10-Q 1 g4115a.txt QTRLY REPORT FOR THE QTR ENDED 3-31-10 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, 2010 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 000-144493 WINCHESTER INTERNATIONAL RESORTS INC. (Exact name of registrant as specified in its charter) Nevada N/A (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 61 Cimarron Meadows Cres., Okotoks, Alberta, Canada T1S 1T1 (Address of principal executive offices) (Zip Code) 403.995.4426 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] YES [ ] NO Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act [X] YES [ ] NO APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [ ] YES [ ] NO Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] YES [ ] NO APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 9,021,000 common shares issued and outstanding as of May 7, 2010 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Our unaudited interim financial statements for the nine month period ended March 31, 2010 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) --------------------------------------------------------------------------------

~~December~~March 31, June 30, ~~2009~~2010 2009 --------- --------- (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash $ -- $ 1,062 Land 189,030 -- --------- --------- TOTAL ASSTS $ --189,030 $ 1,062 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ -- $ -- Loans from related party 65133,~~784~~986 47,000 --------- --------- TOTAL CURRENT LIABILITIES 65133,~~784~~986 47,000 --------- --------- STOCKHOLDERS' EQUITY Capital stock Authorized 75,000,000 ordinary voting shares at $0.001 per share Issued and outstanding: 89,~~055~~021,000 common shares at par value 89,~~055~~021 8,055 Additional paid in capital 18733,~~945~~979 18,945 --------- --------- 27743,000 27,000 Deficit accumulated during the exploration stage (92687,~~784~~956) (72,938) --------- --------- TOTAL STOCKHOLDERS' EQUITY ~~(65~~55,~~784)~~044 (45,938) --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ --189,030 $ 1,062 ========= =========

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

Accumulated From ~~Six~~Nine Months ~~Six~~Nine Months Three Months Three Months Inception Date of Ended Ended Ended Ended August 18, 2003 to ~~December~~March 31, ~~December~~March 31, ~~December~~March 31, ~~December~~March 31, ~~December~~March 31, ~~2009~~2010 ~~2008~~ 2009 ~~2008~~2010 2009 2010 ---------- ---------- ---------- ---------- ---------- GENERAL AND ADMINISTRATIVE EXPENSES Bank charges and interest $ 95 $ ~~150~~177 $ -- $ 5227 $ 823 Filing and transfer agent fees 14,~~087~~471 1,~~607~~867 13,~~087~~384 ~~1,152~~260 2023,~~175~~559 Professional fees 32613,~~060~~354 1215,~~420~~405 9581,~~724~~294 52,~~630~~985 69650,~~616~~910 Mineral properties -- -- -- -- 14,500 Office expenses 611,~~477~~621 220 35,~~757~~144 -- 712,~~543~~687 Travel and entertainment 2631,~~065~~415 -- 115,~~284~~350 -- 2631,~~065~~415 Write off loan from related parties (45,938) -- ~~(45,938)~~-- -- (45,938) ---------- ---------- ---------- ---------- ---------- Total general and administrative expenses 19615,~~846~~018 1417,~~397~~669 ~~(20~~595,~~086)~~172 63,~~834~~272 92687,~~784~~956 ---------- ---------- ---------- ---------- ---------- Net loss / (Recovery) $ (19615,~~846~~018) $ (1417,~~397~~669) $ 20(595,~~086~~172) $ (63,~~834~~272) $ (92687,~~784~~956) ========== ========== ========== ========== ========== EARNINGS PER SHARE - BASIC AND DILUTED $ (0.0007) $ (0.00) $ (0.0007) $ (0.00) ========== ========== ========== ========== WEIGHTED AVERAGE OUTSTANDING SHARES 8,~~055~~296,~~000~~500 8,055,000 8,~~055~~296,~~000~~500 8,055,000 ========== ========== ========== ==========

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

Deficit Accumulated Total Price Number of Additional Total During the Stock- Per Common Par Paid-in Capital Exploration holders' Share Shares Value Capital Stock Stage Equity ----- ------ ----- ------- ----- ----- ------ Balance, August 18, 2003 -- $ -- $ -- $ -- $ -- $ -- September 5, 2003 Subscribed for cash $0.001 2,000,000 2,000 -- 2,000 -- 2,000 October 30, 2003 Subscribed for cash $0.001 1,500,000 1,500 -- 1,500 1,500 Comprehensive loss for the period ended June 30, 2004 (80) (80) ----------- -------- -------- -------- --------- -------- Balance, June 30, 2004 3,500,000 3,500 -- 3,500 (80) 3,420 October 4, 2004 Subscribed for cash $0.001 3,000,000 3,000 -- 3,000 3,000 October 27, 2004 Subscribed for cash $0.01 1,050,000 1,050 9,450 10,500 10,500 December 7, 2004 Subscribed for cash $0.01 450,000 450 4,050 4,500 4,500 January 10, 2005 Subscribed for cash $0.1 15,000 15 1,485 1,500 1,500 January 27, 2005 Subscribed for cash $0.1 40,000 40 3,960 4,000 4,000 Net loss (7,547) (7,547) ----------- -------- -------- -------- --------- -------- Balance, June 30, 2005 8,055,000 8,055 18,945 27,000 (7,627) 19,373 Net loss (7,573) (7,573) ----------- -------- -------- -------- --------- -------- Balance, June 30, 2006 8,055,000 8,055 18,945 27,000 (15,200) 11,800 ----------- -------- -------- -------- --------- -------- Net loss (8,409) (8,409) ----------- -------- -------- -------- --------- -------- Balance, June 30, 2007 8,055,000 8,055 18,945 27,000 (23,609) 3,391 Net loss (28,914) (28,914) ----------- -------- -------- -------- --------- -------- Balance, June 30, 2008 8,055,000 $ 8,055 $ 18,945 $ 27,000 $ (52,523) $(25,523) ----------- -------- -------- -------- --------- -------- Net loss (20,415) (20,415) ----------- -------- -------- -------- --------- -------- Balance, June 30, 2009 8,055,000 $ 8,055 $ 18,945 $ 27,000 $ (72,938) $(45,938) ~~-----------~~Subscribed ~~--------~~for ~~--------~~director's ~~--------~~fee ~~---------~~$1.0 ~~--------~~20,000 20 19,980 20,000 20,000 Subscribed for services $1.0 250,000 250 249,750 250,000 250,000 Subscribed for land $1.0 187,000 187 186,813 187,000 196,000 Subscribed for services $1.0 9,000 9 8,991 9,000 Repayment of loan $0.50 500,000 500 249,500 250,000 250,000 Net loss (19615,~~846~~018) (19615,~~846~~018) ----------- -------- -------- -------- --------- -------- Balance, ~~December~~March 31, ~~2009~~2010 89,~~055~~021,000 $ 89,~~055~~021 $ 18733,~~945~~979 $ 27743,000 $ (92687,~~784~~956) $~~(65~~ 55,~~784)~~044 =========== ======== ======== ======== ========= ========

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

Accumulated From ~~Six~~Nine Months ~~Six~~Nine Months ~~Three Months Three Months~~ Inception Date of Ended Ended ~~Ended Ended~~ August 18, 2003 to ~~December~~March 31, ~~December~~March 31, ~~December~~March 31, ~~December~~2010 ~~31, December 31,~~ 2009 ~~2008~~2010 ~~2009 2008 2009~~ -------- -~~-------~~ -------- -~~-------~~ --------- CASH DERIVED FROM (USED FOR) OPERATING ACTIVITIES Net loss for the period $(19615,~~846~~018) $~~(14,397)~~ ~~$ 20,086 $~~ (617,~~834~~669) $(92687,~~784~~956) Write off loan from related parties (45,938) -- (45,938) Shares issued for land 187,000 -- 187,000 Shares issued for services 529,000 -- 529,000 Adjustments to reconcile net loss to net cash ~~Provided~~provided by (used in) operating activities Changes in operating assets and liabilities Accounts payable -- (1,139) -- -- -- -----~~---~~ -------- -~~-------~~ -------- -~~-------~~ Net cash (used in) operating activities ~~(65~~55,~~784)~~044 (1518,~~536~~808) (2517,~~852~~894) ~~(6,834) (92,784)~~ -------- -~~-------~~ -------- -~~-------~~ --------- FINANCING ACTIVITIES Loans from related party 64(54,~~722~~076) 58,~~000~~500 24(9,~~790~~106) ~~5,000 65,784~~ Shares subscribed for cash -- -- ~~-- --~~ 27,000 -------- -~~-------~~ -------- -~~-------~~ --------- Net cash provided by financing activities 64(54,~~722~~076) 58,~~000~~500 2417,~~790~~894 ~~5,000 92,784~~ -------- -~~-------~~ -------- -~~-------~~ --------- INVESTING ACTIVITIES --Land --(2,030) -- -- -- -------- -------- -~~-------~~ -------- -~~-------~~ Net cash used for investing activities --(2,030) -- -- -- -- -----~~---~~ -------- -~~-------~~ -------- -~~-------~~ Cash increase during the period (1,062) (10,~~536~~308) ~~(1,062) (1,834)~~ -- Cash beginning of the period 1,062 10,616 ~~1,062 1,914~~ -- -------- -~~-------~~ -------- -~~-------~~ --------- Cash end of the period $ -- $ 80308 $ -- ~~$ 80 $ --~~ ======== =~~=======~~ ======== =~~=======~~ =========

6 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Notes to Financial Statements March 31, 2010 (An Exploration Stage Company) (Expressed in US Dollars) (Unaudited) -------------------------------------------------------------------------------- 1. NATURE AND CONTINUANCE OF OPERATIONS Winchester International Resorts Inc. ("the Company"), formerly named Sterling Exploration Inc, was incorporated under the laws of State of Nevada, U.S. on August 18, 2003, with an authorized capital of 75,000,000 common shares with a par value of $0.001. The Company's year end is the end of June. These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $687,956 as at March 31, 2010 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 the Financial Accounting Standards Board Statement No. 7, 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, 2010 a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded. BASIC AND DILUTED LOSS PER SHARE The Company computes loss per share in accordance with SFAS No. 128, "Earnings per Share" which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments and accordingly basic loss and diluted loss per share are equal. 7 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Notes to Financial Statements March 31, 2010 (An Exploration Stage Company) (Expressed in US Dollars) (Unaudited) -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) STOCK-BASED COMPENSATION In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment", which replaced SFAS No. 123, "Accounting for Stock-Based Compensation" and superseded APB Opinion No. 25, "Accounting for Stock Issued to Employees". In January 2005, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 107, "Share-Based Payment", which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. SFAS No. 123R was to be effective for interim or annual reporting periods beginning on or after June 15, 2005, but in April 2005 the SEC issued a rule that will permit most registrants to implement SFAS No. 123R at the beginning of their next fiscal year, instead of the next reporting period as required by SFAS No. 123R. The pro-forma disclosures previously permitted under SFAS No. 123 no longer will be an alternative to financial statement recognition. Under SFAS No. 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include prospective and retroactive adoption options. Under the retroactive options, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS No. 123R, while the retroactive methods would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. The Company adopted the modified prospective approach of SFAS No. 123R for the quarter beginning December 1, 2005. The Company did not record any compensation expense for the period ended March 31, 2010 because there were no stock options outstanding prior to the adoption or at March 31, 2010 RECENT ACCOUNTING PRONOUNCEMENTS In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140", to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", to permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the Impairment or Disposal of Long-Lived Assets", to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. This standard is not expected to have a significant effect on the Company's future reported financial position or results of operations. In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year beginning after September 15, 2006. This adoption of this statement is not expected to have a significant effect on the Company's future reported financial position or results of operations. 8 WINCHESTER INTERNATIONAL RESORTS INC. (Formerly named Sterling Exploration Inc.) Notes to Financial Statements March 31, 2010 (An Exploration Stage Company) (Expressed in US Dollars) (Unaudited) -------------------------------------------------------------------------------- 3. MINERAL INTERESTS On January 20, 2005, the Company entered into a mineral property purchase agreement to acquire a 100% interest in one mineral claim located in one mineral claim located in the Scadding Township, Sudbury Mining Division, Ontario for total consideration of $7,000. During the period ended September 30, 2006, exploration cost of $7,500 was incurred for the mineral property. 4. COMMON STOCK The total number of common shares authorized that may be issued by the Company is 75,000,000 shares with a par value of one tenth of one cent ($0.001) per share and no other class of shares is authorized. During the period ended June 30, 2005, the Company issued 8,055,000 shares of common stock for total cash proceeds of $27,000. At December 31, 2009 there were no outstanding stock options or warrants. During the period ended March 31, 2010, the Company issued 187,000 common shares to acquire building lot in Alberta at appraised value of $187,000; issued 500,000 common shares at $0.50 per share in lieu of debt owed to a related party; issued 279,000 common shares at $1.00 per share for services provided. Each common share attaches warrants for the price of $1.00 per unit. Type "A" and "B" warrants are exercisable until December 31, 2011 at the price of $2.50 and $3.00 respectively. 5. INCOME TAXES As of March 31, 2010, the Company had net operating loss carry forwards of approximately $687,956 that may be available to reduce future years' taxable income through 2027. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. 6. CONSULTING AGREEMENT Starting from March 1, 2008, the Company entered into a 2-year Consulting Agreement with Taggart Financial Trading Corp, ("Taggart"). Taggart provides consulting services to assist the Company in connection with certain aspects of the Projects. The Company has paid Taggart the fees of $250,000 during the period ended March 31, 2010. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our unaudited financial statements are stated in United States Dollars (US$) 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 company", mean Winchester International Resorts Inc. a Nevada corporation, unless otherwise indicated. GENERAL OVERVIEW We were incorporated in Nevada on August 18, 2003. To date, we have been a company primarily engaged in the acquisition and exploration of natural resource properties. On January 20, 2005, we purchased the Railway Prospect property in Ontario Canada, consisting of 633 acres, including within 16 unpatented mining claim units, we purchased the property from Pilgrim Creek Mining Ltd. Subsequent to our year ended June 30, 2009, based on information that we had available to us, we determined that the Railway Prospect property did not, in all likelihood, contain a commercially viable mineral deposit. Our management has been analyzing the various alternatives available to our company to ensure our survival and to preserve our shareholder's investment in our common shares. This analysis has included sourcing additional forms of financing to continue our business as is, or mergers and/or acquisitions. At this stage in our operations, we believe either course is acceptable, as our operations have not been profitable and our future prospects for our business are not good without further financing. On August 3, 2009, we presented an offer to purchase a 90% interest in Winchester International Resorts, LLC a Mississippi limited liability company, in order to effect a business combination of our two companies. It is anticipated that the acquisition will be structured as a share exchange, whereby we will purchase 90% of the memberships of Winchester International Resorts, LLC from its members in exchange for shares of our company. Winchester International Resorts, LLC is a company that is currently seeking to acquire lands and/or buildings in Tunica County, Mississippi. 10 The acquisition contemplated by the offer is subject to the fulfillment of certain conditions precedent, due diligence and the negotiation of a definitive agreement. Effective September 9, 2009, we have our name from "Sterling Exploration Inc." to "Winchester International Resorts Inc.", by way of a merger with our wholly owned subsidiary Winchester International Resorts Inc., which was formed solely for the change of name. The name change became effective with the Over-the-Counter Bulletin Board at the opening for trading on September 14, 2009 under the new stock symbol "WNCH". Our CUSIP number is 972817100. Effective March 12, 2010, we entered into an agreement with Auctus Private Equity Fund, LLC to raise up to ten million ($10,000,000) through a drawdown equity financing facility agreement. Under the terms of the agreement Actus has agreed to purchase from our company, up to ten million dollars 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 have agreed to acquire 51% of the issued and outstanding shares of Factory Outlet Trailers's 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, the closing date. Factory Outlet Trailers Inc. is in the trailer dealership business. 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 share purchase. EMPLOYEES Our directors and officers act as employees of our company. We do not anticipate any significant changes in the number of employees during the next 12 months. PURCHASE OF SIGNIFICANT EQUIPMENT We do not anticipate the purchase or sale of any plant or significant equipment during the next 12 months. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2010 AND 2009 The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended March 31, 2010 which are included herein. Our operating results for the three months ended March 31, 2010 and 2009 are summarized as follows: Three Months Ended March 31, 2010 2009 --------- --------- Revenue $ Nil $ Nil Bank charges and interest $ Nil $ 27 Filing and transfer agent fees $ 3,384 $ 260 Professional fees $ 581,294 $ 2,985 Office expenses $ 5,144 $ Nil Travel and entertainment $ 5,350 $ Nil Net Loss / (Recovery) $(595,172) $ (3,272) REVENUES We did not earn any revenues during our three month period ended March 31, 2010. 11 GENERAL AND ADMINISTRATIVE EXPENSES During the three months ended March 31, 2010, our general and administrative expenses increased over the three months ended March 31, 2008, primarily due to an increase in professional fees, filing and transfer agent fees, office expenses and travel and entertainment. NINE MONTHS ENDED MARCH 31, 2010 AND 2009 The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended March 31, 2010 which are included herein. Our operating results for the nine months ended March 31, 2010 and 2009 are summarized as follows: Nine Months Ended March 31, 2010 2009 --------- --------- Revenue $ Nil $ Nil Bank charges and interest $ 95 $ 177 Filing and transfer agent fees $ 4,471 $ 1,867 Professional fees $ 613,354 $ 15,405 Office expenses $ 11,621 $ 5,144 Travel and entertainment $ 31,415 $ 5,350 Write off loan from related parties $ (45,938) $ Nil Net Loss / (Recovery) $(615,018) $ (17,669) REVENUES We have not earned any revenues since our inception and we do not anticipate earning revenues in the near future. GENERAL AND ADMINISTRATIVE EXPENSES During the nine months ended March 31, 2010, our general and administrative expenses increased over the nine months ended March 31, 2009, primarily due to an increase in professional fees, filing and transfer agent fees, office expenses and travel and entertainment. However, during the three months three months ended March 31, 2010, we had a write off from loan related parties of $45,938. LIQUIDITY AND FINANCIAL CONDITION As of March 31, 2010, our total current assets were $189,030 and our total current liabilities were $133,986 and we had a working capital of $55,044. Our financial statements report a net loss of $615,018 for the nine months ended March 31, 2010, and a net loss of $687,956 for the period from August 18, 2003 (date of inception) to March 31, 2010. We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. In this regard we have raised additional capital through equity offerings and loan transactions. CASH FLOWS At At March 31, March 31, 2010 2009 -------- -------- Net Cash (Used in) Operating Activities $ 55,044 $(18,808) Net Cash Used In Investing Activities $ (2,030) $ Nil Net Cash Provided by Financing Activities $(54,076) $ 8,500 INCREASE (DECREASE) IN CASH $ (1,062) $(10,308) 12 We had cash in the amount of $Nil and land in the amount of $189,030 as of March 31, 2010 as compared to $1,062 as of June 30, 2009. We had a working capital of $55,044 as of March 31, 2010 compared to working capital deficit of $45,938 as of June 30, 2008. Our principal sources of funds have been from sales of our common stock. CONTRACTUAL OBLIGATIONS As a "smaller reporting company", we are not required to provide tabular disclosure obligations. INFLATION The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments. OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. APPLICATION OF CRITICAL ACCOUNTING POLICIES Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. . EXPLORATION STAGE COMPANY Pursuant to authoritative accounting pronouncements, our company recognizes its characterization of our company as an exploration stage enterprise. USE OF ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. The carrying value of cash and accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management's opinion our company is not exposed to significant interest, currency or credit risks arising from these financial instruments. INCOME TAXES Our company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At March 31, 2010, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded. 13 BASIC AND DILUTED LOSS PER SHARE Pursuant to authoritative accounting pronouncements, our company computes loss per share which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. Our company has no potential dilutive instruments and accordingly basic loss and diluted loss per share are equal. RECENT ACCOUNTING PRONOUNCEMENTS In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140", to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", to permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the Impairment or Disposal of Long-Lived Assets", to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. This standard is not expected to have a significant effect on the Company's future reported financial position or results of operations. In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year beginning after September 15, 2006. This adoption of this statement is not expected to have a significant effect on the Company's future reported financial position or results of operations. 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 (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure. As of March 31, 2010, the end of our third quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report. 14 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, 2010 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Other than as set out below, our company is not a party to any pending legal proceeding and no legal proceeding is contemplated or threatened as of the date of this quarterly report. ITEM 1A. RISK FACTORS Much of the information included in this quarterly report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections and estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements". BECAUSE OUR AUDITORS HAVE ISSUED A GOING CONCERN OPINION, THERE IS SUBSTANTIAL UNCERTAINTY WE WILL CONTINUE ACTIVITIES IN WHICH CASE YOU COULD LOSE YOUR INVESTMENT. Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. As such we may have to cease activities and you could lose your investment. OUR MANAGEMENT IS CURRENTLY SEEKING OUT POTENTIAL BUSINESS OPPORTUNITIES AND THERE ARE NUMEROUS RISKS ASSOCIATED WITH ANY POTENTIAL BUSINESS OPPORTUNITY. We intend to use reasonable efforts to acquire or complete potential business opportunities that our management determines is in the best interests of our shareholders. Such combinations will be accompanied by risks commonly encountered in acquisitions. Failure to manage and successfully integrate acquisitions we make could harm our business, our strategy and our operating results in a material way. TRADING IN OUR COMMON SHARES ON THE OTC BULLETIN BOARD IS LIMITED AND SPORADIC MAKING IT DIFFICULT FOR OUR SHAREHOLDERS TO SELL THEIR SHARES OR LIQUIDATE THEIR INVESTMENTS. Our common shares are currently listed for public trading on the OTC Bulletin Board. The trading price of our common shares has been subject to wide fluctuations. Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance. 15 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, 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. 16 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 Share Purchase Agreement between the Winchester International Resorts Inc. 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) (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 Ronald L. Marquardt 31.2* Section 302 Certifications under Sarbanes-Oxley Act of 2002 of Andrew Buchholz (32) SECTION 1350 CERTIFICATIONS 32.1* Section 906 Certifications under Sarbanes-Oxley Act of 2002 of Ronald L. Marquardt 32.2* Section 906 Certifications under Sarbanes-Oxley Act of 2002 of Andrew Buchholz ---------- * Filed herewith. 17 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 18, 2010 /s/ Ronald L. Marquardt ----------------------------------------------- Ronald L. Marquardt President, Chief Operating Officer and Director (Principal Executive Officer) Date: February 19, 2010 Date: May 18, 2010 /s/ Andrew Buchholz ----------------------------------------------- Andrew Buchholz Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer) 18

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