Business Context and Reporting Period
Company: International Surf Resorts, Inc. (Note: Metadata listed "Cocrystal Pharma" is incorrect; filing is for International Surf Resorts, Inc.)
Reporting Period: Quarter ended September 30, 2008 (Unaudited)
Status: Development Stage Company / Shell Company
Operations: Internet-based provider of surf resorts and tours; owns 55% of ISR de Mexico, holding 2.5 acres of land in San Juanico, Baja California Sur, Mexico for potential surf camp development. The company has generated no revenue since inception (December 4, 2006).
Key Financial Metrics
| Metric | 9 Months Ended Sep 30, 2008 | 9 Months Ended Sep 30, 2007 | Balance Sheet (Sep 30, 2008) |
|---|---|---|---|
| Net Revenue | $0 | $0 | N/A |
| Total Operating Expenses | $46,831 | $36,718 | N/A |
| Net Loss | $(44,301) | $(20,028) | N/A |
| Cash and Cash Equivalents | N/A | N/A | $79,357 |
| Total Assets | N/A | N/A | $141,970 |
| Total Liabilities | N/A | N/A | $38,359 |
| Stockholders' Equity | N/A | N/A | $104,879 |
| Accumulated Deficit | N/A | N/A | $(105,871) |
Capital Structure: 3,769,800 shares of common stock issued and outstanding as of November 13, 2008.
Material Changes vs. Prior Period
- Expense Increase: Operating expenses for the nine months ended September 30, 2008, increased to $46,831 from $36,718 in the prior year period. This was primarily driven by an increase in legal and professional fees ($36,164 vs. $29,725) and general and administrative expenses ($7,425 vs. $3,122).
- Net Loss Expansion: Net loss for the nine-month period more than doubled to $(44,301) compared to $(20,028) in the prior year, largely due to higher operating costs and a reduction in minority interest income.
- Cash Position: Cash decreased from $109,846 at December 31, 2007, to $79,357 at September 30, 2008, reflecting a net cash outflow of $30,489 for the period.
- Asset Acquisition: The company purchased computer equipment ($1,012) during the period. No new real property investments were made in 2008; the $61,335 real property investment was acquired in 2006/2007.
Outlook, Risks, and Management Commentary
- Going Concern: The company has incurred a cumulative net loss of $105,871 since inception. Management states that additional debt or equity financing is required to fund development and operations. There is no assurance that financing will be available.
- Plan of Operation: The primary objective for the next 3-6 months is to assess the feasibility of building "surf casas" or subdividing the Mexican property. The company estimates needing approximately $5,000 to complete website development.
- Liquidity: Management believes current cash ($79,357) is sufficient to meet working capital requirements for the next 12 months, though the economic crisis may hinder capital raising efforts.
- Risks: Significant risks include the inability to raise capital, failure to generate revenue, and the potential need to cease operations if funding is not secured. The company is classified as a shell company.
- Tax Position: The company has a federal net operating loss carryforward of approximately $103,000 (expiring 2028), but a 100% valuation allowance has been established against the related deferred tax asset.
Investor Verification Checklist
- Capital Adequacy: Verify if the company has secured the additional financing required to fund operations beyond the next 12 months, given the "Going Concern" warning.
- Property Feasibility: Confirm the status of the feasibility study for the San Juanico, Mexico property and any progress on joint venture negotiations.
- Revenue Generation: Assess the timeline and strategy for transitioning from a development stage to revenue-generating operations, as no revenue has been recorded since 2006.
- Related Party Transactions: Review the terms of office space usage provided by a director at no charge, which is recorded as rent expense and additional paid-in capital.
- Shell Company Status: Acknowledge the risks associated with investing in a shell company with limited assets and operations.