gains and losses for marketable securities are excluded from
earnings and reported as a separate component of stockholder's equity. Realized
gains and losses for securities classified as available-for-sale are reported in
earnings based upon the adjusted cost of the specific security sold. On August
31, 2005, the investments have been recorded at $40,000 based upon the fair
value of the marketable securities.
Following is a summary of marketable equity securities classified as available
for sale as of August 31, 2005:
Investee Name Cost at Market Value at Accumulated Number of Shares
(Symbol) August 31, 2005 August 31, 2005 Unrealized Gain/Loss Held at August 31, 2005
---------------- ---------------- --------------------- -----------------------
Island Concepts Indonesia (ICON) $ 40,000 $ 40,000 $ - 4,000,000
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 August 31, 2005, no preferred stock has been issued.
B. Common Stock
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.
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 4 - RELATED PARTY TRANSACTIONS
Island Residences Club, Inc ("IRCI"), Meridian Pacific Investments ("Meridian"),
Francis Street PT Limited, and PT Island Concepts, Indonesia Tbk ("Island
Concepts") are related parties through common ownership and officers.
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. Francis Street is an Australian 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, 100% of Francis
Street, and 70% of IRCI.
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
August 31, 2005, the balance due to the related party amounted to $54,727.
NOTE 5 - 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 sale of membership in The Island Residences
Club, a vacation rights club initially based in Bali, for the Company to
continue as a going concern. The company has 10,000,000 vacation rights in
inventory for sale. It has sold 54,000 rights amounting to $135,000, subsequent
to the period ended August 31, 2005, to a related party (unaudited) and
continues to market the rights for sale. However, there can be no assurance that
management will be successful in this endeavor.
The management's plans also include the possible 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 6 - SUBSEQUENT EVENTS
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 definitive agreements and expired on
December 1, 2005. The Company received the shares of Grand Sierra Resorts
subsequently to November 30, 2005; therefore the transaction was not recorded
during the six month period ended November 30, 2005. On February 24, 2006, the
Company entered into a Stock Purchase Agreement with DTLL, Inc., a publicly
traded Minnesota corporation, whereby the Company would purchase 400,000 shares
of DTLL, Inc. in exchange for 400,000 shares of Grand Sierra Resorts
Corporation. DTLL share is quoted at $1.25 per share as of February 24, 2006,
the transaction date.
On February 23, 2006, the Company and Rich Woods, an unaffiliated investor,
entered into a Stock Purchase Agreement with RotateBlack LLC, a Michigan limited
liability company ("RBL"), whereby the Company and the investor would purchase
9,400,000 shares of common stock, $.01 par value (the "Shares") of DTLL, Inc., a
publicly traded Minnesota corporation ("DTLL"). The allocation of the Shares and
the Company's obligation related thereto will be determined at closing. The
Shares represent approximately 70% of the 13.5 million issued and outstanding
common stock of DTLL. The transaction resulted in a change of control of DTLL.
The purchase price for the shares to be paid at closing is $1,500,000,
represented by cash in the amount of $500,000 and a Secured Note Payable in the
amount of $1,000,000 due no later than April 10, 2006.
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.
Plan of Operation
The Island Residences Club, Inc has commenced a sales and marketing campaign to
launch the Island Residences Club concept. Initially properties owned by PT
Island Concepts Indonesia Tbk in Seminyak, Bali; Sydney and Noosa Heads,
Queensland, Australia will be available to members for vacation and/or business
stays. We believe the target market should be the higher income local and
expatriate communities in Asia and Europe. The Company is seeking to acquire
and/or develop properties in the United States and Baja, Mexico to launch the
Club concept in the US and Canada later in 2006. Club Members will enjoy "stays"
at the Island Villas in Bali, a selection of luxury apartments and Villas in
Australia, New Zealand, Thailand, Singapore, USA and Mexico and elsewhere when
available, each and every year. The membership will receive a right each year to
stay at an Island Residences Club property.
PT Island Concepts Indonesia Tbk will construct unique modern Villas on land it
has acquired in Thailand and Mexico. These properties will be modern,
contemporary and yet tropical in design and can be sold with or without a
lease-back option to the Island Residences Club or with a contract to the
company for management and/or sundry letting. The Company will maintain a policy
of keeping its properties in the utmost pristine condition and will sell and
roll-over its inventory within a three to five year time frame. The company will
develop its own properties on both leasehold and freehold land appealing to both
local and foreign customers when time to sell. Over time the Company will
develop into essentially a property trust with the increasing value of its
inventory creating an increasing asset value for the shareholders. The company
will also develop a commercial property portfolio consisting of Luxury Hotels,
Spas and Resorts. These properties will provide the infrastructure to support
Villas and Residences located within or adjacent to the Resorts.
The Company's plans for the next twelve months includes moving forward with next
phase of the Company's business plan. PT Island Concepts Indonesia, on behalf of
the Company, currently has a software and web design team of three persons and a
research team of seven persons developing the Company's websites and back and
front office software systems. This includes but is not limited to the
development of a membership loyalty program, online reservation system and an
in-room information system. This work will be moved to the United States when
staff and expertise become available or are employed. However, the Company will
continue to maintain a research and online concierge service from Bali. These
systems will be for the Company's use and not for resale. The Company does not
intend to seek any specific patents or trademarks but will use a general
copyright to protect the company's property and systems.
The Company intends to invest up to $10,000,000 in 2006 into property and income
producing assets. The Company intends for these funds to come from further
investment from its majority shareholder and/or borrowings secured by property
owned by the Company. There is no guarantee that the Company will be able to
obtain these funds.
The Company intends to hire up to fifteen persons in 2006, predominately for its
Southern California operations, which it has yet to establish.
Results of Operations - Inception (July 16, 2002) through August 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 August 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 $76,025 for the three months ended August 31, 2005 as compared to $0 at the
three months ended August 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 August 31, 2005. At August
31,2005, the company had current assets of $40,000 in the form of
marketable securities and $97,273 in current liabilities consisting of
$54,727 due to a related party and $42,546 in the form of an account
payable.
We have no current source of income. Further, that without realization of
additional capital, it would be unlikely for the Company to continue as a going
concern. A stockholder has agreed that they will advance any additional funds
which we need for operating capital and for costs in connection with
implementing our business. Such advances will be made without expectation of
repayment. There is no minimum or maximum amount such stockholder will advance
to us or guarantee that such advances will continue.
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.
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.
Subsequent to August 31, 2005:
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 definitive agreements and expired on
December 1, 2005. The Company received the shares of Grand Sierra Resorts
subsequently to November 30, 2005; therefore the transaction was not recorded
during the six month period ended November 30, 2005. On February 24, 2006, the
Company entered into a Stock Purchase Agreement with DTLL, Inc., a publicly
traded Minnesota corporation, whereby the Company would purchase 400,000 shares
of DTLL, Inc. in exchange for 400,000 shares of Grand Sierra Resorts
Corporation. DTLL shares were quoted at $1.25 per share as of February 24, 2006,
the transaction date.
On February 23, 2006, the Company and Rich Woods, an unaffiliated investor,
entered into a Stock Purchase Agreement with RotateBlack LLC, a Michigan limited
liability company ("RBL"), whereby the Company and the investor would purchase
9,400,000 shares of common stock, $.01 par value (the "Shares") of DTLL, Inc., a
publicly traded Minnesota corporation ("DTLL"). The allocation of the Shares
and the Company's obligation related thereto will be determined at closing. The
Shares represent approximately 70% of the 13.5 million issued and outstanding
common stock of DTLL. The transaction resulted in a change of control of DTLL.
The purchase price for the shares to be paid at closing is $1,500,000,
represented by cash in the amount of $500,000 and a Secured Note Payable in the
amount of $1,000,000 due no later than April 10, 2006.
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.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Our chief executive
officer and chief financial officer, carried out an evaluation (as required by
paragraph (b) of Rule 13a-15 or 15d-15) of the effectiveness of the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e))
as of the end of the period covered by this report. Based on their evaluation,
our chief executive officer and chief financial officer believe that, given our
limited operations, our disclosure controls and procedures are effective.
Subsequent to August 31, 2005, in connection with comments from the Securities
and Exchange Commission (the "Commission"), our board of directors concluded on
October 21, 2005 that our previously issued financial statements included in our
Form 10-KSB for the year ended December 31, 2004 and Form 10-QSB for the quarter
ended March 31, 2005 should no longer be relied upon. The facts underlying these
conclusions are as follows:
- - The company did not include audited financial statements its Form 10-KSB for
the year ended December 31, 2004 in reliance upon classification of the Company
as an "inactive entity" under Rule 3-11 of Regulation S-X. Since the Company
issued common stock during this period, this classification is inapplicable and
the Company must provide audited financial statements in this report.
- - 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, including the
engagement of Kabani & Company, CPAs, and will continue its efforts to improve
and strengthen its control processes and procedures.
(b) CHANGES IN INTERNAL CONTROLS. 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
There no sales of securities for the period ended August 31, 2005.
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 August 31, 2005:
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. On February 24, 2006, the Company entered into a
Stock Purchase Agreement with DTLL, Inc., a publicly traded Minnesota
corporation, whereby the Company would purchase 400,000 shares of DTLL, Inc. in
exchange for 400,000 shares of Grand Sierra Resorts Corporation. DTLL shares
were quoted at $1.25 per share as of February 24, 2006, the transaction date.
On February 23, 2006, the Company and Rich Woods, an unaffiliated investor,
entered into a Stock Purchase Agreement with RotateBlack LLC, a Michigan limited
liability company ("RBL"), whereby the Company and the investor would purchase
9,400,000 shares of common stock, $.01 par value (the "Shares") of DTLL, Inc., a
publicly traded Minnesota corporation ("DTLL"). The allocation of the Shares
and the Company's obligation related thereto will be determined at closing. The
Shares represent approximately 70% of the 13.5 million issued and outstanding
common stock of DTLL. The transaction resulted in a change of control of DTLL.
The purchase price for the shares to be paid at closing is $1,500,000,
represented by cash in the amount of $500,000 and a Secured Note Payable in the
amount of $1,000,000 due no later than April 10, 2006.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit No. Description
- ------------- -----------
Exhibit 10.1 Investment Agreement with Dutchess Private Equities Fund II, LP
(filed with Form 8-K dated June 20, 2005 and incorporated by
reference herein)
Exhibit 10.2 Registration Rights Agreement with Dutchess Private Equities Fund
II, LP (filed with Form 8-K dated June 20, 2005 and incorporated by
reference herein)
Exhibit 31.1 Certification of Principal Executive Officer Pursuantto 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: CEO, President
Dated: March 23, 2006.