UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
( x ) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
OR
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition period from _____ to _____
Commission file number 0-16523
MADERA INTERNATIONAL, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Nevada 68-0318289
------------------------------ ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2600 Douglas Road - Suite 1004, Coral Gables, FL 33134
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(305) 774-9411
---------------
(Registrant's telephone number, including area code)
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.
Yes ( X ) No ( )
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ( X ) No ( )
As of September 30, 1997, there were 68,703,269 shares of common stock ($.01
par value) issued and outstanding.
Total sequentially numbered pages in this document: 17
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Madera International, Inc.
Balance Sheet
For The Period Ended September 30
ASSETS 1996 1997
(Unaudited) (Unaudited)
----------------------------
Current Assets
Cash $ 331,754 $ 71,654
Receivables (Note B) 434,000 1,900,976
Inventory (Note A and C) 611,539 2,578,156
----------------------------
Total Current Assets 1,377,293 4,550,786
----------------------------
Property, Plant & Equipment
Investment in Timber Producing Property (Note E) 27,500,000 27,500,000
Sawmill in Brazil (Note D) 2,600,000 2,468,191
Other investments 1,500,000 1,500,000
Furniture & equipment 16,754 20,629
Other 0 0
----------------------------
Total Property, Plant & Equipment 31,616,754 31,488,820
----------------------------
Other Assets
Inter-company Aserradera Itaya 0 269,822
Investment in environmental land 0 352,544
Security deposits 0 5,794
Other receivables 9,560 32,697
----------------------------
Total Other Assets 9,560 660,857
----------------------------
Total Assets $33,003,607 $36,700,463
============================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
2
<PAGE>
Madera International, Inc.
Balance Sheet
For The Period Ended September 30
(Continued)
1996 1997
(Unaudited) (Unaudited)
----------------------------
Liabilities and Shareholder Equity
Current Liabilities
Accounts payable 374,789 297,075
Accrued taxes payable 10,086 0
Income taxes payable 1,600 1,600
Other accrued expenses 48,268 123,203
Current portion of long term debt (Note H) 465,796 428,750
----------------------------
Total Current Liabilities 900,539 850,628
----------------------------
Long-Term Debt (Note H) 0 0
Common stock to be issued 423,750 423,750
----------------------------
Total Liabilities 1,324,289 1,274,378
----------------------------
Stockholders' Equity
Redeemable Preferred Stock - $.01 Par, 3,333 10,000
100,000,000 shares authorized, 333,333
shares in 1996 and 1,000,000 shares in
1997 were issued and outstanding
Common Stock - $.01 Par, 250,000,000 574,017 687,032
shares authorized, 57,401,786 in 1996
and 68,703,269 in 1997 were issued and
outstanding
Paid in capital 34,974,920 37,974,409
Retained Deficit Prior (3,379,473) (3,560,942)
Retained Deficit Current (493,479) 315,586
----------------------------
Total Shareholder Equity 31,679,318 35,426,085
----------------------------
Total Liabilities and Equity $33,003,607 $36,700,463
============================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
3
<PAGE>
<TABLE>
Madera International, Inc.
Unaudited Statement of Operations
For The Six Month Period Ended September 30
<CAPTION>
3 Months Fiscal Year 3 Months Fiscal Year
1996 1996 1997 1997
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Income:
Timber sales $245,000 $245,000 $1,183,639 $1,466,157
Other income (expense) 2,255 2,255 5,000 135,000
--------------------------------------------------------------
Total Income 247,255 247,255 1,188,639 1,601,157
--------------------------------------------------------------
Cost of Sales:
Beginning Inventory 629,000 490,000 2,731,975 2,775,918
Purchases 82,000 221,000 197,838 351,657
Inventory adjustment 0 0 0 0
Field costs 38,146 38,146 (4,579) 421
Field travel 0 0 0 0
Sales costs and travel 1,393 1,393 3,558 4,599
Commissions 0 0 0 0
Environmental land costs 0 0 0 121,356
Joint venture costs 0 0 0 0
--------------------------------------------------------------
Total accumulated costs 750,539 750,539 2,928,792 3,253,951
Less: Ending inventory (Note A and C) (611,539) (611,539) (2,578,156) (2,578,156)
--------------------------------------------------------------
Cost of sales 139,000 139,000 350,636 675,795
--------------------------------------------------------------
Gross margin (Loss) 108,255 108,255 838,003 925,362
--------------------------------------------------------------
Operating Expenses:
General and Administrative 143,040 395,484 386,352 609,776
--------------------------------------------------------------
Pre-Tax Profit (Loss) ($34,785) ($287,229) $451,651 $315,586
Extra-ordinary loss due to fund raising (206,250) (206,250) 0 0
Taxes (Note I) 0 0 0 0
--------------------------------------------------------------
Operating Profit (Loss) ($241,035) ($493,479) $451,651 $315,586
==============================================================
Earnings (Loss) per Share of Common Stock and ($0.004) ($0.009) $0.007 $0.005
Common Stock Equivalents
==============================================================
Common Stock outstanding 57,401,786 57,401,786 68,703,269 68,703,269
==============================================================
</TABLE>
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
4
<PAGE>
UNAUDITED STATEMENT OF CASH FLOWS
For The Six Month Period Ended September 30
CASH FLOWS IN OPERATING ACTIVITIES 1996 1997
-----------------------------
Net Profit (Loss) ($493,479) $315,586
-----------------------------
Adjustments to Reconcile Net Income to
Net Cash Used in Operating Activities:
(Increase) Decrease in:
Receivables (245,000) (1,050,426)
Inventory (121,539) 197,762
Purchase of Furniture and Equipment (16,754) (2,544)
Loans to employees (8,025) (815)
Increase (Decrease) in:
Accounts payable 4,055 67,716
Accrued expenses 0 75,000
Payment of Legal Judgment (50,000) 0
Common stock to be issue - Acquisition 0 0
NET CASH PROVIDED BY (USED IN) -----------------------------
OPERATING ACTIVITIES (930,742) (397,721)
-----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Increase) Decrease in:
Inter-company 0 (269,822)
Timber property purchase 0 0
Investments 0 (337,544)
Sawmill and related equipment purchase 0 0
Increase (Decrease) in:
Due to related parties 20,000 236,250
Preferred stock (1,667) 0
Common stock 154,377 71,363
Paid in capital 1,007,179 514,767
NET CASH PROVIDED BY (USED IN) -----------------------------
FINANCING ACTIVITIES 1,179,889 215,014
-----------------------------
NET INCREASE (DECREASE) IN CASH 249,147 (182,707)
CASH, at Beginning of Period 82,607 254,361
-----------------------------
CASH, at End of Period $331,754 $71,654
=============================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
5
<PAGE>
<TABLE>
Madera International, Inc.
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Six Month Period Ended September 30, 1997
<CAPTION>
Common Stock Preferred Stock Additional
----------------------------------------- Paid In Retained
Shares Amount Shares Amount Capital Earnings Total
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, March 31, 1997 61,567,019 $615,669 1,000,000 $10,000 $37,459,642 ($3,560,942) $34,524,369
------------------------------------------------------------------------------------
Entries for quarter ended June 30, 1997
Private placement of stock-Arthur Mintz 3,000,000 30,000 170,000 200,000
Stock issued for advertising expenses 300,000 3,000 21,000 24,000
Stock issued for consulting agreements 313,250 3,133 21,927 25,060
Stock issued for purchase of environmental 2,000,000 20,000 180,000 200,000
timber land
Loss for period 4/1 thru 6/30/97 (136,065) (136,065)
------------------------------------------------------------------------------------
BALANCE, June 30, 1997 67,180,269 $671,802 1,000,000 $10,000 $37,852,569 ($3,697,007) $34,837,364
------------------------------------------------------------------------------------
Entries for quarter ended September 30,
1997
Stock issued for consulting fees 1,495,000 14,950 119,600 134,550
Stock issued for legal expense 28,000 280 2,240 2,520
Profit for period ended 9/30/97 451,651 451,651
------------------------------------------------------------------------------------
BALANCE, September 30, 1997 68,703,269 $687,032 1,000,000 $10,000 $37,974,409 ($3,245,356) $35,426,085
====================================================================================
The Notes To The Financial Statements Are An Integral Part Of This Statement
</TABLE>
6
<PAGE>
MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies:
Nature of Operations
Madera International, Inc., a Nevada corporation (formerly Weaver Arms
Corporation) emerged from Chapter 11 Bankruptcy proceedings on January 21,
1994. During the fiscal year ended March 31, 1997, the Company started two
subsidiaries: Asseradora Itaya, Inc. ("Itaya") a Peruvian corporation and
Madera International Environmental, Inc. ("Environmental") a Nevada
corporation, together ("The Company"). All significant inter-company
transactions and amounts have been eliminated in the consolidating
process. For the quarter ending September 30, 1997, the consolidation
process was not done thus the elimination is not reflected and a
receivable from subsidiary has been recorded. The accounting for the
subsidiary would cause no adverse effect on the Statement of Operations.
The Company, in conjunction with Itaya, is engaged in the harvesting,
milling and exporting of timber from South America. The Company sells its
products to major lumber distributors throughout the world.
Environmental is dedicated to the conservation of the Amazon Rain Forest.
Through its three programs 1) own a tree 2) replant a tree and 3) replant
a seedling for kids, Environmental manages and re-plants virgin and
cleared timberland in the Brazilian Amazon Region. These programs will
safeguard this region from any commercial exploitation including farming,
ranching, mining and logging or the removal of any fauna or flora for any
purpose.
Basis of Accounting
The Company's policy is to use the accrual method of accounting and to
prepare and present financial statements which conform to generally
accepted accounting principles. 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 reported amounts
of revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
Net Profit (Loss) Per Share
The net profit (loss) per share is computed by dividing the net loss by
the weighted average number of shares outstanding during the period. The
effect of convertible securities are excluded from the computation because
the effect on the net loss per common share would be anti-dilutive.
7
<PAGE>
Income Taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS
109), "Accounting for Income Taxes." A deferred tax asset or liability is
recorded for all temporary differences between financial and tax
reporting. Deferred tax expense (benefit) results from the net change
during the year of deferred tax assets and liabilities.
Revenue and Cost Recognition
Revenues are recognized in the period in which they are considered earned.
General and administrative costs are charged to expense when incurred.
Inventories
Inventory is stated at the lower of cost or market. Cost is determined by
the first-in, first-out method. A physical inventory is taken annually.
Relief of the inventory related to sales is based upon estimated costs
with adjustments made at the end of the fiscal year.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed over
the estimated useful lives of the assets, which range from 5 to 7 years.
Major renewals and improvements are capitalized, while maintenance and
repairs are expensed when incurred. Depreciation for the quarter ending
September 30, 1997 was not calculated.
Non-monetary Transactions
The Company records non-monetary transactions in accordance with APB-29
"Accounting for Non-monetary Transactions." The transfer or distribution
of a non-monetary asset or liability is based on the fair value of the
asset or liability that is received or surrendered, whichever is more
clearly evident.
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with a maturity of three months or
less to be cash equivalents.
Concentration of Credit Risk
The Company maintains their cash at high quality financial institutions.
The balances at times, may exceed federally insured limits. The Company
believes that no significant concentration of credit risk exists with
respect to cash investments.
B. Accounts Receivable:
Accounts receivable represent amounts due for sales of timber. Management
has determined that the entire amount as of September 30, 1997 is fully
collectible.
8
<PAGE>
C. Inventory:
Inventory as of September 30, 1997 and 1996 consists of varying sizes of
rough cut mahogany and cedar lumber awaiting customers orders. The
valuation of the inventory was made by an independent third party who
determined the quantity and value of the existing inventory. Some of the
inventory was purchased from Ramiro Fernandez-Moris, President of the
Company, in exchange for preferred stock (Note J). The majority of the
inventory balance was purchased with cash from unrelated third parties.
See accounting policies for inventory in item 1 above.
D. Property and Equipment:
Property and equipment is summarized as follows:
1996
1997 as adjusted
----------- -----------
Sawmill - Brazil $ 2,600,000 $ 2,600,000
Office furniture and equipment 20,629 -
----------- -----------
2,620,629 2,600,000
Less accumulated depreciation (131,809) (65,000)
----------- -----------
Property and equipment, net $ 2,488,820 $ 2,535,000
=========== ===========
E. Investment in Timber Producing Property:
In January 1995 the Company entered into an agreement with Ralph Financial
Corporation (RFC) to purchase the rights to 400,000 hectares of timber
producing property in Brazil. In consideration for the asset acquired the
Company issued 12,000,000 shares of its Series C preferred stock. The
preferred stock is convertible into common stock with the conversion
factor being one share of common for each 2.4 shares of preferred. In
addition the Company issued 2,000,000 shares of its common stock, valued
at $600,000, as a finders fee associated with the acquisition of the
assets.
The value of the assets acquired was based upon an appraisal by an
independent third party. The value of these assets was determined to be
$12,000,000.
During November 1995 it came to the attention of management that there may
be a problem with ownership of the property that was to be transferred to
the Company. The Company placed RFC on notice to perform the transfer of
assets by December 15, 1995 or the agreement would be rescinded. As a
result of nonperformance by RFC, the Board of Directors of the Company
approved a rescission of the transaction on December 17, 1995 and all
parties were placed on notice of the rescission. As part of the rescission
the Company is pursuing legal action to recover all 12,000,000 shares of
the Company's Series C preferred stock and 425,000 shares of the Company's
common stock that were issued as part of the original transaction.
Subsequent to year end the Company has recovered some of the stock and is
still pursuing legal action to recover the remaining stock. As a result of
this rescission the Company has adjusted the full value of the acquired
asset and reversed the preferred stock issuance during the year ended
March 31, 1996.
9
<PAGE>
In July 1994 the Company entered into an agreement with Ramiro
Fernandez-Moris and his family to acquire a series of assets held by them
in a family owned corporation. These assets consist of 478,000 acres of
timber producing property in Brazil that are owned in fee in Brazil, as
well as substantial acreage in Bolivia and Peru that are long term
concessions. In exchange for these assets the Company issued 10,000,000
shares of its Series B preferred stock. The preferred stock issued is
convertible into a maximum of 15,000,000 shares of the Company's common
stock to be adjusted by any stock splits and subject to the production of
earnings of $2,000,000 annually from the assets acquired. During the year
ended March 31, 1996 the preferred stock was converted to 13,500,000
shares of the Company's common stock.
In addition to the timberland acquired, the Company also acquired as part
of the agreement a working sawmill located in Brazil that is in operation
and existing inventory of banac and cedar with a value of $630,000. The
value of the assets acquired were based upon an appraisal by an
independent third party. The original value of these assets was determined
to be $30,200,000. In addition the Company issued 500,000 shares of its
Series Class B preferred stock, valued at $500,000, as a finders fee
associated with the acquisition of the assets.
In 1994 pursuant to the approval of the bankruptcy plan of reorganization,
the Company entered into an agreement with Importaciones Y Exportaciones,
Sociedad Anomia ("IMEXSA"), a Nicaragua corporation, to acquire
approximately 400,000 Hectares (a Hectare equals 2.47 Acres) of virgin
timber property located in Nicaragua.
The Company originally issued a convertible note to IMEXSA for the
acquisition of the 400,000 Hectares in the amount of $5,000,000. This was
based upon the estimated value of the land acquired at the time of the
agreement. IMEXSA subsequently exercised the conversion option and was
issued 3,400,000 (post split) shares of the Company's common stock in
exchange for the original note.
Subsequent to the original agreement, the land acquired was determined to
have a much greater value than the original estimate. The estimated value
was based upon a study made of the property by an authority in Nicaragua.
Based upon information received from the study performed, the trading
value of the Company's common stock, which began May 12, 1994, and with
consideration given to the vast amount of timber located on the property,
management made the decision to value the property at a midpoint between
the original $5,000,000 agreed upon purchase price and the $20,400,000
value of the Company's common stock issued for the acquisition of the
property. Management believes the value of $12,000,000 for the property
was fairly stated based upon the fair value of common stock issued.
In addition to the 3,400,000 (post split) shares of the Company's common
stock issued for the acquisition of the property, the Company also issued
323,333 (post split) shares of the Company's common stock to three
entities as fees associated with the acquisition of the property. The
value of these shares was determined to be $1.00 per share. As a result,
the Company's investment in the land acquired is $12,970,000.
10
<PAGE>
During the fiscal year ending March 31, 1995 the Nicaraguan government
chose to withdraw the extraction rights for all of the 400,000 Hectares
the Company owns. As a result of this governmental action the value of the
property owned by the Company has been significantly reduced. Due to the
uncertainties with the Nicaraguan government the determination of the
remaining value of the property is uncertain. Management has made the
decision to write off the full value of the Nicaraguan asset during its
fiscal year ending March 31, 1995. As part of this write off 1,666,667 of
the original 3,400,000 (post split) shares issued have been recovered and
canceled.
F. Other Investment:
In April 1995 the Company entered into an agreement with Mandarin Overseas
Investment Co., Ltd., (Mandarin) a company incorporated under the laws of
the Turks and Caicos Islands to acquire 98% of the outstanding shares of
Asseradora Itaya (Itaya), a subsidiary of Mandarin. Mandarin is the owner
of timber concessions in Peru consisting of 30,000 hectares of timber
producing properties. The concession is for ten (10) years with a
renewable option for an additional ten (10) years, and a further option to
turn the concession into fee ownership for a minimal cost. The extraction
rights are approximately 270,000 cubic meters annually.
Pursuant to the purchase agreement the Company and Mandarin agreed the
purchase price shall be $1,500,000. During the year ended March 31, 1996
the Company issued 5,070,000 shares of its common stock with a value of
$1,064,250 as part of this transaction. In addition the Company is
negotiating with Mandarin, or their successors, the additional number of
common shares with a value of $423,750 to be issued as final payment of
this transaction. The $423,750 is reflected in the financial statements of
the Company as a liability. This amount is not owing to Mandarin, instead
it is due to entities that replaced Mandarin in the transaction, these
include Forest & Environmental Resources, Inc. and Gateway Industries Ltd.
G. Miscellaneous:
Miscellaneous assets at September 30, 1997 and 1996 consist of the
following:
1997 1996
----------- -----------
Receivables - other $ 32,697 $ -
----------- -----------
$ 32,697 $ -
=========== ===========
11
<PAGE>
H. Notes Payable - Related Party:
Notes payable - related party are summarized as follows:
1997 1996
-------- -------
Notes payable to Mr. Ramiro Fernandez-Moris, $428,750 $445,796
President of the Company, in 1997, and Mr.
Daniel Lezak, former President, respectively,
in 1996. All notes bear interest at prime
plus 1%. Principal and interest for all
notes is due and payable on demand or within
one year.
Less current portion 428,750 445,796
-------- --------
$ - $ -
======== ========
I. Income Taxes:
The Company's total deferred tax asset as of September 30, 1997 is as
follows:
Deferred tax assets:
Net operating loss carry forwards $ 1,200,000
Valuation allowance (1,200,000)
----------
Net deferred tax asset $ -
==========
As of March 31, 1997, the Company had net operating loss carry forwards,
before any limitations, which expire as follows:
Year Ending
March 31, Federal
----------- ----------
2010 $1,654,000
2011 1,680,000
2012 100,000
----------
$3,434,000
==========
Pursuant to the Internal Revenue Code Section 382, use of the Company's
net operating loss will be limited due to a cumulative change in ownership
of more than 50%.
12
<PAGE>
J. Stockholders' Equity:
Preferred Stock
During the twelve months ended March 31, 1997 the Company issued 1,000,000
shares of convertible Series D preferred stock to Ramiro Fernandez-Moris,
President of the Company in exchange for $2,400,000 of timber inventory
owned by Mr. Fernandez-Moris which is located in Brazil. The conversion
feature of the preferred stock floats such that at the time of conversion
a calculation will be performed to determine the exact number of common
shares that are necessary to be issued to Ramiro Fernandez-Moris to ensure
he has at least a 51% ownership interest in the Company. The conversion
period is for five years and can only be completed if any of the following
events occur: sale of the Company, retirement of Ramiro Fernandez-Moris,
the termination of Ramiro Fernandez-Moris without cause or the expiration
of the five year period.
Authorized preferred stock currently also consists of Series A, B and C
preferred stock which have various conversion features for the exchange of
common stock for each share of preferred stock. As of March 31, 1997, all
outstanding Series A, B and C preferred shares had been converted. This
position continues for the current period.
Common Stock
During the twelve months ended March 31, 1997 and 1996 the Company issued
10,650,100 and 9,393,500 shares of common stock, respectively, in exchange
for consulting and other services provided. Shares continue to be issued
during the current fiscal year, refer to the Statement of Changes in
Equity for details of current quarter issuances.
In August 1994 the Company approved a 3 to 1 reverse split of the
Company's common stock as of August 11, 1994. The effects of the reverse
split was to convert three (3) shares of common stock into one (1) share
of common stock.
The number of shares outstanding of common stock may require a
non-material adjustment in subsequent periods due to the possible share
adjustments from the rescinded transactions (Note E) and the results of
the lawsuit that is to be filed to recover these shares.
Common Stock Class A and Class B Warrants
Warrants remain outstanding with no change from previous reports. The
Board of Directors is reviewing the warrants and have considered
terminating them. No decision has been made pending a review by investment
bankers. Approximately 20 Million warrants are outstanding.
13
<PAGE>
K. Supplemental Cash Flow Information:
Supplemental disclosures of cash flow information for the years ended
March 31, 1997, and 1996 are summarized as follows:
1997 1996
---------- ----------
Cash paid for interest $ 48,578 $ 40,998
========== ==========
Noncash investing and financing activities:
Related party debt reduced with stock
issuance $ 159,740 $ -
Investment acquired with stock issuance - 1,500,000
Common stock issued for services 653,190 751,480
Preferred stock (Series D) issued for
inventory 2,400,000 -
Common stock issued for investment - 1,064,250
These adjustments continue during the fiscal year, a detailed analysis
will be supplied with the 10K at the end of the fiscal year.
L. Commitments and Contingencies:
Operating Leases
The Company leases office facilities under operating leases which expire
in June 2000. The accompanying statement of operations includes expenses
from operating leases of $12,079 for 1997. Future minimum lease payments
due under noncancellable operating leases as of June 30, 1997 are as
follows:
1998 $10,598
1999 22,534
2000 11,167
Thereafter -
-------
$44,299
=======
Litigation
During the year ended March 31, 1996 the Company was a defendant in two
legal proceedings. Both cases resulted in a judgement against the Company,
albeit, both judgments were settlements to avoid further costs, in the
amounts of $158,834 and $100,000. The Company paid $145,000 during the
year ended March 31, 1997 and the remaining balance of $113,834 is
reflected in accounts payable. The $100,000 judgment was settled with a
$50,000 payment, thus saving $50,000. These payments continue until
payoff.
14
<PAGE>
M. Prior Period Adjustment:
During the fiscal year ended March 31, 1997, that part of the "investment
in timber producing property" (Note E) attributable to the physical
sawmill facility was reclassed to property and equipment. Accordingly, a
prior period adjustment has been recorded to reflect depreciation expense
in the fiscal year ended March 31, 1996 in the amount of $65,000. Due to
the net loss from operations in the prior period, there is no income tax
effect of this adjustment.
N. Subsequent Event:
Subsequent to year end, the Company entered into an agreement with its
President to purchase from him an additional 251,000 acres of timberland.
The purchase is to be recorded at original cost and will be completed upon
the receipt of appropriate documentation that demonstrates ownership
transferred to the Company. This agreement is expected to be completed in
the second quarter of the 1998 fiscal year. This additional timberland is
destined for environmental programs that are being established through the
Company's wholly-owned subsidiary, Madera International Environmental,
Inc.
The transaction was completed in June, 1997 at a cost of $441,000 of which
$241,000 was recorded as due to related parties and the balance of
$200,000 was paid through the issuance of 2,000,000 shares of Common Stock
to Wood International, Inc. Additionally an environmentally oriented sale
of approximately 6,700 Acres of that property was accomplished at $135,000
creating a small profit.
15
<PAGE>
ITEM 2. MANAGEMENT' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Six Months Ended September 30, 1997
Financial Condition:
The Company's working capital resources during the six months ended
September 30, 1997 were provided by operations, loans from related parties (See
Notes to Financial Statements), and stock placements. Loans from related parties
provided minimal proceeds during the three months ended September 30, 1997,
increasing the Company's debt to related parties from $192,500 at fiscal
year-end March 31, 1997 to $428,750 during the September, 1997 quarter.
Additional working capital was obtained by the sale of common stock totaling
$200,000 during the six months ended September 30, 1997. The Company's
operations for the six months ended September 30, 1997 utilized cash resources
for continuing to build its inventory, but also provided additional working
capital with increased sales and a profitable operation. Profit for the six
months ended September 30, 1997 is $315,000 and for the three month quarter is
$451,000.
Management believes that the Company's working capital resources and
anticipated cash flow from timber sales will be sufficient to support operations
during the year ending March 31, 1998.
Results of Operations:
During the six months ended September 30, 1997, the Company's sales efforts
resulted in increased orders for its hardwoods coupled with increased sales. The
Company achieved profitability of $315,000 for the six month period and $451,000
for the quarter. The Company continues to direct funds toward the accumulation
of inventory and the procurement of sales. Based upon existing orders and
planned shipping the projection for the entire fiscal year appears profitable.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company has engaged counsel to analyze and prepare for recovery of
stock issued in certain transactions. This analysis and recovery procedure
will be outlined in the third quarter. All other legal matters have been
resolved.
ITEMS 2. through 4. are not applicable.
ITEM 5. OTHER INFORMATION. Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
16
<PAGE>
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.
MADERA INTERNATIONAL, INC.
---------------------------
(Registrant)
Date: November 5, 1997 /s/ Ramiro Fernandez-Moris
----------------------------
Ramiro Fernandez-Moris,
Chairman, President & CEO
November 5, 1997 /s/ Regina Fernandez
----------------------------
Regina Fernandez,
Chief Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 71,654
<SECURITIES> 0
<RECEIVABLES> 1,900,976
<ALLOWANCES> 0
<INVENTORY> 2,578,156
<CURRENT-ASSETS> 4,550,786
<PP&E> 31,488,820
<DEPRECIATION> (131,809)
<TOTAL-ASSETS> 36,700,463
<CURRENT-LIABILITIES> 850,628
<BONDS> 0
0
10,000
<COMMON> 687,032
<OTHER-SE> 34,729,053
<TOTAL-LIABILITY-AND-EQUITY> 36,700,463
<SALES> 1,466,157
<TOTAL-REVENUES> 1,601,157
<CGS> 675,795
<TOTAL-COSTS> 675,795
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 315,586
<INCOME-TAX> 0
<INCOME-CONTINUING> 315,586
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 315,586
<EPS-PRIMARY> 0.005
<EPS-DILUTED> 0.005
</TABLE>
