10-Q 1 g5119.txt QTRLY REPORT FOR THE QTR ENDED 3-31-11 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 March 31, 2011 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.) 1802 North Carson Street, Suite 108, Carson City, Nevada 89701-1227 (Address of principal executive offices) (Zip Code) 702.685.9009 (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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-K (ss.229.405 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 [ ] 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 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. 9,021,000 common shares issued and outstanding as of May 12, 2011 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Our unaudited interim financial statements for the three and nine month periods ended March 31, 2011 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) --------------------------------------------------------------------------------

Non-cash Investing and Financing Activities: In fiscal year 2010 the Company issued 187,000 common shares for land valued at $187,000, and a former officer contributed $47,000 in working capital loans to paid in capital. Cash paid for interest and income taxes: Year ended June 30, 2010: None Year ended June 30, 2009: None 6 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Notes to Financial Statements March 31, 2011 (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. The Company is currently considering business opportunities in resort development, mining exploration, and other areas as allowed by law. 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 $1,126,641 as at March 31, 2011 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 The Company complies with ASC 915, 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 March 31, 2011 a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded. 7 Basic and Diluted Loss Per Share The Company computes loss per share in accordance with ASC 105 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. Fixed assets Fixed assets are recorded at cost and depreciable assets are depreciated under the straight line method over each item's estimated useful life. Long-Lived Assets In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. Stock based compensation The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. 2. 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 March 31, 2011 there were no outstanding stock options or warrants. In March 2010, the Company issued 187,000 common shares to acquire a building lot in Alberta, Canada at a contact price of $187,000. The Company wrote down the property in 2010 to the assessed value of $109,700, taking a write-down expense of $77,300. Title to the land has not yet been transferred from the seller into the Company's name, although the Company believes the transaction has been consummated. The Company issued 500,000 common shares at $1.00 per for related party services and issued 279,000 units at $1.00 per unit for services provided. Each unit consists of one share of common stock and one. type "A" and one type "B" warrant, exercisable by the holder anytime until December 31, 2011 at the price of $2.50 and $3.00 respectively. At the end of June 2010 the Company had 466,000 A warrants and 466,000 B warrants outstanding. All value in the unit issuances was allocated to the common stock as the warrants were not in the money. 8 3. INCOME TAXES As of June 30, 2010, the Company had net operating loss carry forwards of approximately $930,000 that may be begin to expire in 2024. 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. 4. CONSULTING AGREEMENT Starting from March 1, 2008, the Company entered into a 2-year Consulting Agreement with Taggart Financial Trading Corp, ("Taggart"). Taggart, a related party provides consulting services to assist the Company in connection with certain aspects of the Projects. The Company has paid Taggart the fees of $250,000 during the period ended June 30, 2010. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our unaudited financial statements are stated in United States Dollars (US$) 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" and "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. Effective September 9, 2009, we 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 stock symbol "WNCH". Our CUSIP number is 972817100. Effective March 12, 2010, we entered into an agreement with Auctus Private Equity Fund, LLC to raise up $10,000,000 through a drawdown equity financing facility agreement. Under the terms of the agreement Auctus agreed to purchase from our company, up to $10,000,000 of our common stock. The agreement expires 24 months after the effective date of the agreement. On May 6, 2010, we entered into a share purchase agreement with David and Vickie Chuchmuch, the shareholders of Factory Outlet Trailers Inc. Pursuant to the terms of the share purchase agreement, we agreed to acquire 51% of the issued and outstanding shares of Factory Outlet Trailers' common stock in consideration for the payment of CDN$4.4 million. The payments are to be made in periodic installments with the final payment to occur on June 15, 2011. Factory Outlet Trailers Inc. is in the trailer dealership business. 10 On September 2, 2010, we entered into a merger agreement with Lake W Holdings Inc. and its sole shareholder, Northstar Global GT. Lake W Holdings is a Colorado corporation that holds certain mineral claims in Nevada and California. The following is a brief description of certain of the terms and conditions of the merger agreement that are material to us: 1. The resulting company's share structure shall be amended so as to provide for both common stock and two classes of preferred stock, one with super voting rights and the other with such rights and restrictions as may be set by the board of directors. The super voting preferred stock is to be issued on the effectiveness of the merger. 2. Our company will be re-domiciled to become a Wyoming corporation and our name is to be changed Winchester Resources Inc. 3. Upon closing of the merger, current Lake W shareholders will own 90% of the resulting company with our current shareholders owning the remaining 10%. 4. Our current agreement for an acquisition of a 51% interest in Factory Outlet Trailers, Inc. Will be assigned/spun out into a newly incorporated company, to be held pro-rata by our current shareholders. Due to conditions precedent to closing, including those set out above, and the risk that these conditions precedent will not be satisfied, there is no assurance that we will complete the merger as contemplated in the merger agreement. Our company and Lake W Holdings have mutually agreed to discontinue discussions at this time. EMPLOYEES Currently our only employees are our directors and officers. We do not expect any material changes in the number of employees over the next 12 month period. We will outsource contract employment as needed. 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 REVENUES We did not earn any revenues during the three and nine month periods ended March 31, 2011. THREE MONTHS ENDED MARCH 31, 2011 AND 2010 The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended March 31, 2011 which are included herein. 11 Our operating results for the three months ended March 31, 2011 and 2010 are summarized as follows: Three Months Ended March 31, 2011 2010 ---------- ---------- Revenue $ Nil $ Nil Bank charges and interest $ Nil $ Nil Filing and transfer agent fees $ 100 $ 3,384 Professional fees $ Nil $ 581,294 Office expenses and other $ 2,589 $ 5,144 Travel and entertainment $ 4,619 $ 5,350 Write down of asset $ Nil $ Nil Net Loss / (Recovery) $ (7,308) $ 595,172 GENERAL AND ADMINISTRATIVE EXPENSES During the three months ended March 31, 2011, our general and administrative expenses decreased over the three months ended March 31, 2010, primarily due to decreases in professional fees. NINE MONTHS ENDED MARCH 31, 2011 AND 2010 Our operating results for the nine months ended March 31, 2011 and 2010 are summarized as follows: Nine Months Ended March 31, 2011 2010 ---------- ---------- Revenue $ Nil $ Nil Bank charges and interest $ Nil $ 95 Filing and transfer agent fees $ 547 $ 4,471 Professional fees $ 18,030 $ 613,354 Office expenses and other $ 13,414 $ 11,621 Travel and entertainment $ 13,706 $ 31,415 Write down of asset $ Nil $ (45,938) Net Loss / (Recovery) $ (45,697) $ (615,018) GENERAL AND ADMINISTRATIVE EXPENSES During the nine months ended March 31, 2011, our general and administrative expenses decreased over the nine months ended March 31, 2010, primarily due to decreases in professional fees and travel and entertainment. LIQUIDITY AND FINANCIAL CONDITION As of March 31, 2011, our total current assets were $109,700 and our total current liabilities were $196,341 and we had a working capital deficit of $86,641. Our financial statements report a net loss of $45,697 for the nine months ended March 31, 2011, and a net loss of $1,126,641 for the period from August 18, 2003 (date of inception) to March 31, 2011. 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. 12 CASH FLOWS At At March 31, March 31, 2011 2010 -------- -------- Net Cash (Used in) Operating Activities $ (46797) $(55,044) Net Cash Used In Investing Activities $ Nil $ (2,030) Net Cash Provided by Financing Activities $ 45,697 $(54,076 Increase (Decrease) In Cash $ Nil $ (1,062) We had cash in the amount of $Nil as of March 31, 2011 and as of March 31, 2010. We had a working capital deficit of $86,641 as of March 31, 2011 compared to working capital deficit of $40,944 as of the fiscal year ended June 30, 2010. Our principal sources of funds have been from sales of our common stock. 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. 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. APPLICATION OF CRITICAL ACCOUNTING POLICIES BASIS OF PRESENTATION 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 Our company complies with ASC 915, its characterization of our 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. 13 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 that 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 March 31, 2011 a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded. BASIC AND DILUTED LOSS PER SHARE Our company computes loss per share in accordance with ASC 105 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. We have no potential dilutive instruments and accordingly basic loss and diluted loss per share are equal. FIXED ASSETS Fixed assets are recorded at cost and depreciable assets are depreciated under the straight line method over each item's estimated useful life. LONG-LIVED ASSETS In accordance with ASC 350, we regularly review the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by us if the carrying amount of a long-lived asset exceeds its fair value. CASH AND CASH EQUIVALENTS We consider all highly liquid investments with an original maturity of three months or less as cash equivalents. STOCK BASED COMPENSATION Our company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a "smaller reporting company", we are not required to provide the information required by this Item. 14 ITEM 4. 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 (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure. As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer) and our chief financial officer (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 (our principal executive officer) and our chief financial officer (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 March 31, 2011 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest. 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 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". 15 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. 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 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, 16 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. [REMOVED AND RESERVED] 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) (10) MATERIAL CONTRACTS 10.1 Drawdown Equity Financing Agreement (incorporated by reference from our Current Report on Form 8-K filed on March 18, 2010) 10.2 Share Purchase Agreement between our company and David and Vickie Chuchmuch dated May 6, 2010 (incorporated by reference from our Current Report on Form 8-K, filed on May 12, 2010) 10.3 Agreement and Plan of Merger with Lake W Holdings Inc. and it sole shareholder, Northstar Global dated September 2, 2010 (incorporated by reference from our Current Report on Form 8-K, filed on September 9, 2010) 17 Exhibit Number Description ------ ----------- (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) (31) RULE 13A-14(A)/15D-14(A) CERTIFICATIONS 31.1* Section 302 Certifications under Sarbanes-Oxley Act of 2002 of Veryl Norquay 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 Veryl Norquay 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. Date: May 12, 2011 /s/ Veryl Norquay ----------------------------------------------- Veryl Norquay President, Chief Executive Officer and Director (Principal Executive Officer) Date: May 12, 2011 /s/ Andrew Buchholz ----------------------------------------------- Andrew Buchholz Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer) 19

Winchester International Resorts, Inc. 10-Q