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 June 30, 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
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 No X
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 June 30, 1999, there were 90,099,674 shares of common stock ($.01 par
value) issued and outstanding.
Total sequentially numbered pages in this document: 16
Page 1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Madera International, Inc.
Balance Sheet
<TABLE>
<S> <C> <C>
ASSETS 1999 1998
(Unaudited) (Unaudited)
-------------------------------
Current Assets
Cash ($12,792) $ 12,987
Receivables (Note B) 15,105 2,980,600
Inventory (Note A and P) 4,569,328 3,507,800
-------------------------------
Total Current Assets 4,571,641 6,501,387
-------------------------------
Property, Plant & Equipment
Investment in Timber Producing Property (Note D) 27,972,394 27,972,394
Investment in sawmill and related 2,124,629 2,194,274
properties
Other investments 1,500,000 1,500,000
Furniture & equipment 25,043 21,585
Other 0 0
-------------------------------
Total Property, Plant & Equipment 31,622,066 31,688,253
-------------------------------
Other Assets
Inter-company Aserraadera Itaya 0 0
Investment in environmental land (2,200) 0
Security deposits 6,567 5,794
Other receivables 2,200 32,697
-------------------------------
Total Other Assets 6,567 38,491
-------------------------------
Total Assets 36,200,274 38,228,131
-------------------------------
</TABLE>
Page 2
<PAGE>
Madera International, Inc.
Balance Sheet
(Continued)
<TABLE>
<S> <C> <C>
Liabilities and Shareholder Equity
Current Liabilities
Accounts payable 197,581 271,200
Accrued taxes payable 0 165,000
Income taxes payable 28,000 28,000
Other accrued expenses 93,945 49,803
Notes payable - related parties 285,500 566,395
-------------------------------
Total Current Liabilities 605,026 1,080,398
-------------------------------
Long-Term Debt (Note E) 0 0
Common stock to be issued 423,750 423,750
===============================
Total Liabilities 1,028,776 1,504,148
-------------------------------
Stockholders' Equity
Redeemable Preferred Stock - $.01 Par, 30,000 20,000
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 900,997 729,056
authorized, 72,905,669 in 1998 and 88,359,924
in 1999 were issued and outstanding
Paid in capital 37,875,735 38,182,505
Retained Earnings (Deficit) Prior (3,617,069) (2,423,272)
Retained Earnings (Deficit) Current (18,165) 215,694
-------------------------------
Total Shareholder Equity 35,171,498 36,723,983
-------------------------------
Total Liabilities and Equity 36,200,274 38,228,131
===============================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
Page 3
<PAGE>
Madera International, Inc.
Unaudited Statement of Operations
For The Three Month Period Ended June 30
<TABLE>
<S> <C> <C> <C> <C>
3 Months Fiscal Year 3 Months Fiscal Year
1999 1999 1998 1998
----------------------------------------------------------
Income:
Timber sales $590,232 $590,232 $1,819,350 $1,819,350
Other income (expense) 0 0 0 0
----------------------------------------------------------
Total Income 590,232 590,232 1,819,350 1,819,350
----------------------------------------------------------
Cost of Sales:
Beginning Inventory 4,569,328 4,569,328 3,121,978 3,121,978
Purchases 460,801 460,801 1,560,551 1,560,551
Inventory adjustment 0 0 0 0
Field costs 193 193 226,427 226,427
Field travel 4,714 4,714 0 0
Sales costs and travel 38,815 38,815 0 0
Commissions 0 0 200 200
Joint venture share 0 0 0 0
Joint venture costs 0 0 0 0
-----------------------------------------------------------
Total accumulated costs 5,073,851 5,073,851 4,909,156 4,909,156
Less: Ending inventory (Note A and P) (4,569,328) (4,569,328) (3,507,800) (3,507,800)
-----------------------------------------------------------
Cost of sales 504,523 504,523 1,401,356 1,401,356
-----------------------------------------------------------
Gross margin (Loss) 85,709 85,709 417,994 417,994
-----------------------------------------------------------
Operating Expenses:
General and Administrative 103,874 103,874 202,300 202,300
-----------------------------------------------------------
Pre-Tax Profit (Loss) ($18,165) ($18,165) $215,694 $215,694
Taxes (Note I) 0 0 0 0
-----------------------------------------------------------
Operating Profit (Loss) ($18,165) ($18,165) $215,694 $215,694
===========================================================
Earnings (Loss) per Share of Common Stock and $0.000 0.000 $0.003 $0.003
Common Stock Equivalents
===========================================================
Common Stock outstanding 90,099,674 90,099,674 72,905,669 72,905,669
===========================================================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
Page 4
<PAGE>
Madera International, Inc.
UNAUDITED STATEMENT OF CASH FLOWS
For The Three Month Period Ended June 30
<TABLE>
<S> <C> <C>
CASH FLOWS IN OPERATING ACTIVITIES 1999 1998
---------------------------
Net Profit (Loss) ($ 18,165) $215,694
Profit adjustment for non-cash depreciation $ 0 $ 0
---------------------------
Adjustments to Reconcile Net Income to
Net Cash Used in Operating Activities:
(Increase) Decrease in:
Other assets 0 0
Receivables 1,223,050 60,523
Inventory 0 (385,822)
Purchase of Furniture and Equipment (180) 0
Loans to employees 0 (30,697)
Increase (Decrease) in:
Letters of Credit 0 0
Accounts payable (42,844) 56,103
Accrued expenses 43,945 0
Payment of Legal Judgment 0 0
Common stock to be issue - Acquisition 0 0
NET CASH PROVIDED BY (USED IN)
---------------------------
OPERATING ACTIVITIES 1,205,806 (84,199)
---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Increase) Decrease in:
Inter-company 0 0
Timber property purchase 0 0
Investments 0 0
Sawmill and related equipment purchase 0 0
Increase (Decrease) in:
Due to related parties (175,681) 0
Preferred stock 0 10,000
Common stock 17,488 0
Paid in capital (1,069,401) 40,000
NET CASH PROVIDED BY (USED IN) ---------------------------
FINANCING ACTIVITIES (1,227,594) 50,000
---------------------------
NET INCREASE (DECREASE) IN CASH (21,788) (34,199)
CASH, at Beginning of Period 8,996 47,186
---------------------------
CASH, at End of Period ($12,792) $ 12,987
===========================
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
Page 5
<PAGE>
Madera International, Inc.
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three Month Period Ended June 30, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Additional
Common Stock Preferred Stock Paid In Retained
-----------------------------------------------
Shares Amount Shares Amount Capital Earnings Total
-------------------------------------------------------------------------------------------
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 0
June 30, 1999:
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 (18,165) (18,165)
6/30/98
-------------------------------------------------------------------------------------------
BALANCE, June 30, 1999 90,099,674 900,997 3,000,000 30,000 37,875,735 (3,635,234) 35,171,498
-------------------------------------------------------------------------------------------
The Notes To The Financial Statements Are An Integral Part Of This Statement
</TABLE>
Page 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 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.
Page 7
<PAGE>
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.
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.
Page 8
<PAGE>
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:
1998 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
=========== ===========
Page 9
<PAGE>
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.
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.
Page 10
<PAGE>
G. Miscellaneous:
Miscellaneous assets at June 30, 1998 and 1997 consist of the
following:
<TABLE>
<S> <C> <C>
1999 1998
----------- -----------
Receivables - other $ 0 $ 32,697
Deposits 6,567 0
----------- -----------
$ 6,567 $ 32,697
=========== ===========
</TABLE>
H. Notes Payable - Related Party:
Notes payable - related party are summarized as follows:
<TABLE>
<S> <C> <C>
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
285,500 566,395
Less current portion 285,500 566,395
-------- --------
$ - $ -
======== ========
</TABLE>
I. Income Taxes:
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%.
Page 11
<PAGE>
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 cancelled.
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
June, 1998, and 1997 are summarized as follows:
<TABLE>
<S> <C> <C>
1998 1997
---------- ----------
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
inventory 0 0
Common stock issued for investment 1,748,750 0
</TABLE>
Page 12
<PAGE>
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:
<TABLE>
<S> <C> <C>
1999 22,534
2000 11,167
Thereafter -
-------
$44,299
</TABLE>
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.
Page 13
<PAGE>
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
Page 14
<PAGE>
ITEM 2. MANAGEMENT' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Three Months Ended June 30, 1999 and 1998
Financial Condition:
The Company's working capital resources during the three months ended
June 30, 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 three months ended June 30, 1998,and 1999 saw a
reduction of the Company's debt to related parties. The Company's operations for
the three months ended June 30, 1998 utilized cash resources for continuing to
build its inventory, but also provided additional working capital with increased
sales and a profitable operation. The company's operations for the three months
ended June 30, 1999 showed a small profit on reduced sales and working capital
was reduced by a marked reduction in accounts receivable. Losses for the three
months ended June 30, 1999 is $18,165.
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 June 30, 1999, the Company's sales
efforts were disrupted by external causes. A small loss for the period was the
result of this disruption and was $18,165 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.
Page 15
<PAGE>
ITEM 1. LEGAL PROCEEDINGS.
(Continued)
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.
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
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 13, 1999 /s/ Ramiro Fernandez-Moris
--------------------------
Ramiro Fernandez-Moris, Chairman,
President & CEO and acting CFO
Page 16
