UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the quarterly period ended January 31, 2007
Commission File Number 000-27211
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(Exact name of small business issuer as specified in its chapter)
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COLORADO 84-1469319
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(State or other jurisdiction of (IRS Employer Identification Number)
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10088 6th Street, Suite G, Rancho Cucamonga, CA 91730
(Address of principal executive offices)
(303) 741-5785
(Issuer's telephone number)
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(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 X NO
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES NO X
As of January 31, 2007, there were 28,988,391 shares of the registrant's sole
class of common stock issued and outstanding.
Transition Small Business Disclosure Format (check one): YES NO X
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Condensed Consolidated Balance Sheet -January 31, 2007 and April 30, 2006 F-2
Condensed Consolidated Statements of Operations - Three and Nine months ended
January 31, 2007 and 2006 and March 16, 1998 (Inception) to January 31, 2007 F-3
CondensedConsolidated Statements of Cash Flows - Nine months ended January 31,
2007 and 2006 and March 16, 1998 (Inception) to January 31, 2007 F-4
Notes to Condensed Consolidated Financial Statements F-5
Item 2. Management's Discussion and Analysis 1
Item 3. Controls and Procedures 3
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 4
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 4
Item 3. Defaults Upon Senior Securities - Not Applicable 5
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 5
Item 5. Other Information - Not Applicable 5
Item 6. Exhibits 5
SIGNATURES 6
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
9175 Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Medina International Holdings, Inc.
We have reviewed the accompanying balance sheet of Medina International
Holdings, Inc. as of January 31, 2007 and the related statements of operations
for the three-months and nine-months ended January 31, 2006 and 2007, and the
related statement of cash flows for the nine-months ended January 31, 2007 and
2006. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2, conditions
exist which raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Jaspers + Hall, PC
Denver, Colorado
March __, 2007
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Balance Sheet
(Unaudited)
January 31, April 30,
2007 2006
---- ----
Assets:
Current assets:
Cash $ 1,453 $ 1,968
Inventory 11,428 11,428
Other receivables (Note 3) 5,118 -
Prepaid expenses - 800
---------- ---------
Total current assets 17,999 14,196
---------- ---------
Fixed assets:
Mold for fire rescue boats - 21 ft 236,435 188,910
---------- ---------
Other assets:
WIP - Mold for fire rescue boat - 15ft 100,332 -
Investment 25,000 25,000
---------- ---------
Total other assets 361,767 25,000
---------- ---------
Total assets $ 379,766 $ 228,106
========== ==========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 110,854 $ 79,784
Accrued interest payable 10,814 -
Lines of credit (Note 5) 51,718 25,765
Note payable 20,500 17,000
Short-term borrowing from stockholders (Note 6) 232,148 129,991
----------- ----------
Total liabilities (all current) 426,034 252,540
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Commitments and contingencies (Note 8)
Stockholders' deficit (Note 7):
Common stock; $0.0001 par value; 100,000,000 shares
Shares committed to be issued 12,705 -
Additional paid-in capital 1,636,794 1,110,459
Subscription receivable (7,000) -
Deficit accumulated during the development stage (1,691,777) (1,137,792)
----------- ----------
Total stockholders' deficit ( 46,268) ( 24,434)
----------- ----------
Total liabilities and stockholders' deficit $ 379,766 $ 2228,106
=========== ==========
See accountants' review report and accompanying notes to financial statements.
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended March 16, 1998
January 31, January 31, (Inception) to
January 31,
2007 2006 2007 2006 2007
---- ---- ---- ---- ----
Income $ - - - - 25,000
--------- --------- --------- --------- -----------
Operating Expenses:
Professional fees 8,334 1,412 34,412 5,157 143,275
Registration fees - - 540 - 540
General and
administration expenses 20,931 2,427 506,548 18,242 1,559,963
---------- ---------- ---------- ---------- ------------
Total operating expenses 29,275 3,839 541,500 23,399 1,703,778
---------- ---------- ---------- ---------- ------------
Other income (expense):
Interest expense ( 5,790) ( 1,263) ( 13,414) ( 1,821) ( 13,980)
Other expense 930 - 930 - 982
---------- --------- ---------- --------- ------------
( 4,860) ( 1,263) ( 12,485) ( 1,821) ( 12,998)
---------- --------- ---------- --------- ------------
Net loss from operations $( 34,135) ( 5,102) ( 553,985) ( 25,220) ( 1,691.776)
======== ========= ========= ========= ===========
Weighted average number of shares
outstanding 25,969,245 27,731,539 22,846,625 27,115,990
Net loss per share $( 0.0013) ( 0.0002) ( 0.0242) ( 0.0009)
======== ========= ========== =========
See accountants' review report and accompanying notes to financial statements.
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
March 16, 1998
Nine Months Ended (Inception) to
January 31, January 31,
2007 2006 2007
---- ---- ----
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash used
in operating activities:
Net (loss) $( 553,985) $( 25,220) $( 1,691,776)
Non-cash items included in loss:
Stock issued for services 472,152 1,189 1,469,859
Stock issued in lieu of debt 17,000 - 17,000
Changes in assets and liabilities:
Decrease in prepaid expenses 800 - -
Increase in inventory - ( 11,428) ( 11,428)
Increase in other receivables ( 5,118) - ( 5,118)
Increase in accounts payable and accrued liabilities 41,883 10,000 121,667
Increase in customer deposits 3,500 4,001 -
---------- --------- ----------
Total adjustments 530,217 3,762 1,591,980
---------- ---------- ----------
Net cash used in operating activities ( 23,768) ( 21,458) ( 99,797)
---------- --------- ----------
Cash flows from investing activities:
Purchase in investment - - -
Purchase of molds ( 147,857) ( 161,773) ( 336,767)
---------- ---------- ----------
Net cash used by investing activities ( 147,857) ( 161,773) ( 336,767)
---------- ---------- ----------
Cash flows from financing activities:
Proceeds (payments) to/from short-term borrowing 102,157 - 232,148
Increase in lines of credit 25,953 23,999 57,718
Proceeds from note payable - 28,167 -
Issuance common stock for cash 43,000 40,252 154,151
---------- --------- ----------
Net cash provided by financing activities 171,110 192,418 438,017
---------- --------- ----------
Increase (decrease) in cash and cash equivalents ( 515) 9,187 1,453
Cash and cash equivalents, beginning of period 1,968 180 -
---------- --------- ----------
Cash and cash equivalents, ending of period $ 1,453 9,367 1,453
========== ========= ==========
(Continued)
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
(Continued)
March 16, 1998
Nine Months Ended (Inception) to
January 31, January 31,
------------------------------------------- ---------------------
2007 2006 2007
---- ---- ----
Supplemental disclosure of cash flow information:
Interest paid $ - $ - $ -
======== ========= =========
Taxes paid $ - $ - $ -
======== ========= =========
See accountants' review report and accompanying notes to financial statements.
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
Notes to the Condensed Consolidated Financial Statements
Nine Months Ended January 31, 2007
(Unaudited)
NOTE 1. GENERAL:
MEDINA INTERNATIONAL HOLDINGS, INC (the "Company") was formed on June 23, 1998.
The Company contracted to purchase the low power television license and station
serving Estes Park, Colorado. It planned to operate the station to broadcast
local programming mixed with appropriate national programming. The Company was
unable to complete purchase arrangements and withdrew from the contract. The
Company was seeking other low power station opportunities in market areas in the
western US. The Company, in 2002, ceased all activities involving low power
television business.
On January 28, 2002, the Company entered into an Asset Purchase Agreement with
Mako Communications, LLC to sell its low power television station, W67AF of Rock
Harbor, Florida, subject to FCC approval of the license change for $25,000. The
license transfer was approved and the sale occurred on March 28, 2002. The
Company sold its Monroe County contract for $25,000 in 2002.
Medina Marine, Inc. ("Medina Marine"), is the Company's wholly owned subsidiary.
Medina Marine was organized to conduct the Company's business of producing fire,
rescue and recreational boats.
The Company has commenced boat manufacturing business operations and is seeking
capital to operate. Management intends to manufacture and sell recreational,
Fire CAT and Rescue CAT boats. The Company purchased two 15' "V" bottom FRJ Hull
& deck, Plug for 15' "V" bottom Fire Rescue Jet, Plug for 12' "V" bottom FRJ
Hull, Fiberglass parts for 12' and 15' "V" bottom FRJ and parts required for
final assembly.
Going Concern
In view of the matters described above, recoverability of a major portion of the
recorded asset amounts shown in the accompanying balance sheet is dependent upon
continued operations of the Company, which in turn is dependent upon the
company's ability to raise additional capital, obtain financing and to succeed
in its future operations. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should the company be unable to continue as a going concern.
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
Notes to the Condensed Consolidated Financial Statements
Nine Months Ended January 31, 2007
(Unaudited)
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States, which
contemplates continuation of the Company as a going concern. On January 31st,
2007, the Company's current liabilities exceeded its current assets by $408,053.
Also, the Company's operations generated no income during the period ended
January 31, 2007 and the Company's accumulated deficit during its developmental
stage is $1,691,777.
Management has taken various steps to revise its operating and financial
requirements, which we believe are sufficient to provide the Company with the
ability to continue on in the subsequent year. Management devoted considerable
effort during the period ended January 31st, 2007 towards management of
liabilities and improving the Company's operations. Management believes that the
above actions will allow the Company to continue its operations through the next
fiscal year.
The future success of the Company is likely to be dependent on its ability to
attain additional capital to develop its proposed products and ultimately, upon
its ability to attain future profitable operations. There can be no assurance
that the Company will be successful in obtaining such financing, or that it will
obtain positive cash flow.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Presentation of Interim Information
In the opinion of the management of MEDINA INTERNATIONAL HOLDINGS, INC. AND
SUBSIDIARY, that the accompanying unadudited financial statements include all
normal adjustments considered necessary to present fairly the financial position
as of January 31, 2007, and the results of operations for the three-month and
nine-month periods ended January 31st, 2007 and 2006, and cash flows for the
nine-month period ended January 31, 2007 and 2006. Interim results are not
necessarily indicative of results for a full year.
The financial statements and notes to the financial statements are presented as
permitted by Form 10-QSB, and do not contain certain information included in the
Company's audited financial statements and notes for the fiscal year ended April
30, 2006.
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
Notes to the Condensed Consolidated Financial Statements
Nine Months Ended January 31, 2007
(Unaudited)
Use of Estimates
The preparation of financial statements in conformity with U.S. 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 the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash
The Company considers all liquid investments with a maturity of three months or
less from the date of purchase that are readily convertible into cash to be cash
equivalents. The Company maintains its cash in bank deposit accounts that may
exceed federally insured limits. The company has not experienced any losses in
such accounts. At January 31, 2007, the Company had $1,453 in cash.
Inventory
Property & Equipment
Capital assets are stated at cost. Equipment consisting of computers is carried
at cost. Depreciation of equipment is provided using the straight-line method
over the estimated useful lives (5-7 years) of the assets. Expenditures for
maintenance and repairs are charged to expense as incurred.
At January 31, 2007, fixed assets consisted of the following:
Mold - 21' Fire/Rescue boat - $268,535
Mold work in process - 15' Fire/Rescue boat $ 68,232
---------
Net Fixed Asset $336,767
---------
Long-Lived Assets
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting provisions of Accounting
Principles Board Opinion No. 30, "Reporting the Results of Operations for a
Disposal of a Segment of a Business." The Company periodically evaluates the
carrying value of long-lived assets to be held and used in accordance with SFAS
144. SFAS 144 requires impairment losses to be recorded on long-lived assets
used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amounts. In that event, a loss is recognized based on the
amount by which the carrying amount exceeds the fair market value of the
long-lived assets. Loss on long-lived assets to be disposed of is determined in
a similar manner, except that fair market values are reduced.
Revenue Recognition
Revenue Recognition is recognized when earned. The Company's revenue recognition
policies are in compliance with Staff accounting bulletin (SAB) 104. Sales
revenue is recognized at the date of shipment to customers when a formal
arrangement exists, the price is fixed or determinable, the delivery is
completed, no other significant obligations of the Company exist and
collectability is reasonably assured. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as unearned
revenue.
Income Taxes
Deferred income tax assets and liabilities are computed annually for differences
between the financial statements and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted laws
and rates applicable to the periods in which the differences are expected to
affect taxable income (loss). Valuation allowance is established when necessary
to reduce deferred tax assets to the amount expected to be realized.
Comprehensive Loss
Accounting principles generally require that recognized revenue, expenses, gains
and losses be included in net income. Certain statements, however, require
entities to report specific changes in assets and liabilities, such as
unrealized gains and losses on available-for-sale securities, as a separate
component of the equity section of the balance sheet. Such items, along with net
income, are components of comprehensive income.
Issuance of Shares for Services
The Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable.
Fair Value of Financial Instruments
Statement of Financial Accounting Standard No. 107, "Disclosures about Fair
Value of Financial Instruments" ("SFAS No. 107"), requires that the Company
disclose estimated fair values of financial instruments. The carrying amounts
reported in the statements of financial position for current assets and current
liabilities qualifying, as financial instruments are a reasonable estimate of
fair value.
Basic and Diluted Net Loss Per Share
Net loss per share is calculated in accordance with the Statement of Financial
Accounting Standards No. 128 (SFAS No. 128), "Earnings per Share". SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB No. 15). Net loss per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.
NOTE 3. OTHER RECEIVABLE:
On January 31, 2007, other receivable consisted of $5,118 of which $5,118 was
owed to the Company by Genesis Companies Group, Inc. ("Genesis").
NOTE 4. INVESTMENT:
The Company purchased 500,000 shares of the common stock of Genesis in exchange
for 50,000 shares of the Company's common stock valued at $25,000 ($0.50 per
share).
NOTE 5. LINE OF CREDIT
The Company has a demand bank line of credit totaling $20,000, under which the
Company may borrow on an unsecured basis at the bank's prime rate. At January
31, 2007, $19,248 was outstanding under this line of credit.
The Company has a demand bank line of credit totaling $20,000, under which the
Company may borrow on an unsecured basis at the bank's prime rate. At January
31, 2007, $20,000 was outstanding under this line of credit.
The Company has a credit card with a limit of $10,000, under which the Company
may borrow on an unsecured basis at the bank's prime rate. At January 31, 2007,
$10,249 was owed in connection with the credit card.
Medina Marine has a credit card with a limit of $5,000, under which Medina
Marine may borrow on an unsecured basis at the bank's prime rate. At January 31,
2007, $1,896.28 was owed on the credit card.
NOTE 6. STOCKHOLDER'S LOAN
At January 31, 2007, Stockholder's loan consisted of the following:
Stockholder's loan from stockholder
of the Company, unsecured,
8% interest per annum, $ 97,902
Stockholder's loan from stockholder
of the Company, unsecured
8% interest per annum 134,246
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Total $232,148
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NOTE 7. STOCKHOLDERS' DEFICIT
Common Stock
At January 31, 2007, the Company has authorized for issue, 100,000,000 shares of
its common stock with a par value of $0.0001. On January 31, 2007, the Company
had 30,103,641 shares of its common stock issued and outstanding.
The following capital stock transactions have occurred during the nine-month
period ended January 31, 2007:
The Company issued 895,000 restricted shares of its common stock for
services valued at $449,230;
The Company issued 18,750 restricted shares of its common stock for
directors services valued at $9,375;
The Company issued 300 restricted shares of its common stock for rent
valued at $150;
The Company issued 1,200 restricted shares of its common stock for royalty
valued at $600;
The Company issued 100,000 restricted shares of its common stock for in
exchange for cash of $50,000; and
The Company issued 100,000 restricted shares of its common stock for
Royalty valued at $17,000.
NOTE 8. COMMITTMENTS & CONTINGENCIES
Rental Leases
The Company sub-leases an 11,000 square-foot manufacturing facility for $3,000
per month on a month-to-month basis at 255 S. Leland Norton Way, San Bernardino,
CA 92408.
The Company rents a mailbox from Hollytouch Corporation for $50 per month on a
month-to-month basis at 10088 6th Street, Suite G, Rancho Cucamonga, 91730.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Cautionary and Forward Looking Statements
In addition to statements of historical fact, this Form 10-QSB contains
forward-looking statements. The presentation of future aspects of MEDINA
INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY ("MEDINA INTERNATIONAL HOLDINGS,
INC. AND SUBSIDIARY," "MIH," "the Company," "we," "us," "our," or "issuer")
found in these statements is subject to a number of risks and uncertainties that
could cause actual results to differ materially from those reflected in such
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis only as of the
date hereof. Without limiting the generality of the foregoing, words such as
"may," "will," "expect," "believe," "anticipate," "intend," or "could" or the
negative variations thereof or comparable terminology are intended to identify
forward-looking statements.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause actual results to be materially different from any
future results expressed or implied by us in those statements. Important facts
that could prevent the Company from achieving any stated goals include, but are
not limited to, the following:
(a) Volatility or decline of the Company's stock price;
(b) Potential fluctuation in quarterly results;
(c) Failure of the Company to earn revenues or profits;
(d) Inadequate capital to continue or expand its business,
inability to raise additional capital or financing to implement
its business plans;
(e) Failure to achieve a business;
(f) Rapid and significant changes in markets;
(g) Litigation with or legal claims and allegations by
outside parties;
(h) Insufficient revenues to cover operating costs.
There is no assurance that the Company will be profitable, the Company may not
be able to successfully develop, manage or market its products and services, the
Company may not be able to attract or retain qualified executives and personnel,
the Company's products and services may become obsolete, government regulation
may hinder the Company's business, additional dilution in outstanding stock
ownership may be incurred due to the issuance of more shares, warrants and stock
options, or the exercise of warrants and stock options, and other risks inherent
in the Company's businesses.
We undertake no obligation to publicly revise these forward-looking statements
to reflect events or circumstances that arise after the date hereof. Readers
should carefully review the factors described in other documents the Company
files from time to time with the Securities and Exchange Commission ("SEC"),
including the Quarterly Reports on Form 10-QSB and Annual Report on Form 10-KSB
and any Current Reports on Form 8K.
Management's Discussion and Analysis of Financial condition and Results of
Operations
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution the reader
regarding this report and in any other statement made by, or on our behalf,
whether or not in future filings with the SEC. Forward-looking statements are
statements not based on historical information and which relate to future
operations, strategies, financial results or other developments. Forward looking
statements are necessarily based upon estimates and assumptions that are
inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
Results of Operations
The Company did not recognize any revenues during the nine-months periods ended
January 31, 2007 and 2006. The Company did not recognize sales, as the Company
is in the process of manufacturing fire and rescue boats for sale.
Operating Expenses
The Company incurred total operating expenses of $541,500 for the nine months
ended January 31, 2007 as compared to $23,399 for the nine months ended January
31, 2006 ($29,275 and $3,839 for the three months ended January 31, 2007 and
2006, respectively). The operating expenses during the nine-month period ended
January 31, 2007, primarily included $34,412 in professional fees and $506,548
in other general and administration expenses for the nine-month period ending
January 31, 2007 compared to the nine-month period ended January 31, 2006 which
included $5,157 in profession fees and $18,242 for general and administration
expenses.
During the nine-month period, the Company recognized interest expense of $13,414
compared to interest expense of $1,821 during the nine-month period of January
31, 2006. During the nine-month period ended January 31, 2007, the Company
recognized interest income of $930 compared to $0 for the nine-month period
ended January 31, 2006.
-2-
Net Loss
The Company recognized a net loss of $553,985 for the nine-month period ended
January 31, 2007 compared to a new loss of $25,220 for the nine-month period
ended January 31, 2006 ($34,135 and $5,102 for the three-month period ended
January 31, 2007 and 2006, respectively). The net loss per share for the
nine-months ended January 31, 2007 was $0.0242 compared to $0.0009 for the
nine-month period ended January 31, 2006 (net loss per share for the three-month
period ended January 31, 2007 was $0.0013 compared to net loss per share of
$0.0002 for the three-month period ended January 31, 2006.
Liquidity and Capital Resources
As of January 31, 2007, the Company had $1,453 in cash and other current assets
of $17,999. The Company's total current liabilities were $426,034 as of January,
31, 2007, which was represented mainly by accounts payable of $110,854, advances
from customers in the form of a note payable of $20,500, lines of credits
totaling $51,718 and short-term loans from stockholders totaling $232,148. In
addition, the Company had accrued interest payable of $10,814. At January, 31,
2007, the Company's current liabilities exceeded current assets by $408,153.
The Company used $23,768 in operating activities during the nine-month period
ended January 31, 2007 compared to $21,458 for the nine-month period ended
January 31, 2006.
The Company used cash of $147,857 in investing activities during the nine-month
period ended January 31, 2007 on the manufacturing of molds for the fire and
rescue boats. During the nine-months ended January 31, 2006, the Company had
used cash $161,773 for the same purpose.
During the nine-month period ended January 31, 2007, the Company obtained
$171,110 from financing activities, which included the $25,953 increase in the
lines of credits held by the Company and $102,157 obtained in short-term loans
from stockholders of the Company. In addition, the Company sold shares of its
common stock for $43,000. During the nine-month period ended January 31, 2006,
the Company obtained $192,418 through its financing activities.
The Company has incurred an accumulated deficit as of January 31, 2007 of
$1,691,777. The Company does not have capital sufficient to meet its cash needs,
including the costs of compliance with the continuing reporting requirements of
the Securities Exchange Act of 1934. Management will have to seek loans or
equity placements to cover such cash needs and cover outstanding payables. Lack
of existing capital may be a sufficient impediment to prevent us from
accomplishing the goal of expanding operations. There is no assurance, however,
that without funds we will ultimately be able to carry out our business. We will
need to raise additional funds to expand our business activities in the future,
and prepare a private offering memorandum to attempt to raise operating capital.
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any
-3-
additional funds will be available to us to allow us to cover our expenses as
they may be incurred. Irrespective of whether our cash assets prove to be
inadequate to meet our operational needs, we might seek to compensate providers
of services by issuances of stock in lieu of cash.
Item 3. Controls and Procedures.
Our management has evaluated the effectiveness of the issuer's disclosure
controls and procedures as of the end of the period of the report (evaluation
date) and has concluded that the disclosure controls internal controls and
procedures are adequate and effective based upon their evaluation as of the
evaluation date.
There were no changes in the Company's internal control over financial reporting
identified in connection with the Company evaluation required by paragraph (d)
of Rule 13a-15 or Rule 15d-15 under the Exchange act that occurred during the
small business issuers second fiscal quarter that has materially affected or is
reasonable likely to materially affect, the small business issuers internal
control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material legal proceedings which are pending or have been
threatened against us of which management is aware.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The Company has issued during the nine-month period ending January 31, 2007,
restricted shares of its common stock, as set forth below, pursuant to
exemptions from registration under Section 4(2), 4(6) and Regulation D of the
Securities Act of 1933, as amended.
The Company issued 895,000 restricted shares of its common stock for
services valued at $449,230.
The Company issued 18,750 restricted shares of its common stock for
directors services valued at $9,375.
The Company issued 300 restricted shares of its common stock for rent
services valued at $150.
The Company issued 1,200 restricted shares of its common stock for royalty
valued at $600.
The Company issued 100,000 restricted shares of its common stock for cash
valued at $50,000.
The Company issued 100,000 restricted shares of its $.0001 par value common
stock for royalty valued at $17,000.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-QSB. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-B.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act
Exhibit 31.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
Exhibit 32.2 Certification of Principal Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
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SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MEDINA INTERNATIONAL HOLDINGS, INC.
(Registrant)
March 21, 2007 Daniel Frank Medina
President
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