SEC Filing Summary: International Surf Resorts, Inc. (10-Q)
Business Context and Reporting Period
This is a Quarterly Report (Form 10-Q) for International Surf Resorts, Inc. for the period ended March 31, 2009. The company is classified as a "Development Stage Company" incorporated in Nevada. It operates as an internet-based provider of international surf resorts and camps, with a primary asset being 2.5 acres of land in San Juanico, Baja California Sur, Mexico, held through a 55% owned subsidiary (ISR de Mexico). The company has generated no revenue since its inception in December 2006.
Key Financial Metrics
| Metric | Three Months Ended Mar 31, 2009 | Three Months Ended Mar 31, 2008 | Inception to Mar 31, 2009 |
|---|---|---|---|
| Net Revenue | $0 | $0 | $0 |
| Total Operating Expenses | $17,547 | $22,217 | $137,274 |
| Net Loss | $(17,248) | $(21,108) | $(131,735) |
| Cash and Equivalents | $62,071 | $94,550 | N/A |
| Total Assets | $124,620 | $137,203 | N/A |
| Total Liabilities | $46,310 | $41,859 | N/A |
| Stockholders' Equity | $79,915 | $96,713 | N/A |
Debt and Liquidity: The company has no long-term debt. Current liabilities consist entirely of accounts payable and accrued expenses ($46,310). Cash flow from operations was negative $12,281 for the quarter.
Material Changes vs. Prior Period
- Expense Reduction: Total operating expenses decreased by approximately 21% from $22,217 in Q1 2008 to $17,547 in Q1 2009. This was primarily driven by a reduction in legal and professional fees (from $20,180 to $15,613).
- Cash Position: Cash on hand decreased by $12,517 during the quarter, reflecting the net loss and cash used in investing activities (minority interest payments).
- Asset Base: Total assets declined slightly due to depreciation and cash burn, though the investment in real property ($61,335) remained stable.
Outlook, Risks, and Management Commentary
Plan of Operation: Management intends to assess the feasibility of building "surf casas" (vacation rentals) or subdividing the Mexican property for sale. The President plans to travel to the site to evaluate these options. The company also aims to complete website development (estimated cost $5,000) to attract customers.
Liquidity and Capital Resources: Management believes current cash ($62,071) is sufficient to meet working capital requirements for the next 12 months. However, the filing includes a Going Concern warning. The company has incurred cumulative losses of $131,735 since inception and will require additional debt or equity financing to fund development and operations. There is no assurance that such financing will be available.
Risks:
- Failure to generate revenue to cover operating costs.
- Inability to secure additional funding.
- Uncertainty regarding the development and profitability of the Mexican property.
Investor Verification Checklist
- Capital Adequacy: Verify if the $62,071 cash balance is truly sufficient for 12 months given the lack of revenue and ongoing legal/accounting costs.
- Property Feasibility: Confirm the status of the feasibility study for the San Juanico property and any regulatory hurdles in Mexico.
- Related Party Transactions: Review the $450 monthly rent expense charged for office space provided by a director at no cash cost.
- Financing Needs: Assess the likelihood of raising the additional capital required to market services and develop the property.
- Revenue Timeline: Evaluate the realistic timeline for transitioning from a development stage to a revenue-generating entity.