AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON August 4, 2006
REGISTRATION NO. 333 - 133742
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 2 )
ISLAND RESIDENCES CLUB, INC.
(Name of small business issuer in its charter)
DELAWARE
(State of jurisdiction of incorporation or organization)
6552
(Primary Standard Industrial Classification Code Number)
20-2443790
----------
(I.R.S. Employer Identification No.)
1769-203 JAMESTOWN ROAD
WILLIAMSBURG, VA 23185
(757) 927-6848
(Address and telephone number of principal executive office)
1769-203 JAMESTOWN ROAD
WILLIAMSBURG, VA 23185
(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
(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 14,737,000 Shares $1.00(1) $14,737,000 $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).
*previously paid
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 14,737,000 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. The shares of common
stock owned by affiliates of the company will be sold at a fixed price of $1.00
per share throughout the term of this offering.
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
----
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
Until __________, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
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 for the foreseeable future;
- - Our auditor has expressed substantial doubt about our ability to continue
as a going concern;
- - We have a limited operating history;
- - We have not yet engaged in significant marketing activities to determine
whether there is a market for our services; and
- - Based on our expenses from last year, 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 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. Presently, these rights may be
used for a related party's's luxury properties at the recently completed Bali
Island Villas in Seminyak, Bali. There is a minimum of 10,000 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 each and every year.
During the nine month period ended February 28, 2006, we sold 91,000 vacation
stay entitlements (rights) amounting $227,500 to clients of PT Island Concepts
Indonesia Tbk, a related party.
These Villas have been developed by and are operated and managed by PT Island
Concepts Indonesia Tbk, for the Island Residences Club. We invoice PT Island
Concepts for the sales of vacation rights and credit the invoice for management
services that PT Island Concepts provides in the sales of the rights. There are
no material agreements that cover these transactions. 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 it owns. PT
Island Concepts Indonesia Tbk, an Indonesian corporation, whose securities are
listed on the Surabaya Stock Exchange and trade under the ticker symbol "ICON,"
is able to employ and manage the necessary staff required to operate and
maintain the properties at significant discount to labor costs in the U.S.
Island Concepts is also well positioned to acquire properties throughout Asia
that can be developed for use by our members, although its priorities currently
are to operate and manage the existing properties, and further develop the
existing properties by building new two bedroom units in Bali. We intend to
develop, market and manage the Island Residences Club concept in the U.S. and
Mexico and sell existing inventory of Vacation Stay Entitlements in the Bali
Island Villas and obtain and sell future vacation stay entitlements in other
properties. Our business focus over the next five years is acquiring properties
predominately in the U.S. and Mexico. These properties will consist of single
family homes and hotel resort properties that will include the development of
luxury suites as part of the hotel resort properties. We are currently
identifying suitable properties in the U.S. and Mexico to acquire, and plan to
manage these properties ourself.
We hope to finance our business activities through the sale of our vacation
rights, future borrowings from our majority shareholder, and third party loans
and investments. There is no guarantee that we will be able to obtain any
financing or on terms favorable to the company and its shareholders.
Island Residences Club, Inc. holds a 19.4% investment in PT Island Concepts
Indonesia Tbk, a listed Indonesian corporation. Island Residences Club, Inc. and
PT Island Concepts, Indonesia are related parties with common ownership and an
officer. Specifically, of the 125,000,000 shares issued and outstanding in PT
Island Concepts Indonesia Tbk at July 24, 2006, we owned 24,250,000 shares;
Meridian Pacific Investments HK Ltd, our majority shareholder, owned 39,750,000
shares; Francis Street Pty Ltd owned 36,000,000 shares and Graham James Bristow
owned 16,000,000 shares for a total of 116,000,000 shares or 92.8% of the total
issued capital. Meridian Pacific Investments HK Ltd and Francis Street Pty Ltd
are entities controlled by Graham Bristow and therefore, are related parties to
Island Residences Club, Inc. Further, Graham Bristow is an officer and director
of the Company and Meridian and a commissioner of PT Island Concepts Indonesia
Tbk on its advisory board.
5
THE OFFERING
This prospectus relates to the sale of up to 14,737,000 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 Pacific Investments 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 Pacific Investments 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. Frank Josep Kristan was issued 1,000,000
shares for consulting services rendered to the company. 2,240,000 shares were
transferred to 525 shareholders by Meridian Pacific Investments HK Ltd., an
affiliate of the company. Of the 14,737,000 shares outstanding, 11,566,500
shares are being offered by affiliates of the company, including Meridian
(10,000,000 shares), Francis Street (1,000,000 shares), Graham Bristow (500,000
shares held by his wife, Margaret Ann Ojala), John Kennerley, our chairman
(48,000 shares, which includes 24,000 shares held by his wife, Kerri-Anne
Kennerley), Bob Bratadjaya, a officer and director (12,000 shares), Julian James
Bristow, an officer of the company (1,000 shares, including 500 shares owned by
his wife, Astrid Bristow), Bettina Pfeiffer, an officer of the company (5,000
shares) and Joseph Joyce, a director of the company (500 shares). Our common
stock is not publicly traded.
The shares of common stock owned by affiliates of the company will be sold at a
fixed price of $1.00 per share throughout the term of this offering.
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 Fiscal Year Ended Nine Months Ended
12/31/04(audited) 5/31/05(audited) 02/28/06(unaudited)
------------------ ----------------- ------------------------
Balance Sheet Data:
- -----------------------------
Total Assets $ 0 $ 40,000 $ 2,719,356
- ----------------------------- ------------------ ----------------- ------------------------
Total Current Liabilities $ 12,275 $ 21,248 $ 298,362
- ----------------------------- ------------------ ----------------- ------------------------
Total Stockholders' Equity
(Deficit) $ (12,275) $ 18,752 $ 2,420,994
- ----------------------------- ------------------ ----------------- ------------------------
Statement of Operations:
- -----------------------------
Revenues $ 0 $ 0 $ 227,500
- ----------------------------- ------------------ ----------------- ------------------------
Cost of Revenue $ 0 $ 0 $ 159,250
- ----------------------------- ------------------ ----------------- ------------------------
Expenses $ 12,275 $ 8,973 $ 270,769
- ----------------------------- ------------------ ----------------- ------------------------
Other expense $ 0 $ 0 $ 0
- ----------------------------- ------------------ ----------------- ------------------------
Net Income (Loss) $ (12,275) $ (8,973) $ (202,519)
- ----------------------------- ------------------ ----------------- ------------------------
Income (Loss) Per Share $ (0.01) $ (0.0) $ (0.03)
- ----------------------------- ------------------ ----------------- ------------------------
Shares Outstanding 2,240,000 6,240,000 14,912,000
- ----------------------------- ------------------ ----------------- ------------------------
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 revenues. We incurred losses of
$8,973 and $12,275, respectively, for the fiscal year ended May 31, 2005 and
December 31, 2004. We incurred losses of $202,519 for the nine months ended
February 28, 2006. 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, Meridian Pacific Investments HK Ltd.
We will need $250,000.00 in funding to continue our operations for the next
twelve months. This sum is required to meet the expenses of a reporting public
company and the day to day business of the company, based on expenses from the
last fiscal year. Further, we will need up to $10,000,000 to acquire property in
the U.S. and Mexico for our business and enhance our systems. The company hopes
to raise these funds through its remaining inventory of 3,878,050 Vacation Stay
Entitlements to the Bali Island Villas, Seminyak, Bali. The company has already
commenced marketing these rights and has recorded revenues of $227,500.00
(unaudited) as of February 28, 2006 from sales to a related party. The company
expects to continue to sell and market these rights at $2.50 per right producing
gross revenues over a 5 year period, although there can be no assurance of this.
The rights are marketed currently to clients of PT Island Concepts Indonesia
Tbk. There is no guarantee that we can continue to sell our inventory of rights
to Island Concepts clients or others. Further,there is no guarantee that the
shareholder, Meridian Pacific Investments HK Ltd. will continue to advance us
funds, particularly since Meridian is offering all of its shares under this
prospectus. 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.
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.
We were an inactive entity until March 17, 2005. On March 17, 2005, we commenced
operations relating to our vacation rights, and subsequently began operations by
selling 54,000 rights to clients of PT Island Concepts Indonesia Tbk. Currently,
our entitlements are limited to properties located in Seminyak, Bali, which
became open for business in April 2005. 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, possible marketing and sales obstacles and delays, inability
to gain customer acceptance of our product, Vacation Stay Entitlements, and
significant competition from other private residence clubs such as those
operated by Marriott and Hilton Hotel Groups and market specific companies such
as Sunterra and RCI who have similar business models. 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 travel,
particularly by air to 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. For example, after the
Sept. 11 terrorist attacks, the occupancy rate at some San Francisco hotels
dropped to 40% according to sfgate.com. PFK Consulting in San Francisco, which
tracks the hotel industry, found that in the first seven months of the following
year the occupancy rate of hotels near San Francisco was 57%. At the end of July
of 2000, the occupancy rate in San Francisco hotels was 83.8%, a 31% drop. By
comparison, in September 2001, hotels experienced a 27 percentage point lag in
occupancy behind September 2000. Significantly, in October 2001, the average
daily room rate was down 29% from the previous year in October 2000, marking the
largest post-9/11 year-to-year difference.
After the September 11 attacks in New York, the post-9/11 lows in September
2001, total hotel room nights were down 30% from September 2000 and total room
sales were down 45% from September 2000. Hotel occupancy and room rates are
provided by PFK Consulting that tracks the hotel industry. Obviously some
tourist groups and destinations will be more affected than others, hence the
company's plan to spread risk in terms of Residence Club sites between the Asian
region and the Americas. If we were not to have operations in both geographical
areas, our business plan and our ability to generate revenues could suffer.
Currently, our only vacation stay entitlement rights are to the Bali Island
Villas in Seminyak, Bali. We also own an investment in PT Island Concepts
Indonesia Tbk, a listed Indonesian corporation with its major assets in Bali.
The following chart demonstrates the direct result on arrival passengers into
Bali during a period of actual terrorist activity. Less arrivals at Denpasar
International Airport, means less guests to the Bali Island Villas in Bali and
other Hotels and Resorts on the Island.
Arrival Passengers - Denpasar International Airport, Bali
2001 2002 2005
August 162,000 161,000 156,000
September 121,000* 165,000 150,000
October 178,000 80,000** 82,000***
November 167,000 29,000 61,000
December 140,000 62,000 76,000
January 158,000 60,000 82,000
* September 11, 2001, terror attack in New York
** October 12, 2002, terror attack in Bali, Indonesia
*** October 1, 2005, terror attack in Bali, Indonesia
These statistics are from the Bali Department of Tourism.
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.
PT Island Concepts Indonesia Tbk. quotes 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. Island Concepts
employs local staff at local wages and conditions, and acquires 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. They have no borrowings and all loans and investments made have been
converted to capital and into local currency; and therefore there is no exposure
to currency fluctuations. However, our operations and future profitability could
be harmed in terms of our ability to utilize and sell rights to their facilities
if they are unable to protect theirselves against currency fluctuations in the
future.
Our direct cost and revenue base is in the United States of America and
therefore is not directly affected by foreign currency fluctuations, except to
the extent that we are currently only offering rights to accommodations in Bali,
and seek to acquire properties in the future in Mexico.
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 business,to the extent we are
unable to offer rights to various locations based on these factors. In
particular, Island Concepts owns the only vacation destination to which we have
rights to. It is 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 Island Concepts faces many cultural and
traditional difficulties, in the fact that many of its employees are local. They
employ a cross section and varied work force of different religious and ethnic
backgrounds. There is no guarantee that Island Concepts will not face labor
shortages or strikes in the property it develops and manages, which our business
currently depends on.
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 affect 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 vacation rights or purchase or lease properties 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. Due to changes
in regional or geographic conditions we may not be able to continue to sell our
Rights ("Vacation Stay Entitlements") inventory in the Bali Island Villas and
thus impact our ability to fund new purchases or development of residences. 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. Both Island Concepts and Island Residences
Club, Inc. do not employ a large proportion of ex-patriates 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. The Company has
consultancy agreements with Dutchess Advisors, Frank Kristan, and Francis Street
Pty Ltd, of which Graham Bristow, CEO of the company controls. We have one (1)
year contracts in place for our executives, Julian James Bristow, Chief
Operating Officer and Vice President Operations and Bettina Pfieffer, Vice
President Marketing beginning July 1, 2006.
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 backing up all files and systems
daily and monthly onto off-line storage media. Separate systems are operated by
both Island Concepts and Island Residences Club, Inc., and are hosted on each
other's equipment to minimize any system failures. Island Concepts provides IT
and systems development support to the company. There are no contractual
arrangements between Island Concepts and Island Residences Club, Inc., as work
is undertaken on behalf of the company on normal commercial arrangements by
Island Concept's staff.
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."
At this time we have no control over search engine results as the company does
not pay fees to any search engine operator for priority or exclusive listings.
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.
Property owned by Island Concepts in Bali and potential purchases of property by
us in the future, is 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, which may
affect our ability to sell and market the rights.
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 destination of Bali 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. Further, the resort is located in a
region that has been subjected to volcanoes, earthquakes and tsunamis, which
could negatively impact operations.
OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER CONTROLS A SIGNIFICANT PERCENTAGE OF
OUR COMMON STOCK.
As of July 27, 2006, Graham Bristow, our President and Chief Executive Officer,
controls through Meridian Pacific Investments HK Ltd, 10,000,000 shares of
common stock and through Francis Street Pty Ltd, 1,000,000 shares of common
stock. He also owns 500,000 shares of common stock through his spouse. This
represents a control of 11,500,000 shares of the total issued capital of
14,737,000 or 78% of our total 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.
However, all outstanding shares are being registered for sale pursuant to this
registration statement. If Mr. Bristow and his affiliated entities sell all of
their shares, Mr. Bristow will no longer exercise control over the Company and
could be removed as an officer and director of the Company. To the extent that
Mr. Bristow is instrumental in executing the Company's business agenda and that
past financing has come from Meridian, an entity Mr. Bristow controls, the
Company's business and finances could be negatively affected.
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 14,737,000 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. The shares of
common stock offered by affiliates of the company will be sold at a fixed price
of $1.00 per share throughout the term of this offering.
SELLING SECURITY HOLDERS
As of July 27, 2006, a total of 14,737,000 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 14,737,000 outstanding shares of our common stock atJuly 27, 2006 are being
offered under this prospectus. 4,000,000 shares and 6,000,000 shares,
respectively, were issued by us to Meridian Pacific Investments 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. Frank Josep Kristan was issued
1,000,000 shares for consulting services rendered to the company. 2,240,000
shares were transferred to 525 shareholders by Meridian Pacific Investments HK
Ltd., an affiliate of the company. Of the 14,737,000 shares outstanding,
11,566,500 shares are being offered by affiliates of the company, including
Meridian Pacific Investments HK Ltd. (10,000,000 shares), Francis Street Pty
Ltd. (1,000,000 shares), Graham Bristow (500,000 shares held by his wife,
Margaret Ann Ojala), James Kennerley, our chairman (48,000 shares which includes
24,000 shares held by his wife, Kerri-Anne Kennerley), Bob Bratadjaya, an
officer and director (12,000 shares), Julian James Bristow, an officer of the
company (1,000 shares, including 500 shares owned by his wife, Astrid Bristow),
and Bettina Pfeiffer, an officer of the company (5,000 shares)and Joseph Joyce,
a director of the company (500 shares). Graham Bristow, our CEO, controls
Meridian Pacific Investments HK Ltd. and Francis Street Pty Ltd.
Ownership before Amount and Percentage
Name of Selling Shareholder the Offering Amount to be Offered Owned After the Offering(1)
I Made Suka Adnyana 500 500 0
Siti Ainul Af'idah 500 500 0
Anni Aftiani 500 500 0
Siti Aisyah 500 500 0
Cameron Templeman Aitken 500 500 0
Dianne Sally Aitken 500 500 0
Kenneth Aitken 500 500 0
Lucas Imrie Aitken 500 500 0
Mitchell Thomas Aitken 500 500 0
Nicholas Kenneth Aitken 500 500 0
Bubun Ali Akbar 500 500 0
Mansyur Ali 500 500 0
Chadijah Amalia 500 500 0
Susi Andayani 500 500 0
Joanna Anderson 500 500 0
Nigel Anderson 500 500 0
Putu Wahyuni Fitria Andini 500 500 0
Andoko Andoko 500 500 0
Diana Angelina 500 500 0
Sofie Anggraini 500 500 0
Mumu Maulana Anhar 500 500 0
David Clarke Ansell 2500 2500 0
Ni Made Juni Antari 500 500 0
Ni Luh Sudi Antarini 500 500 0
Suhendro Anwar 500 500 0
Fajar Ardianto 500 500 0
I Putu Gede Ariantha 500 500 0
I Made Ariawan 500 500 0
Arifin Arifin 500 500 0
Ni Nyoman Ariyani 500 500 0
I Wayan Bagus Arjana 500 500 0
Citra Adriana Armadhonie 500 500 0
Arief Aditya Arman 500 500 0
A.A. Istri Raka Armini 500 500 0
I Gde Arnawa 500 500 0
Ni Ketut Arni 500 500 0
I Ketut Wija Arta 12000 12000 0
Ni Nyoman Sumini Asih 500 500 0
Yunita Asnidar 500 500 0
I Gst Km Astawa 500 500 0
I Made Raka Astika 500 500 0
Christine Astwood 500 500 0
Michael Astwood 500 500 0
Luthfi Azizah 500 500 0
Rene Baas 500 500 0
Miranda Jane Ball 500 500 0
Alton Thomas Barret 500 500 0
Jonathan Barton 500 500 0
Revi Maria Barton 500 500 0
Lukas Maraly Barus 500 500 0
Grace Evalina Barus 500 500 0
Abdul Basit 500 500 0
Fred Baudzus 500 500 0
Milton John Bavin 500 500 0
Glen Francis Edward Bewley 500 500 0
Lynette Bewley 500 500 0
Libelle Emily Boyd 500 500 0
William Edward Bradshaw 500 500 0
Audrey Flora Jacquiline Brand 5000 5000 0
Bob Bratadjaya 12000 12000 0
Elvina Priscilla Brereton 2500 2500 0
Marie Anne Brereton 500 500 0
Shayne Michael Brereton 500 500 0
Lucky Arietta Brillianto 500 500 0
Melanie Cherie Bristow 24000 24000 0
Russell John Bristow 5000 5000 0
Vanessa Joy Bristow 5000 5000 0
Janine Joye Bristow 1250 1250 0
Barbara Helen Bristow 500 500 0
Emma Jocelyn Bristow 500 500 0
Kate Helen Bristow 500 500 0
Astrid Bristow 500 500 0
Joyce Elizabeth Bristow 500 500 0
Julian James Bristow 500 500 0
Ni Kade Ayu Budhiartini 500 500 0
Akhmad Budianto 500 500 0
Budianto Budianto 500 500 0
I Gde Made Praba Budiartha 500 500 0
I Made Rai Budiartha 500 500 0
Peter Robert Burn 500 500 0
Cambium Alliance LLC 100000 100000 0
Patrice Arnault Caraty 500 500 0
Clive Geoffrey Carlin 5000 5000 0
John Cathcart 500 500 0
Arthur Chondros 500 500 0
David Christanto 500 500 0
Mario Paulus Christian 500 500 0
Lorraine Clark 500 500 0
Ali Wardhana Cokrosucipto 500 500 0
Warwick Stephen Collins 500 500 0
Gordon David Cooper 500 500 0
I Ketut Cukik 500 500 0
Maureen Ann Cummins 500 500 0
Prima Nungky Damayanti 500 500 0
Ni Ketut Dariani 500 500 0
I Ketut Darma 500 500 0
Aries Darmanto 500 500 0
Putu Novi Darmayanthi 500 500 0
I Nyoman Darmayuda 500 500 0
Dasilan Dasilan 500 500 0
Ida Nadia David 2500 2500 0
Joseph David 500 500 0
Agustinus Dawarja 50250 50250 0
Hessel Eugene De Jong 2500 2500 0
Novak Mathew De Jong 500 500 0
Dedeh Dedeh 500 500 0
Arlini Dellarinatasia 500 500 0
Mudjitabe Dellarinatasia 500 500 0
Michelle Louise Desmazures 500 500 0
I Gde Agus Martha Desyanto 500 500 0
Ludia Devinurdini 500 500 0
Ivan Diary 500 500 0
Cypriana Sri Krismiyati Diaz 500 500 0
Hendrikus Endy Diaz 500 500 0
I Made Dirgayasa 500 500 0
Toby Charles Dolman 500 500 0
Lisa Jodie Dorday 500 500 0
David Cubit Duncan 500 500 0
Helen Duncan 500 500 0
Michelle Anne Dunstan 500 500 0
Roger John Dunstan 500 500 0
Stuart Russell Dunstan 500 500 0
Malcolm Leslie Edwards 500 500 0
Mark John Edwards 500 500 0
Jana El-Husseini 1000 1000 0
Daniel Bruce Ellaway 500 500 0
Fitri Falhadad 500 500 0
Fitri Falhadad 500 500 0
Fitri1 Falhadad1 500 500 0
John Frederick Fallon 500 500 0
Luke Anthony Fallon 500 500 0
Mathew James Fallon 500 500 0
Pamela Maie Fallon 500 500 0
Glen Edwards Ferguson 500 500 0
Michelle Fieldsend 500 500 0
James Fitzgerald 500 500 0
Caroline Alexandria Folbigg 5000 5000 0
Hayden Charles Folbigg 2500 2500 0
Francis Street Pty Ltd. 1000000 1000000 0
Phil Edward Gambell 500 500 0
Clarence Carl Garay 500 500 0
Edwige Anna Gaul 500 500 0
Raymond Trevor Gaul 500 500 0
Goenarni Geonawan 500 500 0
Geoffrey William Glew 2500 2500 0
Geoffrey Maurice Gold 2500 2500 0
Ni Nyoman Gunanti 500 500 0
Sari Christin Gurning 500 500 0
Albert Halim 500 500 0
Siti Hamidah 500 500 0
Made Sri Handarini 500 500 0
Lalu Zul Hardi 500 500 0
Supardi Hardjono 500 500 0
Richard John Harley 500 500 0
Helena Hindarto Heffman 500 500 0
Elmid Hendro 12000 12000 0
Andrew Leight Heng 5000 5000 0
Hermawan Hermawan 500 500 0
Deni Herniwan 500 500 0
Anastasia Sopacula Hesler 500 500 0
Ronald Patrick Hesler 500 500 0
Dion Hasan Heyder 500 500 0
Leonie Ann Heyder 500 500 0
Lutfi Heyder 500 500 0
Natasya Jamila Heyder 500 500 0
Nicole Shaakira Heyder 500 500 0
Urip Hidayat 500 500 0
Totong Hidayat 500 500 0
Gary Mark Hill 500 500 0
Julie Anne Hilton 500 500 0
Laurie Raymond Hocking 500 500 0
Gary John Hofmaier 2500 2500 0
Andy Neo Chee Hoon 500 500 0
Eric Carl Horneman 2500 2500 0
Colette Suzanne Hunt 250000 250000 0
Maxwell Morris Hunt 250000 250000 0
Brian Douglas Hunt 5000 5000 0
Felicity Hunt 2500 2500 0
James Hunt 1250 1250 0
Jason Hunt 1250 1250 0
Nicholas Dunstan Hunt 500 500 0
Pascale Celine Hunt 500 500 0
Sascha Hunt 500 500 0
Cheryl Ann Hunt 500 500 0
Noela Joy Hunt 500 500 0
Beverley Joy Hunter 500 500 0
Anne Catherine Hurley 500 500 0
Paul Edwin Hynes 500 500 0
Awaliyah Ice 500 500 0
Dipl. Ing. Aditya Indradjaja 500 500 0
Febrianti Intan 500 500 0
Bambang Irawan 500 500 0
Irwan Irwan 500 500 0
Marvin Isaacson 500 500 0
Budi Iskandar 500 500 0
Muhammad Jamil 500 500 0
Ermelinda Oniza Jehamit 500 500 0
Geneveva Jemina 500 500 0
Peter Jhon 500 500 0
Bernadette Valerie Johnson 5000 5000 0
Elvina Marie Johnson 2500 2500 0
Monica Johnson 500 500 0
Ni Nyoman Joni 500 500 0
Robert Alan Joske 500 500 0
Selfia Joso 500 500 0
David Mathew Joyce 500 500 0
Helen Elizabeth Joyce 500 500 0
Joseph Anthony Joyce 500 500 0
Anthony George Jude 500 500 0
Walter Rudolf Kaminski 12000 12000 0
Ludwig Theodore Kaminski 500 500 0
Muchammad Iwan Kartiwan 500 500 0
Jan Patricia Kehoe 1250 1250 0
John Kehoe 500 500 0
Doris Keller 500 500 0
Nurul Kemala 1000 1000 0
John Randall Kennerley 24000 24000 0
Kerri-Anne Kennerley 24000 24000 0
Lah Komariah 500 500 0
Frank Josep Kristan 23000 23000 0
Katherine Kristan 500 500 0
Noelle Kristan 500 500 0
Paige Kristan 500 500 0
Frank Josep Kristan 750000 750000 0
Susi Kristina 500 500 0
Billy Andrew Kristyono 500 500 0
Emmanuel Kristyono 500 500 0
Johanes Kristyono 500 500 0
Nethania Kristyono 500 500 0
Ni Made Ratna Dewi Kusuma 500 500 0
Bayu Kusworo 500 500 0
L C Asia Limited 50250 50250 0
Ni Ketut Lalis 500 500 0
Jeffrey Alan Lampe 1250 1250 0
I Made Yudika Lanang 500 500 0
Lynette Penny Lander 500 500 0
Ni Made Langgeng 500 500 0
Lasmidi Lasmidi 500 500 0
David Victor Laurence 2500 2500 0
I Made Lena 500 500 0
Ni Putu Sri Lestari 500 500 0
Tjhin Lin Lie 500 500 0
Lily Lily 500 500 0
Chew Miaw Ling 500 500 0
I Gusti Ketut Lodra 500 500 0
Edwardi Lubis 500 500 0
David John Lucas 500 500 0
James Thomas Lucas 500 500 0
Jennifer Elizabeth Lucas 500 500 0
Ludvik Nominees Pty Ltd 100000 100000 0
I Dewa Made Mahayana 500 500 0
Morris Richard Mair 500 500 0
Domingo Laxamana Manuel 500 500 0
I Nyoman Mardawa 500 500 0
Ni Made Mariani 500 500 0
Early Riza Marini 500 500 0
I Wayan Marjaya 500 500 0
Ani Marwati 500 500 0
Christian Mathindas 500 500 0
Yudhi Maulana 500 500 0
Janine Margaret McDonald 1250 1250 0
Kathleen Mary McDonald 500 500 0
Stewart Douglas McDonald 500 500 0
Timothy John McDonald 500 500 0
Russell Mclaine 500 500 0
Hector Charles McLeod 2500 2500 0
Malcolm Hector McLeod 500 500 0
David John McLeod 500 500 0
Anthony Lloyd Meagher 500 500 0
Corinne Jeanette Meagher 500 500 0
John Horsley Meagher 500 500 0
Heru Media 500 500 0
Asif Haneef Mehrudeen 5000 5000 0
I Wayan Meja 500 500 0
A.A. Gede Raka Mendra 500 500 0
Ni Wayan Menuh 500 500 0
PT Taman Merah 500 500 0
Meridian Pacific Investment HK, Ltd 4000000 4000000 0
Meridian Pacific Investment HK, Ltd 6000000 6000000 0
Poer Miniati 500 500 0
Misradin 500 500 0
Eka Misyati 500 500 0
David Moorman 500 500 0
Elsie Moorman 500 500 0
Melville Guy Moorman 500 500 0
Kristen Jane Moran 500 500 0
Noel Morley 500 500 0
Patrica Morley 500 500 0
Lie (Wong) Lie Moy 500 500 0
I Ketut Mudana 500 500 0
Zakaria Muhamad 500 500 0
I Wayan Muliartha 500 500 0
Tati Muliyanti 500 500 0
Munisah Munisah 500 500 0
Joseph Murray 500 500 0
Gusti Ayu Murtini 500 500 0
Ni Ketut Juniasih Murtini 500 500 0
Solihfia Nadafuri 12000 12000 0
Mohammad Narwan 500 500 0
Mira Nathalia 500 500 0
Sinclaire Nattalia 500 500 0
Bradley Newlove 500 500 0
Claire Newlove 500 500 0
Jillian Anne Newlove 500 500 0
Sarah Jane Newlove 500 500 0
Vjekoslav Nizic 12000 12000 0
Angelka Nizic 500 500 0
Michael Nizic 500 500 0
Genevieve Nizic 500 500 0
Natice Nizic 500 500 0
C. Markus Nong 500 500 0
Normandy Normandy 500 500 0
Ita Adhitya Nova 500 500 0
Siti Nuraeni 500 500 0
Lilis Nuraini 500 500 0
Sufaat Nurhartoyo 500 500 0
Popon Nurhayati 500 500 0
Nurliza Nurliza 500 500 0
Nursasongko Nursasongko 500 500 0
Ida Nursida 500 500 0
PT EcoEnergy Nusantara 500 500 0
Annie Victoria O'Brien 5000 5000 0
Margaret Ann Ojala 500000 500000 0
Alan Ojala 500 500 0
Darryl Ojala 500 500 0
Joyce Ojala 500 500 0
Nelson James Ojala 500 500 0
I Ketut Pandi 500 500 0
Hendrik Pardede 500 500 0
I Wayan Agus Pardiasa 5000 5000 0
Ni Wayan Parmiti 500 500 0
Robert William Parsons 500 500 0
Yun Maulina Parsons 500 500 0
Douglas Maxwell Pauling 500 500 0
Reawyn Valentine Pauling 500 500 0
Emily Pauling 500 500 0
Georgina Pauling 500 500 0
Sonia Winifred Pearson 500 500 0
I Putu Widya Laksana Pendit 500 500 0
Ni Made Kanunia Sari Pendit 500 500 0
Roland Petrie 500 500 0
Philip John Pinsent 500 500 0
Pio Services Limited 13000 13000 0
Boy Pebie Piranhadi 500 500 0
Rita Ellen Polli 500 500 0
Kristianus Seno Prasetyo 500 500 0
Dodi Prawira 500 500 0
Prawito Prawito 500 500 0
Bettina Louise Pfeiffer 5000 5000 0
Hunung Priwidayati 500 500 0
Wyuna Estelle Prosser 500 500 0
I Nengah Purna 500 500 0
Sari Purnama 500 500 0
Yongki Purnama 500 500 0
Ni Ketut Purnamini 500 500 0
Ni Wayan Purnamini 12000 12000 0
Purwadi Purwadi 500 500 0
Meita Indah Purwaningtias 500 500 0
Ari Purwanto 500 500 0
Putu Ayu Rena Purwita 500 500 0
Anak Agung Gede Putrawan 500 500 0
Maryvonne Eloise Pyne 500 500 0
John Daniel Rachmat 500 500 0
Rahayu Rahayu 500 500 0
Siti Rahayu 500 500 0
Endang Sri (Anna) Rahayu 500 500 0
Amanda Leigh Raines 500 500 0
Clive Duncan Raines 500 500 0
Sarah Emma Raines 500 500 0
Rudy Irzan Redjamat 500 500 0
Judith Lynn Reid 500 500 0
Gerald Arndt Resnick 5000 5000 0
Retty Rianika 500 500 0
Robert Allan Rice 500 500 0
Kletus Riu 500 500 0
George Edwin Robinson 500 500 0
Joyce Robinson 500 500 0
Brent Mark Robinson 500 500 0
Lisa-Marie Robinson 500 500 0
Nicolene Mathilda Rodda 500 500 0
Dwi Rohani 500 500 0
Rokesih Rokesih 500 500 0
Rosemary Cecilia Rovetto 500 500 0
James & Nancy Rowbotham 50000 50000 0
James Rowbotham 12000 12000 0
Rusmayanti Rusmayanti 500 500 0
I Made Sadiartha 500 500 0
Dedeh Sadiah Sadikin 500 500 0
Agus Samsudin 500 500 0
I Wayan Sanggra 500 500 0
Arief Dipa Sanjaya 500 500 0
Didik Budi Santoso 500 500 0
Edi Sanyoto 500 500 0
Gede Arya Eka Saputra 500 500 0
Debbie Sarris 2500 2500 0
Allister James Sarris 500 500 0
I Made Sedana 500 500 0
I Wayan Sendri 500 500 0
Ni Made Sepriadi 500 500 0
David Setiawan 500 500 0
Rebella Lean Shanley 500 500 0
Joanna Marie Shiff 1250 1250 0
Baiq Sifawati 500 500 0
Rayani Metrola Simanjuntak 500 500 0
David Benjamin Simmons 500 500 0
Debra Ellis Simmons 500 500 0
Roganda Siregar 500 500 0
Annie Siriwidadi 500 500 0
Adjie Iridium Sjaaf 500 500 0
Richard Armstrong Slaney 500 500 0
Theodore Smith 310000 310000 0
Ni Nyoman Sokarini 500 500 0
Ria Juwairiah Solihin 500 500 0
Mark R. Soper 500 500 0
Sriatun Sriatun 500 500 0
Robert John Stadler 500 500 0
William David Stannard 12000 12000 0
Gregory James Stannard 2500 2500 0
Dorothy Stannard 500 500 0
Susanne Priscilla Stevens 500 500 0
Andreas Heinrich Stokowy 500 500 0
I Made Suadha 500 500 0
I Nyoman Suadnya 500 500 0
Ni Luh Suamirni 500 500 0
I Wayan Suartha 500 500 0
Subhan Subhan 500 500 0
Antonius Johanes Subrata 500 500 0
Robertus Subrata 500 500 0
I Putu Sudartana 500 500 0
I Nyoman Sudiarta 500 500 0
I Nyoman Sudiartha 500 500 0
Ni Nengah Sugiani 500 500 0
I Nyoman Sugiarta 500 500 0
Mimin Suharti 500 500 0
Suhartini Suhartini 500 500 0
Sukarman Sukarman 500 500 0
Didik Sukarna 500 500 0
Djatnika Sukarta 500 500 0
I Made Sukirta 500 500 0
Ni Made Sukraeni 500 500 0
Endang Sulastri 500 500 0
Ni Ketut Sulastri 500 500 0
Suliasih Suliasih 500 500 0
Lianny Suliawan 500 500 0
Ni Putu Sumariani 500 500 0
Sumiyati Sumiyati 500 500 0
Supanto Supanto 500 500 0
Made Ani Suprapta 500 500 0
Supriyanto Supriyanto 500 500 0
Supriyono Supriyono 500 500 0
PT Global Surindo 500500 500500 0
Arif Suryadi 500 500 0
Ni Ketut Susana 500 500 0
I Nyoman Dharma Susila 500 500 0
I Nyoman Suwandana 500 500 0
Ni Luh Ratini Suweni 500 500 0
I Gede Suwirya 500 500 0
Ni Ketut Suwitri 500 500 0
Epafroditus Suyanto 12000 12000 0
Siti Syarifah 500 500 0
Frederic Piere Taffin 500 500 0
Isabela H. Sjaaf Tanoto 500 500 0
Martalena Tarigan 500 500 0
Ni Wayan Tatik 500 500 0
Hendrikus Tawur 500 500 0
Tempio Group of Companies Ltd 12000 12000 0
Helen Mary Thompson 2500 2500 0
Benny Tjahyadi 500 500 0
Brian Walter Torrance 24000 24000 0
Anne Torrance 5000 5000 0
Julie Anne Torrance 500 500 0
Marianne Torrance 500 500 0
Samuel Tov-Lev 500 500 0
Dewa Ayu Trisna 500 500 0
Christopher John Turner 5000 5000 0
Prita Dora Ukitasari 500 500 0
Ulfiah Ulfiah 500 500 0
Elizabeth Anne Wadsworth 2500 2500 0
Lodewyk Karel Wagiu 500 500 0
Rully Wahyudi 500 500 0
Eko Wahyudi 500 500 0
Sulin Wahyudi 500 500 0
Ni Luh Putu Ana Wahyuni 500 500 0
Ni Komang Sri Wahyuni 500 500 0
Gregory Walsh 500 500 0
Therese Walsh 500 500 0
Francis Andri Paul Waneukem 500 500 0
Ni Luh Oka Wardani 500 500 0
David Simon Warhaft 2500 2500 0
I Ketut Warta 500 500 0
Catherine Elizabeth Waters 5000 5000 0
James Charles Waters 1250 1250 0
John Waters 500 500 0
Erna Wati 500 500 0
Ronny Wazier 500 500 0
Stephen Heinz Weber 500 500 0
Weed & Co. LLP 75000 75000 0
I Ketut Wenia 500 500 0
Robert Clive West 500 500 0
Andrew Arnott Wheeler 5000 5000 0
Danielle Lisa Wheeler 5000 5000 0
David Arnott Wheeler 2500 2500 0
Pauline Maureen Wheeler 500 500 0
Peter Whitfield 500 500 0
Wayan Wiwik Wiartini 500 500 0
I Putu Agus Widiantara 500 500 0
I Putu Widnyana 500 500 0
Brett Adrian Wiley 500 500 0
Malcolm Edwards Williams 500 500 0
Ni Made Rai Wismayani 500 500 0
I Made Wita 500 500 0
Karen Wittich 500 500 0
Thomas Leslie Wittich 500 500 0
Desmond Wong 2500 2500 0
Angus Chooi Wong 500 500 0
Richard Woods 100000 100000 0
Wulandari Wulandari 500 500 0
I Wayan Yadnya 500 500 0
Mohammad Yahya 500 500 0
I Made Putra Yasa 12000 12000 0
Yati Yati 500 500 0
Wong Chooi Yoke 500 500 0
Hendra Yudio 500 500 0
Yuliana Yuliana 500 500 0
A.A. Sri Yulliani 500 500 0
Hasta Yuwana 500 500 0
Horst Ernst Zilch 500 500 0
Edy Zulferdi 500 500 0
14737000 14737000 0
<FN>
(1) 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 shares of common stock owned by affiliates of the company will be offered at
a fixed price of $1.00 per share throughout the term of this offering.
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 July 27, 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 59 Director, President and Chief Executive Officer
Bob Bratadjaya 40 Director, Secretary and Treasurer
Julian James Bristow 33 Chief Operating Officer,
Vice President Operations
Bettina Pfeiffer 34 Vice President Marketing
Joseph Anthony Joyce 59 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 was appointed a director of an
Indonesian listed company PT Indoexchange Tbk in 2002 resigning in June 2004.
Graham invested in PT Island Concepts Indonesia, Tbk in 2002, a villa
development and management company located on the island of Bali via his
corporate entity, Meridian Pacific Investments HK Ltd, a company incorporated in
Hong Kong. PT Island Concepts Indonesia Tbk is also involved in the sale and
leasing of third party properties, however the majority of business activity is
the development and management of properties owned by itself. The company's
securities were listed on the Surabaya Stock Exchange in Indonesia in July 2005.
He is currently a Commissioner of the company on its advisory board.
Graham Bristow is an officer and director of Island Residences Club, Inc. and is
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 resigned from Island Concepts in
May 2006.
He recently joined the board of Island Residences Club, Inc. and was appointed
as treasurer and corporate secretary.
JULIAN JAMES BRISTOW - CHIEF OPERATING OFFICER, VICE PRESIDENT OPERATIONS
Born March 22nd 1973, Hastings, New Zealand, Julian is a US Resident living in
Torrance, California with his wife Astrid.
Julian Bristow is the son of the Chief Executive Officer and President of the
Company, Graham James Bristow.
Julian was educated in New Zealand, however attended the University of
Queensland in Brisbane, Australia. He played representative Rugby for the
Brisbane West's Rugby Club and on taking up employment with Omni
Telecommunications in Melbourne, Australia as Production Manager in 1996 trained
the Melbourne Universities Women's Rugby Team. Under Julian's stewardship this
newly established team went on to win the National Championships in its second
year of competitive sport. In 1998 Julian relocated to Sydney to join LibertyOne
Limited and was involved in managing and developing the online businesses of
Australian Tennis Champion, Pat Rafter; Golfing Legend, Greg Norman and others.
He moved to Los Angeles in 1999 with the company's US subsidiary Digital Rights
Inc. He left in 2001 to join Marketing and Promotions Company, Makai Event
Management & Promotions of Manhattan Beach, California.
Julian is currently active in the sport of Rugby in California joining the Los
Angeles Rugby Squad as a player coach. The team has participated at the
National's in recent years. He joins Island Residences Club, Inc. charged with
the specific responsibility of launching and managing the company's Vacation
Residences Club concept in North and Central America. Julian will open a
regional office for the company in Southern California.
BETTINA PFEIFFER
VICE PRESIDENT - MARKETING
Bettina Pfeiffer was born in Hong Kong and moved to the U.S. in 1991 and
attended the Arizona State University in Tempe, Arizona. Bettina graduated in
1995 with a B.S. Degree in Psychology concentrating in the area of Neuroanatomy
and Child Development. Today Bettina lives in Scottsdale, Arizona with her two
children of 7 and 4 years.
From March 2002 until late 2004 Bettina was a partner in custom home building
company, Sonora West Developments, Inc. with the specific responsibility for the
locating of suitable land plots for development, project management and client
service relations.
During the period with Sonora, Bettina organized the Arizona Foothills Magazine
Home Builder of the year functions; also Sonora West Developments, Inc. has been
a recipient and honoree of this award.
Bettina attended the Arizona School of Real Estate in 2004 obtaining
Certification in Loan Processing and obtaining an Arizona Real Estate Sales
License. She commenced with Century 21, Arizona Foothills Branch in October
2005. Over this period Bettina gained invaluable experience working with the
Spur Cross Spa in the capacity of Front Office and Customer Services Manager and
together with her Real Estate Development and Sales experience will bring to
Island Residences Club, Inc. invaluable relevant skills.
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 expecs 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 July 27, 2006, out
of 14,737,000 outstanding shares, 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 78.0%
Bob Bratadjaya, Secretary,
Treasurer and Director
1769-203 Jamestown Road
Williamsburg, VA 23185 12,000 <1%
Julian James Bristow,
Chief Operating Officer(6)
and VP of Operations
1769-203 Jamestown Road
Williamsburg, VA 23185 1,000 <1%
Bettina Pfeiffer,
Vice-President Marketing
1769-203 Jamestown Road
Williamsburg, VA 23185 5,000 <1%
Joseph Anthony Joyce, Director
1769-203 Jamestown Road
Williamsburg, VA 23185 500 <1%
Meridian Pacific Investments HK Ltd (4)
P.O. Box 1947 Noosa Heads
Queensland 4567, Australia 10,000,000 67.9%
Francis Street Pty Ltd(5)
P.O. Box 1947 Noosa Heads 1,000,000 6.1%
All directors and executive
officers as a group (6 persons) 11,566,500 78.5%
(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) 24,000 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.
(6) Includes 500 shares held by Mr. Bristow's wife, Astrid Bristow.
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 14,737,000 shares issued and
outstanding as of July 27, 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., Inc. 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.
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 commenced business activities and 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. Meridian sold its interest in PT Island
Concepts Indonesia Tbk to Meridian so vacation rights could be marketed in the
United States. We recorded no value for the rights since they were acquired from
a related party whose basis was zero. With this acquisition, our business plan
includes marketing and selling vacation stay entitlements in the form of
vacation rights. 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 one of the
ten villas in Bali Island Villas in Seminyak, Bali owned by PT Island Concepts
Indonesia Tbk. PT Island Concepts's business includes property sales, leasing,
development and management. PT Island Concepts has built the ten villas in Bali
and intends to continue to develop the property with additional villas. It
manages the properties with its staff and engages travel agents to book
accommodation at the villas. There is a minimum of 10,000 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 each and every year. This was the
value of a one night stay at the Villas at March 2005; the current published
rate at the Villas is $338.80 per night, giving the holder of rights a discount
value of 26.21%.
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
it owns. PT Island Concepts Indonesia Tbk, an Indonesian corporation, is able to
employ and manage the necessary staff required to operate and maintain the
properties at significant discount to labor costs in the U.S. PT Island Concepts
is also well positioned to acquire properties throughout Asia that can be
developed for use by our members, although its priorities currently are to
operate and manage the existing properties, and further develop the existing
properties by building new two bedroom units in Bali. We intend to (1) develop,
acquire and manage vacation properties in the U.S. and Mexico for members of the
Island Residences Club, (2) develop, market and manage the Island Residences
Club concept and (3) sell existing inventory of vacation stay entitlements in
the Bali Island Villas and obtain and sell future vacation stay entitlements in
other properties.
We hope to finance our business activities through the sale of our vacation
rights, future borrowings from our majority shareholder, and third party loans
and investments. There is no guarantee that we will be able to obtain any
financing or on terms favorable to the company and its shareholders.
19
Island Residences Club, Inc., Meridian Pacific Investments HK Ltd, Francis
Street Pty Ltd and PT Island Concepts Indonesia Tbk are related parties with
common ownership and an officer. Specifically, of the 125,000,000 shares issued
and outstanding in PT Island Concepts Indonesia Tbk, we own 24,250,000 shares;
Meridian Pacific Investments HK Ltd owns 39,750,000 shares; Francis Street Pty
Ltd owns 36,000,000 shares and Graham James Bristow owns 16,000,000 shares for a
total of 116,000,000 shares or 92.8% of the total issued capital as of July 24,
2006. Meridian Pacific Investments HK Ltd and Francis Street Pty Ltd are
entities controlled by Graham Bristow and therefore are related parties to
Island Residences Club, Inc. Further, Graham Bristow is an officer and director
of the Company and Meridian. PT Island Concepts Indonesia Tbk securities are
listed on the Surabaya Stock Exchange in Indonesia. Mr. Bristow is currently a
Commissioner of PT Island Concepts on its advisory board.
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. Ten one
Bedroom Luxury Villas were completed July 2005 and will be operated as a
private residences club. These acquired Vacation Stay Entitlements are being
marketed by us in the United States and internationally.
To become a member of the Island Residences Club, one must acquire a minimum of
10,000 Vacation Stay Entitlements (sometimes referred to as "right", "vacation
rights" or "entitlement rights") at a price of USD $2.50 each for a total value
of $25,000.00. This will entitle the holder/member to 10 nights per annum each
and every year at an Island Residences Club property. Alternatively, a member
can redeem these Vacation Stay Entitlements at the rate of 100 Rights per night.
Rights can also be purchased in minimum parcels of 1,000 Rights and redeemed at
100 Rights per night per stay (an aggregate of ten nights per annum), without
becoming an Island Residences Club member. Therefore, 100 Rights at a value of
$2.50 each equals a one night stay at the Island Villas at a rate of $250.00 per
day. The current published rate for stays at the Island Villas in Bali is
$280.00 plus 21% being VAT and service charge for a total daily rate of $338.80.
Guests acquiring or using Vacation Stay Entitlements (Rights) therefore only pay
$250.00 with nothing more to pay. This is a discount over published advertised
rates of 26.21%.
We intend to market Island Residences Club memberships in Europe, Korea, Japan,
South East Asia and Australia via our associate company PT Island Concepts
Indonesia Tbk as well as directly through the Island Residences Club, Inc. in
the U.S.
THE PRODUCT
Our primary business focus is the development and management of the Island
Residences Club. Island Residences Club members who pay a onetime membership fee
of $25,000.00 much like a Golf Club membership fee, will have the use of Club
Vacation properties each and every year their membership remains current.
Members are allocated Vacation points annually and/or can purchase additional
Vacation Stay Entitlements to Club properties at $2.50 per Vacation Right. The
Company has current inventory in the Bali Island Villas of 3,878,050 rights.
Points can be redeemed at the existing Bali Island Villas and future Island
Residences Club properties throughout Asia, North and Central America as
available. We have commenced a sales and marketing campaign to launch the Island
Residences Club concept. Initially, the properties owned by PT Island Concepts
Indonesia Tbk in Seminyak, Bali 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. Currently, Club Members can only
enjoy "stays" at the Island Villas in Bali, which consist of ten (10) luxury one
bedroom villas in Bali, each with their own lap pool; in the future, the company
hopes to offer a selection of luxury apartments and Villas in Asia, USA and
Mexico and elsewhere when available, each and every year. Members are those who
hold a minimum of 10,000 Vacation Stay Entitlements and who will receive an
annual non-cash right each year to stay at an Island Residences Club property
for 10 days per annum.
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 and develop further unique
modern Villas on land it currently owns in Bali, and has acquired in Thailand.
These properties will continued to be developed as modern and 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. In other words, Island Residences Club, Inc. will be able
to elect if it acquires the developed property and manages it or just manages or
just markets the vacation rights for the said properties. We will maintain a
policy for our members of keeping our properties in the utmost pristine
condition and will sell or roll-over our inventory within a three to five year
time frame. In some countries where Island Concepts intends to operate; e.g.
Thailand and Indonesia local regulations will not allow foreign "freehold title"
to land and property and therefore, the company will lease such properties where
applicable. We intend to develop our own properties in the U.S. and Mexico on
both leasehold and freehold land appealing to both local and foreign customers
when it is time to sell. Over time, we expect to develop into essentially a
property trust with the increasing value of our inventory creating an increasing
asset value for the shareholders. There is no fixed timeline for the
accumulation of properties, although the Company hopes to acquire properties in
the United States and Mexico in the next five years. This is determined by
market forces, and the availability of capital to the company. Capital is
provided by the sale of subscriptions to membership of the Island Residences
Club and the sale of existing inventory of vacation stay entitlements (rights).
These rights exist with the company but as they resulted from a related party
transaction are recorded at nil value in the financial books of the company
until realized.
Island Concepts plans to acquire, develop and manage properties in Asia, in
particular Phuket, Thailand and continue to expand the Bali Island Villa Resort
for the Island Residences Club, Inc. Island Concepts has commenced stage II of
the Bali Island Villa expansion, the construction of ten Two Bedroom Villas on
land it owns adjacent to existing One Bedroom Villas. Island Concepts will
commence expansion into Thailand in 2007. If Island Concepts completes the
expansion in Thailand and if Island Concepts successfully builds the additional
villas then it intends to have us market the vacation rights in a similar
program. We would invoice Island Concepts for the sale of rights and credit
management fees for managing the program. We would then have vacation rights in
Bali and Thailand. There are no formal agreements with Island Concepts. There is
no guarantee that this arrangement will continue.
We also intend to develop a commercial property portfolio consisting of luxury
hotels, spas and resorts in the United States and Mexico. These properties will
provide the infrastructure to support Villas and Residences located within or
adjacent to the Resorts. The Company plans to acquire properties over the next
five years predominately in the U.S. and Mexico. These properties will consist
of single family homes and hotel resort properties that will include the
development of luxury suites as part of the hotel resort properties. The Company
is currently identifying suitable properties in the U.S. and Mexico to acquire.
Both Island Residences, Inc. and PT Island Concepts Tbk Indonesia have a similar
development and business expansion plan. PT Island Concepts Tbk Indonesia in
Asia and Island Residences Club, Inc. in the US and Mexico. This entails the
identification of a suitable vacation destination; the acquisition or
development of a Hotel Resort property or properties at that destination and
rebranded or branded as an Island Resort or Villa Resort, followed by the
acquisition or development of Vacation Villas or Residences in a close
proximity. The Hotel Resort business provides infrastructure (Spa, Fitness and
Restaurant facilities) as well as staff training and management, for the
vacation residences. Some residences may be located within the actual
Hotel/Resort property. These Residences will continually be updated through sale
and then acquisition of replacement assets/properties. The Resort/Hotel
properties will be maintained as part of an ongoing property portfolio for the
Companies, Island Residences Club, Inc and PT Island Concepts Indonesian Tbk.,
similar to that of an investment property trust.
OTHER
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 directly expended any funds in the last two years on research and
development activities. We currently have no employees and operate through
consultancy arrangements. The Company has consultancy agreements with Dutchess
Advisors, Frank Kristan and Francis Street Pty Ltd, of which Graham Bristow, CEO
of the company controls. We have one (1) year contracts in place for our
executives, Julian James Bristow, Chief Operating Officer and Vice President
Operations and Bettina Pfeiffer, Vice President Marketing beginning July 1,
2006.
20
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
Our principal business includes the development, management and operations of
luxury resorts and residences and marketing and selling vacation stay
entitlements ("rights") in the form of vacation points. The rights are issued as
stay entitlements in the Island Residences Club, Inc. and the recently completed
Bali Island Villas in Seminyak, Bali. The purchase of 10,000 rights at $2.50 per
right entitles the purchaser to membership in the Island Residences Club, a
vacation membership club we have established.
Island Residences Club, Inc. has commenced a sales and marketing campaign to
launch the Island Residences Club concept. Initially the property owned by PT
Island Concepts Indonesia Tbk in Seminyak, Bali is the only property available
to members for vacation and/or business stays. At this time, there are ten (10)
one bedroom luxury villas in Bali, each with its own lap pool available in the
vacation rights program. We believe the target market is the higher income local
and expatriate communities in Asia. 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. Ultimately, Club Members will enjoy "stays" at
the Island Villas in Bali, and later, a selection of luxury apartments and
Villas in Thailand, North America, Mexico and elsewhere when available, each and
every year. The membership will receive a right each year to stay at an Island
Residences Club property. PT Island Concepts Indonesia Tbk will expand its
current Bali Island Villa Resort in Seminyak, Bali and construct unique modern
Villas on land it has acquired in Thailand. 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 hope to
develop our own properties in the U.S. and Mexico on both leasehold and freehold
land appealing to both local and foreign customers when time to sell. Over time
we expect to develop into essentially a property trust with the increasing value
of our inventory creating an increasing asset value for the shareholders. We
also intend to 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, which is to (1) develop, acquire and manage vacation
properties in the U.S. and Mexico for members of the Island Residences Club, (2)
develop, market and manage the Island Residences Club concept and (3) sell
existing inventory of Vacation Stay Entitlements in the Bali Island Villas and
obtain and sell future Vacation Stay Entitlements in other properties. PT Island
Concepts Indonesia Tbk, 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 invoice Island Concepts for
the sale of vacation rights and credit the invoice for management services that
they provide in the sales of the rights. There are no material agreements that
cover these transactions. IT services are provided on a normal commercial basis.
Also, if required, PT Island Concepts Indonesia Tbk is able to finance Island
Residences Club member's subscription payment through the sale of the vacation
entitlements held by the member to third party guests with 45% of rental income
received being credited against such loans.
We intend to invest up to $10,000,000 in 2006 into property and income producing
Assets located in the USA and Mexico. We intend for these funds to come from the
sale of Vacation Stay Entitlements ("Right"), and/or borrowings secured over the
assets acquired. There is no guarantee that we will be able to sell these
Vacation Stay Entitlements or obtain these funds or that the cost of funds is
acceptable to the Company. We intend to hire up to fifteen persons in 2006,
predominately for our Southern California operations, that we have yet to
establish.
In the next twelve months, Island Concepts has advised us that it will raise
funds to move forward with the next stage of development in the Bali Island
Villas in Seminyak, Bali. Ten two Bedroom Villas and a Spa Complex will be built
on land already owned by Island Concepts adjacent to stage I, being the existing
ten one bedroom Villas. These new Villas along with the original development
will be managed by PT Island Concepts Indonesia Tbk for the Island Residences
Club, Inc. Construction of Stage II is expected to be completed by August 2007.
Island Concepts also intends to expand in Thailand in 2007 on land it has
acquired.
Island Residences Club, Inc will market the Vacation Stay Entitlements
applicable to the new development as with the existing ten one bedroom Villas.
PT Island Concepts Indonesia Tbk will own and operate this development on behalf
of Island Residences Club, Inc.
It is the intention of Island Residences Club, Inc. within the next years to
acquire sufficient stock in PT Island Concepts Indonesia Tbk to achieve majority
control. The company currently owns 19.4% of the issued capital of PT Island
Concepts Indonesia Tbk and intends to acquire a further 19-20% per annum over
the next 3 years, although there can be no guarantee of this.
CRITICAL ACCOUNTING POLICIES
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.
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.
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 nine month period ended
February 28, 2006.
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 February 28, 2006
there were no dilutive convertible shares, stock options or warrants.
Revenue recognition
The Company recognizes revenues under the full accrual method of accounting when
a formal arrangement exists, title is transferred, no other significant
obligations of the Company exist and the Company deems the receivables to be
collectible. The revenue is recognized net of returns and discounts.
Issuance of shares for service
The Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable.
21
Recent Pronouncements
In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAS No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement is effective for all financial instruments acquired
or issued after the beginning of the Company's first fiscal year that begins
after September 15, 2006. SFAS No. 155 is not expected to have a material effect
on the financial position or results of operations of the Company.
In March 2006 FASB issued SFAS 156 'Accounting for Servicing of Financial
Assets' this Statement amends FASB Statement No. 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, with
respect to the accounting for separately recognized servicing assets and
servicing liabilities. This Statement:
6. Requires an entity to recognize a servicing asset or servicing liability
each time it undertakes an obligation to service a financial asset by
entering into a servicing contract.
7. Requires all separately recognized servicing assets and servicing
liabilities to be initially measured at fair value, if practicable.
8. Permits an entity to choose 'Amortization method' or 'Fair value
measurement method' for each class of separately recognized servicing
assets and servicing liabilities.
9. At its initial adoption, permits a one-time reclassification of
available-for-sale securities to trading securities by entities with recognized
servicing rights, without calling into question the treatment of other
available-for-sale securities under Statement 115, provided that the
available-for-sale securities are identified in some manner as offsetting the
entity's exposure to changes in fair value of servicing assets or servicing
liabilities that a servicer elects to subsequently measure at fair value.
10. Requires separate presentation of servicing assets and servicing
liabilities subsequently measured at fair value in the statement of financial
position and additional disclosures for all separately recognized servicing
assets and servicing liabilities.
This Statement is effective as of the beginning of the Company's first fiscal
year that begins after September 15, 2006. Management believes that this
statement will not have a significant impact on the financial statements.
RESULTS OF OPERATIONS -FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED
FEBRUARY 28, 2006 AND 2005 (UNAUDITED)
The operations of Island Residences Clubs, Inc. will include marketing and
selling the vacation stay entitlements in the form of vacation rights. The
rights are issued as stay entitlements in the Bali Island Villas in Seminyak,
Bali. Membership in the Island Residences Club requires the purchase of 10,000
rights at $2.50 per right. There is a minimum of 10,000 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, based on the price of one nights
stay at the Villas in March 2005 each and every year. These Villas have been
developed by and are operated by, PT Island Concepts Indonesia Tbk for The
Island Residences Club. PT Island Concepts Indonesia Tbk is working with the
company to (i) acquire, develop and operate other vacation ownership resorts,
(ii) providing financing to individual purchasers of Vacation Rights and (iii)
providing resort management and maintenance services to vacation ownership
resorts in Asia.
The company has generated $92,500 in net revenue from a related party for the
three months ended February 28, 2006 as compared to $0 for the three months
ended February 28, 2005. The increase in net revenue was due to sale of vacation
rights to a related party. Cost of revenue was $64,750 for the three months
ended February 28, 2006 as compared to $0 for the three months ended February
28, 2005. This cost of revenue is due to the fee paid to a related party for
management of the Bali Island Villas in Seminyak, Bali. Selling, general and
administrative expenses were $82,798 for the three months ended February 28,
2006 as compared to $12,275 at the three months ended February 28, 2005. These
expenses were the result of the company commencing operations. The company has
generated $227,500 in net revenue from a related party for the nine months ended
February 28, 2006 as compared to $0 for the nine months ended February 28, 2005.
The increase in revenues was due to sales of vacation rights to a related party.
Cost of revenue was $159,250 for the nine months ended February 28, 2006 as
compared to $0 for the nine months ended February 28, 2005. This cost of revenue
is due to a fee paid to a related party for management of the Bali Island Villas
in Seminyak, Bali. Selling, general and administrative expenses were $270,769
for the nine months ended February 28, 2006 as compared to $12,275 at the nine
months ended February 28, 2005. These expenses were the result of the company
commencing operations.
Net loss for the three months ended February 28, 2006 was $55,048 as compared to
$12,275 for the three months ended February 28, 2005. The increase in net loss
was due to increased costs associated with sales and administrative costs. Net
loss for the nine months ended February 28, 2006 was $202,519 as compared to
$12,275 for the nine months ended February 28, 2005. The increase in net loss
was due to increased costs associated with sales and costs associated with
public filings.
Our basic and diluted loss for the three months ended February 28, 2006 was
($0.01) as compared to ($0.01) for the three months ended February 28, 2005. Our
basic and diluted loss for the nine months ended February 28, 2006 was ($0.03)
as compared to ($0.01) for the nine months ended February 28, 2005.
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 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.
RESULTS OF OPERATIONS -- FOR THE YEAR ENDED DECEMBER 31, 2004 AND 2003
We did not generate revenue for the years ended December 31, 2004 and December
31, 2003. General and administrative expenses were $12,275 for the year ended
December 31, 2004 as compared to $100 for the year ended December 31, 2003.
These expenses contributed to a net loss of $12,275 for the year ended December
31, 2004 as compared to $100 for the year ended December 31, 2003.
LIQUIDITY AND CAPITAL RESOURCES
We had no cash or cash equivalents as of May 31, 2005 or December 31, 2004. We
had no assets at December 31, 2004. 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 $581 in cash and cash equivalents as of February
28, 2006. At February 28, 2006, the company had current assets of $2,719,356 in
the form of $581 in cash and cash equivalents, marketable securities in the
amount of $2,626,275 and $92,500 in the form of an account receivable from a
related party. All of the marketable securities are comprised of shares of
common stock of Island Concepts Indonesia Tbk(ICON), a company related through
common ownership. As of February 28, 2006, we had $298,362 in current
liabilities consisting of $123,844 in the form of an account payable and
$174,518 due to a related party. 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. Our intended source of income is the continued
sale of Vacation Stay Entitlements.The company has inventory of Rights, the
value of which is not recorded in the financial statements of the company due to
related party accounting policies. A stockholder, Meridian Pacific Investments
HK Ltd, 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 for the sale of Vacation Stay Entitlements, 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 HK Ltd
("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 IRCI and Meridian and a commissioner on
the advisory board of ICON. Graham Bristow, through direct and indirect
ownership, owns 100% of Meridian and approximately 92.0% of Island Concepts and
78% 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. This line of credit is not available there is an
effective registration statement for the shares of common stock
underlying this line of credit. This registration statement will not be
filed until the Company establishes a market, if at all, for its common stock.
On November 1, 2005, 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.
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, Inc.
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 did not
issue our shares or receive the shares of Grand Sierra Resorts during the nine
month period ended February 28, 2006; therefore, the transaction was not
recorded during the nine month period ended February 28, 2006. 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. As of February 28, 2006, this transaction has
not closed. On July 17, 2006, both the AWI and DTLL transactions were rescinded
and the 1,600,000 shares issued to AWI were cancelled.
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.
During the nine month period ended February 28, 2006, the Company sold 91,000
Vacation Stay Entitlements (rights) amounting $227,500 to Island Concepts. This
has been recorded as income in the financial statements of Island Residences
Club, Inc.
During the nine month period ended February 28, 2006, the Company incurred
$159,250 of management fees to Island Concepts in respect of Vacation Stay
Entitlements redeemed at the Island Villas in Bali during that time
As set forth above, Island Residences Club, Inc., Meridian Pacific Investments,
Francis Street Pty Limited, and PT Island Concepts Indonesia Tbk are related
parties through common ownership and an officer.
DESCRIPTION OF PROPERTY
We lease an office at 1769-203 Jamestown Rd., Williamsburg, Virginia 23185 for
$400.00 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."
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 Stay Entitlements ("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. Membership in the Island Residences Club requires the purchase
of 10,000 rights at a price of $2.50 per right. There is a minimum of 10,000
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, based on one
nights stay at the Villas in March 2005 each and every year. 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.
On November 1, 2005, 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.
On November 16, 2005, we entered into a Share Purchase Agreement with Meridian
Pacific Investments Pty Ltd, 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.
During the nine month period ended February 28, 2006, the Company sold 91,000
rights amounting $227,500 to clients of Island Concepts and Island Residences.
During the nine month period ended February 28, 2006, the Company paid $159,250
of management fees to Island Concepts.
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
February 28, 2006, the balance of due to a related party was $174,518. 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.
The company and its major shareholder, Meridian Pacific Investments HK Limited,
have common interests in PT Island Concepts Indonesia Tbk which we do not
consider to be competitive with our business. This is holdings in PT Island
Concepts Indonesia Tbk and its properties in Bali, Indonesia which are being
marketed for vacation rights PT Island Concepts is developing and marketing
properties in Asia. PT Island Concepts is not developing and marketing
properties in the US or Mexico. The Company plans to develop and market
properties in the US or Mexico. The parties are not conflicted as they operate
in different regions of the world and intend to work together in Bali as set
forth above.
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.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is currently no public market for our securities. There were 530 record
holders of our common stock as of July 27, 2006. We voluntarily agreed to file a
registration statement covering all 14,737,000 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. Mr.
Rowbotham resigned from the company on June 3, 2006.
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 July 27, 2006, no shares
have been issued under this agreement. On March 17, 2006, this contract expired.
Mr. Bristow will continue to serve as an officer of the company. On November 5,
2005, we entered into agreement with Francis Street Pty Ltd., an entity he
controls, for management consulting services in exchange for 1,000,000 shares of
common stock until December 31, 2008.
On June 7, 2006, we appointed Julian James Bristow as the Company's Chief
Operating Officer and Vice President Operations and Bettina Pfeiffer as the
Company's Vice President of Sales & Marketing for the Company for a period of
one-year beginning July 1, 2006. Effective July 1, 2006, we entered into
employment agreements with both of these individuals for a term of one year.
Both agreements provide for compensation of $2,000 per month during the
employment term.
As of July 27, 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
FEBRUARY 28, 2006
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 581
Account receivable - related party 92,500
Marketable securities 2,626,275
------------
Total assets $ 2,719,356
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Account payable $ 123,844
Due to related party 174,518
------------
Total liabilities 298,362
------------
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;
14,912,000 shares issued and outstanding 1,491
Additional paid-in capital 267,828
Shares to be issued 9,300
Accumulated comprehensive gain 2,383,775
Prepaid consulting (17,409)
Accumulated deficit (223,991)
------------
Total stockholders' equity 2,420,994
------------
Total liabilities and stockholders' equity $ 2,719,356
============
<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 NINE MONTH PERIODS ENDED FEBRUARY 28, 2006 AND 2005
(UNAUDITED)
FOR THE THREE MONTH PERIODS FOR THE NINE MONTH PERIODS
ENDED FEBRUARY 28, ENDED FEBRUARY 28,
2006 2005 2006 2005
------------ ------------ ------------ ------------
NET REVENUE-related party $ 92,500 $ - $ 227,500 $ -
COST OF REVENUE 64,750 - 159,250 -
------------ ------------ ------------ ------------
GROSS PROFIT 27,750 - 68,250 -
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 82,798 12,275 270,769 12,275
------------ ------------ ------------ ------------
NET LOSS (55,048) (12,275) (202,519) (12,275)
COMPREHENSIVE GAIN
Unrealized gain on marketable securities 1,171,275 - 2,383,775 -
COMPREHENSIVE INCOME / (LOSS) $ 1,116,227 $ (12,275) $ 2,181,256 $ (12,275)
============ ============ ============ ============
LOSS PER SHARE - BASIC AND DILUTED $ (0.01) $ (0.01) $ (0.03) $ (0.01)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES -
BASIC AND DILUTED 7,798,756 2,240,000 6,768,527 2,240,000
============ ============ ============ ============
<FN>
*Basic and diluted weight average number of shares are the same since the Company has no dilutive
securities
F-2
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED FEBRUARY 28, 2006 AND 2005
(Unaudited)
2006 2005
------------ ------------
Cash flows from operating activities:
Net loss (202,519) (12,275)
Adjustments to reconcile net loss to net
cash used in operating activities:
Issuance of common stock
in exchange for services 6,595 -
Shares to be issued for service 9,300 -
Amortization of prepaid consulting 2,591 -
Decrease in current assets:
Account receivable - related party (92,500) -
Increase in current liabilities:
Account payable 123,844 -
Due to related party 153,270 12,275
------------ ------------
Total adjustments 203,100 -
------------ ------------
Net cash used in operating activities - -
------------ ------------
Net increase in cash and cash equivalents 581 -
Cash and cash equivalents, beginning - -
------------ ------------
Cash and cash equivalents, ending $ 581 $ -
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ - $ -
============ ============
Income taxes paid $ - $ -
============ ============
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 month period 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 nine month period ended February 28, 2006
are not necessarily indicative of results for any future period.
C. Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of three months or less from the date of purchase that are
readily convertible into cash to be cash equivalents.
D. Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
E. Income Taxes
The Company accounts for income taxes under the Financial Accounting
Standards Board of Financial Accounting No. 109, "Accounting for Income Taxes"
"Statement 109"). Under Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date. There were no current or deferred income tax expense or benefits due to
the Company not having any material operations for the nine month period ended
February 28, 2006.
F-4
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 February 28, 2006
there were no dilutive convertible shares, stock options or warrants.
G. Revenue recognition
The Company recognizes revenues under the full accrual method of accounting when
a formal arrangement exists, title is transferred, no other significant
obligations of the Company exist and the Company deems the receivables to be
collectible. The revenue is recognized net of returns and discounts.
H. Issuance of shares for service
The Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable.
I. Recent Pronouncements
In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAS No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement is effective for all financial instruments acquired
or issued after the beginning of the Company's first fiscal year that begins
after September 15, 2006. SFAS No. 155 is not expected to have a material effect
on the financial position or results of operations of the Company.
In March 2006 FASB issued SFAS 156 'Accounting for Servicing of Financial
Assets' this Statement amends FASB Statement No. 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, with
respect to the accounting for separately recognized servicing assets and
servicing liabilities. This Statement:
1. Requires an entity to recognize a servicing asset or servicing liability
each time it undertakes an obligation to service a financial asset by
entering into a servicing contract.
2. Requires all separately recognized servicing assets and servicing
liabilities to be initially measured at fair value, if practicable.
3. Permits an entity to choose 'Amortization method' or 'Fair value
measurement method' for each class of separately recognized servicing
assets and servicing liabilities.
4. At its initial adoption, permits a one-time reclassification of
available-for-sale securities to trading securities by entities with recognized
servicing rights, without calling into question the treatment of other
available-for-sale securities under Statement 115, provided that the
available-for-sale securities are identified in some manner as offsetting the
entity's exposure to changes in fair value of servicing assets or servicing
liabilities that a servicer elects to subsequently measure at fair value.
5. Requires separate presentation of servicing assets and servicing
liabilities subsequently measured at fair value in the statement of financial
position and additional disclosures for all separately recognized servicing
assets and servicing liabilities.
This Statement is effective as of the beginning of the Company's first fiscal
year that begins after September 15, 2006. Management believes that this
statement will not have a significant impact on the financial statements.
F-5
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 Island Concepts Indonesia (ICON), a Company related through
common ownership. 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 traded on the Surabaya Stock Exchange in Indonesia through brokers. 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 February
28, 2006, the investments have been recorded at $2,626,275 based upon the fair
value of the marketable securities.
Following is a summary of marketable equity securities classified as available
for sale as of February 28, 2006:
Investee Name Cost at Market Value at Accumulated Number of
Shares
(Symbol) February 28, 2006 February 28, 2006 Unrealized Gain/Loss Held at February 28, 2006
Island Concepts
Indonesia (ICON) $242,500 $2,626,275 $2,383,775 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 February 28, 2006, no preferred stock has been issued.
B. Common stock
During the nine month period ended February 28, 2006, the Company issued 422,000
shares of common stock for services valued at $6,595, which is the fair value of
the shares.
During the nine month period ended February 28, 2006, the Company issued
2,000,000 shares of common stock in exchange for prepaid consulting service
amounting $20,000, which is the fair value of the shares.
During the nine month period ended February 28, 2006, the Company issued
6,000,000 shares of common stock in exchange for marketable securities amounting
$202,500. 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.
During the nine month period ended February 28, 2006, the Company issued 250,000
shares of common stock to a consultant by mistake. These shares were canceled in
April 2006.
C. Shares to be issued
During the three month period 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 shares. During the three month ended February 28, 2006, these
shares were issued.
During the three month period 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.
During the three month ended February 28, 2006, these shares were issued.
During the three month period ended February 28, 2006, the Company recorded
shares to be issued for consulting service amounting $9,300, which is the fair
value of the shares.
F-6
D. Prepaid consulting:
During the nine month period ended February 28, 2006, the Company recorded
$20,000 prepaid consulting for common stock issued for consulting service, which
is the fair value of the shares. During the nine month period ended February 28,
2006, the Company amortized $2,591 as an operating expense. The balance of
prepaid service at February 28, 2006 is $17,409.
F. Warrants and Options
The Company did not issue any warrants or options to buy shares of common stock
or preferred stock during the nine month periods ended February 28, 2006 and
2005.
NOTE 4 - SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
The Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard No. 95.
During the nine month period ended February 28, 2006, the Company issued
2,000,000 shares in exchange for prepaid consulting service amounting $20,000,
which is the fair value of the shares.
During the nine month period ended February 28, 2006, the Company issued
6,000,000 shares in exchange for marketable securities amounting $202,500. 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.
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
February 28, 2006, the balance due to the related party amounted to $174,518.
During the nine month period ended February 28, 2006, the Company sold 91,000
rights amounting $227,500 to Island Concepts. As of February 28, 2006, the
balance of account receivable from Island Concepts is $92,500.
During the nine month period ended February 28, 2006, the Company incurred
$159,250 of management fees to Island Concepts.
On November 16, 2005, the Company entered into a Share Purchase Agreement with
Meridian Pacific Investments ("Meridian"), whereby the Company purchased 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 issued Meridian 6,000,000 shares of its restricted common
stock.
On November 1, 2005, the Company entered into an advisory agreement with Francis
Street Pty Ltd., whereby Francis Street would provide certain business
consulting services for the period from November 1, 2005 to December 31, 2008 in
exchange for 1,000,000 shares of common stock valued at $10,000, which is the
fair value of the shares. The prepaid consulting is amortized over the service
period.
Island Residences Club, Inc ("IRCI"), Meridian Pacific Investments ("Meridian"),
Francis Street Pty Limited, and PT Island Concepts, Indonesia Tbk ("Island
Concepts") are related parties through common ownership and officers.
F-7
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 of
the 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 assuming that the
Company will continue as a going concern. This basis of accounting contemplates
the recovery of the Company's assets and the satisfaction of its liabilities in
the normal course of business. The Company incurred a loss of $202,519 and
$12,275 during the nine month periods ended February 28, 2006 and 2005,
respectively. The Company has an accumulated deficit of $223,991 as of February
28, 2006. The continuing losses have adversely affected the liquidity of the
Company.
In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet is dependent upon continued operations of the Company, which in turn is
dependent upon the Company's ability to raise additional capital, obtain
financing and to succeed in its future operations. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.
Management has made plans to revise its operating and financial requirements,
which it believes are sufficient to provide the Company with the ability 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.
F-8
NOTE 7 - SHARE EXCHANGE AGREEMENTS
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 did not issued its shares nor received the shares
of Grand Sierra Resorts during the nine month period ended February 28, 2006;
therefore the transaction was not recorded during the nine month period ended
February 28, 2006. On February 24, 2006, the Company entered into a Stock
Purchase Agreement with DTLL, Inc., a publicly traded Minnesota corporation,
whereby the Company would purchase 400,000 shares of DTLL, Inc. in exchange for
400,000 shares of Grand Sierra Resorts Corporation. DTLL shares are quoted at
$1.25 per share as of February 24, 2006, the transaction date. As of February
28, 2006, this transaction has not closed.
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 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 the
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.
F-9
NOTE 8 - SUBSEQUENT EVENTS
On March 30, 2006, the Company issued 75,000 shares to its legal counsel as a
retainer for legal service.
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) AND
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 -
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. For the period March 17,
2005 until May 31, 2005 the company commenced the marketing of 4,000,000
vacation rights that it had purchased from Island Concepts. In also began to
engage the necessary legal, accounting, marketing and business consultants to
operationalize the business. There was limited operations due to the completion
of the Bali Island Villas being delayed until July 2005. 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.
The principal business of the Company includes the development, management and
operations of luxury resorts and residences and marketing and selling of
vacation stay entitlement ("rights") in the form of vacation points. The rights
are issued as stay entitlements in the Island Residences Club, Inc. affiliate's
recently completed Bali Island Villas in Seminyak, Bali.
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 75% of Island Concepts and 78% 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
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 December 31, 2004 and the
related statements of operations, stockholders' deficit and cash flows for the
years ended December 31, 2004 and 2003. 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 December 31, 2004 and the results of its operations and its cash flows for
the years ended December 31, 2004 and 2003, 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 $12,499 including net losses of
$12,275 and $100 for the years ended December 31, 2004 and 2003, 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.
As discussed in note 7, the financial statements for the year ended December 31,
2004 have been restated.
/s/KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS
Los Angeles, California
January 6, 2006
F-19
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 2004
ASSETS
(Restated)
Current assets:
Cash and cash equivalents $ -
Total assets $ -
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Due to related party $ 12,275
-------------
Stockholders' deficit:
Preferred stock, $.0001 par value, 20,000,000 shares
authorized; no shares issued and outstanding -
Common stock, $.0001 par value, 100,000,000 shares
authorized; 2,240,000 shares issued and outstanding 224
Deficit accumulated during the development stage (12,499)
Total stockholders' deficit (12,275)
Total liabilities and stockholders' deficit $ -
=============
F-20
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 AND
FOR THE PERIOD FROM JULY 16, 2002(INCEPTION) TO DECEMBER 31, 2004
(Restated)
For the period from
July 16, 2002
(inception) to
2004 2003 December 31, 2004
------------- ------------- -------------
(Restated) (Restated)
Net revenue $ - $ - $-
Cost of revenue - - -
Gross profit - - -
Selling, general and administrative
expenses 12,275 100 12,499
Loss before provision for income taxes (12,275) (100) (12,499)
------------- ------------- -------------
Provision for income taxes - - -
Net loss $ (12,275) $ (100) $ (12,499)
============= ============= =============
Loss per share - basic and diluted $ (0.01) $ (0.00) $ (0.01)
============= ============= =============
Weighted average number of shares -
basic and diluted 2,240,000 2,240,000 2,240,000
============= ============= =============
F-21
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND
FOR THE PERIOD FROM JULY 16, 2002(INCEPTION) TO DECEMBER 31, 2004
(Restated)
Deficit
accumulated
Additional during the Total
Common stock paid-in development stockholder's
----------------------------
Shares Amount capital stage equity (deficit)
------------- ------------- ------------- ------------- -------------
Balance at July 16, 2002 - $ - $ - $ - $ -
(inception)
Issuance of shares for services
at $0.0001 per share - July 16, 2002 1,240,000 124 - - 124
Net loss - - - (124) (124)
------------- ------------- ------------- ------------- -------------
Balance at December 31, 2002 1,240,000 124 - (124) -
Issuance of shares to convert
debt to equity
at $.0001 per share - Dec 31, 2003 1,000,000 100 - - 100
Net loss - - - (100) (100)
------------- ------------- ------------- ------------- -------------
Balance at December 31, 2003 2,240,000 224 - (224) -
Net loss - - - (12,275) (12,275)
------------- ------------- ------------- ------------- -------------
Balance at December 31, 2004 2,240,000 $ 224 $ - $ (12,499) $ (12,275)
F-22
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 AND
FOR THE PERIOD FROM JULY 16, 2002(INCEPTION) TO DECEMBER 31, 2004
(Restated)
For the period
from July 16, 2002
(inception) to
2004 2003 December 31, 2004
------------- ------------- -------------
(Restated) (Restated)
Cash flows from operating activities:
Net loss (12,275) (100) (12,499)
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 - 100 100
------------- ------------- -------------
Increase in liabilities:
Due to related party 12,275 - 12,275
------------- ------------- -------------
Total adjustments 12,275 100 12,499
------------- ------------- -------------
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-23
ISLAND RESIDENCES CLUB, INC.
(FORMERLY ISLAND INVESTMENTS, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Operations
Island Residences Club, Inc, formerly Island Investments, Inc., formerly Hengest
Investments, Inc (a development stage company)("the Company") was incorporated
in the State of Delaware on July 16, 2002 to serve as a vehicle to effect a
merger, exchange of capital stock, asset acquisition or other business
combination with a domestic or foreign private business.
On March 17, 2005, the Company began business operations, and all activity prior
to that date relates to the Company's formation and proposed fund raising.
On June 20, 2005, the board of directors resolved to change the company's fiscal
year end from December 31 to May 31, commencing May 31, 2005.
B. 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 December 31,
2004.
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 December 31, 2004
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 December 31, 2004, 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."
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
December 31, 2004, the balance of due to related party amount to $12,275.
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.
The management's plans include the acquisition of a suitable business venture to
provide the opportunity for the Company to continue as a going concern. However,
there can be no assurance that management will be successful in this endeavor.
NOTE 6 - RESTATEMENT
The company did not include audited financial statements in its Form 10-KSB for
the year ended December 31, 2004 in reliance upon classification of the Company
as an "inactive entity" under Rule 3-11 of Regulation S-X. Since the Company
issued common stock during this period, this classification is inapplicable. In
addition, the Company failed to record expense paid by related party in the
amount of $12,275.
The Company has restated its financial statement for the years ended December
31, 2004 and 2003 to reflect those changes.
The effect of the correction of the error is as follows:
BALANCE SHEET
AS
PREVIOUSLY AS
REPORTED RESTATED
----------- ----------
As of December 31, 2004
--------------------------
Liabilities:
Due to related party $ - $ 12,275
Stockholder's deficit:
Accumulated deficit $ (224) $ (12,499)
Total stockholder's deficit $ - $ (12,275)
STATEMENT OF OPERATIONS:
For the year ended
December 31, 2004
-------------------
General and administrative $ - $ 12,275
Loss before income tax $ - $ (12,275)
Net loss $ - $ (12,275)
Net loss per share:
Basic and diluted $ - $ (0.01)
NOTE 7 - SUBSEQUENT EVENTS
On March 17, 2005 the company issued 4,000,000 shares to Meridian Pacific
Investments HK Ltd for the transfer of 4,000,000 shares of PT Island Concepts
Indonesia Tbk valued at $40,000 and 4,000,000 rights valued at $0. The company
has recorded no value for the rights since they are acquired from a related
party whose basis was zero.
Island Residences Club, Inc ("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 June 20, 2005, the Company entered into an Investment Agreement (the
"Agreement") with Dutchess Private Equities Fund II, LP (the "Investor"). This
Agreement provides that, following notice to the Investor, the Company may put
to the Investor up to $10,000,000 of its common stock for a purchase price equal
to 95% of the lowest closing bid price of its common stock during the five day
period following that notice. The number of shares that the Company is permitted
to put pursuant to the Agreement is either: (A) 200% of the average daily volume
of the common stock for the twenty trading days prior to the applicable put
notice date, multiplied by the average of the three daily closing bid prices
immediately preceding the put date; or (B) $100,000; provided however, that the
put amount can never exceed $1,000,000 with respect to any single put.
In connection with this Agreement, the Company agreed to register the shares
issuable pursuant to the Agreement.
On June 20, 2005, the board of directors resolved to change the company's fiscal
year end from December 31 to May 31, commencing May 31, 2005.
Effective July 1, 2005, Island Residences Club, Inc. appointed James Rowbotham
as Chief Operating Officer and Vice President of Operations for the company for
a period of one-year. In connection with this appointment, Mr. Rowbotham will
receive 1,000 shares of common stock of the company per month, or an annual
total of 12,000 shares.
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 sentences.
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 HK Ltd
("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 of IRCI and Meridian and a commissioner on
the advisory board of ICON. . Graham Bristow, through direct and indirect
ownership, owns 100% of Meridian and approximately 92.8% of Island Concepts and
78% 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.
During the three months ended February 28, 2006, 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 HK Ltd 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. On July 17, 2006, this agreement
was rescinded and the 1,600,000 shares were cancelled.
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(8)
(10.6) Advisory Agreement with Francis Street Pty Limited(8)
(10.7) Share Exchange Agreement with Angela Whichard, Inc. (6)
(10.8) Share Purchase Agreement with Meridian Pacific Investments HK
Ltd (6)
(10.9) Stock Purchase Agreement with RotateBlack, LLC (7)
(10.10) Stock Purchase Agreement with DTLL, Inc. (7)
(10.11) Employment Agreement with Julian James Bristow(9)
(10.12) Employment Agreement with Bettina Pfeiffer(9)
(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
(8) Filed as an exhibit with Form SB-2 on May 1, 2006, File No. 333-133742
(9) Filed as an exhibit to our Form 8-K dated July 1, 2006
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 August 3, 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: August 3, 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 August 3, 2006
/s/ John Kennerley
- --------------------
John Kennerley Chairman August 3, 2006
/s/Bob Bratadjaya
- ------------------
Bob Bratadjaya Secretary, Treasurer (Chief Financial
Officer/Principal Accounting Officer) August 3, 2006
/s/Julian James Bristow Chief Operating Officer and
Julian James Bristow Vice President of Operations August 3, 2006
/s/Bettina Pfeiffer Vice President of Sales and August 3, 2006
Bettina Pfeiffer Marketing
/s/Joseph Anthony Joyce Director August 3, 2006
- -------------------------
/s/Joseph Anthony Joyce
32