Form 10-QSB
QUARTERLY OR TRANSITION REPORT
UNDER SECTION 13 OR 15(d)
(As last amended by 34-2231, eff. 6/3/93)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter year ended September 30, 1999
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to
Forestry International, Inc.
(Name of small business issuer as specified in its charter)
0-23310
Commission File Number
Colorado 84-1116284
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1205, Ampere Street, Ste 206, Boucherville, (QC) J4B 7M6
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (514) 495-7747
Check whether the issuer (1) filed all reports required to be
filed by
Section 13 or 15(d) of the Exchange Act during the 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 X Yes No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution
of securities under a plan confirmed by a court. N/A
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of
common equity, as of the latest practicable date:
As of September 30, 1999, registrant had one class of commons
stock, of
which 19,561,833 shares were outstanding of which 982,428 are
in Stop
Transfer.
Transitional Small Business Disclosure Format (Check one):
Yes X No
(Added by Exch Act Rel No. 31905, eff 4/26/93)
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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Forestry International, Inc.
Balance Sheet
September 30
1999
1998
(Unaudited) (Unaudited)
Assets
Current Assets:
Cash and Cash Equivalents
$ 3,151 $ 834
Equipment held for sale
- 1,050
Total Current Assets
3,151 1,884
Property and Equipment
Office Equipment
6,000 6,000
Computers and Software
6,000 6,000
12,000
12,000
Less Accumulated Depreciation
11,600 8,750
Net Property and Equipment
400 3,250
Other Assets:
Deferred Income Tax Benefit
Net of Valuation Allowance of
$1,364,043 and $1,669,821
- -
Other Assets
-
-
Total Other Assets
-
-
Total Assets $ 3,551 $ 5,134
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
(See Accompanying Notes to Financial Statements)
Forestry International, Inc.
Balance Sheet
September 30
1999
1998
(Unaudited) (Unaudited)
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Current Portion of Long-Term Debt $
352,691 $ -
Accounts Payable
131,000 110,333
Accrued Payroll and Other Expenses
138,471 136,579
Income Tax Payable
42,764 40,308
Due to Related Party
10,461 6,186
Total Total Current Liabilities 675,387 293,406
Curr^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Long Term Debt - Unrelated
- 1,052,127
Contingency (Note 5)
Stockholders' Equity:
Preferred Stock, Par Value $.0001
Per Share, Authorized
10,000,000 Shares
Common Stock, Par Value $.0001
Per Share, Authorized
100,000,000 Shares: Issued and
Outstanding 18,629,333 Shares
1,739 1,586
Additional Paid in Capital
7,280,971 6,966,558
Retained Earnings
( 7,954,546) (8,308,542)
Total Stockholders' Equity
(671,836) (1,340,398)
Total Liabilities and Stockholders' Equity
$ 3,551 $ 5,134
(See Accompanying Notes to Financial Statements)
Forestry International, Inc.
Statement of Operations and Changes in Retained
Earnings
Three Months Ended
September 30 Nine Months Ended September
30
1999
1998 1999
1998
(Unaudited) (Unaudited)
(Unaudited) (Unaudited)
Operating Revenue $
- $ -
$ - $ -
Cost of Sales
- -
-
-
_________ __________
_________ _________
Gross Margin
- -
- -
Operating Expenses:
Gen. & Administrative 56,168
30,079 180,165
101,753
_________ _________
_________ _________
Operating Loss (56,168)
(30,079)
(180,165) (101,753)
_________
_________ _________
_________
Other Income (Expense):
Interest Expense (9,707)
-
(31,577) -
Total Other Income and Exp -
-
- -
_________ _________
__________ _________
Loss Before Income Taxes
(30,079)
(101,753)
Income Tax (Benefit) -
-
- -
_________ _________
_________ _________
Net Loss ($
65,875) ($ 30,079)
($ 211,742) ($101,753)
_________ _________
_________ _________
Retained Earnings, Beginning ($7,888,671)
($7,742,804)
($ 8,206,789)
Retained Earnings, Ending ($7,954,546)
($7,954,546)
($ 8,308,542)
Net Loss per Common Share ($0.003)
($0.002) ($ 0.012)
($0.006)
Weighted Average Number
of Common Shares 18,999,224
15,757,833 18,237,808
15,757,833
(See Accompanying Notes to Financial Statements)
Forestry International, Inc.
Statement of Cash Flows
Three Months Ended
September 30 Nine Months Ended
Septe,ber 30
1999 1998
1999 1998
(Unaudited) (Unaudited)
(Unaudited) (Unaudited)
Cash Flows from Operating Activities:
Net Loss ($65,875)
($ 30,079)
($211,742) ($101,752)
Adjustments to Reconcile Net Loss
Amortization & Depreciation 400
250 1200
750
(Increase) Decrease in:
Prepaid Expenses and
Deposits
- 20
330 20
Other Assets
- - - - -
- -
Increase (Decrease) in:
Acc Pay And Accrued Exp 2,507
3,930 (14,118)
18,974
Due to Related Parties (8,503)
-
10,461 (3,710)
Income Tax Payable -
-
2,456 (600)
Net Cash Used by Oper.
Activities (71,471)
(34,834)
(211,413) (86,358)
Cash Flows from (Applied to)
Investing Activities:
Purchase of Property and Equipment
16,625
59,125
Net Cash Used by Investing
Activities
- - - - 16,625
- 59,125
Cash Flows From (Applied to)
Financing Activities:
Issuance of Common Stock
for cash
52,251 18,275
110,474 25,275
Issuance of Common Stock
for services
-
74,000 -
Issuance of Notes Payable -
-
- -
Increase in Debt 9,707
-
29,123 -
Net Cash Provided by
Financing Activities 71,958
18,275
213,597 25,275
Net Increase (Decrease)
in Cash
437 66
2,184 (1,958)
Cash, Beginning of Period 2,664
748
967 2,772
Cash, End of Period 5,151
814
3,151 814
(See Accompanying Notes to Financial Statement)
FORESTRY INTERNATIONAL, INC.
Notes to Financial Statements
September 30, 1999
(1) Basis of Presentation
The accompanying unaudited financial statements
have been prepared by
Forestry in accordance with generally accepted
accounting principles
pursuant to the rules and regulations of the
Securities and Exchange
Commission. In the opinion of management, the
accompanying financial
statements include all adjustments (of a normal
recurring nature) which are
necessary for fair presentation of the financial
results for the interim periods
presented. Certain information and footnote
disclosures normally included in
financial statements have been condensed or
omitted pursuant to such rules
and regulations. Although Forestry believes that
the disclosures are adequate
to make the information presented not misleading,
it is suggested that these
financial statements be read in conjunction with
the financial statements and
the notes thereto included in the Companys 1998
Annual Report on Form
10-KSB. The results of operations for the nine
months ended September 30,
1999 are not necessarily indicative of the
results to be expected for the full
year.
(2) Computation of Net Income Per Share
Net Income per common and common equivalent share
is computed using the
weighted average number of common shares
outstanding during the periods.
Outstanding stock options are non-dilutive as of
September 30, 1999.
(3) Liquidity
The Companys financial statements have been
presented on the basis that it
is a going concern, which contemplates the
realization of assets and the
satisfaction of liabilities in the normal course
of business. The company has
a shareholders equity of ($671,836) at the
quarter ended September 30,
1999. The company generated no operating revenue
for the nine months
ended September 30, 1999. See Item 2,
Management's Plan of Operation.
(4) Concentrations
On September 30, 1999 cash in bank account did
not exceed federally insured
limits.
FORESTRY INTERNATIONAL, INC.
Notes to Financial Statements
September 30, 1999
(5) Contingency
A civil action for back-wages claims for
approximately $97,000 was filed on
March 19, 1998 by David L. Shorey, former
President of the Company in
Arizona Superior Court against Forestry
International. The Company is
vigorously defending the lawsuit against it, and
has several defenses and
claims that Forestry believes eliminate all of
David Shorey's claims.
Forestry's defense is based upon the fact that
there are no written documents
or materials that support David Shorey's claims
for compensation
independent of his own assertions. Moreover,
there are claims and setoffs
based upon Mr. Shorey's actions while he was
President, which more than
offsets his claims for compensation.
To that effect, on October 2, 1998, Forestry
filed a counterclaim against Mr.
David Shorey based on the alleged conversion of
Company property to his
own use, and also a second claim contending a
breach of fiduciary duty as an
officer and director of Forestry International,
Inc. The latter claim stipulates
that Mr. Shorey substituted a promissory note to
allow the conversion of that
debt into a recourse debt convertible into
Forestry common shares without
any consideration to the Company.
Although final resolution of this matter may not
occur until the end of 1999
or thereafter, the occurrence of the future
judgement is not determinable. As
of December 31, 1997 the Company has accrued
salaries payable to Mr.
David Shorey in the amount of $59,774.
On November 17, 1998 in the United States
District Court of Jackson
Mississippi, Forestry filed a $35,000,000 civil
action against Randy Pope,
President of Dixieland Forest Products, Inc. for
breach of contract, breach of
duty of good faith and fair dealing including
wrongful foreclosure. The
Company is seeking restitution in equity as well
as compensatory and
punitive damages as a result of Defendant's
actions. Mr. Pope filed a
counter-claim for $300,000 based on money he paid
for the operation of
Dixieland, which was payment for the benefit of
Dixieland. A trial has been
set for the trial calender commencing May 7, 2000
and ending May 25, 2000.
Unless there is a settlement before such time,
the trial should proceed within
that time frame.
FORESTRY INTERNATIONAL, INC.
Notes to Financial Statements
September 30, 1999
On March 17, 1999 the Arizona Department of
Revenue filed an amended
complaint against Forestry International, Inc.
claiming $10,869.34 in unpaid
income taxes, plus interest as of March 9, 1999
in the amount of $31,894.32
for the audited period of March 31, 1993 through
March 31, 1994. Although
the initial audit by the Arizona Department of
Revenue reflected a tax
liability base on the sale of certain common
shares by Forestry. It appears
that Forestry may not have owned the common
shares in question and
therefore, no gain should have been recognize on
the transaction. If this
assumption is correct, there should be no tax
liability related to the
transaction. Although one can never predict with
absolute accuracy the
outcome of litigation, it is our opinion that
Forestry has a good case and is
prepared to see it through conclusion. The
result of this case is presently
indeterminable.
No other legal proceedings to which the Company
is a party or to which the
property of the Company is subject is currently
pending against the Company,
and no such material proceeding is known to be
contemplated against any
officer or director which is adverse to the
Company, except as mentioned in
the preceding paragraphs.
.
ITEM 2. MANAGEMENTS PLAN OF OPERATION.
Forestry International's initial involvement and
primary business was the
acquisition of clonal technology relating to the
accelerated development of
rapid-growth hardwood trees as an alternative
wood species source. Effective
September 5, 1997, the Company took another
direction with a new
management team and a growth strategy plan.
The Company sold its interest in the remaining
Paulownia plantation located
in Sparta Georgia to pursue other business
opportunities. While actively
negotiating on an acquisition and until a new
business venture is determined,
the Company has eliminated the majority of its
payroll and will utilize
contract consultants to maintain its reporting
requirements. It is anticipated
that only nominal funding should be necessary for
the next several months,
which amounts should be available from equity or
debt financing.
The Company, as of September 30, 1999 had net
operation loss
carryforwards for federal and state income tax
purposes of approximately
$3,984,000 and $2,631,000 respectively.
Management plans to use these
losses to its advantage to save taxes on the
operations of future acquisitions.
Forestry will consult tax specialists to
determine to which extent this may be
used to its greatest benefit.
New management has determined that the Company's
new business strategy
plan is primarily to seek one or more potential
businesses which may, in the
opinion of its Board of Directors and Principal
Consultant, warrant the
Company's involvement. In seeking to attain its
business objective, the
Company will mainly focus on targets within the
Forest Products Industry
but will not restrict its search to that
industry. Forestry may investigate
businesses of essentially any kind or nature,
including but not limited to, high
technology, manufacturing, service, research and
development,
communications and others. Management's
discretion is otherwise
unrestricted, and it may participate in any
business whatsoever which may,
in the opinion of management, meet the business
objectives discussed herein.
The Company may acquire any entity or position in
a company which is (i)
a fully integrated corporation in a specific
segment of its industry; or (ii) in
its preliminary or development stage; or (iii) is
a going concern. In other
instances, possible business endeavors may
involve the acquisition of or a
merger with a company that does not need
additional equity, but seeks to
establish a public trading market for its
securities. Businesses that seek the
Company's participation in their operations may
desire to do so to avoid what
such businesses deem to be adverse factors
related to undertaking a public
offering. Such factors include substantial time
requirements and legal costs,
along with other conditions or requirements
imposed by Federal and State
securities laws.
Since new management got involved in the daily
operation of Forestry
International, the analysis of potential business
endeavors will be undertaken
by or under the supervision of the Company's
Directors and their principal
consultants. The Directors and principal
consultants are comprised of
individuals of varying business experiences, and
management will rely on
their own business judgment in formulating
decisions as to the types of
businesses that the Company may acquire or in
which the Company may
participate.
In analyzing prospective businesses, management
will consider such factors
as available technical, financial and managerial
resources, working capital
and other financial requirements such businesses
history of operations, if any,
and prospect for the future, the nature of
present and expected compensation,
the quality and experience of management
services, the depth of that
management, the potential for further research
and development and risk
factors. Forestry will also consider their niche
market, the opportunities to
improve operating margins, potential growth and
expansion, the economic of
the region in which the target is located, the
potential for profit, the perceived
public recognition or acceptance of such
businesses, products, services and
other relevant factors. The Company will seek
opportunities in the United
States, with an emphasis in the southeast.
Canada will also be considered in
future development program. Management believes
that geographic and
customer diversification will enhance the
Company's stability to fluctuations
in regional economic conditions or changes that
affect particular market
segments.
Generally, the Company will analyze all available
information and make a
determination based upon a composite of available
facts, without reliance
upon a single factor as controlling.
Forestry has targeted several acquisitions to
fulfill its management objectives.
Also, it is anticipated that prospective
businesses will be available to the
Company from various sources, including its
management, its professional
advisors, securities broker dealers, venture
capitalists members of the
financial community, and others who may present
unsolicited proposals. In
some instances, the Company may publish notices
or advertisements in
financial or trade publications seeking potential
business acquisition. In
certain circumstances, the Company may agree, in
connection with an
acquisition, to pay a finder's fee or other
compensation to an investment
banking firm or other person who submits to the
Company a business in
which Forestry participates.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
N\A
Item 2. Changes in Securities
N\A
Item 3. Defaults Upon Senior Securities
N\A
Item 4. Submission to a Vote of Security Holders
N\A
Item 5. Other Information
N\A
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
In accordance with Section 13 or 15(d) of the
Exchange Act, the registrant
caused this report to be signed on its behalf by
the undersigned, thereunto
duly authorized.
Forestry International, Inc.
(Registrant)
By: /s/ Louis R. Turp, President
(Signature and Title)
November 10, 1999
Date
