SEC Filing Summary: International Surf Resorts, Inc. (10-K)
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2010, for International Surf Resorts, Inc. (Note: The input metadata referenced "Cocrystal Pharma," but the filing text explicitly identifies the registrant as International Surf Resorts, Inc.). The company is a development-stage entity incorporated in Nevada in 2006. Its business model involves operating as an Internet-based provider of international surf resorts, camps, and guided tours, with a primary physical asset being 2.5 acres of undeveloped beachfront land in San Juanico, Baja California Sur, Mexico, held through a 55% owned subsidiary.
Key Financial Metrics
| Metric | 2010 | 2009 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(48,478) | $(41,370) |
| Accumulated Deficit (Inception to 2010) | $(204,335) | $(155,857) |
| Total Assets | $89,373 | $112,554 |
| Cash and Cash Equivalents | $22,778 | $43,055 |
| Total Liabilities | $82,443 | $58,014 |
| Stockholders' Equity | $10,465 | $57,143 |
Debt and Liquidity: The company has no long-term debt. Total liabilities of $82,443 consist entirely of accounts payable and accrued expenses. Cash decreased by approximately $20,000 during the year due to operating losses. The company has no revenue to sustain operations.
Material Changes vs. Prior Period
- Operating Expenses: Increased from $42,848 in 2009 to $49,493 in 2010. This increase was primarily driven by higher legal and professional fees, which rose from $34,142 to $42,980.
- Net Loss: Widened by approximately $7,100 year-over-year due to the increase in professional fees.
- Assets: Total assets decreased by $23,181, largely due to the burn of cash reserves and the expiration of prepaid expenses.
- Liabilities: Accounts payable increased by $24,429, reflecting the accumulation of unpaid expenses.
Outlook, Risks, and Management Commentary
Going Concern: The company's auditors have issued a "going concern" opinion, stating that substantial doubt exists regarding the company's ability to continue operations. The company has incurred recurring losses and has an accumulated deficit. Management plans to fund operations through additional equity or debt financing, but there is no assurance such funds will be available.
Strategic Plan: Management intends to assess the feasibility of building "surf casas" (vacation rentals) or subdividing the Mexican property for sale. They also plan to complete the development of their website (estimated cost $5,000) and launch a pilot surf resort in Bali, where they currently lease land and own a wood house.
Key Risks:
- Capital Needs: The company requires significant additional capital to develop its property and website. Failure to raise funds will result in business failure.
- Property Title: There is significant uncertainty regarding the title to the Mexican property. The land was originally "ejido" (government-owned) and may not have been properly regularized to private property, potentially rendering the asset worthless.
- Competition: The market is highly competitive with low barriers to entry. Competitors in Baja California have greater resources and name recognition.
- Management Dependence: Operations rely heavily on the President, Eduardo Biancardi, who works part-time. There are no employment agreements.
Investor Verification Checklist
- Capital Sufficiency: Verify if the company has secured the additional financing required to fund the next 12 months of operations, given the "going concern" warning.
- Property Title Status: Confirm the legal status of the Mexican land title and whether the "ejido" regularization process is complete and legally binding.
- Revenue Generation: Assess the timeline and feasibility of generating revenue from the website or the Bali pilot program, as the company has zero revenue to date.
- Related Party Transactions: Review the concentration of ownership (approx. 84% held by officers/directors) and the reliance on a director for free office space.
- Stock Liquidity: Note that the stock is subject to "penny stock" regulations and has had no trading activity since July 2009.