During the year ended March 31, 1998, an appraisal was performed on the  sawmill which provided a value that was $205,000 below historical cost. Management has elected to write down the asset to its appraised  value. Accordingly,  $205,000 was expensed to  Administrative  and other costs  for the year ended March 31, 1998.

E.       Investment in Timber Producing Property:

         The Company acquired 478,000 acres of timber producing property located  in Brazil  as well as  substantial  acreage  in Peru that are long term concessions from Ramiro Fernandez-Moris and his family.  Management has  used an appraisal to estimate the fair value of this investment.  It is  reasonably  possible  that a change in the  estimate  will occur in the near term.

         On May 16, 1997 the Company  entered  into an  agreement  with  various small  land  owners  in  Brazil  to  purchase  251,000  acres of timber producing   property   to  be  used  for  the   operations   of  Madera  Environmental  construction  program.  In  consideration  for the asset acquired,  the Company paid $441,000  through the private  placement of  2,000,000  common  shares  valued at  $200,000,  and the  issuance of a  $241,000 notes payable to a related party (Note G). Management has used  an  appraisal  to  estimate  the fair value of this  investment.  It is  reasonably  possible  that a change in the  estimate  will occur in the
 near term.

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.  Asseradora Itaya 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.

                                      F-10

<PAGE>

                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997
                                   (Continued)

F.       Other Investment: (continued)

         Pursuant to the purchase agreement, the Company and Mandarin agreed the  purchase  price  shall be  $1,500,000.  During the year ended March 31, 1996,  the Company issued  5,070,000  shares of its common stock with a  value of  $1,064,250  as part of this  transaction.  In  addition,  the  Company is negotiating  with Mandarin the  additional  number of common  shares to be issued as final payment of $423,750 for this  transaction.
The $423,750 is reflected in the financial statements of the Company as a liability  at March 31,  1998.  Management  has used an  appraisal to estimate the fair value of this investment.  It is reasonably  possible that a change in the estimate will occur in the near term.

G.       Notes Payable - Related Parties: