<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
(FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997)
COMMISSION FILE NO. 1-6110
INTERNATIONAL RESORT DEVELOPERS, INC.
IDAHO 82-0291307
- ---------------------------- -------------------------
STATE OF INCORPORATION I.R.S. EMPLOYER NO.
1801 WEST END AVENUE, SUITE 1110
NASHVILLE, TN 37203
ADDRESS OF PRINCIPAL OFFICES ZIP CODE
- ----------------------------------- ------------
REGISTRANT'S TELEPHONE NUMBER: 615-329-3300
NUMBER OF OUTSTANDING SHARES AS OF
OCTOBER 15, 1997:
<TABLE>
<CAPTION>
OUTSTANDING
CLASS AS OF SEPTEMBER 30, 1997
- ----- ------------------------
<S> <C>
COMMON SHARES, WITH
PAR VALUE $0.10 PER SHARE 1,807,124
</TABLE>
<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS.
See following pages.
1
<PAGE> 3
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND JUNE 30, 1997
(UNAUDITED)
2
<PAGE> 4
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
<TABLE>
<S> <C>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS .................................. 4-5
CONSOLIDATED STATEMENTS OF OPERATIONS ........................ 6
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY ............................... 7
CONSOLIDATED STATEMENTS OF CASH FLOWS ........................ 8-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................... 9-21
</TABLE>
3
<PAGE> 5
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30,
------------- -------------
1997 1997
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 501,417 $ 876
Accrued interest and other receivables 17,580 300
---------- ----------
Total current assets 518,997 1,176
---------- ----------
PROPERTY AND EQUIPMENT
Oil property
Gas property
Mining property 250,430 250,40
Pipeline & pipeline equipment
---------- ----------
250,430 250,430
Less accumulated depreciation, depletion &
valuation allowance ---------- ----------
250,430 250,430
---------- ----------
OTHER ASSETS
Land, purchase rights concessions and related
capitalized costs and improvements 3,342,062 6,180,764
Long-term notes and advances receivable (Note 14) 1,855,525
Investment in unconsolidated companies 10,000 10,000
---------- ----------
5,207,587 6,190,764
---------- ----------
$5,977,014 $6,442,370
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 6
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30,
------------- --------------
1997 1997
------------- --------------
<S> <C> <C>
CURRENT LIABILITIES
Current debt $ 1,007,799 $ 1,861,799
Accounts payable 27,045 53,914
Accrued payroll and related taxes 19,220 121,575
Override royalty and interest payable 13,325 138,463
Loans payable - Doggart Trading, Ltd. and Hugh Downey 121,255 1,138,685
----------- -----------
Total Current Liabilities 1,188,644 3,314,436
----------- -----------
LONG-TERM DEBT
----------- -----------
DEFERRED INCOME TAXES PAYABLE - (NOTE 7)
----------- -----------
MINORITY INTEREST IN SUBSIDIARY 284,183 284,183
----------- -----------
COMMITMENTS AND CONTINGENCIES (NOTE 13) ----------- -----------
STOCKHOLDERS' EQUITY - after giving retroactive
1.30 reverse stock split (See NOTE 1):
Common Stock, $.10 par value, 100,000,000 shares
authorized, 1,841,298 issued for September and June
1997 and 1,838,967 issued for June 1996 184,129 184,129
Additional paid in capital 7,478,158 7,478,158
Less shares of common stock held in Treasury-at cost;
267 share for 1997, 1996 and 1995 (2,895) (2,895)
----------- -----------
7,659,392 7,659,392
----------- -----------
Retained Deficit:
Accumulated from operations prior to the
development state (3,191,265) (3,191,265)
Accumulated during the development stage 36,060 (1,624,376)
----------- -----------
(3,155,205) (4,815,641)
----------- -----------
Total Stockholders' Equity 4,504,187 2,843,751
----------- -----------
$ 5,977,014 $ 6,442,370
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 7
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Cumulative
Operations From
Inception of The
For The Three Months Ended Development Stage
September 30, April 1, 1994 to
-------------------------- September 30,
1997 1996 1997
----------- ----------- -----------------
<S> <C> <C> <C>
REVENUES
Sale of Real Estate Development-Ensenada (Note 13) $ 5,150,000 $ $ 5,150,000
COST OF REVENUES
Cost of developing Real Estate-Ensenada 3,451,964 3,451,964
----------- ----------- -----------
GROSS PROFIT FROM REAL ESTATE DEVELOPMENT 1,698,036 1,698,036
OPERATING EXPENSES
Predevelopment costs expensed on abandoned projects 303,514
Real estate acquisition overhead and administrative expenses 26,139 566,052
Legal and accounting 41,461 65,103 405,053
Officer salaries 81,000 272,690
Office expenses, rent and other 15,374 23,154 68,169
Travel 5,968 44,650
Printing 1,002 5,399
Payroll taxes 2,927 21,676
----------- ----------- -----------
Total Operating Expenses 56,835 205,293 1,687,203
----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS 1,641,201 (205,293) 10,833
----------- ----------- -----------
OTHER INCOME (EXPENSE)
Miscellaneous income (expense) 497
Interest income 19,235 19,235
Bad debts (9,593)
Minority interest in subsidiary's net income 6,088
Gain on sale of real estate (prior to development stage)
----------- ----------- -----------
19,235 16,227
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 1,660,436 (205,293) 27,060
PROVISION (CREDIT) FOR INCOME TAXES - (NOTE 7) (9,000)
----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS 1,660,436 (205,293) $ 36,060
===========
DISCONTINUED OPERATIONS - (NOTE 1)
Loss from discontinued oil & gas operations - less
applicable income tax credits (600)
----------- -----------
NET INCOME (LOSS) $ 1,660,436 $ (205,893)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,835,975 1,838,967
=========== ===========
INCOME (LOSS) FROM CONTINUING OPERATIONS
PER SHARE $ 0.904 $ (0.112)
=========== ==========
NET INCOME (LOSS) PER SHARE $ 0.904 $ (0.112)
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 8
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
From July 1, 1994 through September 30, 1997
<TABLE>
<CAPTION>
Common Stock
-----------------------------------
Paid in
Per Share Shares Amount Capital
--------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCE, JUNE 30, 1994 46,008,348 $ 4,500,835 $(1,674,167)
Shares canceled related to rescinded transaction (Note 14) (1,000,000)
Shares issued for payment of notes payable
plus accrued interest to Daggart Trading, Inc. 1.00 205,373 20,537 184,836
Shares subscribed but unissued at June 30, 1995
related to advances from
Doggart Trading, Ltd.
for use in real estate development and operations 1.00 1,225,300 122,530 1,102,770
Shares issued to Dardell International Ltd. to acquire
real estate (Note 2) .67 3,000,000 300,000 1,700,000
Net loss for the year ended June 30, 1995
---------- ----------- -----------
BALANCE, JUNE 30, 1995 49,439,021 4,943,902 1,313,439
Sharesubscribed but unissued at June 30, 1996
related to advances from DoggartTrading, Ltd.
for use in real estate development and operations 1.00 235,286 23,529 211,757
Shares issued for payment of advances payable
to Doggart Trading, Ltd. 1.00 774,700 77,470 697,230
Shares subscribed for acquisition of 45% of Ensenada
concession rights .50 720,000 72,000 288,000
Shares issued for acquisition of Langer Holdings, Ltd. (Note 2) 4,000,000 400,000 3,600,000
Adjustment to reflect excess of contract purchase
price over Transferor's cost (Note 2) (4,000,000)
Net loss for the year ended June 30, 1996
---------- ----------- -----------
BALANCE, JUNE 30, 1996 55,169,007 5,516,901 2,110,426
Shares subscribed but unissued at June 30, 1997
related to $394,960 of advances from Doggart
Trading, Ltd. for use in development of the
Ensenada project .50 789,920 78,992 315,968
Recision of shares subscribed for acquisition
of 45% of Ensenada concession rights
due to renegotiations (Note 2) (720,000) (72,000) (288,000)
One for thirty reverse stock split approved
May 12, 1997 (Note 1) (53,397,629) (53,339,764) 5,339,764
Net loss for the year ended June 30, 1997
---------- ----------- -----------
BALANCE, JUNE 30, 1997 1,841,298 184,129 7,478,158
Net income for the three months ended
September 30, 1997-Unaudited
---------- ----------- -----------
BALANCE, SEPTEMBER 30, 1997 1,841,298 $ 184,129 $ 7,478,158
========== =========== ===========
<CAPTION>
Cumulative
Changes from
Treasury Stock Inception of the
--------------------- Retained Total Development Stage
Earnings Stockholders' April 1, 1994 to
Shares Amount (Deficit) Equity September 30, 1997
--------- ---------- -------------- -------------- ---------------------
<S> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1994 8,000 $ (2,895) $ (822,170) $ 2,001,603 $ 349,212
Shares canceled related to rescinded transaction
Shares issued for payment of notes payable
plus accrued interest to Daggart Trading, Inc. 205,373 205,373
Shares subscribed but unissued at June 30, 1995
related to advances from
Doggart Trading, Ltd.
for use in real estate development and operations 1,225,300 1,225,300
Shares issued to Dardell International Ltd. to acquire
real estate (Note 2) 2,000,000 2,000,000
Net loss for the year ended June 30, 1995 (2,206,902) (2,206,902) (302,476)
----- ------- ----------- -----------
BALANCE, JUNE 30, 1995 8,000 (2,895) (3,029,072) 3,225,374
Sharesubscribed but unissued at June 30, 1996
related to advances from DoggartTrading, Ltd.
for use in real estate development and operations 235,286 235,286
Shares issued for payment of advances payable
to Doggart Trading, Ltd. 774,700 774,700
Shares subscribed for acquisition of 45% of Ensenada
concession rights 360,000 360,000
Shares issued for acquisition of Langer Holdings, Ltd. 4,000,000 4,000,000
Adjustment to reflect excess of contract purchase
price over Transferor's cost (4,000,000) (4,000,000)
Net loss for the year ended June 30, 1996 (1,080,885) (1,080,885) (616,216)
----- ------- ----------- -----------
BALANCE, JUNE 30, 1996 8,000 (2,895) (4,109,957) 3,514,475
Shares subscribed but unissued at June 30, 1997
related to $394,960 of advances from Doggart
Trading, Ltd. for use in development of the
Ensenada project 394,960 394,960
Recision of shares subscribed for acquisition
of 45% of Ensenada concession rights
due to renegotiations (360,000) (360,000)
One for thirty reverse stock split approved
May 12, 1997 (7,733)
Net loss for the year ended June 30, 1997 (705,684) (705,684) (705,684)
----- ------- ----------- ----------- ----------
BALANCE, JUNE 30, 1997 267 (2,895) (4,815,641) 2,843,751 3,560,455
Net income for the three months ended
September 30, 1997-Unaudited 1,660,436 1,660,436 1,660,436
----- ------- ----------- -----------
BALANCE, SEPTEMBER 30, 1997 267 $(2,895) $(3,155,205) $ 4,504,187 $5,220,891
===== ======= =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 9
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Cumulative
Operations From
Inception Of The
For The Three Months Ended Development Stage
September 30, April 1, 1994 To
-------------------------- September 30,
1997 1996 1997
----------- ------------ -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $1,660,436 $ (205,893) $(2,523,862)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion, amortization
& valuation allowance 1,736,814
Gain on sale of real estate and easement 26,112
Issue of stock for services 33,325
Issue of stock in payment of interest 5,373
Loss on disposal of oil & gas assets 458,227
Write-down of predevelopment costs for abanded projects 303,514
Minority interest in current operations of subsidiary (712)
Change in assets and liabilities:
Decrease (increase) in accounts receivable 48,305
Decrease (increase) in accrued interest, prepaid and other (17,280) (8,000) 31,195
Increase (decrease) in accounts payable and
accrued expenses (129,224) 98,696 129,220
Decrease in current income taxes payable (16,000)
Decrease in interest payable (125,138) (135,352)
Decrease in deferred income taxes payable (60,000)
(Decrease) increase in other loans payable 1,866
---------- -------- ----------
Net cash used by operating activities 1,388,794 (172,930) 38,025
---------- -------- ----------
INVESTING ACTIVITIES:
Proceeds from sale of real estate, net 3,451,964 8,303
Increase in long-term notes and advances receivable (1,855,525)
Acquisition of Bucaneros purchase rights (1,050,000)
Capitalized real estate predevelopment costs (613,262) (204,558) (3,551,337)
Capitalized oil & gas development costs, net of dry hole costs (23,495)
Payment for property and equipment 60,346
Acquisition of Ensenada concession rights (494,000)
---------- -------- ----------
Net cash (used) provided by investing activities 983,177 (104,558) (5,050,183)
---------- -------- ----------
FINANCING ACTIVITIES:
Additions to debt:
Short-term (1,871,430) 239,966 5,526,957
Long-term 225 1,370,500
Payments on debt:
Short-term (30,875)
Decrease in short-term loans from officer (10,338)
---------- -------- ----------
Net cash provided from financing activities (1,871,430) 24,191 6,856,244
---------- -------- ----------
NET INCREASE (DECREASE) IN CASH 500,541 (37,297) 1,844,086
CASH AT BEGINNING OF PERIOD 876 38,173 27,849
---------- -------- ----------
CASH AT END OF PERIOD $ 501,407 $ 876 $1,844,086
========== ======== ==========
Taxes paid during the period $ 0 $ 0 $ 7,962
========== ======== ==========
Interest paid during the period $ 155,900 $ 0 $ 225,252
========== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 10
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended September 30, 1997 and 1996 (Unaudited)
SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
In fiscal year ended June 30, 1994 the Company issued a total of 66,648 shares
of its stock at $.50 per share for various legal and consulting services.
In fiscal year ended June 30, 1994 the Company sold 5 acres of land for $500,000
which consisted of $100,000 down payment applied directly to company debt and
the balance in the form of a real estate contract in the amount of $400,000. On
May 31, 1995 the Company used the above real estate contract, plus accrued
interest, and approximately 18 acres of land located in Centerville, Ohio to
retire all the outstanding debt of the Company to its affiliates which totaled
$847,160.
On August 10, 1994 a note receivable held by the Company in the amount of $112,
941 was exchanged for the assumption, by International Mortgage and Guaranty Co.
(IMG), of various of the Company's obligations to IMG and other creditors.
In fiscal year ended June 30, 1995 the Company issued 205,373 shares to retire
$200,000 in advances payable to Doggart Trading, Ltd. and to pay $5,373 in
accrued interest at $1.00 per share. The Company also subscribed 1,225,300
shares to retire $1,225,300 in advances from Doggart Trading, Ltd., related to
Mexico real estate development costs.
In fiscal year June 30, 1995 the Company issued 3,000,000 shares of its stock at
$.67 per share in settlement of the acquisition price of $2,000,000 for the
purchase rights to the Los Bucaneros property.
In fiscal year ended June 30, 1996 the Company issued 2,000,000 shares, at $1.00
per share, to retire $1,225,300 of subscriptions from the prior year and to
retire $774,700 in advances payable to Doggart Trading, Ltd. for 1996. The
Company also subscribed 235,286 shares to retire $235,286 in advances from
Doggart Trading, Ltd., related to Mexico real estate development costs.
In fiscal year ended June 30, 1996 the Company issued 720,000 shares, at $.50
per share, as part of an acquisition agreement to acquire concession rights in
Ensenada (Note 2).
In June 1996 the Company issued 4,000,000 shares as part of the original
acquisition agreement for the Playas Palmeras property (Note 2). Since the
original transaction was treated as a reverse acquisition the value of these
shares issued is limited to the transferor's cost which was recorded in 1994.
Accordingly, these shares were issued at no additional book value to the
Company.
9
<PAGE> 11
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
(Continued)
On May 12, 1997 the shareholders approved a one for thirty reverse stock split
resulting in a decrease in common stock and increase in paid in capital of
$5,339,763.
During June 1997 the Company subscribed for issuance 789,920 shares, at $.50 per
share, to retire advances of $394,960 payable to Doggart Trading, Ltd. for 1997.
During June 1997 the company completed a renegotiation with sellers of 45% of
the Ensenada project to pay the acquisition price of $360,000 in cash rather
than with the Company's stock, as previously agreed. This resulted in an
increase in current liabilities and a reduction of shareholder equity of
$360,000.
NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Organization - The Company was incorporated in the State of Idaho on
August 12, 1968 as Fourth of July Silver, Inc. and changed its name on August 8,
1983 to International Basic Resources, Inc. At this time the Company was engaged
in mining and development of basic metals and other natural resources. From
August 1983 to May 1996 the Company acquired land holdings, oil and gas leases
and a pipeline gathering facility. In April 1994 the Company decided to pursue
real estate acquisition and development in addition to its oil and gas and
mining operations. In May, 1996 the Company sold all of its oil and gas leases
and related pipeline gathering facilities. Subsequent to the sale the Company
had no operations and was focusing solely on real estate development. The
Company considers itself to be a development stage enterprise and considers the
inception of this development stage to be April, 1994, when it began its current
real estate and development activities. During 1997 the Company changed its name
from International Basic Resources, Inc. to International Resort Developers,
Inc. During July, 1997 the Company closed the sale of its Ensenada project with
a third party for a gross sales price of $5,150,000. The company still considers
itself to be in the development stage since its only other real estate project
is expected to require substantial development effort before significant
revenues are realized.
Principles of Consolidation - The consolidated statements include the accounts
of International Basic Resources, Inc. and subsidiaries (Carson Industries
Corporation, Texas NGPP, Inc., Langer Holdings, Ltd. and Playas Palmeras, S.A.).
All significant intercompany accounts and transactions are eliminated.
Receivables - The Company expects to collect the full amount of its receivables.
There is no allowance for uncollectible accounts as of June 30, 1997.
10
<PAGE> 12
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment - Property and equipment are carried at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. Major additions and betterments are capitalized.
Costs of maintenance and repairs which do not improve or extend the life of the
associated assets are expensed currently. When there is a disposition of
property and equipment, the cost and related accumulated depreciation are
removed from the accounts and any gain or loss is reflected in net income.
Depletion is computed using the unit-of-production method.
Exploration Costs - The Company uses the successful efforts method of accounting
whereby development costs, whether productive or nonproductive, are capitalized
and amortized using the unit-of-production method. All geological and
geophysical costs are expensed as incurred and all exploratory drilling costs
are initially capitalized and the cost of an unsuccessful well is charged to
expense when it is determined to be nonproductive.
Evaluation of Impairment of Oil and Gas and Mining Properties-
Proved oil and gas:
The Company periodically assesses the potential impairment of its proved oil and
gas properties by comparing the net capitalized cost to projected undiscounted
future net cash flows. The excess of net capitalized cost over projected
undiscounted future net cash flows is adjusted as a charge to current operations
through a valuation allowance offset to the respective assets.
Unproved oil and gas:
The Company periodically assesses the potential impairment of its unproved oil
and gas properties. Among the factors considered are drilling of a dry hole with
no firm plans to continue drilling or the approaching expiration of a lease
without commencement of drilling on the property or adjoining properties. If
impairment is determined to have occurred, a charge is made to operations
through a valuation allowance offset to the respective assets.
Mining property:
Exploration, acquisition and development costs of mining properties are
capitalized for properties with potential viable mineral reserves sufficient to
economically recover the capitalized costs. Exploration costs incurred which do
not lead to the discovery of potential viable general reserves are expensed.
When production is commenced, capitalized costs are depleted using the units of
production method. Net undepleted capitalized costs are compared to future
undiscounted net cash flows in evaluating impairment. If impairment has
occurred, a charge is made to operations through a valuation allowance offset to
the respective assets. There are currently no mining assets under development or
production.
11
<PAGE> 13
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Capitalized Real Estate Acquisition and Development Costs - Payments made by the
Company to obtain an option to acquire real estate are capitalized as incurred.
All other costs that are specifically identified with a project or property are
capitalized unless the acquisition or future development of the project is, or
becomes, improbable. Indirect project costs that relate to several projects are
capitalized and allocated to the projects to which the costs relate. Indirect
costs that do not clearly relate to project acquisition or development,
including general and administrative expenses, are charged to expense as
incurred.
Net Income Per Share - Earnings per share is computed using the weighted average
number of common shares outstanding during each period. Outstanding common stock
equivalents, consisting of shares under option and outstanding warrants, do not
have a significant dilutive effect on earnings per share. Any shares subscribed
but unissued at year end are included in the weighted average number of shares
outstanding for purposes of computing earnings per share. On May 12, 1997 the
shareholders approved a one for thirty reverse stock split. Earnings per share
computations have been retroactively computed giving effect for this event.
Development Stage Activities of Real Estate Segment - As discussed in Note 2,
the Company's stock ownership changed significantly during March, 1994. Since
April 1994 the Company has been in the development stage related to its real
estate acquisition and development activities through its wholly owned
subsidiary Langer holdings, Ltd. Operations related to real estate activities in
the development stage are as follows:
The Company has undertaken acquisition and development of the Playas Palmeras
and Bucaneros Properties discussed in Note 2. The Company also incurred
predevelopment costs associated with certain properties in the Yucatan and
Campeche area of Mexico it intended to jointly develop with DSC, S.A. de C.V.
(DSC) during 1995. During 1996 these projects were abandoned and the related
capitalized predevelopment costs of $303,514 were expensed.
On December 14, 1995 the Company entered into an agreement to effectively
acquire the concession rights to build and operate a cruise ship terminal and
marina village at the harbor in Ensenada, Baja California, Mexico.
In May 1996 the Company sold all of its oil and gas leases and related pipeline
gathering facilities. Subsequent to this sale the Company had no operations and
focused solely on the real estate development. The Company considers itself to
be a development stage enterprise and considers the inception of this
development stage to be April 1994, when it began its current real estate and
development activities.
12
<PAGE> 14
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
During August 1997 the company sold all of its rights to develop and operate its
Ensenada project to an unrelated third party for $5,150,000 (Note 2). The
Company still considers itself to be in the development stage.
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid instruments with an initial maturity of
three months or less to be cash equivalents. The Company had no cash equivalents
at September 30, 1997, June 30, 1997 or June 30, 1996.
Use of Estimates in the preparation of Financial Statement Amounts - The process
of preparing financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions regarding
certain types of assets, liabilities, revenues and expenses. Such estimates
primarily relate to unsettled transactions and events as of the date of the
financial statements. Accordingly, upon settlement, actual results may differ
from estimated amounts.
Reverse Stock Split - On May 12, 1997 the Company's shareholders approved a one
for thirty stock split. The notes to the financial statements related to periods
prior to this action have not been retroactively restated to reflect the effect
of this change.
NOTE 2--LAND HELD FOR DEVELOPMENT AND RESALE
During March 1994, the Company entered into an acquisition agreement with
Doggart Trading, LTD, a Grand Cayman, B.W.I. Corporation (Doggart) to acquire
its 100% interest in Langer Holdings, LTD. (Langer) and Langer's 99% owned
subsidiary Playas Palmeras, S.A. (Playas) in exchange for 33,000,000 common
shares of the Company being issued to the shareholders of Doggart. The agreement
also includes a commitment to issue an additional 4,000,000 shares of the
Company when the board of directors approves an increase in the authorized
shares of the Company in an equal or greater amount. In June 1997 the authorized
shares were increased and the additional 4,000,000 shares were issued.
Playas is a Mexican corporation which owns fee simple title to two parcels of
land situated within the Municipality of Champoton, State of Campeche, Yucatan
Peninsula, Mexico. The Company acquired directly the additional 1% interest in
Playas at the date of closing. The property held by Playas is described as
approximately 8.5 miles of unimproved beach property located along the Gulf of
Mexico.
The Company's obligation, under its acquisition agreement with Doggart, to issue
33,000,000 shares, as above referenced, was conditioned upon the obligation of
Doggart to obtain and furnish to the Company an appraisal of the property
indicating appraised value of no less than $10,000,000 U.S. Since the
transaction resulted in the shareholders of the transferor (Doggart) receiving
approximately 71% of the shares of the Company as consideration, the transaction
is considered to be a reverse acquisition. Accordingly, the Playas land is
valued at the transferor's cost, which at June 30, 1994 was $80,321.
13
<PAGE> 15
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 2--LAND HELD FOR DEVELOPMENT AND RESALE (Continued)
During May 1995 the Company purchased the acquisition right to approximately 3.5
miles of contiguous unimproved beach property known as Los Bucaneros. The
Company assumed the seller's underlying debt of $1,050,000 and issued 3,000,000
shares of stock at $.67 per share for a total acquisition price of $3,050,000.
During May, 1995, $50,000 was paid by the Company for the matured portion of the
note payable assumed. The balance of $1,000,000 is payable on May 24, 1998 (Note
5).
On December 14, 1995 the Company entered into an agreement to effectively
acquire the concession rights to develop and operate a cruise ship terminal and
marina village at the harbor in Ensenada, Baja California, Mexico. The
acquisition price was $854,000 which the Company agreed to pay with subscribed
shares of stock for $360,000 at $.50 per share and an obligation to pay the
balance of $494,000 in cash or with shares at the option of the sellers. The
sellers exercised their right to receive cash and have agreed to be paid in
twelve equal principal installments starting April 1, 1997 plus interest at 8%
(Note 5). These payment terms were renegotiated with the sellers and the Company
during June 1997. The new terms called for all $854,000, plus accrued interest
from the date of sale, to be paid in cash. During August 1997, subsequent to the
sale of the Ensenada project by the Company, this obligation was paid by the
Company including accrued interest of $91,093.
NOTE 3--MINING PROPERTY
The mining property consists of:
a) A contiguous group of twenty-one (21) unpatented mining claims
situated in the St. Joe Mining District, Shoshone County, Idaho;
b) A multi-year leasehold interest on the Daddy Lode mining claims, and
ownership of the Mother Lode patented mining claims situated in the
Summit Mining District, Shoshone County, State of Idaho, together with
fee ownership of certain unpatented mining claims contiguous to the
Mother Lode property, all of which are of interest to the Company for
purported gold potential. In May 1989, the Company executed a
lease/joint venture contract with Newmont Exploration Company for the
entire Mother Lode and Daddy Lode group of patented and unpatented
mining claims in Shoshone County, Idaho. Newmont subsequently
reassigned all the Mother Lode and Daddy Lode group properties to the
Company. The Company started to develop the vein found by Newmont in
June 1990 by contracting General Mine Services Corp. to work on this
property. Work has since been suspended on this property until
additional funding for development can be obtained.
14
<PAGE> 16
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 4--PIPELINE AND PIPELINE EQUIPMENT
On April 22, 1985, the company purchased a six (6) mile pipeline gathering
facility. The facility serves the oil and gas properties acquired by the
company. These assets were sold during May 1996 as part of the Company's
disposal of its oil and gas operations.
NOTE 5--CURRENT DEBT
Current debt of the Company at September 30, 1997 consist of the following:
<TABLE>
<S> <C>
Deed of Trust payable to Granjas Los
Bucaneros to complete the acquisition of 3.5
miles of beach-front property which is
adjacent to the Company's property known as
Playas Palmeras (Note 2). During 1997 the
Company obtained a one year extension of its
due date for this debt. The balance is due
May 24, 1998. If the Company does not make
this payment it may lose its rights to
acquire and develop this property and would
realize a reduction of shareholder equity of
approximately $2,000.000. $1,000,000
Other advances payable 7,799
----------
Total Current Debt $1,007,799
==========
</TABLE>
15
<PAGE> 17
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 5--CURRENT AND LONG-TERM DEBT (Continued)
In settlement of a long-term debt in May 1994, to an affiliated company, the
Company agreed to a 6 1/4% overriding revenue interest from all future income
from oil and gas properties developed or purchased with the proceeds of the
debt. The overriding revenue interest continues through the life of the
production of these properties. Royalties paid to the affiliate were $0, $4,203
and $4,084 for the years ended June 30, 1997, 1996 and 1995, respectively. As
part of the sale of its oil and gas operations during May 1996 (Note 1) all
royalty obligations of the Company were assumed by the buyer.
NOTE 6--RELATED PARTY TRANSACTIONS
Mr. M.K. Miller, past President of International Basic Resources, Inc., was a
member of the immediate family of the principal shareholders of B.M. Woods, Inc.
which owns 100% of Inland Mortgage Guaranty Company, Inc. (Inland). Inland made
loans to the Company for the development of its oil and gas interests, receiving
an overriding revenue interest in future production from properties developed
with the debt. The debt, in addition to additional accrued obligations of
$104,515, was retired in May 1994 through the transfer to Inland of a $400,000
note receivable, together with accrued interest of $7,216, and certain
undeveloped residential real estate with a cost of $428,108 (Note 5).
As discussed in Note 2, the Company purchased certain undeveloped real estate in
Mexico from Doggart with approximately 71% of its common stock in June, 1994.
Doggart had advanced the Company $150,000 by June 30, 1994, with interest at 7%,
payable December, 1994. During September 1994, Doggart agreed to convert this
debt of the Company into common shares at $1 per share. During the year ended
June 30, 1995 Doggart advanced an additional $1,290,300 and received shares
totaling 205,373 shares to retire $200,000 of advances plus accrued interest of
$5,373. During the year ended June 30, 1996 additional shares totalling
1,225,300 and 774,700 have been issued at $1.00 per share to retire $2,000,000
in advances. At June 30, 1996 shares totalling 235,286 have been subscribed at
$1 per share to retire an additional $235,286 in advances. During 1997 an
additional 789,920 shares were subscribed at $.50 per share to retire $394,960
in advances during 1997. Additional 1997 advances of $121,255 have not been
retired as of September 30, 1997 (Note 5).
NOTE 7--PROVISION (CREDIT) FOR INCOME TAX
The Company does not file a consolidated income tax return. Each corporation in
the group files a separate return. Thus the tax benefits from net operating loss
deductions and general business credit carryovers are limited to the separate
returns of the respective corporations.
16
<PAGE> 18
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 7--PROVISION (CREDIT) FOR INCOME TAX (Continued)
The components of the provision (credit) for income taxes at September 30, are
as follows:
<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Current
Federal $ - $ -
State - -
---------- ----------
Total current provision - -
Deferred
Federal - -
State - -
---------- ----------
Total deferred provision - -
Total provision (credit)
for income taxes $ - $ -
========== ==========
</TABLE>
The reconciliation of the income tax (provision) expense at the statutory rate
to the effective rate at September 30, is as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------- --------------------
Amount % Amount %
-------- ------ ------ ----
<S> <C> <C> <C> <C>
Federal taxes (credit)
at the statutory rate $(565,000) (34.0)% $(70,000) (34.0)%
Additional deferred tax
assets providing no
tax benefit 565,000 34.0 70,000 34.0
NOL of subsidiaries
providing no tax
benefit - - - -
NOL carryover of
subsidiary utilized
in the current year - - - -
- - - -
-------- ---- ------- ----
Other $ - -% $ - -%
======== ==== ======= ====
</TABLE>
17
<PAGE> 19
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 7--PROVISION (CREDIT) FOR INCOME TAX (Continued)
For financial reporting purposes, a valuation allowance of $290,000 has been
deducted for the full amount of the deferred tax asset resulting from the
Company's net operating loss carryforwards noted below as it was determined that
there is limited probability for the deferred tax asset to be realized at this
time.
The items of carryover remaining, for the separate corporations, for which no
tax benefit has been provided are as follows:
<TABLE>
<CAPTION>
International Carson Texas
Basic Industries NGPP,
Resources Corporation Inc.
------------ ----------- -------
<S> <C> <C> <C>
Net operating loss $ 565,000 $ 1,475,000 $ 7,600
Capital loss - 142,000 -
General business credit - 12,000 16,000
</TABLE>
The net operating losses above expire beginning in 1999. The capital loss carry
forward of Carson Industries Corporation expires in 1997. The general business
credit of Carson Industries Corporation expires in 1998 and of Texas NGPP, Inc.
in 2000.
NOTE 8--MINORITY INTEREST IN SUBSIDIARY
The minority interest in subsidiary represents interests of outsiders (29.66%)
in the stock of Carson Industries Corporation.
18
<PAGE> 20
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 9--INVESTMENT IN UNCONSOLIDATED COMPANIES
The Company owns 100 shares of Investmark stock. The investment in this
unconsolidated company is presented by the Company at a cost of $10,000.
NOTE 10--ARTICLES OF INCORPORATION AMENDED
On March 22, 1993 the Company's articles of incorporation were amended to
increase the authorized capital of the Company from 20,000,000 to 50,000,000
common shares, par value $0.10 per share, with rights and privileges of the
common shares remaining the same. On January 8, 1996 the Company again amended
its articles of incorporation to increase the authorized capital of the Company
from 50,000,000 to 100,000,000 common shares.
NOTE 11--GAIN ON SALE OF ASSETS
The gain on sale of assets for fiscal year June 30, 1994 consists of the gain on
sale of 5 acres of Centerville, Ohio real property. The total sales price was
$500,000 consisting of a $100,000 down payment applied directly to Company debt
and the balance in the form of a real estate contract receivable.
NOTE 12--EXECUTIVE COMPENSATION AND INCENTIVE STOCK OPTION PLAN
<TABLE>
<CAPTION>
9/30/97 6/30/97 6/30/96
------- ------- -------
Principal Salary- Salary- Salary-
Position Fees Fees Fees
- -------- ------- -------- --------
<S> <C> <C> <C>
M.K.Miller - Past Chairman $ - $ - $ 16,000
Alton E. Jones - Past President/Chairman - 147,400 186,000
Nigel Spinks - Consultant - - -
David P. Lawrence - Consultant - 48,000 13,500
Steven Barker - Vice President- - 60,000 47,000
Ensenada Cruiseport Village
Francis Cobb - Past Secretary - 39,050 106,000
</TABLE>
In addition to the compensation presented above, on April 19, 1996 the Company
adopted the International Basic Resources, Inc. 1996 Incentive Stock Option Plan
whereby the Company reserved 10,000,000 shares of its common stock for use in
granting stock options to officers and key employees.
19
<PAGE> 21
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 12--EXECUTIVE COMPENSATION AND INCENTIVE STOCK OPTION PLAN (Continued)
At that same date options to acquire stock were granted as follows:
<TABLE>
<CAPTION>
Number of Exercise Date Options
Shares Under Price Option Exercised
Recipient Option Per Share Expires To Date
- --------- ------------ --------- ------- --------
<S> <C> <C> <C> <C>
Alton E. Jones 3,000,000 $0.359 4/18/2006 None
Francis H. Cobb 1,500,000 0.359 4/18/2006 None
Stephen Barker 750,000 0.359 4/18/2006 None
</TABLE>
The option price of $0.359 was determined based upon the NASDAQ trading share
price at the date the options were granted. As part of their employment
termination agreements with the Company all of the above employees agreed to
relinquish their options to acquire stock. Accordingly, at June 30, 1997 there
were no outstanding granted options to acquire the Company's stock.
NOTE 13--COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS
The Company concluded its litigation related to the 1,000,000 shares issued to
Advanced Capital Services Corporation on August 21, 1995. The Company received a
default judgement against Advanced Capital which rescinded the issuance of the
shares and authorized the Company to seek further monetary damages at its
discretion.
During the year ended June 30, 1996, Doggart agreed to convert the current debt
of the Company to Doggart into common shares at $1 per share and at $.50 per
share for 1997. As of June 30, 1996, 235,286 shares of the Company's stock are
subscribed for this purpose and as of June 30, 1997 an additional 789,920 of its
stock is subscribed to retire $394,960 of advances from Doggart during 1997.
The Company and its Officers have been named in a lawsuit which alleges
violations of federal securities laws related to the transactions discussed
above with Advanced Capital Services. The plaintiffs consider their claim to be
worth $4,000,000 and have made demands for settlement at $800,000. The Company,
and its trial counsel, believe the plaintiffs claim to be without merit and its
current demands for settlement unacceptable. The Company and its Officers deny
involvement in the identified transactions. Management has indicated its
willingness to entertain a settlement through the issuance of shares to the
plaintiffs, in order to resolve the matter without further expenses of
litigation.
20
<PAGE> 22
INTERNATIONAL RESORT DEVELOPERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 13--COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS (Continued)
The Company has been named in a civil action regarding claimed fraudulent
inducements offered to the plaintiffs by the Company, and its officers, to
acquire shares of the Company. The plaintiffs claim damages of $1.5 million. The
plaintiffs have filed suit but no other significant discovery or legal
evaluation has been performed. The Company's counsel is unable to indicate the
likelihood of an outcome at this time.
The Company is in dispute with two firms claiming to have provided services to
the Company totaling $242,000. These are unasserted claims that the Company has
not included in expenses or as a liability on its financial statements.
Management does not believe that these amounts are properly due and owing and
intends to vigorously defend its position if lawsuits are filed.
The Company incurred net losses of $705,684, $1,080,885 and $2,206,902 for the
years ended June 30, 1997, 1996 and 1995, respectively. At June 30, 1997 the
Company's current liabilities exceed its current assets by $3,313,260. In order
to retain its right to acquire the Bucaneros property the Company will need to
make timely debt payments (Note 5). Failure to do so may require the Company to
write off approximately $2,000,000 of equity in this asset. The Company is in
the process of completing an acquisition of business assets from Growth
Strategies, Inc. (GSI). These assets are primarily related to the sales,
installation and distribution of satellite dishes and various programming to
residential customers. It will generate cash flow and operating income from this
new venture. The Company has no current revenues, consistent sources of cash
flow or operations. The Company anticipates generating cash flow from
development of productive operations of its proposed asset acquisition and
development for resale of its land located in Campeche, Mexico. Both of these
ventures are expected to require obtaining sources of working capital and
long-term development capital. Completion of the acquisition of the GSI assets
is contingent upon shareholder approval at the next annual meeting scheduled for
December 9, 1997. The Company did produce net cash flow of approximately
$3,450,000 during August 1997 from the sale of its Ensenada project.
Approximately $1,870,000 of these proceeds was used to pay short-term
liabilities. At September 30, 1997 the Company's current liabilities exceed its
current assets by approximately $670,000.
NOTE 14--LONG-TERM NOTES AND ADVANCES RECEIVABLE
In connection with the sale of the Ensenada Project the Company has received a
note receivable in the amount of $1,200,000. This note bears interest at 7.2%
and is payable as $800,000 on January 19, 1998 and $400,000 on July 19, 1998. In
addition to this receivable the Company also has advances $655,525 to GSI as a
loan in anticipation of completion of the proposed merger subject to shareholder
approval at December 9, 1997.
21
<PAGE> 23
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Recent Transactions.
1. Sale to ICTSI. On July 19, 1997, the Company entered into an
agreement with International Container Terminal Services, Inc. ("ICTSI"), a
major Philippine corporation, pursuant to which the Company sold its Mexican
subsidiary, Ensenada Cruiseport Village, S.A. de C.V. ("Cruiseport") to ICTSI.
Cruiseport, in turn, held a 35-year concession to build and operate piers, a
cruiseship terminal, marina and marina village and associated commercial and
tourist development at the Port of Ensenada, Mexico.
The sale price, in the sale to ICTSI, was $5,150,000; $3,950,000 of
which has been received by the Company. The balance is to be paid, $800,000
in January, 1999 and $400,000 in July, 1999, with the latter payment to be
reduced to the extent that Cruiseport suffers any loss as the result of
certain specified contingent liabilities.
The above-described sale was reported by the Company in a Form 8-K
filed on July 30, 1997. Attached to that Form 8-K was a copy of the agreement
between the Company and ICTSI, which is incorporated herein by reference.
Of the sales proceeds which have been received, the Company satisfied
substantially all of the current liabilities of the Company as of June 30,
1997, except for the following: 1) an amount of $1,000,000 which the Company is
obligated to pay, on or before May 24, 1998, pursuant to its contractual right
to acquire the Los
22
<PAGE> 24
Bucaneros property (comprising 3.5 miles of breachfront land in the State of
Campeche, Mexico), if the Company is to perfect and maintain title to this
property; and 2) $121,155 owing to Doggart Trading, Ltd., a substantial
shareholder in the Company, for advances which it has made to the Company for
working capital. These two liabilities, including the Company's contractual
rights and obligations with respect to the Los Bucaneros property, are
discussed in detail in the Company's Form 10-KSB for fiscal 1997.
The liabilities of the Company, as of June 30, 1997, which were
satisfied by the Company from the proceeds of the sale to ICTSI, included
$1,017,430 of advances, including accrued interest, by Mr. Hugh Downey during
fiscal 1997 for capitalized and expensed costs for the Ensenada project (See
the Company's Form 10-KSB for fiscal 1997). The total amount paid to Mr.
Downey, from the proceeds of the sale, which also included repayment of
additional amounts advanced in the first part of fiscal 1998 as well as a
$200,000 fee for making such advances and forebearing in not demanding earlier
payment, was $1,534,200. The Company also utilized $955,000, from the
proceeds of the sale to ICTSI, to satisfy amounts owing to the owners of two
corporations who previously owned the concession rights in the Port of Ensenada
(See Company's Form 10-KSB for fiscal 1997).
2.) Agreement to Acquire Growth Strategies, Inc. On September 29,
1997, the Company entered into an agreement with Park Investments Limited
("Park"), a Liberian corporation with headquarters at 15 Hector Street, Herne
Bay, Auckland, New Zealand,
23
<PAGE> 25
to acquire all of Park's stock in a Nevada corporation by the name of Growth
Strategies, Inc. ("GSI"), whose address is 5300 West Sahara Avenue, Suite 101,
Las Vegas, Nevada 89126.
The agreement is subject to the approval of the shareholders of the
Company. That meeting is scheduled to be held on December 9, 1997.
The sole shareholder of Park, and the President and sole director of
Park and GSI, is David Mackarness, a British citizen resident in Belgium, whose
address is Avenue Walckiers 45, Brussels, Belgium 1160. The Secretary of GSI
is Nigel Spinks, a British solicitor who, prior to June, 1995, was a director
of International Resort Developers, Inc., is currently a director of Langer
Holdings Ltd., a subsidiary of the Company, and has continued to be active in
the negotiation of potential contracts for the Company, inclusive of the
contract between the Company and Park.
GSI had, in turn, in August of 1997, acquired the net assets
utilized in a business conducted by a Nevada corporation named BrightStar
Worldwide Entertainment, Inc. ("BrightStar"). Based upon unaudited figures
supplied to the Company, BrightStar had a stated book value of tangible and
current assets, as of September 30, 1997, in the amount of $313,137 (including
computer equipment and furniture with an approximate book value of $200,000,
and inventory, receivables and other current assets with an approximate book
value of $100,000), offset by current liabilities in the approximately amount
of $50,000. The business of BrightStar had
24
<PAGE> 26
been conducted under the name "AmeriStar Worldwide Entertainment Corporation",
and GSI acquired from BrightStar, as well as the above-stated tangible assets,
the right to utilize this name and various contractual relationships, as
described below.
The business conducted by BrightStar was the distribution of satellite
dishes for capturing television signals, and related video and audio
programming, as well as installation services, to the residential market
throughout the United States, pursuant to a contractual relationship with
EchoStar Communications Corporation ("EchoStar"), a manufacturer and
distributor of satellite dishes and related programming. EchoStar currently
offers, through its network, 170 channels to subscribers to its network. After
March of 1998, when an additional satellite is active, EchoStar will have the
capability of broadcasting 500 channels, and believes that it will be the only
direct broadcast service provider to offer local programming to the largest 40
U.S. cities.
The business of BrightStar also included the sign-up of distributors
to distribute the satellite dishes and related services, and the earning of
sign-up fees from, and over-ride fees on sales by, such distributors. As of
the date of acquisition by the Company of the assets of GSI, there were
approximately 8,500 such distributors.
GSI acquired from BrightStar, in addition to the name "AmeriStar",
BrightStar's contractual relationship with EchoStar and with the distributors
above-described.
25
<PAGE> 27
The President, director and owner of BrightStar, prior to the
acquisition of its assets by GSI, was one Samuel B. Watson of 9412 Highwood
Hill Road, Brentwood, Tennessee. Mr. Watson has agreed to serve as the chief
executive officer of GSI, now re-named AmeriStar Worldwide Entertainment
Corporation ("AmeriStar"), as a subsidiary of the Company, pursuant to an
employment contract cancelable by either party upon twelve months written
notice, and has also agreed to serve as a director of International Resort
Developers, Inc.
The reported revenues of BrightStar, during the eighteen months it was
in business, prior to the time of the sale of its assets to GSI, was
approximately $3,000,000, and its net loss from operations over the previous 12
months approximately $1,000,000. However, management believes, based on
discussions with Mr. Watson, that one of the principal contributors to a poor
bottom line was the fact that BrightStar was not set up to process orders on a
high volume basis. Management hopes to remedy that situation.
Between September 29, 1997 and the current time, the Company has
advanced to GSI $750,000, $400,000 of which was utilized by GSI to repay a
$400,000 note issued by GSI to BrightStar in connection with the acquisition by
GSI of the assets and relationships of BrightStar. The remaining $350,000 has
been used as operating capital by GSI. During October, 1997, AmeriStar
operated at a reported net loss of $162,317. It is anticipated by the Company
that it will be necessary to utilize approximately $300,000 of its additional
capital to support deficit operations during the balance of calendar 1997.
Management is hopeful that GSI will be able to
26
<PAGE> 28
operate on a break-even and then profitable basis during 1998. However, no
representations can be made in said regard.
The agreement between Park and the Company, for the acquisition of the
stock of GSI, is in consideration of the issuance by the Company of 340,000
shares of the Company's common stock to Park, which after issuance will amount
to 15.2% of the enlarged capital of the Company, and 60,000 shares to Samuel B.
Watson, which after issuance will amount to 2.7% of the enlarged capital of the
Company.
In addition to the foregoing payments, the contract between the
Company and Park provides for the further issuance of 2,550 shares to Park and
450 shares to Samuel B. Watson for each $1,000 of after-tax profit earned by
GSI in excess of $1,000,000 during each of the calendar years 1998 and 1999, as
shown in GSI's audited accounts.
GSI had conducted no business prior to its acquisition of the assets
of BrightStar above discussed.
GSI has now changed its name to AmeriStar Worldwide Entertainment
Corporation. Therefore, it will hereafter be referred to as "AmeriStar."
In addition to continuing and intending to expand the business of
AmeriStar, as previously conducted by BrightStar, it is the intention of the
Company to utilize the business of AmeriStar to leverage the Company's Mexican
property interests by utilizing the communications facilities of EchoStar, as
well as the internet, to market residential lots into which the Palmeras and
Irvine parcels
27
<PAGE> 29
of the Company, comprising 8.5 miles of beachfront property, in the State of
Campeche, Mexico, are and will be subdivided. (See Form 10-KSB, accompanying
this Proxy Statement, for a detailed description of the Company's Mexican real
property interests).
The Company, at this time, has marked out 100 lot sites on its
Palmeras and Irvine properties for sale, as well as a hotel site, and is in
negotiation with persons who have expressed an interest in placing hotel or
motel facilities on that site. The Company hopes to be able to beginning
marketing lots before the end of calendar year 1997, if the shareholders of the
Company approve the acquisition of GSI/AmeriStar (see discussion of pending
shareholders' meeting, below).
EchoStar has indicated to the Company that it will permit the Company
to have preferential rates to advertise the lots into which the Irvine and
Palmeras properties are being subdivided, on the EchoStar satellite network, as
well as to undertake other business ventures (discussed below) through the use
of satellite television.
AmeriStar has also entered into a contract with UniDial
Communications, Inc. ("UniDial") of Louisville, Kentucky, which is a nationwide
provider of long-distance telephone services, internet access, multimedia
conference services and data networking. Pursuant to the contract, it is
intended that AmeriStar, as an agent of UniDial, and on a commission basis,
will place these services with small to medium size businesses and residential
customers throughout the United States. AmeriStar intends, in this
28
<PAGE> 30
regard, to utilize its nationwide distributor network acquired from BrightStar.
Through its relationship with UniDial, the Company plans to
advertise its Mexican properties on the World Wide Web. Additionally, through
its relationship with both UniDial and EchoStar, the Company intends to create
a "Shopping Mall" on the internet and satellite television, through which it
intends to market a variety of products and services on behalf of other
companies, as well as promote its Mexican real estate.
AmeriStar has also entered a contract with Enhanced Personal
Communications, Inc. of Atlanta, Georgia, pursuant to which AmeriStar intends
to market "virtual office services," including services to enable small
businesses and residences to install and operate sophisticated computer and
digital systems.
It must be emphasized that except for the marketing of satellite
dishes and related services on behalf of EchoStar, as above described,
AmeriStar has not been actively involved in the above described ventures. No
representations can be made, at this point, as to the profitability of the
businesses to be conducted by AmeriStar.
Prior to entering into its contract with AmeriStar, the Company, on
August 25, 1997, had entered into a previous contract with the shareholders of
a corporation by the name of World Lynx Communications Corporation ("World
Lynx") of 111 Center Street, Little Rock, Arkansas, for the acquisition of all
of the stock of World Lynx. World Lynx had acquired the assets of BrightStar
from
29
<PAGE> 31
GSI, and accordingly GSI was the largest shareholder of World Lynx. World Lynx
was also engaged in other related activities, including internet access and web
site design. After announcing the prospective acquisition through a press
release and the filing of a Form 8-K with respect to the prospective
acquisition, the Company determined, on the basis of its due diligence
investigation, to terminate the transaction, because the assets of World Lynx
were subject to certain liabilities and encumbrances which were not acceptable
to the Company. The various parties to the agreement consented to its
recision. As a result of the recision, GSI reacquired its BrightStar assets,
and Park, as the sole shareholder of GSI, agreed to sell GSI to the Company.
In consideration of Park, as the parent company of GSI,
consenting to GSI's releasing of the Company from its contract with World-Lynx
and consenting to the revised contract, the Company has agreed to pay Park a
royalty of 2 1/2% of net sales revenue of AmeriStar on and after September 1,
1997. This obligation is in addition to the issuance of 400,000 shares by the
Company to Park and Samuel Watson, as above described, and is in addition to
the Company's advance of $400,000 to GSI which has in turn been paid by GSI to
BrightStar for the BrightStar assets, as above-described.
The above-described agreement between the Company and Park, and
between the Company and various persons agreeing to the recision of the
agreement of August 25, 1997 between the Company and the shareholders of World
Lynx Communications Corporation, were
30
<PAGE> 32
attached as Exhibits to the Company's Form 10-KSB for fiscal 1997, and are
incorporated herein by reference.
Results of Operation and Capital Resources.
During the quarter ended September 30, 1997, the Company recognized
revenues from the sale of Ensenada Cruiseport Village, S.A. de C.V. in the
amount of $5,150,000. Cost of revenuers were $3,451,964, inclusive of the
capitalized cost of the Ensenada project at June 30, 1997, together with
additional costs incurred in the September 30, 1997 fiscal quarter with respect
to the Project, including the fee paid to Mr. Downey as consideration for
making the advances for the Ensenada project and forebearing in demanding
earlier repayment of his advances (discussed in Item 1 of "Recent
Transactions," above). After expenses of $58,835, including legal and
accounting expenses of $41,461 and office expenses of $15,374, the net income
of the Company for the quarter was $1,660,436. This compares with a net loss
from continuing operations of $205,293 for the quarter ended September 30,
1996, and a net loss of $705,684 for the fiscal year ended June 30, 1997.
As of September 30, 1997, the total current assets of the Company were
$518,997, compared with $1,176 as of June 30, 1997, and $45,594 at June 30,
1996. The increase in current assets from June 30, 1997 reflects the receipt
by the Company of $3,950,000 in cash proceeds from the sale of its Ensenada
concession, as above described, less the satisfaction of liabilities from that
amount, as described above in item (1) of "Recent Transactions" above, less
31
<PAGE> 33
the advance of $655,525 to Ameristar/GSI as of September 30, 1997 (out of
$750,000 advanced to the date of this filing, as described above in Item 2 of
"Recent Transactions").
The capitalized costs of the Company, associated with its real
property interests, decreased from $6,180,764 at June 30, 1997 to $3,342,062 at
September 30, 1997, reflecting the sale by the Company of its Ensenada project,
which had accounted for $2,838,702 of such capitalized costs as of June 30,
1997. Long-term notes and advances receivable increased from zero, at June 30,
1997, to $1,855,525 at September 30, 1997, reflecting the note payable to the
Company from ICTSI in the amount of $1,200,000, deriving from the sale of the
Ensenada project (discussed above), as well as $655,525 in advances as of
September 30, 1997 to AmeriStar/GSI (as discussed above).
The Company's capitalized resources at September 30, 1997,
attributable to its real property interests, included $3,050,000 as the
Company's acquisition price for its Los Bucaneros Property in Campeche, Mexico,
$80,321 as its acquisition cost of the 8.5 miles of adjoining coastal property
represented by the Company's Palmeras and Irvine parcels, and $211,741 in
additional capitalized costs associated with the Irvine and Palmeras parcels.
(See complete discussion of these real property interests in the Company's Form
10-KSB for fiscal 1997). The acquisition cost of the Palmeras and Irvine
parcels does not reflect the substantially larger appraisals which have been
secured by the Company. (See discussion in Form 10-KSB for fiscal 1997).
Likewise, the book value of the Los
32
<PAGE> 34
Bucaneros Property is related to the value of stock issued by the Company for
the right to acquire the property, and encumbrances burdening the property; and
management does not represent that the current market value of the Los
Bucaneros property equals the stated book value. The capitalized costs of the
Company described above represent assets which are illiquid, and do not
represent currently realizable value.
GSI/Ameristar, to date of the contract between the Company and Park
Investments Limited for the acquisition of the said company, operated at a
substantial net loss. Additionally, it is continuing to operate at a loss, at
the current time (its reported net loss for the month of October being
$162,317). Although management is hopeful that it will be able to operate, in
1998, at on a break-even and then profitable basis, no representations can be
made in that regard. The Company does not have further commitments for
financing or equity sources of capital which would fund continuing deficits,
beyond its current cash resources. Although during the three fiscal years
ended June 30, 1997, and during the first quarter of the current fiscal year,
substantial advances were made to the Company by Doggart Trading, Ltd., various
of its shareholders, and Hugh Downey, to fund operations and capital
expenditures of the Company, there is no intention or probability that such
advances will continue in the future.
Furthermore, the Company's intentions with respect to the preparation
of the Campeche property for sale of individual lots may require in the range
of $1,000,000 of capital; and the payment
33
<PAGE> 35
by the Company of its obligation of $1,000,0000, to complete the purchase of
the Los Bucaneros property, is due May 24, 1998.
In order to partially fulfill its plans and obligations as set forth
in the previous paragraph, the Company is attempting to discount $800,000 of
the $1,200,000 in promissory notes which it has received in connection with the
sale of the Ensenada concession, and has initiated discussions with a banking
institution in said regard. However, no commitments have been received, as of
this date, in said regard, and the Company has not otherwise determined at this
time how it will raise the necessary capital to finance the plans and
obligations discussed in the previous paragraph. The inability of the Company
to meet its obligation with respect to the Los Bucaneros property would result
in the forfeiture of the Company's interest in that land, and the consequent
write-down of the $3,050,000 at which that property has been capitalized on the
books of the Company. The inability of the Company to finance the necessary
development of its Campeche property to permit the sale of individual lots
would result in a delay or abandonment of such plans.
PART II
Item 1. Legal Proceedings.
In the Company's Form 10-KSB for fiscal 1997, the Company reported
that an action has been commenced against the Company, together with certain
former officers and directors, in the Fifteenth Judicial Circuit in Palm Beach,
Florida, by a corporation
34
<PAGE> 36
named Andaurex International Inc., deriving from the alleged failure of the
Company to properly transfer shares, allegedly owned by the plaintiff, into
plaintiff's or its nominee's name. The Court has determined that the Company
was properly served, and the Company will answer the complaint, as required, on
or before November 23, 1997. The Company intends to deny plaintiff's
allegations that plaintiff is entitled to any recovery in the action.
ITEM 5. OTHER INFORMATION.
The Board of Directors has called the Annual Meeting of Shareholders
for December 9, 1997. The Notice of Meeting, together with Proxy Statement and
related materials, will be sent to shareholders on or about November 19, 1997.
A Preliminary Proxy Statement was filed with the Securities and Exchange
Commission on November 7, 1997.
The following are being proposed by Management, for approval by the
shareholders:
1. Election of directors. Five directors are to be elected at the
meeting to serve until the next Annual Meeting of Shareholders, or until their
successors are elected. Management intends to nominate the following five
persons for election as the directors of the Company: Patrick James Magee,
Pieter Gerhard Keyfer Oosthuizen, Patrick Lappin, Samuel B. Watson, and Donald
M. Spears. Messrs. Magee, Oosthuizen and Lappin are currently the only
directors of the Company.
35
<PAGE> 37
2. Change of Domicile and Name. Management proposes to change the
state of incorporation of the Company to the state of Tennessee, and to change
the name of the Company to AmeriStar International Holdings Corporation. The
procedure which will utilized is as follows. The Company has incorporated a
wholly-owned subsidiary in Tennessee, by the name of AmeriStar International
Holdings Corporation. The Company proposes to merge into its subsidiary. If
the merger is consummated, the current assets and business of the Company will
become the assets and business of AmeriStar International Holdings Corporation,
and the shares of the shareholders of the Company will become shares of
AmeriStar International Holdings Corporation, with the same par value and
voting rights, except that cumulative voting for directors will be replaced by
the election of directors through the more traditional method of a plurality of
votes cast.
As the sole current shareholder of its Tennessee subsidiary, AmeriStar
International Holdings Corporation, the Company intends to elect as directors
of AmeriStar International Holdings Corporation, prior to the merger of the
Company into that corporation (if the shareholders approve the merger), the
same directors as have been elected directors of the Company at the Company's
annual meeting of December 9, 1997. These directors will continue to serve as
directors of AmeriStar International Holdings Corporation, after the merger,
until the next annual meeting of that corporation, scheduled to be held within
the first three months of 1999, or until their successors are otherwise
elected.
36
<PAGE> 38
The purpose of the recommended merger is to change the state of
incorporation from Idaho, where the Company maintains no office (other than the
office of a registered agent) or operations, to Tennessee, where the Company
has established its principal executive offices.
3. Management proposes to amend the Articles of Incorporation, in
Idaho, to change the name of the Company to AmeriStar International Holdings
Corporation, in the event that the Agreement and Plan of Merger, discussed in
item (2) above, is not submitted to the shareholders for approval, or having
been submitted, is not approved by the shareholders, or having been approved,
is not consummated for any reason.
4. Management proposes to amend the Articles of Incorporation, in
Idaho, to eliminate the provision of the Articles providing for cumulative
voting for directors, in the event that the Agreement and Plan of Merger,
discussed in item (2) above, is not submitted to the shareholders for approval,
or having been submitted, is not approved by the shareholders, or having been
approved, is not consummated for any reason.
5. Management proposes the approval by the shareholders of the
acquisition by the Company of AmeriStar Worldwide Entertainment Corporation
("AmeriStar"), pursuant to the agreement of September 29, 1997 between the
Company and Park Investments Limited, discussed above in this Form 10-QSB.
Shareholders' approval is not required by Idaho law. However, the directors of
the Company have
37
<PAGE> 39
nevertheless conditioned the consummation of the acquisition on shareholder
approval.
6. Management proposes the appointment of La Voie, Clark, Charvoz &
May, P.C., Tucson, Arizona, as the accountants to audit the financial
statements of the Company (or alternatively AmeriStar International Holdings
Corporation, the Tennessee corporation, if the merger described in item 2 above
is approved) for the fiscal year next ending after June 30, 1997. La Voie,
Clark, Charvoz & May, P.C. have audited the accounts of the Company for the
past four fiscal years.
ITEM 6. EXHIBITS.
The following exhibits are incorporated herein by reference:
1. Stock Purchase Agreement, dated July 19, 1997, between
International Resort Developers, Inc. and ICTSI International Holdings Corp.
(Incorporated by reference from Form 8-K, filed July 30, 1997) (Reg. S-B,
Section 601(b)(10).
2. Agreement dated 29 September, 1997, between International Resort
Developers, Inc., "The WLC Shareholders", Growth Strategies, Inc., Samuel B.
Watson, Park Investments Limited, and Ameristar Worldwide Entertainment
Corporation (Incorporated by reference from Form 10-KSB for fiscal year ended
June 30, 1997) (Reg. S-B, Section 601(b)(10).
3. Agreement dated 29 September, 1997, between Park Investments
Limited and International Resort Developers, Inc.
38
<PAGE> 40
(Incorporated by reference from Form 10-KSB for fiscal year ended June 30, 1997
(Reg S-B, Section 601(b)(10).
The following exhibits are filed herewith:
27. Financial Data Schedule (for SEC use only).
FORMS 8-K
The following Forms 8-K were filed during the quarter:
1. Form 8-K filed on July 30, 1997, reporting the sale by the Company
of Ensenada Cruiseport Village S.A. de C.V. to International Container Terminal
Services, Inc.
2. Form 8-K filed on September 12, 1997, reporting an agreement of
August 25, 1997 between the Company and the sellers of stock of World Lynx
Communications Corp. (This agreement was later superceded by the agreement of
September 29, 1997 between the Company and Park Investments Limited, as
reported in this Form 10-QSB and Form 10-KSB filed for fiscal year 1997).
39
<PAGE> 41
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorizeds.
INTERNATIONAL RESORT DEVELOPERS, INC.
Date: November 18, 1997 By: s/Patrick Magee
Patrick Magee, President
and Chief Financial Officer
40
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 501,417
<SECURITIES> 0
<RECEIVABLES> 17,580
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 518,997
<PP&E> 250,430<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,977,014
<CURRENT-LIABILITIES> 1,188,644
<BONDS> 0
0
0
<COMMON> 4,504,187<F2>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,977,014
<SALES> 5,150,000<F3>
<TOTAL-REVENUES> 5,150,000
<CGS> 3,451,964
<TOTAL-COSTS> 3,451,964
<OTHER-EXPENSES> 56,835
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,660,436
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,660,436
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,660,436
<EPS-PRIMARY> 0.904
<EPS-DILUTED> 0.904
<FN>
<F1>EXCLUSIVE OF LAND, PURCHASE RIGHTS, CONCESSIONS AND RELATED CAPITALIZED COSTS
IN THE AMOUNT OF $3,342,062.
<F2>STATED AND PAID-IN CAPITAL OF $7,659,392, LESS RETAINED DEFICIT OF $3,155,205.
<F3>SALE OF REAL ESTATE CONCESSION AND RELATED REAL ESTATE DEVELOPMENT.
</FN>
</TABLE>
