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 December 31, 1998
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)
Phone: (305) 774-9411 Fax: (305) 774-9345
-----------------------------------------------------------
(Registrant's telephone and fax 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 December 31, 1998, there were 84,332,249 shares of common stock ($.01 par
value) issued and outstanding.
Total sequentially numbered pages in this document: 14
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Madera International, Inc.
Balance Sheet
For The Period Ended December 31
ASSETS 1998 1997
(Unaudited) (Unaudited)
---------------------------
Current Assets
Cash $140,693 $40,024
Receivables (Note B) 2,243,956 1,127,626
Inventory (Note A and P) 4,390,287 2,578,156
---------------------------
Total Current Assets 6,774,936 3,745,806
---------------------------
Property, Plant & Equipment
Investment in Timber Producing Property (Note D) 27,972,394 27,500,000
Investment in sawmill and related properties 2,192,465 2,468,191
Other investments 1,500,000 1,500,000
Furniture & equipment 21,585 22,134
Other 0 0
---------------------------
Total Property, Plant & Equipment 31,686,444 31,490,325
---------------------------
Other Assets
Inter-company Aserraadera Itaya 0 1,167,838
Investment in environmental land 0 357,544
Security deposits 5,794 5,794
Other receivables 4,200 28,033
---------------------------
Total Other Assets 9,994 1,559,209
---------------------------
Total Assets 38,471,374 36,795,340
---------------------------
Liabilities and Shareholder Equity
Current Liabilities
Accounts payable 209,868 299,147
Accrued taxes payable 165,000 0
Income taxes payable 28,000 1,600
Other accrued expenses 49,803 123,203
Current portion of long term debt 602,067 468,000
(Note E)
---------------------------
Total Current Liabilities 1,054,738 891,950
---------------------------
Long-Term Debt (Note E) 0 0
Common stock to be issued 423,750 423,750
---------------------------
Total Liabilities 1,478,488 1,315,700
---------------------------
Stockholders' Equity
Redeemable Preferred Stock - $.01 Par, 26,000 10,000
100,000,000 shares authorized, 500,000 shares
in 1996 and 1,000,000 shares in 1997 were
issued and outstanding
Common Stock - $.01 Par, 250,000,000 shares 843,322 689,646
authorized, 68,964,669 in 1997 and 84,332,249
in 1998 were issued and outstanding
Paid in capital 38,460,494 37,984,865
Retained Earnings (Deficit) Prior (2,423,272) (3,560,942)
Retained Earnings (Deficit) Current 86,342 356,071
---------------------------
Total Shareholder Equity 36,992,886 35,479,640
---------------------------
Total Liabilities and Equity 38,471,374 36,795,340
===========================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
2
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Unaudited Statement of Operations
For The Nine Month Period Ended December 31
<TABLE>
<CAPTION>
3 Months Fiscal Year 3 Months Fiscal Year
1998 1998 1997 1997
------------------------------------------------------
<S> <C> <C> <C> <C>
Income:
Timber sales $870,203 $2,689,514 $549,570 $2,015,727
Other income (expense) 0 192 0 135,000
------------------------------------------------------
Total Income 870,203 2,689,706 549,570 2,150,727
------------------------------------------------------
Cost of Sales:
Beginning Inventory 4,080,187 3,121,978 2,578,156 2,775,918
Purchases 930,000 2,991,133 564,211 915,868
Inventory adjustment 0 0 0 0
Field costs 0 293,500 0 421
Field travel 0 4,656 0 0
Sales costs and travel 0 0 4,504 9,103
Commissions 0 200 0 0
Joint venture share 0 0 0 121,356
Joint venture costs 0 0 0 0
------------------------------------------------------
Total accumulated costs 5,010,187 6,411,467 3,146,871 3,822,666
Less: Ending inventory (Note A and P) (4,390,287) (4,390,287) (2,775,918) (2,775,918)
------------------------------------------------------
Cost of sales 619,900 2,021,180 370,953 1,046,748
------------------------------------------------------
Gross margin (Loss) 250,303 668,526 178,617 1,103,979
------------------------------------------------------
Operating Expenses:
General and Administrative 192,762 582,184 138,132 747,908
------------------------------------------------------
Pre-Tax Profit (Loss) $57,541 $86,342 $40,485 $356,071
Taxes (Note ) 0 0 0 0
------------------------------------------------------
Operating Profit (Loss) $57,541 $86,342 $40,485 $356,071
======================================================
Earnings (Loss) per Share of Common Stock $0.001 $0.001 $0.001 $0.005
and Common Stock Equivalents
------------------------------------------------------
Common Stock outstanding 84,332,249 84,332,249 68,964,669 68,964,669
======================================================
</TABLE>
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
3
<PAGE>
UNAUDITED STATEMENT OF CASH FLOWS
For The Nine Month Period Ended December 31
CASH FLOWS IN OPERATING ACTIVITIES 1998 1997
---------------------------
Net Profit (Loss) $86,342 $356,071
Profit adjustment for non-cash depreciation $1,809
Adjustments to Reconcile Net Income to
Net Cash Used in Operating Activities:
(Increase) Decrease in:
Receivables 797,167 (277,076)
Inventory (1,268,309) 197,762
Purchase of Furniture and Equipment 0 (4,049)
Loans to employees 0 3,849
Increase (Decrease) in:
Accounts payable (5,229) 69,788
Accrued expenses 0 75,000
Payment of Legal Judgment 0 0
Common stock to be issue - Acquisition 0 0
NET CASH PROVIDED BY (USED IN)
---------------------------
OPERATING ACTIVITIES (388,220) 421,345
---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Increase) Decrease in:
Inter-company 0 (1,167,838)
Timber property purchase 0 0
Investments (2,200) (342,544)
Sawmill and related equipment purchase 0 0
Increase (Decrease) in:
Due to related parties 35,672 275,500
Preferred stock 16,000 0
Common stock 114,266 73,977
Paid in capital 317,989 525,223
NET CASH PROVIDED BY (USED IN)
---------------------------
FINANCING ACTIVITIES 481,727 (635,682)
---------------------------
NET INCREASE (DECREASE) IN CASH 93,507 (214,337)
CASH, at Beginning of Period 47,186 254,361
---------------------------
CASH, at End of Period $140,693 $40,024
===========================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
4
<PAGE>
Madera International, Inc.
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Nine Month Period Ended December 31, 1998
<TABLE>
<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, December 31, 68,964,669 $689,646 1,000,000 $10,000 $37,984,865 ($3,204,871) $35,479,640
1997
---------------------------------------------------------------------------------------
BALANCE, March 31, 1998 72,905,669 $729,056 1,000,000 $10,000 $38,142,505 ($2,423,272) $36,458,289
---------------------------------------------------------------------------------------
Entries for quarter ended
June 30, 1998:
Issued for consulting 1,000,000 10,000 40,000 50,000
fees
Profit for period 4/1 215,694 215,694
thru 6/30/98
---------------------------------------------------------------------------------------
BALANCE, June 30, 1998 72,905,669 $729,056 2,000,000 $20,000 $38,182,505 ($2,207,578) $36,723,983
---------------------------------------------------------------------------------------
Entries for quarter ended
Sep 30, 1998:
Issued for consulting 6,536,170 65,362 600,000 6,000 155,729 227,091
fees
Profit for period 7/1 (186,893) (186,893)
thru 9/30/98
---------------------------------------------------------------------------------------
BALANCE, September 30, 79,441,839 794,418 2,600,000 26,000 38,338,234 (2,394,471) 36,764,181
1998
---------------------------------------------------------------------------------------
Issued for consulting 4,890,410 48,904 0 0 122,260 171,164
fees
Profit for period 10/1 57,541 57,541
thru 12/31/98
---------------------------------------------------------------------------------------
BALANCE, December 31, 84,332,249 $843,322 2,600,000 $26,000 $38,460,494 ($2,336,930) $36,992,886
1998
=======================================================================================
</TABLE>
The Notes To The Financial Statements Are An Integral Part Of This Statement
5
<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. 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. Additionally, Environmental is adding
an internet site for the marketing of these products as well as other
products native to the involved countries including herbal supplements.
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.
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.
6
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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 June 30, 1998 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 December 31,
1998 is fully collectible.
C. Inventory:
Inventory as of December 31, 1997 and 1998 consists of varying sizes of
rough cut mahogany and cedar lumber awaiting customers orders in
addition to unprocessed logs awaiting processing in accordance with
customer requests. The valuation of the audited inventory was made by
an independent third party who determined the quantity and value of the
existing inventory. Subsequent to the audit period, inventory valuation
has been done by adjusting the inventory for cost of shipments. Some of
the inventory, prior to the audit period, 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:
1998 1997
----------- -----------
Sawmill - Brazil $ 2,395,000 $ 2,600,000
Office furniture and equipment 21,585 20,629
----------- -----------
2,416,585 2,620,629
7
<PAGE>
Less accumulated depreciation (202,535) (131,809)
----------- -----------
Property and equipment, net $ 2,214,050 $ 2,488,820
=========== ===========
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 received a judgment against Ralph Financial,
which judgment calls for the return of the balance of the stock,
cancellation of any of the stock that may be in 3rd party hands, and
the collection of $200,000 plus legal fees for stock that may have been
sold. 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.
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
8
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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.
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. The
9
<PAGE>
Company has not converted this amount into stock due to the continued
low current market price for the stock.
G. Miscellaneous:
Miscellaneous assets at June 30, 1998 and 1997 consist of the
following:
1998 1997
----------- -----------
Receivables - other $ 4,200 $ 32,697
Security deposits 5,794 5,794
----------- -----------
$ 9,994 $ 38,491
=========== ===========
H. Notes Payable - Related Party:
Notes payable - related party are summarized as follows:
1998 1997
-------- --------
Notes payable to Mr. Ramiro Fernandez-Moris,
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 is due and payable on
demand or within one year. 602,067 428,750
Less current portion 602,067 428,750
-------- --------
$ - $ -
======== ========
I. Income Taxes:
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%.
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
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<PAGE>
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. No further issuances have been made as of the
current 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 or canceled.
During the current fiscal year a Class E Preferred Stock was created
for officers, Directors, and consultants in lieu of cash payments for
services rendered. These shares are convertible into common stock on
the basis of one for one. 2,600,000 shares of this class have been
issued.
Common Stock
During the three months ended December 31, 1998 and 1997 the Company
issued shares of common stock 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
During the quarter ended December 31, 1997, the Board of Directors
resolved to discontinue all Class A and Class B Warrants. This action
was taken to reflect the current market prices and to avoid dilution at
these prices. The Board left the door open for future warrant issues
that may aid in future financing.
K. Supplemental Cash Flow Information:
Supplemental disclosures of cash flow information for the quarter ended
June, 1998, and 1997 are summarized as follows:
1998 1997
---------- ---------
Cash paid for interest $6,142 $0
========== =========
Noncash investing and financing activities:
Investment acquired with stock issuance 0 3,000,000
Common stock issued for services 11,426,580 4,396,650
Preferred stock (Series D) issued for
inventory 0 1,000,000
Preferred stock (Series E) issued for
services 1,600,000 0
Common stock issued for investment 0 0
11
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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. Future minimum lease payments due under
noncancellable operating leases as of December 31, 1998 are as follows:
1999 $22,534
2000 11,167
Thereafter -
-------
$33,701
Litigation
No new litigation is in process. The past matter of Wright and the
determination of continuing payments is now before Florida courts and
will be decided in fiscal 1999. This has been fully reserved on the
books of the company.
M. Prior Period Adjustment:
None
N. Subsequent Event:
None
12
<PAGE>
ITEM 2. MANAGEMENT' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Three Months Ended December 31, 1998
Financial Condition:
The Company's working capital resources during the three months ended
December 31, 1998 were provided by operations and loans from related parties
(See Notes to Financial Statements). Loans from related parties provided minimal
proceeds during the three months ended December 31, 1998, increasing the
Company's debt to related parties. The Company's operations for the three months
ended December 31, 1998 utilized cash resources for continuing to build its
inventory, due to the seasonality of the business, sales were made during this
period and sales and deliveries will continue in the next quarter. Profit for
the nine months ended December 31, 1998 is $86,342 and for the quarter is
$57,541.
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, 1999. However, management continues to seek
alternative financing for the continued opportunities in South America.
Results of Operations:
During the nine months ended December 31, 1998, the Company's sales
efforts resulted in increased orders for its hardwoods coupled with increased
sales. The Company achieved profitability of $86,342, with a profit for the
quarter at $57,541. 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. However, it should be noted that seasonality has shifted sales into
the third quarter from the second quarter of this fiscal year. The profit for
the year is projected to exceed that of last fiscal year.
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
13
<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: February 15, 1999 /s/ Ramiro Fernandez-Moris
---------------------------------
Ramiro Fernandez-Moris, Chairman,
President & CEO
Date: February 15, 1999 /s/ Regina Fernandez
---------------------------------
Regina Fernandez, Chief Financial
Officer
14
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> DEC-31-1998
<CASH> 140,693
<SECURITIES> 0
<RECEIVABLES> 2,243,956
<ALLOWANCES> (58,000)
<INVENTORY> 4,390,287
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<PP&E> 31,686,444
<DEPRECIATION> (200,726)
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<CURRENT-LIABILITIES> 1,054,738
<BONDS> 0
0
26,000
<COMMON> 843,322
<OTHER-SE> 36,123,564
<TOTAL-LIABILITY-AND-EQUITY> 38,471,374
<SALES> 2,689,514
<TOTAL-REVENUES> 2,689,706
<CGS> 2,021,180
<TOTAL-COSTS> 2,021,180
<OTHER-EXPENSES> 682,384
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<INTEREST-EXPENSE> 6,142
<INCOME-PRETAX> 86,342
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<NET-INCOME> 86,342
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</TABLE>
