After reviewing the 1996 10k It looks like Ramiro sold his business to Lezack for shares in a much larger operation. The other parts of the operation failed. Ramiro has done a good job in turning around a terrible situation.
ITEM 1. DESCRIPTION OF BUSINESS
1. SUMMARY
Madera International, Inc., a Nevada corporation, merged in
February, 1994, with Weaver Arms Corporation, its parent
("Weaver"), with Weaver changing its name to "Madera
International, Inc" ("Registrant"). Weaver emerged from its
Chapter 11 reorganization proceeding ("Bankruptcy Proceeding") on
January 21, 1994. Weaver entered the Bankruptcy Proceeding on
July 14, 1989 and operated as a debtor-in-possession until the
Bankruptcy Court entered an order confirming Registrant's Second
Amended Plan of Reorganization (As Modified) (the "Plan") on
January 21, 1994.
Pursuant to the Plan, creditors and other claimants received
Units consisting of one (1) share of Registrant's common stock
and one (1) Class A warrant entitling the holder to purchase one
(1) share of the Registrant's common stock at a price of $3.00
per share if exercised prior to August 29, 1994. The exercise
price increases to $3.50 between August 30, 1994 and February 1,
1995 (date of termination), unless extended by the Registrant's
board of directors. Upon exercise of the Class A warrant, the
holder shall receive one (1) Class B warrant for the purchase of
one (1) share of Registrant's common stock at an exercise price
of $5.00 per share. The Class B warrant is exercisable until
February 1, 1995, unless extended by the Registrant's board of
directors. On February 28, 1996, the Registrant's board of
directors extended both the Class A warrant and the Class B
warrant until February 1, 1997.
Each Class A and Class B warrant is redeemable by Registrant
for $0.01 per warrant, at any time after January 21, 1994, upon
30 days prior written notice to the holder thereof. Upon written
notice to the appropriate parties and/or regulatory agencies, the
Registrant has the right to reduce the exercise price and/or
extend the term of the Class A and Class B warrants.
Upon confirmation of the Plan, the Registrant began to
engage in the business of harvesting and exporting timber from
Nicaraguan timberland. This timberland was previously owned by
and was purchased from Madera H.P.Z. and Importaciones y
Exportaciones, S.A. (the "Nicaraguan Corporations") in accordance
with an order entered by the U.S. Bankruptcy Court on January 13,
1994. The Nicaraguan Corporations owned the equivalent of fee
simple title to approximately 4,000 square kilometers of land,
which included the right to harvest and export the timber growing
thereon. As consideration for this purchase, the Registrant
issued a promissory note in the amount of $5,000,000 secured by
the land purchased. The Secured Timber Note was convertible at
the option of the Nicaraguan Corporations into 49% of the
Outstanding common stock and Class A warrants of the Registrant
to be issued under the Plan, and was converted effective January
20, 1994.
Subsequent to the original agreement, valuation of the
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assets acquired was received. These valuations were
significantly higher than the original estimate. Also, stock
issued for the properties was trading at a level that caused a
revaluation to occur. The new values were reflected in the
Registrant's audited financial statement for the fiscal year
ended March 31, 1994, however, further acquisitions in the same
area as reflected in the Proforma Financial Statements forced a
total revaluation of the properties. Additional stock was issued
to compensate for the revaluation. Management believes the value
of $12 Million placed on the property was fairly stated based
upon the fair value of common stock issued at the time of
conversion.
In addition to the 10,200,000 pre-split shares of the
Company's common stock issued for the acquisition of the
property, the Company issued 1,013,500 pre-split shares of its
common stock to four entities as fees associated with the
acquisition. The value of these shares was determined to be
$1.00 per share for 970,000 pre-split shares of exempt shares and
par value, or $.01 per share, for 43,500 pre-split restricted
shares.
As a result of the issuance of the aforementioned shares of
common stock, the Company's investment in the property was
$12,970,435.
During the fiscal year ending March 31, 1995, the government
of Nicaragua withdrew the extraction rights for all of the
400,000 hectares owned by the Company in Nicaragua. This
significantly reduced the value of the property. Management
decided to write-off the full $12,970,435 value of the Nicaraguan
assets during the fiscal year ending March 31, 1995. As part of
this write off, 5,000,000 shares of the 10,200,000 shares
originally issued for the acquisition were recovered and
cancelled.
In February 1994, Registrant also entered into a ten year
joint venture with Insumas Electoricos e Industriales, C.A.
("Inselinca"), a large timber concessionaire in Venezuela.
Registrant purchased a 50% interest in all of the timber
concessions owned by Inselinca, amounting to 325,000 hectares
(813,000 acres), for 1,000,000 shares of preferred stock with a
face value of $3 per share totaling $3,000,000. For conservative
valuation purposes, the timber concessions of Inselinca were
valued at $6,000,000.
Registrant had no ownership in Inselinca, but was to receive
and maintain a fifty percent (50%) ownership in the concessions
acquired by the Registrant. This transaction was reversed during
the quarter ended September 30, 1994. The Inselinca group could
not demonstrate the values previously warranted to the
Registrant, and due to conflict with the acquisition of hardwood
in other parts of South America, Management decided to reverse
the transaction. As a result, the Registrant rescinded its
original joint venture agreement with Inselinca, and cancelled
the 3,000,000 shares of its Class A Preferred stock originally
issued.
The Registrant's reversal of the aforementioned transactions
was offset by Registrant's acquisition of properties in South
America. In July 1994, Registrant entered into an agreement with
Ramiro Fernandez-Moris and his family to acquire assets held by
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them in the family owned corporation Forest and Environmental
Resources of the Amazon, Inc. ("FEROA"). These assets consist of
478,000 acres of fee owned timber producing property in Brazil,
as well as substantial acreage in Bolivia and Peru that are long
term concessions. The value of these properties is based upon an
independent third party appraisal supplied as part of the due
diligence procedure. The value used is $27,000,000. In addition
to the real property, a working sawmill was also acquired as part
of the agreement. This sawmill is located in Brazil, and is in
operation. It's appraised value is $2,600,000. It has a
capacity of 200 cubic meters a day. The final part of the
acquisition consists of existing inventory of banac and cedar at
cost of $630,000.
The consideration for this purchase was 10,000,000 shares of
Class B Preferred stock, convertible into a maximum of 15,000,000
shares of 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. A finders fee was paid for this acquisition
amounting to approximately five percent (5%) of the acquisition
value. The Preferred shares issued to the principals for this
transaction have been converted into Common shares as of March 3,
1996, the Preferred shares issued to the finders are still
outstanding.
On August 15, 1994, Registrant through its wholly-owned
subsidiary LVA, Inc. ("Newcorp") acquired one hundred percent
(100%) of the issued and outstanding shares of Las Vegas
Airlines, Inc., a Nevada Corporation ("LVA"). LVA operates
scheduled service to the Grand Canyon as well as chartered
services. In exchange for the LVA shares, Newcorp was to pay one
hundred thousand dollars ($100,000) in cash and to issue a four
hundred thousand dollar ($400,000) promissory note, payable in
monthly installments through March 1, 1995. In exchange for
fifty one percent (51%) of the LVA shares, Registrant agreed to
issue one million five hundred thousand (1,500,000) of its
convertible preferred stock to the former LVA shareholder. The
LVA shares were delivered into an escrow and were to be released
as installment payments on the Note were made by Newcorp. Prior
to any payment by Newcorp to LVA, one of LVA's planes crashed.
Due to LVA's potential liability as a result of this accident,
Newcorp withdrew from the transaction. Newcorp was formed for
the purpose of this transaction, and is non-operational.
January 10, 1995, Registrant entered into a letter
agreement with Ralph Financial Corporation ("RFC"), pursuant to
which Registrant acquired the rights to 400,000 hectares of
timber producing properties in Brazil in exchange for 12,000,000
newly issued shares of Series C Preferred Stock with a stated
value of $1.00 per share. Registrant determined that the
representations made by RFC were not accurate. Registrant
rescinded the transaction as of December 15, 1995 (See Item
13.b., Reports on Form 8-K). The shares issued by Registrant for
this transaction have been cancelled, however, legal action may
be required to recover them.
On March 30, 1995, Registrant entered into a Timber
Concession Purchase Agreement with Mandarin Overseas Investment
Co., Ltd. ("Mandarin") for the acquisition of a twenty three and
one half percent (23.5%) interest in a mahogany rich concession
in Peru. The Registrant had certain disputes with Mandarin. In
the resolution of those disputes, the Registrant acquired an
additional sixty percent (60%) interest, bringing the
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Registrant's total interest to 83.5%. The concession encompasses
30,000 hectares and has approximately 400 million board feet of
marketable hardwood in reserve. 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.
The purchase price of this acquisition is one million five
hundred thousand dollars ($1,500,000), payable as follows: the
Registrant will issue common stock in 1996 when approved by its
Board of Directors. |
