AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON May 1, 2006
REGISTRATION NO. 333 - ________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. ___ )
ISLAND RESIDENCES CLUB, INC.
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(Name of small business issuer in its charter)
DELAWARE
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(State of jurisdiction of incorporation or organization)
6552
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(Primary Standard Industrial Classification Code Number)
20-2443790
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(I.R.S. Employer Identification No.)
1769-203 JAMESTOWN ROAD
WILLIAMSBURG, VA 23185
(757) 927-6848
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(Address and telephone number of principal executive office)
1769-203 JAMESTOWN ROAD
WILLIAMSBURG, VA 23185
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(Address of principal place of business or intended principal place of business)
GRAHAM J. BRISTOW, CHIEF EXECUTIVE OFFICER
ISLAND RESIDENCES CLUB, INC.
P.O. BOX 1947
NOOSA HEADS, QUEENSLAND 4567
AUSTRALIA 61-7-5474-1180
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(Name, address and telephone number of agent for service)
WITH A COPY TO:
APRIL E. FRISBY
WEED & CO. LLP
4695 MACARTHUR CT., SUITE 1430
NEWPORT BEACH, CA 92660
(949) 475-9086
1
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities of 1933
check the following box. [X]
If this Form is filed to register additional securities for any offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION AND REGISTRATION FEE
--------------------------------
Title of each class of Amount to Proposed maximum offering Proposed maximum aggregate Amount of
securities to be registered. be registered price per unit(1) offering price(1) registration fee.
- ---------------------------------------- ----------------- ------------------------- ------------------------- -----------------
Common stock, $.0001 par value per share 16,337,000 Shares $1.00(1) $16,337,000 $1,748.06
<FN>
(1) The proposed maximum offering price per share and the proposed maximum
aggregate offering price in the above table are estimated solely for the purpose
of calculating the registration fee pursuant to Rule 457(a) & (c).
The registration hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Preliminary Prospectus, subject to Completion, dated ________, 2006.
ISLAND RESIDENCES CLUB, INC.
Offering Up to 16,337,000 Shares of Common Stock
All of the shares of common stock, $.0001 par value, of Island Residences Club,
Inc., a Delaware corporation, offered hereby (the "Offering") are by selling
shareholders of the company. We are not selling any securities in this offering
and therefore will not receive any proceeds from this offering. All costs
associated with this registration will be borne by us.
The shares of our common stock are currently not traded.
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SECURITIES IN THIS OFFERING ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
You should rely only on the information provided in this prospectus or any
supplement to this prospectus and information incorporated by reference. We have
not authorized anyone else to provide you with different information. Neither
the delivery of this prospectus nor any distribution of the shares of common
stock pursuant to this prospectus shall, under any circumstances, create any
implication that there has been no change in our affairs since the date of this
prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED
OR DISAPPROVED OF THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Subject to completion, the date of this prospectus is __________________, 2006.
3
TABLE OF CONTENTS
PAGE
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PROSPECTUS SUMMARY 5
RISK FACTORS 6
FORWARD LOOKING STATEMENTS 12
USE OF PROCEEDS 12
DETERMINATION OF OFFERING PRICE 12
SELLING SECURITY HOLDERS 12
PLAN OF DISTRIBUTION 13
LEGAL PROCEEDINGS 14
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT 18
DESCRIPTION OF SECURITIES 19
INTEREST OF NAMED EXPERTS AND COUNSEL 19
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 19
ORGANIZATION WITHIN LAST FIVE YEARS 19
DESCRIPTION OF BUSINESS 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 20
DESCRIPTION OF PROPERTY 24
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 24
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 25
EXECUTIVE COMPENSATION 26
FINANCIAL STATEMENTS 28
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTiNG AND FINANCIAL DISCLOSURE 28
4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial data, including
the financial statements and notes thereto, included elsewhere in this
prospectus.
Investment in our securities involves risks. We encourage you to read the
entire prospectus carefully. In particular, note the following:
- - We have limited revenues, operating and net losses and we expect our losses
to continue indefinitely;
- - Our auditor has expressed substantial doubt about our ability to continue
as a going concern;
- - We have limited operating history;
- - We have not yet engaged in significant marketing activities to determine
whether there is a market for our services; and
- - We will need $250,000.00 of additional funding to continue operations for
the next year.
Business
Island Residences Club, Inc. is a Delaware corporation with principal executive
offices located at 1769-203 Jamestown Road, Williamsburg, VA 23185, where its
phone number is (757) 927-6848.
Our principal business includes the development, management and operations of
luxury resorts and residences and marketing and selling vacation stay
entitlement rights in the form of vacation points. The rights are issued as stay
entitlements in the Island Residences Club, Inc. and an affiliate's luxury
properties including the recently completed 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 in Bali, Asia and beyond, (ii) provide
financing to individual purchasers of vacation rights and (iii) provide resort
management and maintenance services to vacation ownership resorts. Island
Residences Club, Inc. holds a 19.4% investment in a listed Indonesian
corporation, PT Island Concepts Indonesia Tbk. Island Residences Club, Inc. and
PT Island Concepts, Indonesia are related parties with common ownership and
officers.
Our business focus will be on Australasia, Mexico and North and Central America.
5
The Offering
This prospectus relates to the sale of up to 16,337,000 shares of our common
stock by the selling stockholders. 4,000,000 shares and 6,000,000 shares,
respectively, were issued by us to Meridian Capital Pacific HK Ltd., an
affiliate, pursuant to stock purchase agreements dated March 17, 2005 and
November 17, 2005. 1,000,000 shares were issued to Francis Street Pty Ltd for
consulting services. Meridian Capital Pacific HK Ltd. and Francis Street Pty Ltd
are both controlled by Graham Bristow, CEO of the company. Theodore Smith was
issued 310,000 shares for consulting services. Richard Woods was issued 100,000
shares for consulting services. Weed & Co. LLP was issued 75,000 shares for
legal services. James Rowbotham was issued 12,000 shares for services rendered
as an officer of the company. Angela Whichard, Inc. was issued 1,600,000 shares
pursuant to a Share Exchange Agreement dated November 17, 2005. Frank Josep
Kristan was issued 1,000,000 shares for consulting services rendered to the
company. 2,240,000 shares were gifted to 525 shareholders by Meridian Capital
Pacific HK Ltd. an affiliate of the company. Of these amounts, 11,622,500 shares
are being offered by affiliates of the company, including Meridian, Francis
Street, Graham Bristow (500,000 shares held by his wife, Margaret Ann Ojala),
James Rowbotham (62,000 shares, including 50,000 shares held jointly with his
spouse), John Kennerley, our chairman (48,000 shares, which includes 24,000
shares held by his wife, Kerri-Anne Kennerley), Bob Bratadjaya (12,000 shares)
and Joseph Joyce, a director of the company (500 shares).
Our common stock is not publicly traded.
Summary Financial Information
The following summary financial information has been derived from our financial
statements and should be read in conjunction with the financial statements and
the related notes thereto appearing elsewhere in this prospectus.
Fiscal Year Ended Six Months Ended
5/31/05 (audited) 11/30/05 (unaudited)
------------------ ---------------------
Balance Sheet Data:
Total Assets $ 40,000 $ 1,495,500
Total Current Liabilities $ 21,248 $ 201,976
Total Stockholders' Equity $ 18,752 $ 1,293,524
Statement of Operations:
Revenues $ 0 $ 135,000
Expenses $ 8,973 $ 187,971
Other expense $ 0 $ 0
Net Income (Loss) $ (8,973) $ (147,471)
Income (Loss) Per Share $ (0.0) $ (0.02)
Shares Outstanding 6,240,000 6,490,000
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the following risk factors, other information included in
this prospectus and information in our periodic reports filed with the SEC. If
any of the following risks actually occur, our business, financial condition or
results of operations could be materially and adversely affected and you may
lose some or all of your investment. Island Residences Club, Inc.'s business
faces many business risks arising from direct and indirect influences and
factors. These risks include the following:
6
RISKS RELATING TO OUR BUSINESS
WE HAVE OPERATING LOSSES AND WE ANTICIPATE FUTURE LOSSES.
We have only recently begun to generate limited revenues. We incurred losses of
$8,973 and $147,471, respectively, for the fiscal year ended May 31, 2005 and
the six months ended November 30, 2005. We anticipate that losses will continue
until such time, as revenue from operations is sufficient to offset our
operating costs, if ever.
WE WILL NEED SIGNIFICANT ADDITIONAL FUNDS TO CONTINUE OPERATIONS, WHICH WE MAY
NOT BE ABLE TO OBTAIN.
We have historically satisfied our working capital requirements through
borrowings from a majority shareholder. We will continue to seek additional
funds through such channels and from collaborative and other arrangements with
corporate partners. In particular, we will need $250,000.00 in funding to
continue our operations for the next twelve months. There is no guarantee that
the shareholder will continue to advance us funds. Further, we may be unable to
obtain from other sources adequate funds when needed or funding that is on terms
acceptable to us. If we fail to obtain sufficient funds, we may need to delay,
scale back or terminate some or all of our business plans along with our
anticipated expansion. We have no definite plans to obtain necessary funding.
OUR LIMITED OPERATING HISTORY MAKES EVALUATION OF OUR BUSINESS DIFFICULT.
We have a limited operating history and have encountered, and expect to continue
to encounter, many of the difficulties and uncertainties often faced by early
stage companies. We were incorporated in the State of Delaware on July 16, 2002.
On March 17, 2005, we commenced operations relating to our vacation rights.
Accordingly, we have only a limited operating history by which you can evaluate
our business and prospects. An investor in our shares must consider our business
and prospects in light of the risks, uncertainties and difficulties frequently
encountered by early stage companies, including limited capital, delays in
product development, possible marketing and sales obstacles and delays,
inability to gain customer acceptance or to achieve significant distribution of
our products to customers, and significant competition. We may not be able to
successfully address these risks. If we are unable to address these risks, our
business may not grow, our stock price may suffer, and we may be unable to stay
in business.
OUR BUSINESS PLAN IS SUBJECT THE RISK OF TERRORISM, WHICH MAY NEGATIVELY IMPACT
OUR ABILITY TO GENERATE REVENUE.
There is a threat to our business plan from terrorism or more accurately the
threat of terrorism. This has changed the world as we knew it prior to
September 11, 2001 and the war with Iraq has done nothing to change this. The
single event of September 11 caused a massive shift in market forces and desires
to visit previously popular travel and tourist destinations. The effect of this
may be that places that have long been rated as great travel destinations and
even topped the polls in many travel publications are suffering low occupancy
rates due to the perceived risks of terrorism. Further, the threat of terrorism
may lead tourists to vacation in their own countries or seek to spend less time
in the air or to stay in high rise hotel resorts. Travelers may even drive to
their holiday destination when possible.
7
If we are unable to find tourists for our resort villas or vacation home market
sector due to the risk of terrorism or other societal factors, our business plan
and our ability to generate revenue may suffer.
WE ARE SUBJECT TO THE IMPACT OF FOREIGN CURRENCY EXPOSURE, WHICH CANNOT BE
PREDICTED.
We quote our rates for accommodation and services in both US dollars and the
local destination's currency. Although there will always be pressure on
currencies, purchases and costs are primarily in local currency and not affected
to any extent by the cross currency rates. We employ local staff on local wages
and conditions, and acquire all goods and services from local suppliers.
Deposits taken or envisaged to be taken in foreign currency from guests is not
deemed to be significant as to cause concern to us. We have no borrowings and
all loans and investments made have been converted to capital and into local
currency; and therefore no exposure to currency fluctuations. However, our
operations could be harmed if we are unable to protect ourselves against
currency fluctuations in the future.
OUR BUSINESS IS SUBJECT TO THE RISK OF LABOR SHORTAGES AND STRIKES; WHICH COULD
NEGATIVELY IMPACT OUR OPERATIONS.
We are in the property development, hospitality and service industry and could
possibly face the risk of labor strikes and shortages. The risk is sufficient
enough to hamper the smooth operation of our various business units. We have
issued stock to our founding employees and will provide for future staff through
warrants and other ownership and financial benefits. We are making efforts
toward improvement of the employees' welfare and further educational development
and have always been a fair employer in both conditions of work and reward.
In Bali and other destinations outside the U.S., we face many cultural and
traditional difficulties, in the fact that many of its employees are local. We
employ a cross section and varied work force of different religious and ethnic
backgrounds.
DUE TO THE GEOGRAPHIC LOCATION OF OUR BUSINESS, OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION ARE SUBJECT TO REGIONAL ECONOMIC CONDITIONS.
In common with other businesses operating in this sector, we are affected by
regional economic conditions including, without limitation, interest rates,
exchange rates, taxation regulations and rates, employment rates and conditions,
global and local economic cycles, global and local political stability, customer
confidence in the region, and security. Also, government fiscal, monetary and
regulatory policies may also have a significant adverse effect on offshore
investment and confidence in the various economies in which we operate.
As we operate in the property development, hospitality and real estate sector,
our inability to sell, rent or lease when appropriate may adversely affect our
financial condition. Real estate or property assets, especially "luxury"
resorts and residences, generally cannot be sold quickly. We may not be able to
vary our portfolio of residences or other real estate promptly in response to
economic or other conditions. This inability to respond promptly to changes in
the performance of our assets could adversely affect our ability to return a
profit and ultimately a dividend to shareholders.
8
OUR SUCCESS WILL DEPEND IN PART ON THE CONTINUED SERVICES OF OUR KEY EMPLOYEES
AND CONSULTANTS.
The loss or resignation of one or more of our key employees or consultants could
have a material adverse affect on our business, operating results and financial
condition and statutory obligations.
We do not employ a large proportion of ex-patriots or foreign staff preferring
to draw on the local work force. All employees, including executive management,
are engaged locally on local remuneration packages under local conditions of
employment or engagement in local currency. We have five (5) year consultancy
contracts in place for some of our executives.
OUR BUSINESS OPERATIONS ARE DEPENDENT ON THE CONTINUED DEVELOPMENT AND
AVAILABILITY OF INFORMATION TECHNOLOGY.
Our business is dependent on information technology, the continued development
of IT systems and the continued availability of technical services of our
advisors and consultants, in particular architectural and design services, and
building and construction services.
Further, the business is reliant on the continued availability and continued
operation of telecommunications links, along with network infrastructure and
computer systems that are owned and operated by third parties. To ensure the
maximum of availability, we host our internet-based systems and database both in
the U.S. and in Bali, Indonesia as well as operating a full back system
locally.
Some of our accommodations, property sales and rental leads will be generated
from our website and/or third-party travel and real estate websites. Internet
traffic may vary depending upon the position the company's information is placed
by search engines such as "Google."
We have no control over search engine results. Similarly many travel reviews
either published in magazines or on websites that may appear in search results
could project a negative, uncontested review of our services and impact
negatively our financial condition and results of operation.
WE ARE SUBJECT TO GOVERNMENT REGULATIONS AFFECTING THE PROPERTY DEVELOPMENT,
HOSPITALITY, TRAVEL, TOURISM AND REAL ESTATE SECTOR, WHICH MAY AFFECT OUR
FINANCIAL CONDITION AND RESULTS OF OPERATION.
The costs of complying with government regulations, or failure to comply with
such regulations, could affect our financial condition and results of operation.
There are numerous central and provincial government as well as local
regulations; or cultural and religious customs affecting our or sensitive to our
business sector. There are specific regulations affecting the accommodation,
hospitality and building industries, including building and zoning requirements
or changes to such zonings. The requirement to obtain permits and specific
industry licenses could delay and prevent business expansion or limit existing
business operations.
PT Island Concepts Indonesia Tbk has been granted a hotel, bar and restaurant
license for the Bundung Regency in Bali, Indonesia to operate Residences &
Resorts on behalf of the Island Residences Club, Inc. There is no guarantee that
similar licenses can be obtained in other jurisdictions where we intend to
operate.
9
WE ARE SUBJECT TO THE RISK OF CATASTROPHIC LOSS.
PT Island Concepts Indonesia Tbk has comprehensive public and specific liability
insurance coverage for fire, floods, storms, tempests, earthquakes and certain
machinery failures for the properties it operates on behalf of us in Bali. There
are, however, certain types of catastrophic losses that are not generally
insured because it is not economically feasible to insure against such losses.
Should an uninsured loss or a loss in excess of insured limits occur with
respect to any property, we could lose our capital invested in the property, as
well as the anticipated future revenue from the property thereby negatively
affecting the company's financial condition and results of operation.
WE ARE SUBJECT TO ENVIRONMENTAL RISKS THAT MAY NEGATIVELY AFFECT OUR OPERATING
COSTS.
We are subject to environmental risks that could be costly. Our operating costs
may be affected by the obligation to pay for the cost of complying with existing
environmental laws, ordinances and regulations, as well as the cost of
compliance with future environmental legislation.
Environmental laws may impose restrictions on the manner in which a property may
be used or in which businesses may be operated.
While within our current destinations we have not been cited by any government
authority, believe we are at risk, or have knowledge of breach of any government
ordinance or environmental issue, we cannot assure investors that we will not be
affected at a future date.
OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER CONTROLS A SIGNIFICANT PERCENTAGE OF
OUR COMMON STOCK.
As of April 7, 2006, Graham Bristow, our President and Chief Executive Officer,
through affiliated entities and a family member controls approximately 70.4% of
our outstanding common stock. Accordingly, Mr. Bristow may be able to influence
all matters requiring stockholder approval, including election of directors and
approval of significant corporate transactions. This concentration of ownership,
which is not subject to any voting restrictions, could limit the price that
investors might be willing to pay for our common stock. In addition, Mr. Bristow
and his affiliates may be in a position to impede transactions that may be
desirable for other stockholders. He could, for example, make it more difficult
for anyone to take control of us.
RISKS RELATING TO OUR SECURITIES
CURRENTLY, THERE IS NO PUBLIC TRADING MARKET FOR OUR SHARES, AND YOU MAY BE
UNABLE TO SELL YOUR SECURITIES.
If an active market does not develop or, if developed, is not sustained, you
may not be able to sell your securities. There is currently no public trading
market for our shares. We can provide no assurance that an active market will
develop or be sustained for any of these securities. If an active public trading
market for our securities does not develop or is not sustained, it may be
difficult or impossible for purchasers in this offering to resell their
securities at any price. Even if an active public market does develop, the
market price could decline below the amount you paid for your shares.
10
THE PRICE AND LIQUIDITY FOR OUR STOCK IS UNCERTAIN AND SHAREHOLDERS MAY BE
UNABLE TO RECAPTURE THEIR INVESTMENT IN THE COMPANY.
The prices of stock can rise or fall. Such prices can be affected by a range of
factors affecting the stock markets generally or the markets directly or the
industry in which our business operates. In addition, liquidity in the trading
of stocks can be affected by a range of matters beyond the control of the
company. Further, our common stock has not been traded on any public market. We
cannot predict the extent to which a trading market might develop or how liquid
that market might become.
There is no guarantee of any return in respect to an investment in stocks
whether a return by way of profit or capital.
WE MUST COMPLY WITH PENNY STOCK REGULATIONS WHICH COULD EFFECT THE LIQUIDITY AND
PRICE OF OUR STOCK.
The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in "penny stocks." Penny stocks generally are equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on NASDAQ, provided that current
price and volume information with respect to transactions in such securities is
provided by the exchange or system. Prior to a transaction in a penny stock, a
broker-dealer is required to:
- - Deliver a standardized risk disclosure document prepared by the SEC;
- - Provide the customer with current bid and offers quotations for the penny
stock;
- - Explain the compensation of the broker-dealer and its salesperson in the
transaction;
- - Provide monthly account statements showing the market value of each penny
stock held in the customer's account;
- - Make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's consent; and
- - Provide a written agreement to the transaction.
These requirements may have the effect of reducing the level of trading activity
in the secondary market for our stock, if any. Because our shares are subject to
the penny stock rules, you may find it more difficult to sell your shares.
FORWARD-LOOKING STATEMENTS
You should carefully consider the risk factors set forth above, as well as the
other information contained in this prospectus. This prospectus contains
forward-looking statements regarding events, conditions, and financial trends
that may affect our plan of operation, business strategy, operating results, and
financial position. You are cautioned that any forward-looking statements are
not guarantees of future performance and are subject to risks and uncertainties.
Actual results may differ materially from those included within the
forward-looking statements as a result of various factors. Cautionary statements
in the "risk factors" section and elsewhere in this prospectus identify
important risks and uncertainties affecting our future, which could cause actual
results to differ materially from the forward-looking statements made in this
prospectus. We do not intend to update any of the forward-looking statements
after the date of this document to conform these statements to actual results or
to changes in our expectations, except as required by law.
11
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the 16,337,000 shares
of common stock offered by the selling stockholders.
DETERMINATION OF OFFERING PRICE
The selling stockholders may sell shares from time to time in negotiated
transactions, brokers transactions or a combination of such methods at market
prices prevailing at the time of the sale or at negotiated prices.
SELLING SECURITY HOLDERS
As of April 7, 2006, a total of 16,337,000 shares of our common stock were
outstanding. The following table sets forth information as of that date
regarding beneficial ownership of our common stock both before and immediately
after the offering by the selling stockholders. Beneficial ownership is
determined in accordance with Rule 13d-3(d) promulgated by the Commission under
the Securities Exchange Act of 1934. Unless otherwise noted, each person or
group identified possesses sole voting and investment power with respect to the
shares, subject to community property laws where applicable. Changes in the
selling security holders occurring after the date of this prospectus will be
reflected by our filing a Rule 424(b) prospectus with the
Commission.
The shares of common stock being offered under this prospectus may be offered
for sale from time to time during the period the registration statement of which
this prospectus is a part remains effective, by or for the account of the
selling stockholders. As used in this prospectus, "selling stockholders"
includes donees, pledges, transferees and other successors-in-interest selling
shares received from the named selling shareholder as a gift, pledge,
distribution or other non-sale related transfer.
All 16,337,000 outstanding shares of our common stock at April 7, 2006 are being
offered under this prospectus. 4,000,000 shares and 6,000,000 shares,
respectively, were issued by us to Meridian Capital Pacific HK Ltd. pursuant to
stock purchase agreements dated March 17, 2005 and November 17, 2005. 1,000,000
shares were issued to Francis Street Pty for consulting services. Theodore Smith
was issued 310,000 shares for consulting services. Richard Woods was issued
100,000 shares for consulting services. Weed & Co. LLP was issued 75,000 shares
for legal services. James Rowbotham was issued 12,000 shares for services
rendered as an officer of the company. Angela Whichard, Inc. was issued
1,600,000 shares pursuant to a Share Exchange Agreement dated November 17, 2005.
Frank Josep Kristan was issued 1,000,000 shares for consulting services rendered
to the company. 2,240,000 shares were gifted to 525 shareholders by Meridian
Capital Pacific HK Ltd., an affiliate of the company. Of these amounts,
11,622,500 shares are being offered by affiliates of the company, including
Meridian Capital Pacific HK Ltd. (10,000,000 shares), Francis Street Pty Ltd.
(1,000,000 shares), James Rowbotham, Chief Operations Officer of the company
(62,000 shares, including 50,000 shares held jointly with his wife), Graham
Bristow (500,000 shares held by his wife, Margaret Ann Ojala), James Kennerley
(48,000 shares which includes 24,000 shares held by his wife, Kerri-Anne
Kennerley), Bob Bratadjaya (12,000 shares) and Joseph Joyce, a director of the
company (500 shares). Graham Bristow, our CEO, controls Meridian Capital Pacific
HK Ltd. and Francis Street Pty Ltd.
Name of Selling Shareholder Ownership before the Offering Amount to be Offered Amount and Percentage Owned After the Offering(2)
- --------------------------- ----------------------------- -------------------- -------------------------------------------------
(1)
<FN>
(1) Selling shareholders to be added by amendment
(2) These numbers assume the selling shareholders sell all of their shares prior
to the completion of the offering.
12
PLAN OF DISTRIBUTION
The selling stockholders will act independently of us in making decisions with
respect to the timing, manner and size of each sale. After such time, the
selling stockholders may sell the shares from time to time:
- - in transactions on the Pink Sheets, the Over-the-Counter Bulletin Board or
on any national securities exchange or U.S. inter-dealer system of a
registered national securities association on which our common stock may be
listed or quoted at the time of sale; or
- - in private transactions and transactions otherwise than on these exchanges
or systems or in the over-the-counter market;
- - at prices related to such prevailing market prices;
- - in negotiated transactions,
- - in a combination of such methods of sale; or
- - any other method permitted by law.
The selling stockholders may effect such transactions by offering and
selling the shares directly to or through securities broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders and/or the purchasers of the shares
for whom such broker-dealers may act as agent or to whom the selling
stockholders may sell as principal, or both, which compensation as to a
particular broker-dealer might be in excess of customary commissions. The
selling security holders and any brokers, dealers or agents that participate in
the distribution of the common stock may be deemed to be underwriters, and any
profit on the sale of common stock by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
On or prior to the effectiveness of the registration statement to which this
prospectus is a part, we will advise the selling stockholders that they and any
securities broker-dealers or others who may be deemed to be statutory
underwriters will be governed by the prospectus delivery requirements under the
Securities Act. Under applicable rules and regulations under the Securities
Exchange Act, any person engaged in a distribution of any of the shares may not
simultaneously engage in market activities with respect to the common stock for
the applicable period under Regulation M prior to the commencement of such
distribution. In addition and without limiting the foregoing, the selling
security owners will be governed by the applicable provisions of the Securities
and Exchange Act, and the rules and regulations thereunder, including without
limitation Rules 10b-5 and Regulation M, which provisions may limit the timing
of purchases and sales of any of the shares by the selling stockholders. All of
the foregoing may affect the marketability of our securities.
13
On or prior to the effectiveness of the registration statement to which this
prospectus is a part, we will advise the selling stockholders that the
anti-manipulation rules under the Securities Exchange Act may apply to sales of
shares in the market and to the activities of the selling security owners and
any of their affiliates. We have informed the selling stockholders that they
may not:
- - engage in any stabilization activity in connection with any of the shares;
- - bid for or purchase any of the shares or any rights to acquire the shares,
- - attempt to induce any person to purchase any of the shares or rights to
acquire the shares other than as permitted under the Securities Exchange
Act; or
- - effect any sale or distribution of the shares until after the prospectus
has been appropriately amended or supplemented, if required, to describe
the terms of the sale or distribution.
We have informed the selling stockholders that they must effect all sales of
shares in broker's transactions, through broker-dealers acting as agents, in
transactions directly with market makers, or in privately negotiated
transactions where no broker or other third party, other than the purchaser, is
involved.
The selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any broker-dealers, and any profits
received on the resale of shares, may be deemed to be underwriting discounts and
commissions under the Securities Act if the broker-dealers purchase shares as
a
principal.
In the absence of the registration statement to which this prospectus is a part,
certain of the selling stockholders would be able to sell their shares only
pursuant to the limitations of Rule 144 promulgated under the Securities Act.
LEGAL PROCEEDINGS
There are no legal proceedings against us and we are unaware of any proceedings
contemplated against us.
14
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
The following table sets forth the name and age of our directors and executive
officers, along with their principal offices and positions as of April 7, 2006.
Our executive officers are elected annually by the Board. The directors serve
one-year terms until their successors are elected. The executive officers serve
terms of one year or until their death, resignation or removal by the Board.
Unless described below, there are no family relationships among any of the
directors and officers.
NAME AGE POSITION
- ---------------------- ---- -------------------------------------------------
John R. Kennerley 65 Chairman of the Board
Graham J. Bristow 58 Director, President and Chief Executive Officer
Bob Bratadjaya 40 Director, Secretary and Treasurer
James Rowbotham 59 Chief Operating Officer,
Vice President of Operations
Joseph Anthony Joyce 58 Director
JOHN R. KENNERLEY -- Chairman and Director
Born September 1939, John is an Australian and European passport holder. He
lives in Sydney, Australia with his wife, Australian television host, Kerri-Anne
Kennerley. He was involved early in his career with Grand Prix racing and world
championship winner Sterling Moss. He was a member of the Board of the
Directors of Vernon Pools, and in 1977, negotiated with the New York State
Lottery to introduce Lotto into the State of New York. He was President of
Games Management, Inc., the operating company of the New York Lotto.
After the sale of Vernon Pools, he relocated to Australia and became a director
of Fulfillment Australia Ltd. before it was sold to TNT Group and Vusion Pacific
Pty Ltd that was involved in the manufacturing and distribution of electronic
sign boards.
In 1999, he became Chairman of Meridian Pacific Capital Pty Ltd, a related
company to Meridian Pacific Investments HK Ltd, a provider of venture capital.
John is an independent director and is not engaged in the day to day business of
the company.
GRAHAM J. BRISTOW -- President, Chief Executive Officer and Director
Born in July 1947, in Hastings, New Zealand, he resides in Noosa Heads,
Queensland, Australia and is a dual New Zealand and Australian citizen.
Graham moved to Australia in 1992 after a career in the telecommunications and
transport industries. He became joint managing director and founding shareholder
of Omni Telecommunications, Ltd. in Melbourne Australia, listing the company's
securities on the ASX (Australian Stock Exchange) via a reverse merger with
Henry B. Smith Ltd.
He resigned in 1996 to form an internet start-up, LibertyOne, Ltd., taking the
company public on the ASX in 1998. Graham was Managing Director and major
shareholder, relocating to California in 1999 to establish a North American
subsidiary of the company.
15
In 2000, upon leaving LibertyOne, Ltd., he formed Meridian Pacific Capital Pte,
Ltd., an Asian based venture capital company. He was a director of an
Indonesian listed company PT Indoexchange Tbk in 2002 until June 2004 and
invested in PT Island Concepts Indonesia, Tbk in 2002, a villa development and
management company located on the island of Bali.
Graham is an officer and director of the company, actively involved in the day
to day operations.
BOB BRATADJAYA -- Secretary, Treasurer and Director
Bob was born in Central Java, Indonesia, is 40 years of age and married with two
children. He obtained a law degree from the University of Jakarta and worked
within the capital markets as corporate lawyer.
He joined PT Courts Indonesia, a Club concept retailer in 2000 and successfully
took the company public on the Jakarta and Surabaya Stock Exchange in 2003. Bob
was a corporate secretary of Courts.
Bob jointed PT Island Concepts Indonesia, Tbk. in mid 2004 as corporate
secretary and as head of due diligence committee in preparation of the company
going public on the Surabaya Stock Exchange.
He recently joined the board of Island Residences Club, Inc. and was appointed
as treasurer and corporate secretary.
JAMES ROWBOTHAM- Chief Operating Officer, Vice President of Operations
Born in 1947 in Lewiston, Maine, James is a US citizen. He lives in
Kennebunkport, Maine with his wife Nancy.
James obtained a Bachelor of Science degree in Business Management from the
Rochester Institute of Technology in Rochester New York and has completed real
estate courses with the University of Maine in Portland, Maine.
James owned and operated Rumsford Publishing Co. that provided newspapers,
publishing and commercial printing services. He sold the company in 1975.
He has had more than 20 years experience in real estate sales, marketing and
development of both residential and commercial properties. He owned and operated
Barge Construction Co. that provided commercial and residential construction
services in the New England area. During this period he also worked for Palmer
Russell Realty in Brookline, MA and developed the Belnap Mall in Laconia, NH.
James is a principal in Old Cape Enterprises that developed and sold residential
and commercial real estate properties in Kennebunkport, ME.
James currently is currently a Vice President with Island Residences Club and
responsible for business development and operations.
16
JOSEPH ANTHONY JOYCE - Director
Born February 1947, Liverpool, UK, Joe is a New Zealand and EU passport holder.
He lives in Sydney, Australia with his wife Anne who is CEO of the Australian
Government Telecommunications Regulating Organization.
Joe obtained an MBA from the University of Auckland, New Zealand before leaving
for Australia and joining LibertyOne, an Australian listed internet start-up
company in 1997 as its general manager for new technology development being
largely engaged in educational, interactive video, web casting business
development. He was responsible for due diligence, research and development
activities.
He left to start Maestro Business Systems Pty Ltd, a developer, systems
integrator and marketer of specialist employment and event management software
solutions. Joe is founding and majority shareholder and Chairman and CEO of the
company which is successful in its field both in Australia and overseas. He
opened a Hong Kong operation and became a fellow of the Hong Kong Institute of
Directors in 1999.
He remains with Maestro Business Systems and joined the board of Island
Residences Club, Inc. in 2004 as an independent director.
COMMITTEES OF THE BOARD OF DIRECTORS
We presently do not have any committees but expects to establish the following
committees in the next fiscal year.
Executive Committees. The Board of Directors will establish an executive
- ---------------------
committee (the "Executive Committee"), which will be granted such authority as
may be determined from time to time by a majority of the Board of Directors. We
expect that the Executive Committee will consist of the Founders and at least
one independent director. All actions by the Executive Committee will require
the unanimous vote of all its members.
Audit Committee. The Board of Directors will establish an audit committee (the
- ----------------
"Audit Committee"), which will consist of two or more independent directors.
The Audit Committee will be established to make recommendations concerning the
engagement of independent public accountants, review the independence of the
independent public accountants, consider the range of audit and non-audit fees
and review the adequacy of our internal accounting controls.
Compensation Committee. The Board of Directors will establish a compensation
- -----------------------
committee (the "Compensation Committee"), which will consist of two or more
non-employee or independent directors to the extent required by Rule 16b-3 under
the Exchange Act, to determine compensation for our senior executive officers
and advisors.
Our Board of Directors initially will not have a nominating committee.
17
DIRECTORS AND OFFICERS INSURANCE
We will apply for a directors and officers liability insurance policy with
coverage typical for a public company such as the company that will become
effective upon the effectiveness of the registration statement. The directors
and officers liability insurance policy insures (i) the officers and directors
of the company from any claim arising out of an alleged wrongful act by such
person while acting as officers and directors of the company, (ii) the company
to the extent it has indemnified the officers and directors for such loss and
(iii) the company for losses incurred in connection with claims made against the
company for covered wrongful acts.
INDEMNIFICATION OF OFFICERS
The Certificate of Incorporation provides for the indemnification of our
officers and directors against certain liabilities to the fullest extent
permitted under applicable law. The Certificate of Incorporation also provides
that our directors and officers be exculpated from monetary damages to the
fullest extent permitted under applicable law.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information in the following table sets forth information regarding the
beneficial ownership of the common stock of the company as of April 7, 2006, of
16,337,000 with respect to (i) each person known by the company who beneficially
owns 5% or more of the outstanding shares of Common Stock, (ii) each person
who is a director or named executive officer of the company and (iii) all
directors and executive officers of the company as a group.
Name and Address of Beneficial Owner (1) Shares Percentage
- ---------------------------------------------- ------ ----------
John Kennerley, Chairman(2)
1769-203 Jamestown Road
Williamsburg, VA 23185 48,000 <1%
Graham Bristow, President,
CEO and Director (3)(4)(5)
1769-203 Jamestown Road
Williamsburg, VA 23185 11,500,000 70.4%
Bob Bratadjaya, Secretary,
Treasurer and Director
1769-203 Jamestown Road
Williamsburg, VA 23185 12,000 <1%
James Rowbotham
Chief Operating Officer
1769-203 Jamestown Road
Williamsburg, VA 23185 62,000 <1%
Joseph Anthony Joyce, Director
1769-203 Jamestown Road
Williamsburg, VA 23185 500 <1%
Meridian Pacific HK Ltd (4)
P.O. Box 1947 Noosa Heads
Queensland 4567, Australia 10,000,000 61.2%
Francis Street Pty Ltd(5)
P.O. Box 1947 Noosa Heads 1,000,000 6.1%
All directors and executive
officers as a group (5 persons) 11,622,500 71.1%
<FN>
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act and unless otherwise indicated, represents securities for
which the beneficial owner has sole voting investment power or has the power to
acquire such beneficial ownership within 60 days.
(2) 48,000 shares are owned by Mr. Kennerley's wife, Kerri-Anne Kennerley.
(3) Includes 500,000 shares held by Mr. Bristow's wife, Margaret Ann Ojala.
(4) Meridian Pacific Investments HK Ltd. owns 10,000,000 shares and is majority
owned and controlled by Graham J. Bristow.
(5) 1,000,000 shares are owned by Francis Street Pty Ltd which Mr. Bristow
controls.
18
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 100,000,000 shares of common stock, par
value $.0001 per share, of which there are 16,337,000 shares issued and
outstanding as of April 7, 2006 and 20,000,000 shares of preferred stock, par
value $.0001 per share, of which none have been designated or issued. The
following statements relating to the capital stock set forth the material terms
of our securities; however, reference is made to the more detailed provisions
of, and such statements are qualified in their entirety by reference to, the
Certificate of Incorporation and the By-laws, copies of which are as exhibits
to this registration statement.
Common Stock
Holders of shares of common stock are entitled to one vote for each share on all
matters to be voted on by the stockholders. Holders of common stock do not have
cumulative voting rights. Holders of common stock are entitled to share ratably
in dividends, if any, as may be declared from time to time by the Board of
Directors in their discretion from funds legally available therefore. In the
event of a liquidation, dissolution or winding up of our company, the holders of
common stock are entitled to share pro rata in all assets remaining after
payment in full of all liabilities. All of the outstanding shares of common
stock are fully paid and non-assessable.
Holders of common stock have no preemptive rights to purchase our common stock.
There are no conversion or redemption rights or sinking fund provisions with
respect to the common stock.
INTEREST OF NAMED EXPERTS AND COUNSEL
Weed & Co. LLP has rendered an opinion on the validity of the securities being
registered. Weed & Co. LLP owns 75,000 shares of common stock of the company.
The financial statements included in this prospectus, have been audited by
Kabani & Co, CPAs, independent auditors, and have been included in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
<PAGE?
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the small business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer in the successful
defense of any action, suit or proceeding) is asserted by a director, officer or
controlling person in connection with the securities being registered, the small
business issuer will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
ORGANIZATION WITHIN THE LAST FIVE YEARS
Please see Certain Relationships and Related Transactions.
DESCRIPTION OF BUSINESS
HISTORY
Island Residences Club, Inc., formerly Hengest Investments, Inc. and Island
Investments, Inc., was incorporated in the State of Delaware on July 16, 2002.
On March 10, 2004, T. Chong Weng, the sole shareholder of Hengest
Investments, Inc., entered into a Share Purchase Agreement with Meridian
Pacific Investments HK Ltd. pursuant to which Meridian acquired 2,240,000
shares owned by Mr. Weng on March 10, 2004, representing 100% of the outstanding
shares of the company. The total consideration paid by Meridian for the shares
was US$35,000. Meridian used working capital funds to purchase the Hengest
shares. Before to this transaction there was no relationship between
Meridian and the company or Mr. Weng nor did Meridian own any securities of the
company.
Prior to March 17, 2005, our business plan was to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.
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 vacation rights valued at $0. We
recorded no value for the rights since they are acquired from a related party
whose basis was zero. With this acquisition, our business plan includes
marketing and selling vacation stay entitlement rights in the form of vacation
points. Specifically, the company operates The Island Residences Club, which
includes marketing and sales of memberships and the marketing and sales of
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 in Bali, Asia and
beyond, (ii) provide financing to individual purchasers of vacation rights and
(iii) provide resort management and maintenance services to vacation ownership
resorts.
19
Island Residences Club, Inc., Meridian Pacific Investments and PT Island
Concepts, Indonesia Tbk are related parties with common ownership and officers
before and after the transaction.
We registered our common stock on a Form 10-SB registration statement filed
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") and Rule
12(g) thereof. We file with the Securities and Exchange Commission periodic and
episodic reports under Rule 13(a) of the Exchange Act, including quarterly
reports on Form 10-QSB and annual reports on Form 10-KSB. We are based in
Williamsburg, Virginia.
BUSINESS
We operate internationally and in the hospitality industry as a private
residence membership club incorporating property development and management. We
recently acquired 4 million shares in PT Island Concepts Indonesia Tbk, and 4
million Vacation Stay Entitlements (Rights) in the Island Villas Bali. The One
Bedroom Luxury Villas were completed early April 2005 and will be operated as a
private residences club. These acquired Vacation Stay Entitlements are being
marketed by us to our members both in the United States and internationally.
We intend to market Villa rentals on the Island of Bali, in Europe, Korea,
Japan, South East Asia and Australia via our associate company PT Island
Concepts Indonesia Tbk. PT Island Concepts Indonesia Tbk
is listed in Indonesia and trades under the ticker symbol "ICON." Island
Residences Club, Inc. and PT Island Concepts, Indonesia are related parties with
common ownership and officers.
THE PRODUCTS
We have 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.
We are 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 an annual non-cash right each year to stay at an Island Residences Club
property.
Members will be able to extend or sell their annual stay entitlement rights
receiving an income on their membership if they elect not to use them in a given
year. The Private Residences Club concept is relatively new with companies such
as www.exclusiveresorts.com, www.akdestinations.com, www.bellehavens.com,
www.emperors-club.com, and www.quintess.com leading the way. Steve Case, founder
of AOL, has taken a controlling position in Exclusive Resorts Inc. with an
investment of 600m USD. These businesses offer members `annual time plans'
(15-60 days) and concierge services at multiple luxury residences and is akin to
membership at an exclusive country club. Island Residences Club believes it
offers members a new paradigm in the Residence Club concept in that members can
enjoy the same luxury and concierge services by simply buying as much `time' as
they like through the purchase of vacation rights.
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. We will maintain a policy of
keeping our properties in the utmost pristine condition and will sell and
roll-over our inventory within a three to five year time frame. We will develop
our own properties on both leasehold and freehold land appealing to both local
and foreign customers when it is time to sell. Over time, we will develop into
essentially a property trust with the increasing value of our inventory creating
an increasing asset value for the shareholders. We 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.
PT Island Concepts Indonesia TBK has been granted a boutique hotel license and
restaurant license for its Seminyak Villa Resort operation within the regency of
Bandung in the province of Bali within the Republic of Indonesia by the Federal
Government of Indonesia. Other licenses will be applied for as required.
We are in the process of registering our logo as a trademark in the Republic of
Indonesia and the United States. We own URL's www.islandconcepts.com,
www.islandresidencesclub.com, www.islandregency.com, www.islandclubestates.com,
www.islandclubresidences.com and www.islandvillasbali.com
Information on these websites is not part of this prospectus.
We have not expended any funds in the last two years on research and development
activities. We currently have no employees and operate through consultants.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the information
contained in our financial statements and the accompanying Notes.
Plan of Operation
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. We are 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.
20
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. We will maintain a policy of
keeping our properties in the utmost pristine condition and will sell and
roll-over our inventory within a three to five year time frame. We will develop
our own properties on both leasehold and freehold land appealing to both local
and foreign customers when time to sell. Over time we will develop into
essentially a property trust with the increasing value of our inventory creating
an increasing asset value for the shareholders. We 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.
Our plan for the next twelve months includes moving forward with next phase of
our 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 our 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, we will continue to maintain a research and
online concierge service from Bali. These systems will be for our use and not
for resale. We do not intend to seek any specific patents or trademarks but will
use a general copyright to protect our property and systems.
We intend to invest up to $10,000,000 in 2006 into property and income producing
assets. We intend for these funds to come from further investment from our
majority shareholder and/or borrowings secured by property owned by us. There is
no guarantee that we will be able to obtain these funds.
We intend to hire up to fifteen persons in 2006, predominately for our Southern
California operations, which we have yet to establish.
RESULTS OF OPERATIONS - For the Three Month and Six Month Periods Ended November
30, 2005 and 2004 (unaudited)
During the three months ended November 30, 2005, we began to earn revenue,
therefore are no longer a development stage company.
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) provide financing to individual purchasers of Vacation Rights and (iii)
provide resort management and maintenance services to vacation ownership
resorts.
21
The company has generated $135,000 in revenue from a related party for the three
months ended November 30, 2005 as compared to $0 for the three months ended
November 30, 2004. General and administrative expenses were $126,946, of which
$95,000 was to a related party, for the three months ended November 30, 2005 as
compared to $0 at the three months ended November 30, 2004. These expenses were
the result of us commencing limited operations. We have generated $135,000 from
a related party in revenue for the six months ended November 30, 2005 as
compared to $0 for the six months ended November 30, 2004. General and
administrative expenses were $187,971, of which $95,000 was to a related party,
for the six months ended November 30, 2005 as compared to $0 for the six months
ended November 30, 2004. These expenses were the result of us commencing limited
operations.
RESULTS OF OPERATIONS -- For the five month periods ended May 31, 2005 and 2004
We did not generate any revenue at May 31, 2005. General and administrative
expenses were $8,973.00 for the five months ended May 31, 2005 as compared to $0
for the five months ended May 31, 2004. These expenses were the result of us
commencing limited operations at March 17, 2005. These expenses contributed to a
net loss of $8,973 for the five months ended May 31, 2005 as compared to $0 for
the five months ended May 31, 2004.
LIQUIDITY AND CAPITAL RESOURCES
We had no cash or cash equivalents as of May 31, 2005. At May 31, 2005, we had
current assets of $40,000 in the form of marketable securities and $21,248 in
current liabilities due to a related party. We had no cash or cash equivalents
as of November 30, 2005. At November 30, 2005, we had current assets of
$1,495,500 in the form of marketable securities in the amount of $1,455,000 and
$40,500 in the form of an account receivable from a related party. As of
November 30, 2005, we had $201,976 in current liabilities consisting of $109,481
in the form of an account payable and $92,495 due to a related party.
We have no current source of income. Further, without realization of
additional capital, it would be unlikely for us 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 and/or services, 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.
On March 10, 2004, our then majority shareholder and sole officer and director
sold 2,240,000 shares of the company's common stock to Meridian Pacific
Investments HK Ltd., a Hong Kong corporation majority owned and controlled by
Graham J. Bristow, a citizen of New Zealand, in a private transaction. Such
transaction resulted in a change in control of the company. Simultaneously with
this transaction, the Board of Directors of the company nominated John R.
Kennerley and Joseph A. Joyce to the Board of Directors and all former officers
and directors resigned. John R. Kennerley was then named President and Chief
Executive Officer, and Joseph A. Joyce as Secretary and Treasurer of the
company.
22
On March 17, 2005, we 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. We 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.
On March 17, 2005, Graham James Bristow and Bob Bratadjaya were appointed to the
board of directors. Further, Joseph Anthony Joyce resigned as secretary and Bob
Bratadjaya was appointed as secretary and treasurer and Graham Bristow was
appointed as Chief Executive Officer and president.
On June 20, 2005, we 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 we are 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, we agreed to register the shares issuable
pursuant to the Agreement.
On November 16, 2005, we entered into a Share Purchase Agreement with Meridian
Pacific Investments ("Meridian"), whereby we 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, we agreed to
issue Meridian 6,000,000 shares of our 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.
23
On November 17, 2005, we entered into a Share Exchange Agreement with Angela
Whichard, Inc. ("AWI"), whereby we will exchange 1,600,000 shares of our 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 us 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. We 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. Subsequent to November 30, 2005, on February 24, 2006, we entered into a
Stock Purchase Agreement with DTLL, Inc., a publicly traded Minnesota
corporation, whereby we would purchase 400,000 shares of DTLL, Inc. in exchange
for 400,000 shares of Grand Sierra Resorts Corporation. DTLL shares were quoted
at $2.50 per share as of March 31, 2006 and on February 24, 2006, the
transaction date, $1.25.
Subsequent to November 30, 2005, 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.
The allocation of the Shares and the company's obligation related thereto was to
be determined at closing. The Shares represent approximately 70% of the 13.5
million issued and outstanding common stock of DTLL. The transaction was to
result in a change of control of DTLL. The purchase price for the shares to be
paid at closing was $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. On April 11, 2006, this agreement was terminated. The company did not
purchase any shares pursuant to the terms of the Stock Purchase Agreement
between the company, RotateBlack LLC and Richard Woods.
DESCRIPTION OF PROPERTY
We lease an office at 1769-203 Jamestown Rd., Williamsburg, Virginia 23185 for
$300.00 per month. We terminated this lease effective February 2006 and are now
leasing on a month to month basis. We are seeking to establish an office in
Southern California.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 16, 2002, we issued a total of 1,240,000 shares of our common stock to
T. Chong Weng, our former sole officer, director and shareholder for a total of
$124 in services rendered to us. 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, we issued T. Chong Weng, our former sole officer, director
and shareholder 1,000,000 shares of our $.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."
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
November 30, 2005, the balance of due to a related party was $92,495. This debt
is owed to both Meridian Pacific Investments HK Ltd. and Francis Street Pty Ltd,
both of which are controlled by Graham Bristow. There is no term or interest on
the loans, which will be repaid from income and profits when available.
24
On March 17, 2005, we 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 vacation rights valued at $0. We recorded no
value for the rights since they are acquired from a related party whose basis
was zero. With this acquisition, our business plan includes marketing and
selling vacation stay entitlement rights in the form of vacation points. 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 us to
(i) acquire, develop and operate other vacation ownership resorts, (ii) provide
financing to individual purchasers of vacation rights and (iii) provide resort
management and maintenance services to vacation ownership resorts.
During the three months ended November 30, 2005, we sold 54,000 rights amounting
$135,000 to Island Concepts.
During the three months ended November 30, 2005, we paid $95,000 of management
fees to Island Concepts.
On November 16, 2005, we entered into a Share Purchase Agreement with Meridian
Pacific Investments, whereby we will purchase 20.25 million shares and a warrant
to purchase 24.25 million shares of PT Island Concepts Indonesia (collectively,
the "Shares"). In exchange for the Shares, we agreed to issue Meridian 6,000,000
shares of our restricted common stock.
Island Residences Club, Inc., Meridian Pacific Investments HK Limited and PT
Island Concepts, Indonesia Tbk are related parties with common ownership and
officers before and after the transaction.
The company and its major shareholder, Meridian Pacific Investments HK Limited,
have similar interests in entities which own investment properties which we do
not consider to be competitive with our business. This includes holdings in
Island Concepts that we own; vacation rights to use the resort. The properties
include units and resort villas in Bali, Indonesia which are being marketed for
vacation rights and also to use the villas on a rental basis. Mr. Bristow, as
an executive of the company and an executive of the major shareholder, Meridian,
reserves the right to do what is reasonably necessary within these constraints
to carry out his duties and responsibilities pursuant to the terms thereof. We
do not believe that such activities will detract materially from Mr. Bristow's
services to us.
On March 1, 2006, we entered into an advisory agreement with Francis Street Pty
Ltd. whereby Francis Street would provide certain business consulting services
in exchange for 1,000,000 shares of common stock. Graham Bristow, our CEO,
controls Francis Street Pty Ltd.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is currently no public market for our securities.
There were 529 record holders of our common stock as of April 7, 2006. We
voluntarily agreed to file a registration statement covering all 16,337,000
outstanding shares of common stock. We will bear all expenses incurred in
connection with this registration statement.
We have not paid dividends on our common stock and we do not anticipate paying
dividends on our common stock in the foreseeable future. We intend to retain our
future earnings, if any, to finance the growth of our business.
25
EXECUTIVE COMPENSATION
We commenced limited business operations in March 2005. Accordingly, we did not
pay any cash compensation to our executive officers for the year ended May 31,
2005. We do not expect to pay our executive officers or any other highly
compensated executive officers cash compensation on an annualized basis to
exceed $100,000 (salary and bonus).
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by us for the benefit of our employees.
Employment Agreements
On July 1, 2005, we 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 July 6, 2005, we entered into an employment agreement with Graham James
Bristow whereby Mr. Bristow would serve as our President and CEO for a period of
one year, which is renewable thereafter upon agreement by the parties. We
agreed to compensate Mr. Bristow with 5,000 shares of common stock per month,
equaling 60,000 shares of common stock issuable annually. As of March 31, 2006,
no shares have been issued under this agreement.
As of March 31, 2006, our other executive officers agreed to work without
compensation until our cash position improves.
Director Compensation
We intend to pay directors who are not officers of the company ("Independent
Directors") a fee of $1,000 per meeting of the Board of Directors and any
committee thereof (including telephonic meetings) for their services as
directors. In addition, we intend to grant options to purchase 15,000 shares of
common stock at market price at the time of the grant to each such Independent
Director to vest in equal portions over a term of three years. Each Independent
Director who is still a member of the Board of Directors at the end of the three
year vesting period of the initial grant of options will receive a grant of
additional options to purchase 15,000 shares of common stock at the fair market
value of the common stock on the date of the grant, with such options to vest
over an additional three year period. In addition to such option grants, the
Independent Directors will be reimbursed for expenses of attending each meeting
of the Board of Directors. Officers of the company who are directors will not be
paid any director fees but will be reimbursed for expenses of attending meetings
of the Board of Directors.
26
ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file with the Commission at the Commission's Public Reference
room at 100 F. Street, North East, Washington, D.C. 20549. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
room. Our Commission filings are also available to the public at the
Commission's web site at http://www.sec.gov.
You may also request a copy of these filings, at no cost, by writing or
telephoning as follows:
ISLAND RESIDENCES CLUB, INC.
1769-203 Jamestown Road
Williamsburg, VA 23185
(757) 927-6848
27
FINANCIAL STATEMENTS
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
BALANCE SHEET
NOVEMBER 30, 2005
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ -
Account receivable - related party 40,500
Marketable securities 1,455,000
-------------
Total assets $ 1,495,500
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Account payable $ 109,481
Due to related party 92,495
-------------
Total liabilities 201,976
-------------
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;
6,490,000 shares issued and outstanding 649
Additional paid-in capital 42,075
Shares to be issued 226,595
Accumulated comprehensive gain 1,212,500
Prepaid consulting (19,352)
Deficit accumulated (168,943)
-------------
Total stockholders' equity 1,293,524
-------------
Total liabilities and stockholders' equity $ 1,495,500
=============
<FN>
The accompanying notes form an integral part of these unaudited financial statements
F-1
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED NOVEMBER 30, 2005 AND 2004
(Unaudited)
For the Three Month Periods For the Six Month Periods
Ended November 30, Ended November 30,
2005 2004 2005 2004
------------- ------------- ------------- -------------
Net revenue $ 135,000 $ - $ 135,000 $ -
Cost of revenue 94,500 - 94,500 -
------------- ------------- ------------- -------------
Gross profit 40,500 - 40,500 -
Selling, general and administrative
expenses 126,946 - 187,971 -
------------- ------------- ------------- -------------
Loss from operations before other expense
and provision for income taxes (86,446) - (147,471) -
Other expense - - - -
------------- ------------- ------------- -------------
Loss before provision for income taxes (86,446) - (147,471) -
Provision for income taxes - - - -
------------- ------------- ------------- -------------
Net loss (86,446) - (147,471) -
Comprehensive gain
Unrealized gain on marketable securities 1,212,500 - - -
------------- ------------- ------------- -------------
Comprehensive income $ 1,126,054 $ - $ (147,471) $ -
------------- ------------- ------------- -------------
Loss per share - basic and diluted $ (0.01) $ - $ (0.02) $ -
Weighted average number of shares -
basic and diluted 6,283,956 2,240,000 6,261,858 2,240,000
------------- ------------- ------------- -------------
<FN>
The accompanying notes form an integral part of these unaudited financial statements
F-2
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED NOVEMBER 30, 2005 AND 2004
(Unaudited)
2005 2004
------------- -------------
Cash flows from operating activities:
Net loss $ (147,471) $ -
Adjustments to reconcile net loss to net
cash used in operating activities:
Issuance of common stock
in exchange for services 2,500 -
Shares to be issued for consulting service 4,743 -
Issuance of common stock
to convert debt to equity - -
Decrease in current assets:
Account receivable (40,500) -
Increase in current liabilities:
Account payable 109,481 -
Due to related party 71,247 -
------------- -------------
Total adjustments 147,471 -
------------- -------------
Net cash used in operating activities
Net increase (decrease) 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
F-3
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
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. ("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 June 20, 2005, the board of directors resolved to change the company's fiscal
year end from December 31 to May 31.
During the three months ended November 30, 2005, the Company began to earn
revenue, therefore is no longer a development stage company.
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 November 30, 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.
F-4
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 November 30,
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
November 30, 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.
F-5
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 November
30, 2005, the investments have been recorded at $1,455,500 based upon the fair
value of the marketable securities.
Following is a summary of marketable equity securities classified as available
for sale as of November 30, 2005:
Investee Name Cost at Market Value at Accumulated Number of Shares
(Symbol) November 30, 2005 November 30, 2005 Unrealized Gain Held at November 30, 2005
- -------------------------------- ------------------- ------------------- --------------- -----------------------------
Island Concepts Indonesia (ICON) $242,500 $1,455,000 $1,212,500 24,250,000
NOTE 3 - 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 November 30, 2005, no preferred stock has been issued.
F-6
B. Common stock
During the three months ended November 30, 2005, the Company issued 250,000
shares of common stock for services valued at $2,500, which is the fair value of
the stock at the time of issuance.
C. Shares to be issued
During the three months ended November 30, 2005, the Company recorded $24,095 as
shares to be issued for consulting service provided and for consulting service
to be provided in the future. The shares were value at fair value of the stock
at the time of issuance
During the three months ended November 30, 2005, the Company recorded $202,500
in shares to be issued for marketable securities. Since the marketable
securities were acquired from a related party, the marketable securities were
recorded at the related party's cost to acquire the marketable securities.
D. Prepaid consulting:
During the three months ended November 30, 2005, the Company recorded $20,000
prepaid consulting for common stock issued or to be issued for consulting
service. During the three months ended November 30, 2005, the Company amortized
$648 as an operating expense. The balance of prepaid service at November 30,
2005 is $19,352.
F. 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 - COMMITMENTS
The Company leased its office space at $400 per month starting on September 1,
2005. This lease will expire on February 28, 2006 and the Company paid the rent
on a month to month basis.
Future commitments under the operating lease for the twelve months ending
November 30, 2006 are $1,200.
Rent expense for the three months and six months ended November 30, 2005 amount
to $1,200 and $1,200, respectively.
NOTE 5 - RELATED PARTY TRANSACTIONS
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
November 30, 2005, the balance due to the related party amounted to $92,495.
During the three months ended November 30, 2005, the Company sold 54,000 rights
amounting $135,000 to Island Concepts.
F-7
During the three months ended November 30, 2005, the Company paid $95,000 of
management fee to Island Concepts.
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.
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.
NOTE 6 - 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. 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 and 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 7 - SUBSEQUENT EVENTS
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.
F-8
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.
F-9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Stockholders and Board of Directors Island Residences Club, Inc.
We have audited the accompanying balance sheet of Island Residences Club, Inc.,
a development stage company (the "Company") as of May 31, 2005 and the related
statements of operations, stockholders' deficit and cash flows for the five
months ended May 31, 2005 and 2004. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit of these statements in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Island Residences Club, Inc. as
of May 31, 2005 and the results of its operations and its cash flows for the
five months ended May 31, 2005 and 2004, in conformity with accounting
principles generally accepted in the United States of America.
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has accumulated deficit of $21,472 including net losses of
$8,973 and $0 for the five months ended May 31, 2005 and 2004, respectively.
These factors as discussed in Note 5 to the financial statements, raises
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 5. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/S/KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS
Los Angeles, California
January 16, 2006
F-10
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MAY 31, 2005
ASSETS
Current assets:
Cash & cash equivalents $ -
Marketable securities 40,000
-------------
Total assets $ 40,000
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Due to related party $ 21,248
-------------
Total liabilities 21,248
-------------
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 (21,472)
-------------
Total stockholders' equity 18,752
-------------
Total liabilities and stockholders' equity $ 40,000
=============
F-11
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE FIVE MONTH PERIODS ENDED MAY 31, 2005 AND 2004 AND
FOR THE PERIOD FROM JULY 16, 2002 (INCEPTION) TO MAY 31, 2005
For the period from
July 16, 2002
(inception) to
May 31, 2005 May 31, 2004 May 31, 2005
------------- ------------- -------------
Net revenue $ - $ - $ -
Cost of revenue - - -
------------- ------------- -------------
Gross profit - - -
Selling, general and administrative
expenses 8,973 - 21,472
------------- ------------- -------------
Loss from operations before other expense
and provision for income taxes (8,973) - (21,472)
Other expense
Interest expense - - -
------------- ------------- -------------
Loss before provision for income taxes (8,973) - (21,472)
Provision for income taxes - - -
------------- ------------- -------------
Net loss $ (8,973) $ - $ (21,472)
============= ============= =============
Loss per share - basic and diluted $ (0.00) $ - $ (0.01)
============= ============= =============
Weighted average number of shares
basic and diluted 3,526,188 2,240,000 3,526,188
============= ============= =============
F-12
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 MAY 31, 2005
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 - - - (8,973) (8,973)
------------- ------------- ------------- ------------- -------------
Balance at May 31, 2005 6,240,000 $ 624 $ 39,600 $ (21,472) $ 18,752
============= ============= ============= ============= =============
F-13
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE FIVE MONTH PERIODS ENDED MAY 31, 2005 AND 2004 AND
FOR THE PERIOD FROM JULY 16, 2002 (INCEPTION) TO MAY 31, 2005
For the period
from July 16, 2002
(inception) to
May 31, 2005 May 31, 2004 May 31, 2005
------------- ------------- -------------
Cash flows from operating activities:
Net loss (8,973) - (21,472)
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 8,973 - 21,248
------------- ------------- -------------
Total adjustments 8,973 - 21,472
------------- ------------- -------------
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 $ - $ - $ -
============= ============= =============
F-14
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.
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. 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.
C. 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.
D. 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 May 31,
2005.
F-15
E. 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 May 31, 2005
there were no dilutive convertible shares, stock options or warrants.
F. 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 May 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."
F-16
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
May 31, 2005, the balance of due to related party amount to $21,248.
NOTE 4 - CONCENTRATIONS
The company has the majority of its operations located in Indonesia. The company
relies on its Indonesian operations to provide the services for the sale of the
vacation rights. These operations are subject to the ongoing sales and marketing
programs, the availability of staff, and the maintenance of the facilities
located in Bali, Indonesia.
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.
F-17
The management's plans include the sale of vacation rights to stay entitlements
at Island Villas Bali that are owned by an affiliate of the Company, Island
Concepts Indonesia, for the Company to continue as a going concern. The company
has 4,000,000 vacation rights in inventory for sale. It has sold 54,000 rights
amounting $135,000 subsequent to the year end, 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.
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 are
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.
F-18
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There were no changes in or disagreements with accountants on accounting and
financial disclosure for the period covered by this report.
PART II- INFORMATION NOT REQUIRED IN A PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under Delaware law, a corporation may indemnify its officers, directors,
employees, and agents, including indemnification of these persons against
liability under the Securities Act of 1933.
In addition, Section 102(b)(7) of the Delaware General Corporation Law and
Island Residences' Certificate of Incorporation provide that a director of this
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
except for liability:
- - For any breach of the director's duty of loyalty to the corporation or its
stockholders;
- - For acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- - For paying a dividend or approving a stock repurchase in violation of
Section 174 of the Delaware General Corporation Law; or
- - For any transaction from which the director derived an improper personal
benefit.
The effect of these provisions may be to eliminate the rights of Island
Residences and its stockholders, through stockholders derivative suits on behalf
of Island Residences, to recover monetary damages against a director for breach
of fiduciary duty as a director, including breaches resulting from negligent or
grossly negligent behavior, except in the situations described in clauses set
forth above in the preceding sentence.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the expenses in connection with this offering. Island
Residences shall bear all these expenses. All amounts set forth below are
estimates, other than the SEC registration fee.
SEC Registration Fee $ 1,748.06
Legal Fees and Expenses $25,000.00
Accounting Fees and Expenses $10,000.00
Miscellaneous $ 5,000.00
----------
TOTAL $41,748.06
28
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On July 17, 2002, we issued 1,240,000 shares of our $.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, we issued an officer of the company 1,000,000 shares of
our $.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, we 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. We recorded no value for
the rights since they are acquired from a related party whose basis was zero.
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."
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 Island
Residences.
During the three months ended November 30, 2005, we issued 250,000 shares
of common stock for services valued at $2,500, which is the fair value of the
stock at the time of issuance. The securities issued in the foregoing
transaction were offered and sold in reliance upon exemptions from the
Securities Act of 1933 set forth in Section 4(2) of the Securities Act, and
any regulations promulgated there under, relating to sales by an issuer not
involving any public offering. No underwriters were involved in the
foregoing sale of securities. All shares were issued with a Rule 144 restrictive
legend.
Subsequent to November 30, 2005, we issued 2,172,000 common shares, $.0001 par
value to advisors and consultants for services pursuant to advisory and
consultancy agreements. We also issued 6,000,000 shares, $.0001 par value to
Meridian Pacific Investments pursuant to the Share Purchase Agreement dated
November 16, 2005. Meridian is considered an affiliated entity as it owns more
than 10% of the company's common stock and is controlled by Graham Bristow, CEO
of the company. The securities issued in the foregoing transactions were
offered and sold in reliance upon exemptions from the Securities Act of 1933 set
forth in Section 4(2) of the Securities Act, and any regulations promulgated
there under, relating to sales by an issuer not involving any public
offering. No underwriters were involved in the foregoing sale of securities.
All shares were issued with a Rule 144 restrictive legend.
29
In March 2006, we issued 1,600,000 shares of common stock, $.0001 par value to
Angela Whichard, Inc. in connection with a share purchase agreement dated
November 17, 2005. The securities issued in the foregoing transaction were
offered and sold in reliance upon exemptions from the Securities Act of 1933 set
forth in Section 4(2) of the Securities Act, and any regulations promulgated
there under, relating to sales by an issuer not involving any public
offering. No underwriters were involved in the foregoing sale of securities.
All shares were issued with a Rule 144 restrictive legend.
In March 2006, we issued 75,000 shares of common stock, $.0001 par value for
legal services. The securities issued in the foregoing transaction were
offered and sold in reliance upon exemptions from the Securities Act of 1933 set
forth in Section 4(2) of the Securities Act, and any regulations promulgated
there under, relating to sales by an issuer not involving any public
offering. No underwriters were involved in the foregoing sale of securities.
All shares were issued with a Rule 144 restrictive legend.
ITEM 27. EXHIBITS
The following is a list of exhibits required by Item 601 of Regulation S-B that
are filed or incorporated by reference. The exhibits that are incorporated by
reference from Island Residences' prior SEC filings are noted on the exhibit
index. The other exhibits are attached hereto and are being filed with the SEC
as part of this registration statement.
Exhibit
Number Description of Exhibit
------------------------
(3)(i) Certificate of Incorporation. (1)
(3)(ii) Amendment to Certificate of Incorporation (2)
(3)(iii) By-laws (1)
(4.1) Form of Common Stock Certificate (1)
(5.1) Opinion of Weed & Co. LLP re: legality*
(10.1) Agreement for the Purchase of Common Stock dated as of March 10,
2004, by and between Meridian Pacific Investments HK Ltd. and
T. Chong Weng.(3)
(10.2) Agreement for the Purchase of Common Stock dated as of March 17,
2005 between Meridian Pacific Investments HK Ltd. and Island
Residences Club, Inc. (4)
(10.3) Investment Agreement with Dutchess Private Equities Fund II, L.P. (5)
(10.4) Registration Rights Agreement with Dutchess Private Equities Fund
II, L.P. (5)
(10.5) Employment Agreement with Graham James Bristow
(10.6) Advisory Agreement with Francis Street Pty Limited
(10.7) Share Exchange Agreement with Angela Whichard, Inc. (6)
(10.8) Share Purchase Agreement with Meridian Pacific Investments (6)
(10.9) Stock Purchase Agreement with RotateBlack, LLC (7)
(10.10) Stock Purchase Agreement with DTLL, Inc. (7)
(23.1) Consent of Independent Auditors, Kabani & Co., CPAs
(23.2) Consent of Weed & Co. LLP (included in Exhibit 5.1)*
(1) Filed as an exhibit to our Form 10-SB filed August 21, 2002 (File No.
000-49978)
(2) Filed as an exhibit to our Form 8-K dated March 31, 2005
(3) Filed as an exhibit to our Form 8-K dated March 10, 2004
(4) Filed as an exhibit to our Form 8-K dated March 17, 2005
(5) Filed as an exhibit to our Form 8-K dated June 20, 2005
(6) Filed as an exhibit with Form 8-K dated October 21, 2005
(7) Filed as an exhibit with Form 8-K dated February 24, 2006
*To be filed by amendment
30
ITEM 28. UNDERTAKINGS
Island Residences Club, Inc. undertakes to:
(a)(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with
the securities being registered, the small business issuer will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1), or (4) or 497(h) under
the Securities Act as part of this registration statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
31
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it is reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Williamsburg, State of Virginia, on April 27, 2006.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Signature /s/Graham Bristow
------------------
Title: Graham Bristow, Chief Executive Officer
Date: April 27, 2006
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
/s/ Graham Bristow
- --------------------
Graham Bristow Chief Executive Officer, President, Director April 27, 2006
/s/ John Kennerley
- --------------------
John Kennerley Chairman April 27, 2006
/s/Bob Bratadjaya
- ------------------
Bob Bratadjaya Secretary, Treasurer (Chief Financial
Officer/Principal Accounting Officer) April 27, 2006
/s/James Rowbotham
- -------------------
James Rowbotham Chief Operating Officer/
Vice President Operations April 27, 2006
/s/Joseph Anthony Joyce Director April 27, 2006
- -------------------------
/s/Joseph Anthony Joyce
32