UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  
 FORM
10-Q


x
            QUARTERLY REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
      PERIOD ENDED MARCH 31, 2008




o
              TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to.


Commission
File Number: 333-146182




International
Surf Resorts, Inc.


(Exact
name of registrant as specified in its charter)





Nevada
            20-5978559(State
      or other jurisdiction
              of
      incorporation or organization)
            (I.R.S.
      Employer
              Identification
      No.)





1097
      Country Coach Dr., Suite 705, Henderson, Nevada, 89002(Address
      of principal executive offices)





(800)
      315-0045(Issuer’s
      Telephone Number)





Indicate
by check mark whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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. xYes  oNo




Large
      accelerated filer
            o
            Accelerated
      filer
            oNon-accelerated
      filer (Do not check if a smaller reporting company)
            o
            Smaller
      reporting company
            x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). x Yes  oNo





APPLICABLE
ONLY TO CORPORATE ISSUERS




State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practical date.  As of May 13, 2008, there were
3,769,800shares
of the issuer’s $.001 par value common stock issued and
outstanding.




1




PART
I - FINANCIAL INFORMATION





Item 1.  Financial
Statements




INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
BALANCE SHEETS
 
 ASSETS
 
 March
      31,
              
              
              December
      31,2008
              
              
              2007(Unaudited)Current
      assetsCash
              
              $
              94,550
              
              
              $
              109,846Prepaid
      expenses
              
              
              5,400
              
              
              
              -Total
      current assets
              
              
              99,950
              
              
              
              109,846Property
      and equipment, net ofaccumulated
      depreciation
              
              
              984
              
              
              
              -Investment
      in real property
              
              
              61,335
              
              
              
              61,335Total
      assets
              
              $
              162,269
              
              
              $
              171,181
 LIABILITIES AND STOCKHOLDERS’
      EQUITYCurrent
      liabilitiesAccounts
      payable and accrued expenses
              
              $
              36,160
              
              
              $
              24,051Total
      current liabilities
              
              
              36,160
              
              
              
              24,051Minority
      interest in subsidiary
              
              
              (1,063
              )
              
              
              (700
              )Stockholders’
      equityCommon
      stock, $.001 par value; 100,000,000shares
      authorized, 3,769,800 shares issuedand
      outstanding as of March 31, 2008 andDecember
      31, 2007
              
              
              3,770
              
              
              
              3,770Additional
      paid-in capital
              
              
              206,080
              
              
              
              205,630Deficit
      accumulated during the development stage
              
              
              (82,678
              )
              
              
              (61,570
              )Total
      stockholders’ equity
              
              
              127,172
              
              
              
              147,830Total
      liabilities and stockholders’ equity
              
              $
              162,269
              
              
              $
              171,181
   See
accompanying notes to unaudited consolidated financial statements.
  
 2
  INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (Unaudited)
 Inception(December
      4,2006)
      toThree
      Months Ended March 31,
              
              
              March
      31,2008
              
              
              2007
              
              
              2008Net
      revenue
              
              $
              -
              
              
              $
              -
              
              
              $
              -Operating
      expensesLegal
      and professional fees
              
              
              20,180
              
              
              
              3,000
              
              
              
              69,928Dues
      and fees
              
              
              737
              
              
              
              -
              
              
              
              6,628Rent
              
              
              450
              
              
              
              450
              
              
              
              2,400Organization
      costs
              
              
              -
              
              
              
              -
              
              
              
              2,140General
      and administrative
              
              
              850
              
              
              
              1,141
              
              
              
              4,995Total
      operating expenses
              
              
              22,217
              
              
              
              4,591
              
              
              
              86,091Other
      income (expense), net
              
              
              746
              
              
              
              (1,814
              )
              
              
              2,350Net
      loss before minority interest
              
              
              (21,471
              )
              
              
              (6,405
              )
              
              
              (83,741
              )Minority
      interest in subsidiary
              
              
              363
              
              
              
              -
              
              
              
              1,063Net
      loss
              
              $
              (21,108
              )
              
              $
              (6,405
              )
              
              $
              (82,678
              )Net
      loss per common share – basic and diluted
              
              $
              (.01
              )
              
              $
              -
              
              
              $
              (.02
              )Weighted
      average of common shares – basic and diluted
              
              
              3,769,800
              
              
              
              3,000,000
              
              
              
              3,471,275
   See
accompanying notes to unaudited consolidated financial statements.
  3
  INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
 FOR
THE PERIOD FROM INCEPTION (DECEMBER 4, 2006) THROUGH MARCH 31, 2008
 DeficitAccumulatedCommon
      Stock
              
              
              Additional
              
              
              During
              
              TotalNumber
      of Shares
              
              
              Amount
              
              
              Paid-In
                Capital
              
              
              Development
                Stage
              
              Stockholders’
      EquityBalance,
      December 4, 2006
              
              
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Issuance
      of common stock,December
      5, 2006
              
              
              3,000,000
              
              
              
              3,000
              
              
              
              12,000
              
              
              
              -
              
              
              
              15,000Additional
      paid-in capital in exchange forfacilities
      provided by related party
              
              
              -
              
              
              
              -
              
              
              
              150
              
              
              
              -
              
              
              
              150Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,847
              )
              
              
              (2,847
              )Balance,
      December 31, 2006 (Audited)
              
              
              3,000,000
              
              
              
              3,000
              
              
              
              12,150
              
              
              
              (2,847
              )
              
              
              12,303Notes
      payable conversion, May 3, 2007
              
              
              240,000
              
              
              
              240
              
              
              
              59,760
              
              
              
              -
              
              
              
              60,000Issuance
      of common stock, June 30, 2007
              
              
              529,800
              
              
              
              530
              
              
              
              131,920
              
              
              
              -
              
              
              
              132,450Additional
      paid-in capital in exchange forfacilities
      provided by related party
              
              
              -
              
              
              
              -
              
              
              
              1,800
              
              
              
              -
              
              
              
              1,800
 
  See
accompanying notes to unaudited consolidated financial statements.
  4


INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
 FOR
THE PERIOD FROM INCEPTION (DECEMBER 4, 2006) THROUGH MARCH 31, 2008
 DeficitAccumulatedCommon
      Stock
              
              
              Additional
              
              
              During
              
              TotalNumber
      of
                Shares
              
              
              Amount
              
              
              Paid-In
                Capital
              
              
              Development
                Stage
              
              Stockholders’
      EquityNet
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (58,723
              )
              
              
              (58,723
              )Balance,
      December 31, 2007 (Audited)
              
              
              3,769,800
              
              
              
              3,770
              
              
              
              205,630
              
              
              
              (61,570
              )
              
              
              147,830Additional
      paid-in capital in exchange forfacilities
      provided by related party
              
              
              -
              
              
              
              -
              
              
              
              450
              
              
              
              -
              
              
              
              450Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (21,108
              )
              
              
              (21,108
              )Balance,
      March 31, 2008  (Unaudited)
              
              
              3,769,800
              
              
              $
              3,770
              
              
              $
              206,080
              
              
              $
              (82,678
              )
              
              $
              127,172
   See
accompanying notes to unaudited consolidated financial statements.
  5
  INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited)
 Inception(December
      4,Three
      Months Ended March 31,
              
              
              2006)
      toMarch
      31,2008
              
              
              2007
              
              
              2008Cash
      flows from operating activitiesNet
      loss
              
              $
              (21,108
              )
              
              $
              (6,405
              )
              
              $
              (82,678
              )Adjustments
      to reconcile net loss to net cashprovided
      by (used in) operating activitiesAdditional paid-in capital in exchange forfacilities provided by related party
              
              
              450
              
              
              
              450
              
              
              
              2,400Depreciation
              
              
              28
              
              
              
              -
              
              
              
              28Changes
      in operating assets and liabilitiesIncrease
      in prepaid expenses
              
              
              (5,400
              )
              
              
              -
              
              
              
              (5,400
              )Increase
      in accounts payable and accrued expenses
              
              
              12,109
              
              
              
              1,292
              
              
              
              36,160Net
      cash used in operating activities
              
              
              (13,921
              )
              
              
              (4,663
              )
              
              
              (49,490
              )Cash
      flows from investing activitiesPurchase
      of fixed assets
              
              
              (1,012
              )
              
              
              -
              
              
              
              (1,012
              )Investment
      in real property
              
              
              -
              
              
              
              -
              
              
              
              (61,335
              )Minority
      investment in subsidiary
              
              
              (363
              )
              
              
              -
              
              
              
              (1,063
              )Net
      cash used in investing activities
              
              
              (1,375
              )
              
              
              -
              
              
              
              (63,410
              )Cash
      flows from financing activitiesProceeds
      from issuance of common stock
              
              
              -
              
              
              
              -
              
              
              
              147,450Net
      proceeds/(payments) from stockholder loans
              
              
              -
              
              
              
              20,000
              
              
              
              60,000Net
      cash provided by financing activities
              
              
              -
              
              
              
              -
              
              
              
              207,450Net
      (decrease) increase in cash
              
              
              (15,296
              )
              
              
              15,337
              
              
              
              94,550Cash,
      beginning of period
              
              
              109,846
              
              
              
              46,097
              
              
              
              -Cash,
      end of period
              
              $
              94,550
              
              
              $
              61,434
              
              
              $
              94,550
   See
accompanying notes to unaudited consolidated financial
statements.
  6
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited)
  Inception(December
      4,2006)
      toThree
      Months Ended March 31,
              
              
              March
      31,2008
              
              
              2007
              
              
              2008Supplemental
      disclosure of cash flow informationIncome
      taxes paid
              
              $
              -
              
              
              $
              -
              
              
              $
              -Interest
      paid
              
              $
              -
              
              
              $
              -
              
              
              $
              -Conversion
      of notes payable into common stock
              
              $
              60,000
              
              
              $
              60,000
              
              
              $
              60,000
   See
accompanying notes to unaudited consolidated financial statements.
  7
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
   1.
              NATURE OF OPERATIONS
      AND SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES
 
 Organization and Nature of
Operations
 
 International
Surf Resorts, Inc. (the Company) is currently a development stage company under
the provisions of Statement of Financial Accounting Standards (SFAS) No. 7 “Accounting and Reporting by
Development Stage Enterprises”,and was incorporated under the laws of
the State of Nevada on December 4, 2006.  From inception (December 4,
2006) through March 31, 2008, the Company has produced no revenues and will
continue to report as a development stage company until significant revenues are
produced.
 
 The
Company is an Internet based provider of international surf resorts, camps, and
guided surf tours. The Company also intends to operate a surf camp in San
Juanico, Baja California Sur, Mexico on 2.5 acres of land that it owns
there.
 
 On
February 19, 2007, the Company formed ISR de Mexico, a Mexican corporation, for
the purpose of acquiring real estate in Mexico.  At March 31, 2008,
the Company owned 55% of ISR de Mexico.  The remaining 45% interest is
owned by related parties.
 
 Basis of
Presentation
 
 The
unaudited financial statements included herein have been prepared in conformity
with accounting principles generally accepted in the United States for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission.  They do not include all information
and notes required by generally accepted accounting principles for complete
financial statements. However, except as disclosed herein, there has been no
material changes in the information disclosed in the notes to the financial
statements included in the Company’s annual report on Form 10-KSB of
International Surf Resorts, Inc. for the year ended December 31, 2007. In the
opinion of management, all adjustments (including normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 2008, are not necessarily
indicative of the results that may be expected for any other interim period or
the entire year. For further information, these unaudited financial statements
and the related notes should be read in conjunction with the Company’s audited
financial statements for the year ended December 31, 2007, included in the
Company’s annual report on Form 10-KSB.
  8
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
  1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of International Surf
Resorts, Inc. and its 55% owned subsidiary, ISR de Mexico.  All
inter-company accounts and transactions have been eliminated in consolidation
and minority interests were accounted for in the consolidated statements of
operations and the balance sheets.
 
 Minority
Interest
 
 The
Company’s percentage of controlling interest requires that operations be
included in the consolidated financial statements. The percentage of equity
interest that is not owned by the Company is shown as “Minority interest in
subsidiary” in the consolidated balance sheets and consolidated statements of
operations.
  Use of
Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 reported periods.  Actual results could materially differ
from those estimates.
 
 Cash and Cash
Equivalents
 
 For
purposes of the balance sheet and statement of cash flows, the Company considers
all highly liquid debt instruments purchased with maturity of three months or
less to be cash equivalents.
 
 Fair Value of Financial
Instruments
 
 Pursuant
to SFAS No. 107, “Disclosures
About Fair Value of Financial Instruments”, the Company is required to
estimate the fair value of all financial instruments included on its balance
sheet.  The carrying value of cash, prepaid expenses, accounts payable
and accrued expenses approximate their fair value due to the short period to
maturity of these instruments.
  9
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 
 1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Property and
Equipment
 
 Property
and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are calculated using the straight-line method and
with useful lives used in computing depreciation ranging from 3 to 5
years.  When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Expenditures for maintenance and repairs are charged to operations as incurred;
additions, renewals and betterments are capitalized.
 
 Long-Lived
Assets
 
 The
Company accounts for its long-lived assets in accordance with SFAS No. 144,
"Accounting for the Impairment
or Disposal of Long-Lived Assets." SFAS No. 144 requires that long-lived
assets be reviewed for impairment whenever events or changes in circumstances
indicate that the historical cost carrying value of an asset may no longer be
appropriate. The Company assesses recoverability of the carrying value of an
asset by estimating the future net cash flows expected to result from the asset,
including eventual disposition. If the future net cash flows are less than the
carrying value of the asset, an impairment loss is recorded equal to the
difference between the asset's carrying value and fair value or disposable
value. As of March 31, 2008, the Company did not deem any of its long-term
assets to be impaired.
 
 Income
Taxes
 
 The
Company accounts for income taxes under SFAS 109, “Accounting for Income
Taxes”.  Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.  Under
SFAS 109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period the enactment occurs.  The
components of the deferred tax assets and liabilities are classified as current
and non-current based on their characteristics.  A valuation allowance
is provided for certain deferred tax assets if it is more likely than not that
the Company will not realize tax assets through future operations.
  10
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Comprehensive Income
(Loss)
 
 The
Company applies Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive
Income” (SFAS 130).  SFAS 130 establishes standards for the
reporting and display of comprehensive income or loss, requiring its components
to be reported in a financial statement that is displayed with the same
prominence as other financial statements.  For the three months ended
March 31, 2008 and 2007 and for the period from inception (December 4, 2006)
through March 31, 2008, the Company had no other components of comprehensive
loss other than net loss as reported on the statements of
operations.
 
 Segment
Reporting
 
 Pursuant
to Financial Accounting Standards No. 131, “Disclosures about Segments of an
Enterprise and Related Information,” (“SFAS No. 131”), the Company is required
to disclose certain disclosures of operating segments, as defined in SFAS No.
131. Management has determined that the Company has only one operating segment
and therefore does not disclose operating segment information.
 
 Basic and Diluted Income
(Loss) Per Share
 
 In
accordance with SFAS No. 128, “Earnings Per Share”, basic
income (loss) per common share is computed by dividing net income (loss)
available to common stockholders by the weighted average number of common shares
outstanding.  Diluted income (loss) per common share is computed
similar to basic income per common share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive.  As of March 31, 2008 and 2007, the
Company did not have any equity or debt instruments outstanding that could be
converted into common stock.
  11
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES
 
 Recent Accounting
Pronouncements
 
 In
December 2007, the EITF of the FASB reached a consensus on Issue
No. 07-1, Accounting for
Collaborative Arrangements(EITF 07-1). The EITF concluded on the
definition of a collaborative arrangement and that revenues and costs incurred
with third parties in connection with collaborative arrangements would be
presented gross or net based on the criteria in EITF 99-19 and other accounting
literature. Based on the nature of the arrangement, payments to or from
collaborators would be evaluated and its terms, the nature of the entity’s
business, and whether those payments are within the scope of other accounting
literature would be presented. Companies are also required to disclose the
nature and purpose of collaborative arrangements along with the accounting
policies and the classification and amounts of significant financial-statement
amounts related to the arrangements. Activities in the arrangement conducted in
a separate legal entity should be accounted for under other accounting
literature; however required disclosure under EITF 07-1 applies to the entire
collaborative agreement. This Issue is effective for financial statements issued
for fiscal years beginning after December 15, 2008, and interim periods
within those fiscal years, and is to be applied retrospectively to all periods
presented for all collaborative arrangements existing as of the effective date.
We do not expect this will have a significant impact on our financial
statements.
 
 In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations(SFAS
No. 141(R)), which replaces SFAS No. 141, Business Combinations,
requires an acquirer to recognize the assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree at the acquisition date,
measured at their fair values as of that date, with limited exceptions. This
Statement also requires the acquirer in a business combination achieved in
stages to recognize the identifiable assets and liabilities, as well as the
non-controlling interest in the acquiree, at the full amounts of their fair
values.
  12
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Recent
Accounting Pronouncements (Continued)
 
 SFAS
No. 141(R) makes various other amendments to authoritative literature
intended to provide additional guidance or to confirm the guidance in that
literature to that provided in this Statement. This Statement applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. We do not expect this will have a significant impact on
our financial statements.
 
 In
December 2007, FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements(SFAS No. 160), which amends
Accounting Research Bulletin No. 51, Consolidated Financial
Statements, to improve the relevance, comparability, and transparency of
the financial information that a reporting entity provides in its consolidated
financial statements. SFAS No. 160 establishes accounting and reporting
standards that require the ownership interests in subsidiaries not held by the
parent to be clearly identified, labeled and presented in the consolidated
statement of financial position within equity, but separate from the parent’s
equity. This statement also requires the amount of consolidated net income
attributable to the parent and to the non-controlling interest to be clearly
identified and presented on the face of the consolidated statement of income.
Changes in a parent’s ownership interest while the parent retains its
controlling financial interest must be accounted for consistently, and when a
subsidiary is deconsolidated, any retained non-controlling equity investment in
the former subsidiary must be initially measured at fair value. The gain or loss
on the deconsolidation of the subsidiary is measured using the fair value of any
non-controlling equity investment. The Statement also requires entities to
provide sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the non-controlling owners. This
Statement applies prospectively to all entities that prepare consolidated
financial statements and applies prospectively for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008.
We do not expect this will have a significant impact on our financial
statements.
  13
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Recent
Accounting Pronouncements (Continued)
 
 In
June 2007, the EITF of the FASB reached a consensus on Issue No. 07-3,
Accounting for Nonrefundable
Advance Payments for Goods or Services Received for Use in Future Research and
Development Activities(EITF 07-3). EITF 07-3 requires that
non-refundable advance payments for goods or services that will be used or
rendered for future research and development activities should be deferred and
capitalized. As the related goods are delivered or the services are performed,
or when the goods or services are no longer expected to be provided, the
deferred amounts would be recognized as an expense. This Issue is effective for
financial statements issued for fiscal years beginning after December 15,
2007 and earlier application is not permitted. This consensus is to be applied
prospectively for new contracts entered into on or after the effective date. The
pronouncement is not expected to have a material effect on our financial
statements.
 
 In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement
No. 115(SFAS No. 159), which is effective for fiscal years
beginning after November 15, 2007. SFAS No. 159 permits the Company to
choose to measure many financial instruments and certain other items at fair
value. The objective is to improve financial reporting by providing entities
with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. SFAS No. 159 is expected to expand the
use of fair value measurement, which is consistent with the FASB’s long-term
measurement objectives for accounting for financial instruments. SFAS
No. 159 is effective for fiscal year 2008 but early adoption is permitted.
The Company did not elect the Fair Value Option for any of its financial assets
or liabilities, and therefore, the adoption of FAS 159 had no impact on the
Company’s consolidated financial position, results of operations or cash
flows.
 
 In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS
No. 157). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value and enhances disclosures about fair value measures required
under other accounting pronouncements, but does not change existing guidance as
to whether or not an instrument is carried at fair value. The provisions of SFAS
No. 157 were adopted January 1, 2008.
  14
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 
 1.           NATURE OF
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 Recent
Accounting Pronouncements (Continued)
 
 In
February 2008, the FASB staff issued Staff Position No. 157-2 “Effective
Date of FASB Statement No. 157” (FSP FAS 157-2). FSP FAS 157-2 delayed the
effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities,
except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). The provisions of FSP FAS
157-2 are effective for the Company’s fiscal year beginning January 1,
2009.
 
 SFAS No.
157 establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value hierarchy
under SFAS No. 157 are described below:
  Level
      1
              Unadjusted
      quoted prices in active markets that are accessible at the measurement
      date for identical, unrestricted assets or
  liabilities;
  Level
      2
              Quoted
      prices in markets that are not active, or inputs that are observable,
      either directly or indirectly, for substantially the full term of the
      asset or liability;
  Level
      3
              Prices
      or valuation techniques that require inputs that are both significant to
      the fair value measurement and unobservable (supported by little or no
      market activity).
  The
Company had no financial assetsand liabilities measured
at fair value by level within the fair value hierarchy as of March 31,
2008.
  15
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 
 2.
              GOING
      CONCERN
 
 As shown
in the accompanying financial statements, the Company has incurred a net
operating loss of $82,678 from inception (December 4, 2006) through March 31,
2008.
 
 The
Company is subject to those risks associated with development stage
companies.  The Company has sustained losses since inception and
additional debt or equity financing may be required by the Company to fund its
development activities and to support operations.  However, there is
no assurance that the Company will be able to obtain additional
financing.  Furthermore, there is no assurance that rapid
technological changes, changing customer needs and evolving industry standards
will enable the Company to introduce new services on a continual and timely
basis so that profitable operations can be attained.
  3.
              CONCENTRATION OF
      CREDIT RISK
   
 4.
              PROPERTY AND
      EQUIPMENT
 
 Property
and equipment at March 31, 2008, and December 31, 2007, consists of the
following:
 
 March
      31,
              
              December
      31,2008
              
              2007Computer
      equipment
              
              $
              1,012
              
              
              $
              -1,012
              
              
              
              -Less:
      accumulated depreciation
              
              
              (28
              )
              
              
              -Total
      property and equipment
              
              $
              984
              
              
              $
              -
  Depreciation
expense for the three months ended March 31, 2008 amounted to $28.
  16
  INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 5.
              INVESTMENT IN REAL
      PROPERTY
 
 In
December 2006, the Company acquired real property in Mexico for $57,500 to
develop and potentially operate as a surf camp.  During the three
months ended March 31, 2007, the Company incurred additional costs of $3,835
related to the transfer of the property to the Company’s 55% owned subsidiary,
ISR de Mexico.
 
 6.
              NOTES PAYABLE -
      STOCKHOLDERS
 
 On
December 5, 2006, the Company entered into a promissory note agreement with a
shareholder to obtain a loan for $70,000. Under the terms of the promissory note
agreement, the principal together with interest at 8% per annum, was to be
repaid in one lump sum on March 5, 2007, but could be prepaid without any
penalty. On March 21, 2007, under the terms of the promissory note agreement,
the shareholder elected to convert $20,000 of the note payable balance into
80,000 shares of the Company’s common stock at a conversion rate of $0.25 per
share.  In addition, the shareholder agreed to forgive accrued
interest on the note totaling $1,626.  The remaining note payable
balance of $50,000 was repaid to the shareholder on April 4, 2007.
 
 On
December 13, 2006, the Company entered into a promissory note agreement with a
shareholder to obtain a loan for $20,000.  Under the terms of the
promissory note agreement, the principal, together with interest at 8% per
annum, was to be repaid in one lump sum on March 13, 2007, but could be prepaid
without any penalty.  On March 21, 2007, under the terms of the
promissory note agreement, the shareholder elected to convert the $20,000 note
payable balance into 80,000 shares of the Company’s common stock at a conversion
rate of $0.25 per share.  In addition, the shareholder agreed to
forgive accrued interest on the note totaling $430.
 
 On
December 13, 2006, the Company entered into a promissory note agreement with the
Company’s president and shareholder to obtain a loan for
$20,000.  Under the terms of the promissory note agreement, the
principal, together with interest at 8% per annum, was to be repaid in one lump
sum on March 13, 2007, but could be prepaid without any penalty. On March 21,
2007, under the terms of the promissory note agreement, the shareholder elected
to convert the $20,000 note payable balance into 80,000 shares of the Company’s
common stock at a conversion rate of $0.25 per share.  In addition,
the shareholder agreed to forgive accrued interest on the note totaling
$256.
  17
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 7.
              ACCRUED
      EXPENSES
 
 Accrued Wages and
Compensated Absences
 
 The
Company currently does not have any employees.  The majority of
development costs and services have been provided to the Company by the founders
and outside, third-party vendors.  As such, there is no accrual for
wages or compensated absences as of March 31, 2008 and 2007.
 
 8.
              COMMON
      STOCK
 
 The
Company is authorized to issue up to 50,000,000 shares of $0.001 par value
common stock and 5,000,000 shares of $0.001 par value preferred
stock.  Each share of common stock shall entitle the holder to one
vote, in person or by proxy, on any matter on which action of the stockholders
of this corporation is sought.  The holders of shares of preferred
stock shall have no right to vote such shares, with certain exceptions as
determined by the Board of Directors of this corporation or as otherwise
provided by the Nevada General Corporation Law, as amended from time to
time.
 
 On
December 5, 2006, the Company issued 3,000,000 shares of its common stock to its
founders at $.005 per share for a total of $15,000.
 
 On May 3,
2007, the Company issued 240,000 shares of its common stock for the conversion
of notes payable in the amount of $60,000.
 
 In June
2007, the Company performed a private placement and issued 529,800 shares of its
common stock at $0.25 per share for a total of $132,450.
 
 In
September 2007, the Company submitted its Registration Statement on Form SB-2
for the registration of 489,800 shares of its outstanding common
stock.  On October 4, 2007, the Company’s registration statement was
declared effective by the Securities and Exchange Commission.
 
 9.
              PROVISION FOR INCOME
      TAXES
 
 As of
March 31, 2008, the Company reported an estimated federal net operating loss
carryforward of approximately $80,000 which can be used to offset future federal
income tax.  The federal net operating loss carryforward expires in
2028.  Deferred tax assets resulting from the net operating losses are
reduced by a valuation allowance, when, in the opinion of management,
utilization is not reasonably assured.
  18
 INTERNATIONAL
SURF RESORTS, INC. AND SUBSIDIARY
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2008 AND 2007
 (Unaudited)
 9.
              PROVISION
      FOR INCOME TAXES(Continued)
 
 As of
March 31, 2008, the Company had the following deferred tax assets that related
to its net operating losses. A 100% valuation allowance has been established; as
management believes it more likely than not that the deferred tax assets will
not be realized:
 
 Federal
      loss carryforward (@ 25%)
              
              $
              20,000Less:
      valuation allowance
              
              
              (20,000
              )Net
      deferred tax asset
              
              $
              -
 
 The
Company’s valuation allowance increased by approximately $10,250 for three
months ended March 31, 2008.
  10.
              RELATED PARTY
      TRANSACTIONS
 
 From the
Company’s inception (December 4, 2006) through March 31, 2008, the Company
utilized office space of a director of the Company at no charge.  The
Company treated the usage of the office space as additional paid-in capital and
charged the estimated fair value rent of $150 per month to
operations.  The Company recorded total rent expense of $450 for the
three months ended March 31, 2008 and 2007, respectively.


19




Item 2.  Plan of
Operation





This
following information specifies certain forward-looking statements of management
of the company. Forward-looking statements are statements that estimate the
happening of future events and are not based on historical fact. Forward-looking
statements may be identified by the use of forward-looking terminology, such as
“may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”,
“probable”, “possible”, “should”, “continue”, or similar terms, variations of
those terms or the negative of those terms. The forward-looking statements
specified in the following information have been compiled by our management on
the basis of assumptions made by management and considered by management to be
reasonable. Our future operating results, however, are impossible to predict and
no representation, guaranty, or warranty is to be inferred from those
forward-looking statements.





The
assumptions used for purposes of the forward-looking statements specified in the
following information represent estimates of future events and are subject to
uncertainty as to possible changes in economic, legislative, industry, and other
circumstances. As a result, the identification and interpretation of data and
other information and their use in developing and selecting assumptions from and
among reasonable alternatives require the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially from
anticipated or projected results, and, accordingly, no opinion is expressed on
the achievability of those forward-looking statements. We cannot guaranty that
any of the assumptions relating to the forward-looking statements specified in
the following information are accurate, and we assume no obligation to update
any such forward-looking statements.





Critical Accounting Policies and
Estimates.Our Management’s Discussion and Analysis of Financial
Condition and Results of Operations section discusses our financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. On an on-going basis, management evaluates its estimates and
judgments, including those related to revenue recognition, accrued expenses,
financing operations, and contingencies and litigation. Management bases its
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. The most
significant accounting estimates inherent in the preparation of our financial
statements include estimates as to the appropriate carrying value of certain
assets and liabilities which are not readily apparent from other
sources.





These
accounting policies are described at relevant sections in this discussion and
analysis and in the notes to the financial statements included in our Quarterly
Report on Form 10-Q for the period ended March 31, 2008.





Liquidity and Capital
Resources. We had cash of $94,550 and prepaid expenses of $5,400 as of
March 31, 2008.   Our total current assets were
$99,950.  As of March 31, 2008, our investment in real property was
$61,335.  That, along with $984 in property and equipment, net of
accumulated depreciation, equaled our total assets of $162,269.  We
expect that we will incur expense related to our president traveling to the
property located in San Juanico, Baja California, Mexico, as well as
professional fees to determine feasibility of potential uses of that
property.  As of March 31, 2008, our total liabilities were $36,160,
all of which was represented by accounts payable.  We also had $1,063
representing a minority interest in a subsidiary.




20





During
2008, we anticipate that we will incur significant accounting costs associated
with the audit and review of our financial statements. We expect that the legal
and accounting costs of being a public company will continue to impact our
liquidity and we may need to obtain funds to pay those expenses. Other than the
anticipated increases in legal and accounting costs due to the reporting
requirements of being a reporting company and those anticipated costs related to
our real property as specified above, we are not aware of any other known
trends, events or uncertainties, which may affect our future liquidity. We had
no long term liabilities, commitments or contingencies.





In
September 2007, we filed a Registration Statement on Form SB-2 for the
registration of 489,800 shares of our outstanding common stock.  On
October 4, 2007, our registration statement was declared effective by the
Securities and Exchange Commission.  The purpose of the SB-2 was to
register shares of common stock held by our existing shareholders.




For the three months ended
March 31, 2008 as compared to the three months ended March 31,
2007.





Results of
Operations.





Revenues.We had no
revenue for the three months ended March 31, 2008 as compared to the three
months ended March 31, 2007.





Operating Expenses and Net Loss.Our total operating expenses for the three months ended March 31, 2008
was $22,217.  This was comprised of legal and professional fees of
$20,180, rent of $450 and general and administrative expenses of $850, and dues
and fees of $737.  With other income of $746, our net loss before
minority interest in our subsidiary was $21,471, and after $363 in the minority
interest in our subsidiary, our net loss was $21,108.   This is in
comparison to the three months ended March 31, 2007, during which we had total
operating expenses of $4,591, comprised of rent of $450, legal and professional
fees of $3,000, and general and administrative expenses of
$1,141.  After other expenses of $1,814, our net loss was
$6,405.





Our Plan of Operation for the Next
Twelve Months.  To effectuate our business plan during the next
twelve months, we must determine the feasibility of building surf casas, or
vacation rentals, for our property located in San Juanico, Baja California,
Mexico.  We are currently assessing the feasibility of building surf casas
and also the feasibility of sub-dividing our parcel into smaller parcels and
selling them as we believe that we can sell the smaller lots at a significant
gain on our cost. We also may build on the subdivided lots and offer the surf
casas for sale as a finished product. In order to properly determine the
feasibility of those projects, our president Eduardo Biancardi intends to travel
to the property and has explored living in San Juanico for a period of time. We
also intend to look for opportunities to work with other companies that will
assist us in our development of the property. In addition, during the next
twelve months, we must continue to develop our website and begin to attract
customers to our privately-guided surf adventures.





During
the next
three to six months, our primary objective is to complete our
assessment of the opportunities for the property located in San Juanico, Baja
California, Mexico, and complete development of our website. During the next six
to twelve months, we hope to raise additional funds so that we can expand our
product offerings and begin generating revenues. We believe that we will need to
spend approximately $5,000 to complete the development of website. In order to
market and promote our services and develop our property in San Juanico, Baja
California, Mexico, we will need to raise additional capital. Our failure to
market and promote our services will hinder our ability to increase the size of
our operations and generate revenues. If we are not able to generate additional
revenues that cover our estimated operating costs, our business may ultimately
fail.





We had
cash of $94,550 as of March 31, 2008. In the opinion of management, available
funds will satisfy our working capital requirements for the next twelve months.
Our forecast for the period for which our financial resources will be adequate
to support our operations involves risks and uncertainties and actual results
could fail as a result of a number of factors.  In the event that we
experience a shortfall in our capital, we intend to pursue capital through
public or private financing as well as borrowings and other sources, such as our
officers, director and principal shareholders. We cannot guaranty that
additional funding will be available on favorable terms, if at all. If adequate
funds are not available, we hope that our officers, director and principal
shareholders will contribute funds to pay for our expenses to achieve our
objectives over the next twelve months. However, our officers, director and
principal shareholders are not committed to contribute funds to pay for our
expenses.




21





We are
not currently conducting any research and development activities other than the
development of our website which we expect the total cost to be approximately
$5,000. We do not anticipate that we will purchase or sell any significant
equipment. In the event that we generate significant revenues and expand our
operations, then we may need to hire additional employees or independent
contractors as well as purchase or lease additional equipment.





Because
we have limited operations and assets, we may be considered a shell company as
defined in Rule 12b-2 of the Securities Exchange Act of 1934. Accordingly, we
have checked the box on the cover page of this report that specifies we are a
shell company.





Off-Balance Sheet Arrangements.We have no off-balance sheet arrangements.





Item 3. Quantitative and
Qualitative Disclosures about Market Risk




Not
applicable.




Item 4. Controls and
Procedures





Evaluation of disclosure controls and
procedures. We maintain controls and procedures designed to ensure that
information required to be disclosed in the reports that we file or submit under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Based upon their evaluation of those
controls and procedures performed as of March 31, 2008, the date of this report,
our chief executive officer and the principal financial officer concluded that
our disclosure controls and procedures were effective.





Item 4(T). Controls and
Procedures.





Changes in internal controls.There were no changes in our internal control over financial reporting
that occurred during the fiscal quarter covered by this report that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.








PART
II — OTHER INFORMATION





Item 1. Legal
Proceedings.





None.





Item 1A. Risk
Factors.





Not
applicable.





Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.





None.





Item 3.  Defaults
Upon Senior Securities





None.





Item
4.  Submission of Matters to Vote of Security
Holders





None.




22





Item 5.  Other
Information





None.





Item
6.  Exhibits




31. Rule 13a-14(a)/15d-14(a) Certifications.




32.
Section 1350 Certifications.




23




SIGNATURES





In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




International Surf Resorts, Inc.,

                a Nevada
      corporationMay
      13, 2008
              By:
              /s/ Eduardo
      BiancardiEduardo
      Biancardi
                Principal Executive Officer, Principal Financial
      Officer

                  President,
      Secretary, Treasurer, Director








25