SEC Filing Summary: International Surf Resorts, Inc. (Form 10-K)
Business Context and Reporting Period
Company: International Surf Resorts, Inc. (Note: Input metadata referenced "Cocrystal Pharma," but the filing text identifies the registrant as International Surf Resorts, Inc.)
Period: Fiscal year ended December 31, 2009
Status: Development stage company incorporated in Nevada (2006).
Operations: The company operates as an internet-based provider of international surf resorts, camps, and guided tours. It owns approximately 2.5 acres of beachfront land in San Juanico, Baja California Sur, Mexico, through a subsidiary (ISR de Mexico, S. de R. L. de C.V.), and launched a pilot surf resort program in Bali, Indonesia, in June 2009. The company has generated no revenue to date.
Key Financial Metrics
| Metric | 2009 | 2008 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss (Attributable to ISRI) | $(41,370) | $(52,917) |
| Total Operating Expenses | $42,848 | $55,854 |
| Cash and Cash Equivalents | $43,055 | $74,588 |
| Total Assets | $112,554 | $137,203 |
| Total Liabilities | $58,014 | $41,859 |
| Accumulated Deficit (Since Inception) | $(155,857) | $(114,487) |
Debt & Liquidity: The company has no long-term debt. Total liabilities consist entirely of accounts payable and accrued expenses ($58,014). Cash decreased by approximately $31,500 during the year due to operating losses and investing activities.
Material Changes vs. Prior Period
- Expense Reduction: Total operating expenses decreased by approximately 23% from $55,854 in 2008 to $42,848 in 2009. This was driven primarily by a reduction in legal and professional fees (from $43,489 to $34,142) and general and administrative expenses (from $7,623 to $2,669).
- Net Loss Improvement: The net loss attributable to the company narrowed by approximately $11,500 compared to the prior year.
- Asset Acquisition: The company purchased a wood house in Bali for $5,200 in 2009 as part of a pilot program, increasing property and equipment.
- Liability Increase: Accounts payable increased by $16,155, reflecting unpaid operational costs.
Outlook, Risks, and Management Commentary
Going Concern: Auditors have issued a report stating substantial doubt exists regarding the company's ability to continue as a going concern due to recurring losses and an accumulated deficit. The company requires additional financing to fund operations and development.
Plan of Operation: Management intends to assess the feasibility of building vacation rentals ("surf casas") or subdividing the Mexican property for sale. They also plan to complete website development (estimated cost $5,000) and expand the Bali pilot program. Management estimates available funds will satisfy working capital needs for the next 12 months, but additional capital will be required for expansion.
Key Risks:
- Capital Shortage: Failure to raise additional capital will significantly limit operations.
- Property Title Risk: The Mexican property was originally "ejido" land; there is uncertainty regarding whether it was properly regularized and converted to private property, which could result in the company not owning the land.
- Market Viability: The real estate market in Baja California Sur is uncertain; if it fails to develop, the property may have little value.
- Competition: The company faces intense competition from established operators with greater financial resources.
- Management Dependence: Operations rely heavily on the President, Eduardo Biancardi, who works part-time.
Investor Verification Checklist
- Capital Adequacy: Verify if the company has secured the additional funding required to develop the Mexican property and Bali resort, as current cash reserves are limited.
- Property Title: Confirm the legal status of the Mexican land title and whether the "ejido" regularization process was successfully completed to ensure ownership rights.
- Revenue Generation: Assess the timeline and feasibility of generating revenue from the website and surf camps, given the company has zero revenue since inception.
- Related Party Transactions: Review the terms of the office space provided by a director and the ownership structure of the Mexican subsidiary (45% owned by related parties).
- Stock Liquidity: Note that the stock is subject to "penny stock" regulations and has had no trading activity since July 2009.