-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WiNBPeeCYdxt1dLEjlw4+aTY2lyBT/GfFmNKq2qAId/v2PheguZq4qfYq03/DYA8 QOf9ZYEZsZnwIVOPanKa9g== 0001017386-00-000018.txt : 20000414 0001017386-00-000018.hdr.sgml : 20000414 ACCESSION NUMBER: 0001017386-00-000018 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 20000413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MADERA INTERNATIONAL INC CENTRAL INDEX KEY: 0000810750 STANDARD INDUSTRIAL CLASSIFICATION: ORDNANCE & ACCESSORIES, (NO VEHICLES/GUIDED MISSILES) [3480] IRS NUMBER: 953769906 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-16523 FILM NUMBER: 600165 BUSINESS ADDRESS: STREET 1: 2600 DOUGLAS ROAD SUITE 1004 CITY: CORAL GABLES STATE: FL ZIP: 33134 BUSINESS PHONE: 3057749411 MAIL ADDRESS: STREET 1: 2600 DOUGLAS ROAD SUITE 1004 STREET 2: SUITE 1004 CITY: CORAL GABLES STATE: FL ZIP: 33134 FORMER COMPANY: FORMER CONFORMED NAME: WEAVER ARMS CORP DATE OF NAME CHANGE: 19940203 10QSB 1 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 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Madera International, Inc. Balance Sheet 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 -------------------------------
Page 2 Madera International, Inc. Balance Sheet (Continued) 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
Page 3 Madera International, Inc. Unaudited Statement of Operations For The Three Month Period Ended June 30 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 $0.003 Common Stock Equivalents =========================================================== Common Stock outstanding 90,099,674 90,099,674 72,905,669 72,905,669 =========================================================== THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS STATEMENT
Page 4 Madera International, Inc. UNAUDITED STATEMENT OF CASH FLOWS For The Three Month Period Ended June 30 CASH FLOWS IN OPERATING ACTIVITIES 1999 1998 --------------------------- Net Profit (Loss) ($ 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
Page 5 Madera International, Inc. UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the Three Month Period Ended June 30, 1999 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
Page 6 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 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 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 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 G. Miscellaneous: Miscellaneous assets at June 30, 1998 and 1997 consist of the following: 1999 1998 ----------- ----------- Receivables - other $ 0 $ 32,697 Deposits 6,567 0 ----------- ----------- $ 6,567 $ 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 285,500 566,395 Less current portion 285,500 566,395 -------- -------- $ - $ - ======== ========
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 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: 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
Page 12 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. Page 13 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 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 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 -----END PRIVACY-ENHANCED MESSAGE-----