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, 1999
-----------------
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
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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)
8671 N.W. 56th Street, Miami, FL 33166
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Phone: (305) 594-2647 Fax: (305) 594-5747
- --------------------------------------------------------------------------------
(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, 1999, there were 96,559,389 shares of common stock ($.01 par
value) issued and outstanding.
Total sequentially numbered pages in this document: 14
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MADERA INTERNATIONAL, INC.
BALANCE SHEET AS OF DECEMBER 31
ASSETS 1999 1998
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 777 $ 140,693
Receivables (Note B) 10,000 2,243,956
Inventory (Note A and P) 4,494,328 4,390,287
------------ ------------
Total Current Assets 4,505,105 6,774,936
------------ ------------
PROPERTY, PLANT & EQUIPMENT
Investment in Timber Producing Property(Note D) 27,972,514 27,972,394
Investment in sawmill and related properties 2,124,629 2,192,465
Other investments 1,499,880 1,500,000
Furniture & equipment 25,043 21,585
Other 0 0
------------ ------------
Total Property, Plant & Equipment 31,622,066 31,686,444
------------ ------------
OTHER ASSETS
Investment in environmental land 0 0
Security deposits 6,567 5,794
Other receivables 5,197 4,200
------------ ------------
Total Other Assets 11,764 9,994
------------ ------------
Total Assets 36,138,935 38,471,374
------------ ------------
LIABILITIES AND SHAREHOLDER EQUITY
CURRENT LIABILITIES
Accounts payable 187,122 209,868
Accrued taxes payable 0 165,000
Income taxes payable 28,000 28,000
Other accrued expenses 93,945 49,803
Notes payable - related parties 284,315 602,067
------------ ------------
Total Current Liabilities 593,382 1,054,738
------------ ------------
Long-Term Debt (Note E) 0 0
Common stock to be issued 423,750 423,750
------------ ------------
Total Liabilities 1,017,132 1,478,488
------------ ------------
STOCKHOLDERS' EQUITY
Redeemable Preferred Stock - $.01 Par, 30,000 26,000
100,000,000 shares authorized, 1,000,000 shares
in 1998 and 3,000,000 shares in 1999 were
issued and outstanding
Common Stock - $.01 Par, 250,000,000 shares 965,594 843,322
authorized, 88,359,924 in 1998 and 96,559,389
in 1999 were issued and outstanding
Paid in capital 38,144,124 38,460,494
Retained Earnings (Deficit) Prior (3,617,069) (2,423,272)
Retained Earnings (Deficit) Current (400,846) 86,342
------------ ------------
Total Shareholder Equity 35,121,803 36,992,886
------------ ------------
Total Liabilities and Equity 36,138,935 38,471,374
============ ============
</TABLE>
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
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MADERA INTERNATIONAL, INC.
UNAUDITED STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED DECEMBER 31
3 MONTHS FISCAL YEAR 3 MONTHS FISCAL YEAR
1999 1999 1998 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
INCOME:
Timber sales $ 33,640 $ 749,457 $ 870,203 $ 2,689,514
Other income (expense) 0 0 0 192
------------- ------------ ------------- ------------
Total Income 33,640 749,457 870,203 2,689,706
------------- ------------ ------------- ------------
COST OF SALES:
Beginning Inventory 4,494,328 4,569,328 4,080,187 3,121,978
Purchases 86,816 547,617 930,000 2,991,133
Inventory adjustment 0 0 0 0
Field costs 4 202 0 293,500
Field travel 0 4,714 0 4,656
Sales costs and travel 4,067 50,852 0 0
Commissions 0 0 0 200
Joint venture share 0 0 0 0
Joint venture costs 0 0 0 0
------------- ------------ ------------- ------------
Total accumulated costs 4,585,215 5,172,713 5,010,187 6,411,467
Less: Ending inventory (Note A and P) (4,494,328) (4,494,328) (4,390,287) (4,390,287)
------------- ------------ ------------- ------------
Cost of sales 90,887 678,385 619,900 2,021,180
------------- ------------ ------------- ------------
Gross margin (Loss) (57,247) 71,072 250,303 668,526
------------- ------------ ------------- ------------
OPERATING EXPENSES:
General and Administrative 180,911 471,918 192,762 582,184
------------- ------------ ------------- ------------
Pre-Tax Profit (Loss) ($238,158) ($400,846) $ 57,541 $ 86,342
Taxes (Note ) 0 0 0 0
------------- ------------ ------------- ------------
Operating Profit (Loss) ($238,158) ($400,846) $ 57,541 $ 86,342
============= ============ ============= ============
Earnings (Loss) per Share of Common Stock and ($0.002) ($0.004) $ 0.001 $ 0.001
Common Stock Equivalents
============= ============ ============= ============
Common Stock outstanding 96,559,389 96,559,389 84,332,249 84,332,249
============= ============ ============= ============
</TABLE>
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
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MADERA INTERNATIONAL, INC.
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE NINE MONTH PERIOD ENDED DECEMBER 31
CASH FLOWS IN OPERATING ACTIVITIES 1999 1998
----------- ------------
<S> <C> <C>
Net Profit (Loss) ($400,846) $86,342
Profit adjustment for non-cash depreciation $0 $1,809
----------- ------------
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH USED IN OPERATING ACTIVITIES:
(INCREASE) DECREASE IN:
Other assets 0 0
Receivables 1,228,155 797,167
Inventory 75,000 (1,268,309)
Purchase of Furniture and Equipment (180) 0
Loans to employees 0 0
INCREASE (DECREASE) IN:
Letters of Credit 0
Accounts payable (43,303) (5,229)
Accrued expenses 43,945 0
Payment of Legal Judgment (10,000) 0
Common stock to be issue - Acquisition 0 0
NET CASH PROVIDED BY (USED IN)
----------- ------------
OPERATING ACTIVITIES 892,771 (388,220)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
(INCREASE) DECREASE IN:
Inter-company 0 0
Timber property purchase
Investments (5,197) (2,200)
Sawmill and related equipment purchase 0 0
INCREASE (DECREASE) IN:
Due to related parties (176,866) 35,672
Preferred stock 0 16,000
Common stock 82,085 114,266
Paid in capital (801,012) 317,989
NET CASH PROVIDED BY (USED IN)
----------- ------------
FINANCING ACTIVITIES (900,990) 481,727
----------- ------------
NET INCREASE (DECREASE) IN CASH (8,219) 93,507
CASH, at Beginning of Period 8,996 47,186
----------- ------------
CASH, at End of Period $777 $140,693
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</TABLE>
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
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MADERA INTERNATIONAL, INC.
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTH PERIOD ENDED DECEMBER 31, 1999
ADDITIONAL
COMMON STOCK PREFERRED STOCK PAID IN RETAINED
-------------------- ------------------
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
---------- -------- --------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, March 31, 1999 88,350,924 $883,509 3,000,000 $30,000 $38,945,136 ($3,617,069) $36,241,576
---------- -------- --------- ------- ------------ ------------ ------------
Entries for quarter ended June 30, 1999: 0
Issued for consulting fees 1,748,750 17,488 69,950 87,438
Audit reconciliation (1,139,351) (1,139,351)
Profit for period 4/1 thru 6/30/98 (18,165) (18,165)
---------- -------- --------- ------- ------------ ------------ ------------
BALANCE, June 30, 1999 90,099,674 900,997 3,000,000 30,000 $37,875,735 (3,635,234) 35,171,498
---------- -------- --------- ------- ------------ ------------ ------------
Entries for quarter ended Sep 30, 1999:
Issued for consulting fees 2,963,815 29,638 128,553 158,191
Issued for legal claims 200,000 2,000 8,000 10,000
Profit for period 7/1 thru 9/30/99 (144,523) (144,523)
---------- -------- --------- ------- ------------ ------------ ------------
BALANCE, September 30, 1999 93,263,489 $932,635 3,000,000 $30,000 $38,012,288 ($3,779,757) $35,195,166
---------- -------- --------- ------- ------------ ------------ ------------
Entries for quarter ended December 31, 1999:
Issued for consulting fees 3,295,900 32,959 0 0 131,836 164,795
Profit for period 10/1 thru 12/31/99 (238,158) (238,158)
---------- -------- --------- ------- ------------ ------------ ------------
BALANCE, December 31, 1999 96,559,389 $965,594 3,000,000 $30,000 $38,144,124 ($4,017,915) $35,121,803
---------- -------- --------- ------- ------------ ------------ ------------
The Notes To The Financial Statements Are An Integral Part Of This Statement
</TABLE>
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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 has two (2) 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.
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.
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.
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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 June 30, 1999 is fully
collectible.
C. Inventory:
Inventory as of June 30, 1998 and 1999 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 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:
1999 1998
----------- -----------
Sawmill - Brazil $2,395,000 $2,395,000
Office furniture and equipment 25,046 21,585
----------- -----------
2,420,046 2,416,585
Less accumulated depreciation (270,371) (200,726)
----------- -----------
Property and equipment, net $2,149,675 $2,490,325
=========== ===========
E. Investment in Timber Producing Property:
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.
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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.
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. The company was to issue an
additional number of shares with a value of $423,750 to be issued as final
payment of this transaction, however the additional value is now
questionable and the company is holding back this issuance at the present.
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 Company has
not converted this amount into stock and will not do so unless and until
the values of these assets become proven.
G. Miscellaneous:
Miscellaneous assets at June 30, 1999 and 1998 consist of the following:
1999 1998
----------- -----------
Receivables - other $5,197 $32,697
Deposits 6,567 0
----------- ----------
$11,764 $32,697
=========== ===========
H. Notes Payable - Related Party:
Notes payable - related party are summarized as follows:
1999 1998
-------- -------
Notes payable to Mr. Ramiro Fernandez-Moris,
President of the Company, in 1999. All notes bear
interest at prime plus 1%. Principal and
interest is due and payable currently
284,315 566,395
Less current portion 284,315 566,395
-------- --------
$ - $ -
======== ========
I. Income Taxes:
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As of March 31, 1999, 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
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. 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.
The company also has authorized a Class E Preferred Stock which 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. 2,000,000 shares of this class are now issued and
outstanding.
Common Stock
During the three months ended June 30, 1999 and 1998 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.
K. Supplemental Cash Flow Information:
Supplemental disclosures of cash flow information for the quarter ended
September, 1999, and 1998 are summarized as follows: 1999 1998 ----------
----------
Cash paid for interest $ 0 $ 0
========== ==========
Noncash investing and financing activities: 0 0
Investment acquired with stock issuance
Common stock issued for services
Preferred stock (Series D) issued for
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inventory 0 0
Common stock issued for consultants 3,295,800 4,89,410
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, 1997 are as follows:
1999 22,534
2000 11,167
Thereafter -
-------
$44,299
Litigation
Wrights Executives, Inc.,dba, Beacon Hill Resources vs. Madera
International, Inc., a Nevada Corporation, filed on February 7, 1995, in
the District Court of the State of Nevada, County of Cark, Case No. A
342542 is a matter whereby the plaintiff alleged that it was owed
$125,736.03 resulting from an agreement entered into by plaintiff and
Forest and Environmental Resources of the Amazon, Inc. ("FEROA"), pursuant
to which the plaintiff agreed to loan FEROA $70,137.00, with interest to
accrue at the rate of one and one-half percent (1 1/2%) per month. In
furtherance of the agreement, FEROA executed a promissory note in the
amount of $88,000.00 on July 2, 1988 in favor of plaintiff. Plaintiff
alleged that FEROA transferred all of its assets consisting of timber
properties and concessions to defendant, and that stock paid by the
defendant in consideration of the transfer was not transferred to FEROA,
but to Ramiro Fernandez-Moris, the chairman of FEROA, resulting in FEROA
becoming insolvent, and unable to pay its obligation to the plaintiff. A
Motion for Summary Judgment against the Company was substantiated on
November 27, 1995, and the Company ordered to pay the sum of $158,834.00 to
the Plaintiff. Registrant has settled this matter on behalf of Registrant,
Ramiro Fernandez-Moris and FEROA. The settlement is for $171,500.00,
payable at a minimum of $5,000.00 per month, commencing May 1996, and
continuing until the debt is paid off. Plaintiff has the option to convert
into common stock at a 25% discount from the bid price as long as the bid
price is $0.50 per share or higher. This option applies only after the
stock reaches a bid price of $0.50, and may be exercised in any portion of
the total value. This claim was being paid by Registrant until Registrant's
Lawyers advised that the judgment was not properly issued at which time
payments were stopped and legal issues again began. The judgment still
exists and the balance due is reflected in the financial statements.
Registrant is presently under an informal investigation being conducted by
the Securities and Exchange Commission. Although Registrant has received
notice of the investigation, Registrant has no knowledge of the reason or
cause for the investigation and is waiting for the results of the various
inquiries to report the reason.
Subsequent to year end a lawsuit was filed against Registrant and it's CEO
by Arthur Mintz, a former director. The lawsuit relates to loans made by
Mr. Mintz. Registrant and it's CEO are vigorously opposing the lawsuit and
believe that the evidence once presented will show that Mr. Mintz has not
presented an accurate picture.
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
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ITEM 2. MANAGEMENT' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Nine Months Ended December 31, 1999 and 1998
Financial Condition:
- ---------------------
The Company's working capital resources during the nine months ended
December 31, 1999 and 1998 were provided by operations and loans from related
parties (See Notes to Financial Statements). Loans from related parties
provided minimal proceeds during the nine months ended December 31, 1999,and
1998 saw a reduction of the Company's debt to related parties. The Company's
operations for the nine months ended December 31, 1999 showed a loss that
continues to reflect the fall in sales. It is expected that this will turn
around towards year end with the kick-in of herb sales at that time. Operations
for the nine months ended December 31,1999 showed a continuing loss on reduced
sales and working capital was reduced by a marked reduction in accounts
receivable. Loss for the nine months ended December 31, 1999 was $400,000.
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, 2000. However, management continues to seek
alternative financing for the continued opportunities in South America.
Results of Operations:
- -----------------------
During the three months ended December 31, 1999, the Company's sales
efforts were disrupted by external causes. A loss was incurred this quarter of
$238,000 and $400,000 for the nine month period, compared to a profit for the
same period last year. Inventory was static and purchases were made to supply
customer needs for the quarter. The seasonality of the operations continue,
with sales improvement expected later in the year. However, no assurance can be
given that profitable sales of timber products will continue through this fiscal
year.
PART II. OTHER INFORMATION
-----------------------------
ITEM 1. LEGAL PROCEEDINGS
Wrights Executives, Inc., dba, Beacon Hill Resources vs. Madera
International, Inc., a Nevada Corporation, filed on February 7, 1995, in the
District Court of the State of Nevada, County of Cark, Case No. A 342542 is a
matter whereby the plaintiff alleged that it was owed $125,736.03 resulting from
an agreement entered into by plaintiff and Forest and Environmental Resources of
the Amazon, Inc. ("FEROA"), pursuant to which the plaintiff agreed to loan FEROA
$70,137.00, with interest to accrue at the rate of one and one-half percent (1
1/2%) per month. In furtherance of the agreement, FEROA executed a promissory
note in the amount of $88,000.00 on July 2, 1988 in favor of plaintiff.
Plaintiff alleged that FEROA transferred all of its assets consisting of timber
properties and concessions to defendant, and that stock paid by the defendant in
consideration of the transfer was not transferred to FEROA, but to Ramiro
Fernandez-Moris, the chairman of FEROA, resulting in FEROA becoming insolvent,
and unable to pay its obligation to the plaintiff. A Motion for Summary Judgment
against the Company was substantiated on November 27, 1995, and the Company
ordered to pay the sum of $158,834.00 to the Plaintiff. Registrant has settled
this matter on behalf of Registrant, Ramiro Fernandez-Moris and FEROA. The
settlement is for $171,500.00, payable at a minimum of $5,000.00 per month,
commencing May 1996, and continuing until the debt is paid off. Plaintiff has
the option to convert into common stock at a 25% discount from the bid price as
long as the bid price is $0.50 per share or higher. This option applies only
after the stock reaches a bid price of $0.50, and may be exercised in any
portion of the total value. This claim was being paid by Registrant until
Registrant's Lawyers advised that the judgment was not properly issued at which
time payments were stopped and legal issues again began. The judgment still
exists and the balance due is reflected in the financial statements.
Registrant is presently under an informal investigation being conducted by
the Securities and Exchange Commission. Although Registrant has received notice
of the investigation, Registrant has no knowledge of the reason or cause for the
investigation and is waiting for the results of the various inquiries to report
the reason.
Subsequent to year end a lawsuit was filed against Registrant and it's CEO
by Arthur Mintz, a former director. The lawsuit relates to loans made by Mr.
Mintz. Registrant and it's CEO are vigorously opposing the lawsuit and believe
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that the evidence once presented will show that Mr. Mintz has not presented an
accurate picture.
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
Page 12
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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: April 24, 2000 /s/ Ramiro Fernandez-Moris
---------------------------------
Ramiro Fernandez-Moris, Chairman,
President & CEO and acting CFO
Page 13
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