10-Q 1 g3880a.txt QTRLY REPORT FOR THE QTR ENDED 12-31-09 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2009 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 000-144493 WINCHESTER INTERNATIONAL RESORTS INC. (Exact name of registrant as specified in its charter) Nevada N/A (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 61 Cimarron Meadows Cres., Okotoks, Alberta, Canada T1S 1T1 (Address of principal executive offices) (Zip Code) 403.995.4426 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] YES [ ] NO Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act [X] YES [ ] NO APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [ ] YES [ ] NO Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] YES [ ] NO APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 8,055,000 common shares issued and outstanding as of February 14, 2010 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Our unaudited interim financial statements for the six month period ended December 31, 2009 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles. 2 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Balance Sheets (An Exploration Stage Company) (Expressed in US Dollars) --------------------------------------------------------------------------------

3 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Statements of Income (An Exploration Stage Company) (Expressed in US Dollars) (Unaudited) --------------------------------------------------------------------------------

4 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Statement of Stockholders' Equity (An Exploration Stage Company) (Expressed in US Dollars) (Unaudited) --------------------------------------------------------------------------------

5 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Statements of Cash Flows (An Exploration Stage Company) (Expressed in US Dollars) (Unaudited) --------------------------------------------------------------------------------

6 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Notes to Financial Statements December 31, 2009 (An Exploration Stage Company) (Expressed in US Dollars) (Unaudited) -------------------------------------------------------------------------------- 1. NATURE AND CONTINUANCE OF OPERATIONS Winchester International Resorts Inc. ("the Company"), formerly named Sterling Exploration Inc, was incorporated under the laws of State of Nevada, U.S. on August 18, 2003, with an authorized capital of 75,000,000 common shares with a par value of $0.001. The Company's year end is the end of June. These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $92,784 as at December 31, 2009 and further losses are anticipated in the development of its business raising substantial doubt about the Company's ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and or private placement of common stock. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. EXPLORATION STAGE COMPANY Pursuant to authoritative accounting pronouncements, the Company recognizes its characterization of the Company as an exploration stage enterprise. USE OF ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates. The carrying value of cash and accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management's opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. INCOME TAXES The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At December 31, 2009, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded. BASIC AND DILUTED LOSS PER SHARE Pursuant to authoritative accounting pronouncements, the Company computes loss per share which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments and accordingly basic loss and diluted loss per share are equal. 7 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Notes to Financial Statements December 31, 2009 (An Exploration Stage Company) (Expressed in US Dollars) (Unaudited) -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) STOCK-BASED COMPENSATION The authoritative accounting pronouncements provide supplemental implementation guidance to requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. The Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include prospective and retroactive adoption options. Under the retroactive options, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of the accounting pronouncements, while the retroactive methods would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. The Company adopted the modified prospective approach for the quarter beginning December 1, 2005. The Company did not record any compensation expense for the period ended December 31, 2009 because there were no stock options outstanding prior to the adoption or at December 31, 2009. RECENT ACCOUNTING PRONOUNCEMENTS The authoritative accounting pronouncements, "Accounting for Derivative Instruments and Hedging Activities", permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. "Accounting for the Impairment or Disposal of Long-Lived Assets", allows a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. These authoritative accounting pronouncements apply to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. This standard is not expected to have a significant effect on the Company's future reported financial position or results of operations. The authoritative accounting pronouncements, "Accounting for Servicing of Financial Assets, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" require all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. This authoritative accounting pronouncement is effective for an entity's first fiscal year beginning after September 15, 2006. This adoption of this statement is not expected to have a significant effect on the Company's future reported financial position or results of operations. 8 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Notes to Financial Statements December 31, 2009 (An Exploration Stage Company) (Expressed in US Dollars) (Unaudited) -------------------------------------------------------------------------------- 3. MINERAL INTERESTS On January 20, 2005, the Company entered into a mineral property purchase agreement to acquire a 100% interest in one mineral claim located in one mineral claim located in the Scadding Township, Sudbury Mining Division, Ontario for total consideration of $7,000. During the period ended September 30, 2006, exploration cost of $7,500 was incurred for the mineral property. 4. COMMON STOCK The total number of common shares authorized that may be issued by the Company is 75,000,000 shares with a par value of one tenth of one cent ($0.001) per share and no other class of shares is authorized. During the period ended June 30, 2005, the Company issued 8,055,000 shares of common stock for total cash proceeds of $27,000. At December 31, 2009 there were no outstanding stock options or warrants. 5. INCOME TAXES As of December 31, 2009, the Company had net operating loss carry forwards of approximately $92,784 that may be available to reduce future years' taxable income through 2027. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. 6. CONSULTING AGREEMENT Starting from March 1, 2008, the Company entered into a 2-year Consulting Agreement with Taggart Financial Trading Corp, ("Taggart"). Taggart provides consulting services to assist the Company in connection with certain aspects of the Projects. The Company shall pay Taggart the fees of $250,000. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report, particularly in the section entitled "Risk Factors". In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "CDN$" refer to Canadian dollars and all references to "common shares" refer to the common shares in our capital stock. As used in this quarterly report, the terms "we", "us", "our company", mean Winchester International Resorts Inc. a Nevada corporation, unless otherwise indicated. GENERAL OVERVIEW We were incorporated in Nevada on August 18, 2003. To date, we have been a company primarily engaged in the acquisition and exploration of natural resource properties. On January 20, 2005, we purchased the Railway Prospect property in Ontario Canada, consisting of 633 acres, including within 16 unpatented mining claim units, we purchased the property from Pilgrim Creek Mining Ltd. Effective June 30, 2009, Andrew Buchholz and Veryl Norquay were elected directors of our company and Simone Maria Anderson resigned as a director and officer of our company. Effective June 30, 2009, Veryl Norquay was appointed chief executive officer and president and Andrew Buchholz was appointed chief financial officer. Subsequent to our year ended June 30, 2009, based on information that we had available to us, we determined that the Railway Prospect property did not, in all likelihood, contain a commercially viable mineral deposit. Our management has been analyzing the various alternatives available to our company to ensure our survival and to preserve our shareholder's investment in our common shares. This analysis has included sourcing additional forms of financing to continue our business as is, or mergers and/or acquisitions. At this stage in our operations, we believe either course is acceptable, as our operations have not been profitable and our future prospects for our business are not good without further financing. 10 On August 3, 2009, we presented an offer to purchase a 90% interest in Winchester International Resorts, LLC a Mississippi limited liability company, in order to effect a business combination of our two companies. It is anticipated that the acquisition will be structured as a share exchange, whereby we will purchase 90% of the memberships of Winchester International Resorts, LLC from its members in exchange for shares of our company. Winchester International Resorts, LLC is a company that is currently seeking to acquire lands and/or buildings in Tunica County, Mississippi. The acquisition contemplated by the offer is subject to the fulfillment of certain conditions precedent, due diligence and the negotiation of a definitive agreement. Effective September 9, 2009, we have changed our name from "Sterling Exploration Inc." to "Winchester International Resorts Inc.", by way of a merger with our wholly owned subsidiary Winchester International Resorts Inc., which was formed solely for the change of name. The name change became effective with the Over-the-Counter Bulletin Board at the opening for trading on September 14, 2009 under the new stock symbol "WNCH". Our new CUSIP number is 972817100. Effective November 9, 2009, Mr. Veryl Norquay resigned as the President, Chief Executive Officer and a director of our company. As a result of Mr. Norquay's resignation, on November 9, 2009, we appointed Mr. Ronald L. Marquardt as the President, Chief Operating Officer and a director of our company. Our board of directors now consists of Ronald L. Marquardt and Andrew Buchholz. EMPLOYEES Our directors and officers act as employees of our company. We do not anticipate any significant changes in the number of employees during the next 12 months. PURCHASE OF SIGNIFICANT EQUIPMENT We do not anticipate the purchase or sale of any plant or significant equipment during the next 12 months. RESULTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008 The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended December 31, 2009 which are included herein. Our operating results for the three months ended December 31, 2009 and 2008 are summarized as follows: Three Months Ended December 31, 2009 2008 -------- -------- Revenue $ Nil $ Nil General and Administrative Expenses $(20,086) $ 6,834 Net Loss / (Recovery) $ 20,086 $ (6,834) REVENUES We did not earn any revenues during our three month period ended December 31, 2009. 11 GENERAL AND ADMINISTRATIVE EXPENSES Our general and administrative expenses for the three months ended December 31, 2009 and December 31, 2008 are outlined in the table below: Three Months Ended December 31, 2009 2008 -------- -------- Bank charges and interest $ Nil $ 52 Filing and transfer agent fees $ 1,087 $ 1,152 Professional fees $ 9,724 $ 5,630 Office expenses $ 3,757 $ Nil Travel and entertainment $ 11,284 $ Nil Write off loan from related parties $(45,938) $ Nil During the three months ended December 31, 2009, our general and administrative expenses increased over the three months ended December 31, 2008, primarily due to an increase in professional fees, office expenses and travel and entertainment. However, during the three months three months ended December 31, 2009, we had a write off from loan related parties of $45,938 resulting in negative expenditures and a recovery of $20,086. SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008 The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended December 31, 2009 which are included herein. Our operating results for the six months ended December 31, 2009 and 2008 are summarized as follows: Six months Ended December 31, 2009 2008 -------- -------- Revenue $ Nil $ Nil General and Administrative Expenses $ 19,846 $ 14,397 Net Loss $(19,843) $(14,397) REVENUES We have not earned any revenues since our inception and we do not anticipate earning revenues in the near future. GENERAL AND ADMINISTRATIVE EXPENSES Our general and administrative expenses for the six months ended December 31, 2009 and December 31, 2008 are outlined in the table below: Six months Ended December 31, 2009 2008 -------- -------- Bank charges and interest $ 95 $ 150 Filing and transfer agent fees $ 1,087 $ 1,607 Professional fees $ 32,060 $ 12,420 Office expenses $ 6,477 $ 220 Travel and entertainment $ 26,065 $ Nil Write off loan from related parties $(45,938) $ Nil During the six months ended December 31, 2009, our general and administrative expenses increased over the six months ended December 31, 2008, primarily due to an increase in professional fees, office expenses and travel and entertainment. 12 However, during the three months three months ended December 31, 2009, we had a write off from loan related parties of $45,938. LIQUIDITY AND FINANCIAL CONDITION As of December 31, 2009, our total assets were $Nil and our total current liabilities were $65,784 and we had a working capital deficit of $65,784. Our financial statements report a net loss of $19,846 for the six months ended December 31, 2009, and a net loss of $92,784 for the period from August 18, 2003 (date of inception) to December 31, 2009. We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. In this regard we have raised additional capital through equity offerings and loan transactions. CASH FLOWS At At December 31, December 31, 2009 2008 -------- -------- Net Cash (Used in) Operating Activities $(65,784) $(15,536) Net Cash Used In Investing Activities $ Nil $ 0 Net Cash Provided by Financing Activities $ 64,722 $ 5,000 INCREASE (DECREASE) IN CASH $ (1,062) $(10,536) We had cash in the amount of $Nil as of December 31, 2009 as compared to $1,062 as of June 30, 2009. We had a working capital deficit of $65,784 as of December 31, 2009 compared to working capital deficit of $45,938 as of June 30, 2008. Our principal sources of funds have been from sales of our common stock. CONTRACTUAL OBLIGATIONS As a "smaller reporting company", we are not required to provide tabular disclosure obligations. INFLATION The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments. OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. APPLICATION OF CRITICAL ACCOUNTING POLICIES Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. . EXPLORATION STAGE COMPANY Pursuant to authoritative accounting pronouncements, our company recognizes its characterization of our company as an exploration stage enterprise. 13 USE OF ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates. The carrying value of cash and accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management's opinion our company is not exposed to significant interest, currency or credit risks arising from these financial instruments. INCOME TAXES Our company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At December 31, 2009, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded. BASIC AND DILUTED LOSS PER SHARE Pursuant to authoritative accounting pronouncements, our company computes loss per share which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. Our company has no potential dilutive instruments and accordingly basic loss and diluted loss per share are equal. STOCK-BASED COMPENSATION The authoritative accounting pronouncements provide supplemental implementation guidance to requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. Our company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include prospective and retroactive adoption options. Under the retroactive options, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of the accounting pronouncements, while the retroactive methods would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. Our company adopted the modified prospective approach for the quarter beginning December 1, 2005. Our company did not record any compensation expense for the period ended December 31, 2009 because there were no stock options outstanding prior to the adoption or at December 31, 2009. RECENT ACCOUNTING PRONOUNCEMENTS The authoritative accounting pronouncements, "Accounting for Derivative Instruments and Hedging Activities", permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. "Accounting for the Impairment or Disposal of Long-Lived Assets", allows a qualifying special-purpose entity to hold a derivative 14 financial instrument that pertains to a beneficial interest other than another derivative financial instrument. These authoritative accounting pronouncements apply to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. This standard is not expected to have a significant effect on our company's future reported financial position or results of operations. The authoritative accounting pronouncements, "Accounting for Servicing of Financial Assets, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" require all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. This authoritative accounting pronouncement is effective for an entity's first fiscal year beginning after September 15, 2006. This adoption of this statement is not expected to have a significant effect on our company's future reported financial position or results of operations. ITEM 4T. CONTROLS AND PROCEDURES MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure. As of December 31, 2009, the end of our second quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There have been no changes in our internal controls over financial reporting that occurred during the quarter ended December 31, 2009 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Other than as set out below, our company is not a party to any pending legal proceeding and no legal proceeding is contemplated or threatened as of the date of this quarterly report. ITEM 1A. RISK FACTORS Much of the information included in this quarterly report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections and estimates made by us and our management in connection with our business operations. While these 15 forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements". BECAUSE OUR AUDITORS HAVE ISSUED A GOING CONCERN OPINION, THERE IS SUBSTANTIAL UNCERTAINTY WE WILL CONTINUE ACTIVITIES IN WHICH CASE YOU COULD LOSE YOUR INVESTMENT. Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. As such we may have to cease activities and you could lose your investment. OUR MANAGEMENT IS CURRENTLY SEEKING OUT POTENTIAL BUSINESS OPPORTUNITIES AND THERE ARE NUMEROUS RISKS ASSOCIATED WITH ANY POTENTIAL BUSINESS OPPORTUNITY. We intend to use reasonable efforts to acquire or complete potential business opportunities that our management determines is in the best interests of our shareholders. Such combinations will be accompanied by risks commonly encountered in acquisitions. Failure to manage and successfully integrate acquisitions we make could harm our business, our strategy and our operating results in a material way. TRADING IN OUR COMMON SHARES ON THE OTC BULLETIN BOARD IS LIMITED AND SPORADIC MAKING IT DIFFICULT FOR OUR SHAREHOLDERS TO SELL THEIR SHARES OR LIQUIDATE THEIR INVESTMENTS. Our common shares are currently listed for public trading on the OTC Bulletin Board. The trading price of our common shares has been subject to wide fluctuations. Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources. OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK. Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and 16 salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock. THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, OR FINRA, HAS ADOPTED SALES PRACTICE REQUIREMENTS WHICH MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK. In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS Exhibit Number Description ------ ----------- (3) (I) ARTICLES OF INCORPORATION; AND (II) BYLAWS 3.1 Articles of Incorporation (incorporated by reference from our Form SB-2 Registration Statement, filed on February 17, 2005) 3.2 Bylaws (incorporated by reference from our Form SB-2 Registration Statement, filed on February 17, 2005) 3.3 Articles of Merger (incorporated by reference from our Current Report on Form 8-K, filed on September 14, 2009) (14) CODE OF ETHICS 14.1 Code of Ethics (incorporated by reference from our Annual Report on Form 10-K, filed on October 1, 2009) 17 Exhibit Number Description ------ ----------- (31) RULE 13A-14(A)/15D-14(A) CERTIFICATIONS 31.1* Section 302 Certifications under Sarbanes-Oxley Act of 2002 of Ronald L. Marquardt 31.2* Section 302 Certifications under Sarbanes-Oxley Act of 2002 of Andrew Buchholz (32) SECTION 1350 CERTIFICATIONS 32.1* Section 906 Certifications under Sarbanes-Oxley Act of 2002 of Ronald L. Marquardt 32.2* Section 906 Certifications under Sarbanes-Oxley Act of 2002 of Andrew Buchholz ---------- * Filed herewith. 18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WINCHESTER INTERNATIONAL RESORTS INC. /s/ Ronald L. Marquardt -------------------------------------------------------------- Ronald L. Marquardt President, Chief Operating Officer and Director (Principal Executive Officer) Date: February 19, 2010 /s/ Andrew Buchholz -------------------------------------------------------------- Andrew Buchholz Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer) Date: February 19, 2010 19

Winchester International Resorts, Inc. 10-Q