SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED: APRIL 30, 2007
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commissions file number 000-27211
MEDINA INTERNATIONAL HOLDINGS, INC
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(Exact name of registrant as specified in its charter)
Colorado 84-1469319
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(State of incorporation) (I.R.S. Employer Identification No.)
10088 6th Street, Suite G, Rancho Cucamonga, CA 91730
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 422-8127
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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Title of each class
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 the filing
requirements for at least the past 90 days.
Yes [X] No [ ]
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.
Yes [ ] No [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]
State issuer's revenues for its most recent fiscal year. $0
There were 31,988,541 shares of the Registrant's common stock outstanding as of
July 16, 2007. The aggregate market value of the 9,514,432 shares of common
stock held by non-affiliates of the Registrant is approximately $1,902,886 based
on the closing market price of $0.20 per share on July 16, 2007.
Transitional Small Business Disclosure Yes [ ] No [X]
TABLE OF CONTENTS
PART I
Item 1. Description of Business 1
Item 2. Description of Property 14
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 14
Item 6. Management's Discussion and Analysis or Plan of Operation 16
Item 7. Financial Statements 19
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 19
Item 8A. Controls and Procedures 19
Item 8B Other Information 19
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 19
Item 10. Executive Compensation 23
Item 11. Security Ownership of Certain Beneficial Owners and Management 24
Item 12. Certain Relationships and Related Transactions 26
Item 13. Exhibits 27
Item 14. Principal Accountant Fees and Services 28
SIGNATURES 29
PART I
ITEM 1. DESCRIPTION OF BUSINESS
We were incorporated in 1998 in the state of Colorado as Colorado Community
Broadcasting, Inc. Our corporate offices are located at 10088 6th Street, Suite
G, Rancho Cucamonga, California 91730, our telephone number is (909)522-4414.
Our common stock is traded on the Over-the-Counter Bulletin Board and its
trading symbol is MIHI.OB.
In 2005, we changed our name to Medina International Holdings, Inc. Prior to
2005, we originally intended to purchase low power television licenses or
stations and planned to broadcast local programming mixed with appropriate
national programming. We were unsuccessful in our attempt to enter the low power
television business.
In 2004, after the change of our management, the board and shareholders approved
the name change to Medina International Holdings, Inc. At that time, Messrs.
Medina and Mankal were appointed the President and Chief Financial Officer,
respectively and were also appointed directors of the Company. Since these
organizational restructurings, we have pursued a business plan that focuses on
the manufacturing of watercraft for not only recreational use, but also for
rescue operations.
We operate our watercraft manufacturing activities, through our wholly-owned
subsidiary, Medina Marine, Inc. ("Medina Marine"). Medina Marine was
incorporated in May 2006, in the state of California. Our wholly-owned
subsidiary, Medina Marine, Inc. maintains a website at www.medinamarine.com.
Information on Medina Marine's website is not part of this Annual Report and you
should not rely on it in deciding whether to invest in our common stock.
PRODUCTS
We will offer, through Medina Marine, four watercraft products for both
recreational use and for use by fire and/or rescue operations.
1. The Vortex Recreational Boat ("the Vortex"). The Vortex
is a 22' long boat that can seat up to 7 individuals and
its intended use is solely for recreational purposes.
The Vortex has a V-birth cabin that can seat up to 2
individuals. The Vortex is capable of reaching speeds as high
as 60 miles per hour.
2. 12' Commercial Rescue Boat ("12' Rescue"). The 12' Rescue boat
is intended to seat up to 6 people at a time, while including
a containment area for multiple patients. The 12' rescue boat
contains a jet engine, which allows it to reach speeds of 50
miles per hour. The jet engine also allows the boat to obtain
high speeds from a stand still, in a matter of seconds, while
still being able to be stopped from such high speeds. The
smaller of the boats to be offered, it size and weightlessness
means it can be used in smaller water areas.
3. The 15' Commercial Rescue and Fire Boat ("15' Rescue"). The
15' Rescue boat is designed using the patented v-hull design.
The v-hull provides the boat with better stability and
provides the boat with quicker response capabilities. The boat
has been designed with a jet engine that allows the boat to
reach speeds up to 50 miles per hour. The boat has the same
capabilities as the 12' Rescue boat. The difference is in the
usage of the watercraft. The 15' Rescue is designed to also
include a patented water pump, at the designation of the
customer. The inclusion of a water pump allows the boat to be
used in fighting fires.
4. The 21' Commercial Fire and Rescue Boat ("21' Rescue"). The
21' Rescue boat is the longest of the rescue boats offered.
The boat is designed to provide greater stability, while
providing more room for patients and crew members. The boat
incorporates a CAT bottom hull for additional stability. The
boat is designed with five medical compartments, allowing the
boat to carry a greater amount of medical equipment.
Additionally, the boat is designed with a dive area in both
the front and the back of the boat. The 21' Rescue, like the
15' Rescue is designed to include a water pump for fighting
fires.
1
We have recently completed the mold to be used in the manufacturing of the 21'
Rescue boat.
Our watercraft products are made out of fiberglass materials. We are using
fiberglass to build our watercraft products in order to provide durability and
enhance the speeds that the watercraft need to be able to obtain while holding
their maximum capacity. In addition, the use of fiberglass means that any
repairs or damage to the interior or exterior of the craft is easily repaired.
The boats incorporate an enclosed platform in their designs, which prevents the
boats from flooding and therefore provides a greater stability.
All of our watercrafts use jet propulsion for their power. The use of jet
engines allows the watercraft to operate in waters with depths of less than 10
feet of water. The jet engine has a hydro surge intake, which allows the craft
to continue to operate in conditions where seaweed is present. In addition, the
jet engines provide a greater safety to the rescuers and those being rescued.
Most rescue watercraft use propeller engines, however, our jet propulsion
watercrafts allow the crew members to get extremely close to the victims without
worry of doing further injury to those being rescued.
The 15' Rescue and 21' Rescue boats are designed with water pump inserts. The
water pump inserts allows these boats to either be used as just rescue crafts or
for fire fighting. This innovation in design will allow us to market these boats
to both fire departments and rescue departments. The water pump used in these
designs uses water found in the bottom of the boat and is able to achieve sprays
of water at 750 gallons per minute without compromising the stability of the
craft.
LICENSES
In manufacturing our watercrafts we use several patented designs. The patents
and patents applications used are not owned by or being developed by the
Company. Rather, the Company licenses the right to use the patents from Mr.
Albert Mardikian. In connection with the manufacturing of our watercrafts, we
have the following licenses with Mr. Mardikian.
1. In February 2005, we signed a license agreement ("the Vortex License") with
Mr. Mardikian to manufacture and sell our Vortex boats. The Vortex License
has a term of 5 years and provides an option to renew by the Company, as
long as the Company is not in default on the terms of the license
agreement. The Vortex License grants the Company an exclusive right to use
the design in Vortex boats. The Vortex License provides for royalty
payments equal to 2% of the gross sales, less sales returns for a period of
5 years. The Vortex License also requires a minimum license payment of $200
per calendar quarter.
2. In January 2006, we signed a license agreement ("the Water Pump License")
with Mr. Mardikian to use his water pump patent (United States Patent
6,343,964) in the fire and rescue boats designed by us. The license has a
term of 5 years and provides an option to renew by the Company, as long as
the Company is not in default on the terms of the Water Pump License. The
Water Pump License grants us to a non-exclusive right to use the patent in
the manufacturing of both the 15' Rescue and the 21' Rescue boats. The
Water Pump License provides for a royalty payment equal to 1% of the gross
sales, less sales returns, up to January 31, 2008, at which time the
royalty payment will increase to 1.5% of the gross sales, less sales
returns, till January 31, 2011. The Water Pump License does require a
minimum payment of $600 per every six-month period.
2
3. In June 2006, we signed a license agreement ("15' Rescue Design License")
with Mr. Mardikian to use his design for the manufacturing of our 15'
Rescue boats. The 15' Rescue Design License has a term of 5 years and
provides an option to renew by the Company, as long as we are not in
default of any of the terms of the 15' Rescue Design License. The 15'
Rescue Design License grants us a non-exclusive right to use the design of
the 15' Rescue boat through out the world. The 15' Rescue Design License
provides for a royalty payment equal to 2% of the gross sales, less sales
return for the period of 5 years. The 15' Rescue Design License provides
for a minimum $100.00 monthly payment.
All of the licenses referenced above are with Mr. Mardikian, they each provide
that they shall be treated separately and not as one license agreement.
CURRENT OPERATIONS
Our operations to date have focused on the building of molds of our watercraft
designs and minimal sales activities. We have successfully built the molds for
our 15' Rescue and 21' Rescue boats and intend to begin manufacturing of our
watercraft products. In addition, we have subleased an 11,000 square foot
facility in San Bernadino, California in which to manufacture and assemble our
watercraft products.
We do not intend to manufacture the hulls and decks for our Vortex watercraft.
Rather we have entered into an Agreement of Cooperation with Changfeng
Enterprise, Co. of Dalian, China ("Cooperation Agreement"). The Cooperation
Agreement provides for Changfeng Enterprise Co. to produce the 22' hulls and
decks that we will use for the design of our Vortex watercraft. The hulls and
decks will be produced in Dalian, China and then shipped to our facilities in
the United States. The Cooperation Agreement has a term of five years.
At this time, we have obtained orders for two of the Vortex boats and we have
successfully assembled three of the 15' Rescue boats.
COMPETITION
We will receive competition in the sales of our watercraft by those companies
already established in the industry. Our competitors build similar rescue
watercraft, though they use different materials in the construction of their
products. While some competitors also use fiberglass in the construction, while
others manufacture crafts using inflatable materials and metals.
We believe that the use of the jet propulsion engines and the innovations in our
designs that provide greater stability will provides us with an advantage over
our current competition.
There is greater competition for our Vortex boats, then for our rescue and fire
watercrafts. The recreational industry is larger then the fire and rescue
industry and our competition in this industry has an established clientele and
has far greater resources then we have at this time. We believe that our design
of the Vortex will provide us an advantage over our established and larger
competition.
MARKETING
Our marketing strategy includes displaying and demonstrating the watercraft at
regional, national and international boat show. In addition we are working to
demonstrate the boats at the local waterways throughout the United States. We
are also going to advertise in boating magazines and will use the internet to
produce sales.
3
RISK FACTORS
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An investment in our common stock involves a number of risks. Before making an
investment decision, you should carefully consider all of the risks described in
this prospectus and the documents that are incorporated by reference into this
Annual Report. The risks discussed in this prospectus could materially adversely
affect our business, financial condition and results of operations and cause the
trading price of our common stock to decline significantly. If this occurs, you
may lose all or part of your investment.
WE RELY UPON KEY EMPLOYEES TO PROCEED WITH OUR BUSINESS PLANS
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The loss of our key employees could impair our ability to proceed with our
business. Our success depends in significant part on the continued services of
our key employees, including Mr. Daniel Medina, President, Director and Chief
Executive Officer of Design and a Director, and Mr. Madhava Rao Mankal, Chief
Financial Officer and Director.
WE RELY UPON LICENSES IN THE MANUFACTURING OF OUR BOATS
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We manufacture our boats under three licenses, the loss of any could impair our
business. Mr. Albert Mardikian holds the patents on the designs we use to build
our boats. If we breach the license agreement, it may seriously impair our
ability to manufacture the boats and could cause us to fail to successfully
implement our business plan. The licenses are each for a certain period of time.
If Mr. Mardikian is unwilling to renew the licenses, it may seriously impair our
ability to manufacture the boats and could cause us to fail to successfully
implement our business plan.
WE DEPEND ON OUR SUPPLIERS AND IF WE CANNOT OBTAIN CERTAIN COMPONENTS FOR OUR
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PRODUCTS, WE MIGHT HAVE TO DEVELOP ALTERNATIVE DESIGNS THAT COULD INCREASE OUR
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COSTS.
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We depend upon a number of suppliers for components in manufacturing our boats.
There is an inherent risk that certain components will be unavailable for prompt
delivery or, in some cases, discontinued. We have only limited control over any
third-party manufacturer as to quality controls, timeliness of production,
deliveries and various other factors. Should the availability of certain
components be compromised, it could force us to develop alternative designs
using other components, which could add to the cost of goods sold and compromise
delivery commitments. If we are unable to obtain components in a timely manner,
at an acceptable cost, or at all, we may need to select new suppliers, redesign
or reconstruct the process we use to build the hulls, which management believes
would take a minimum of one year. We may not be able to manufacture any boats
for a period of time, which could materially and adversely affect our business,
through the results from our operations, and our financial condition.
In addition, if a change in the manufacturer of a key component is required,
qualification of a new supplier may result in delays and additional expenses in
meeting customer demand for products.
WE HAVE A LIMITED OPERATING HISTORY AND MAY NEVER ACHIEVE OR SUSTAIN PROFITABLE
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OPERATIONS.
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We are a development stage company. We have not generated any revenue to date
from our operations. Our ability to successfully commercialize the boats will
depend on, among other things, our ability to manufacture and sell our boats and
the relative cost to the customer of our product as compared to alternative
competitive products. As a result, we may never achieve or sustain profitable
operations.
4
IT IS POSSIBLE THAT OUR OPERATING LOSSES MAY INCREASE IN THE FUTURE AND WE MAY
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NEVER ACHIEVE OR SUSTAIN PROFITABILITY.
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We anticipate that we will continue to incur operating losses for the
foreseeable future, due to a high level of planned operating and capital
expenditures developing manufacturing capabilities, increased sales and
marketing costs, the hiring of additional personnel, greater levels of product
development and our general growth objectives related to the design and
manufacturing of our boats.
We have incurred losses since our inception and expect to continue to incur
losses in the future. We may never become profitable. We have historically
generated substantial losses, which, if continued, could make it difficult to
fund our operations or successfully execute our business plan, and could
adversely affect our stock price. We experienced net losses of $649,321 for the
year ended April 30, 2007 and we had accumulated losses of $1,787,113. We
anticipate that we will have losses for the foreseeable future. We may never
become profitable.
WE CANNOT PREDICT THE IMPACT OF MARKET FLUCTUATIONS IN MONEY MARKETS ON OUR
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OPERATIONS AND FINANCIAL PICTURE AND FINANCING COSTS COULD ADVERSELY AFFECT OUR
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PROFITABILITY.
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Most of our expenses and capital spending are transacted in the US dollars. The
Company's exposure to market risk for changes in interest rates relate primarily
to the Company's cash and cash equivalent balances, marketable securities,
investment in sales-type leases, and loan agreement. The majority of the
Company's investments may be in short-term instruments and therefore subject to
fluctuations in US interest rates. Our financing arrangements will periodically
renew and increase in interest rates may result in higher interest charges to
us. Due to the uncertain nature of such, we cannot assure that this will not
have a material adverse impact on our financial condition and results of
operations.
OUR INDEPENDENT ACCOUNTANTS HAVE ISSUED A GOING CONCERN OPINION AND IF WE DO NOT
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GENERATE ENOUGH CASH FROM OPERATIONS TO SUSTAIN OUR BUSINESS WE MAY HAVE TO
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LIQUIDATE ASSETS OR CURTAIL OUR OPERATIONS.
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The accompanying financial statements have been prepared assuming we will
continue as a going concern. Conditions exist which raise substantial doubt
about our ability to continue our business unless we are able to generate
sufficient cash flows to meet our obligations and sustain our operations. In
addition, we have limited working capital. We cannot assure or guarantee that
additional capital and/or debt financing will be available when and to the
extent required by us, or that if available, it will be on terms favorable or
acceptable by us. Our financial statements do not include any adjustment that
might result from the outcome of this uncertainty. This may be an indicator of
our inability to continue in business which could cause loss of investment.
OUR CURRENT LIABILITIES EXCEED OUR CURRENT ASSETS BY A SIGNIFICANT AMOUNT, WHICH
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COULD PUT STOCKHOLDER/INVESTORS AT SERIOUS RISK OF OR LOSS OF THEIR INVESTMENT.
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The Company, at April 30, 2007, has current liabilities totaling $465,630 and
$59,811 in current assets. As of April 30, 2007, we have a working capital
deficit of approximately $405,820. Our liabilities include accounts payables and
accrued interest of $144,737 at April 30, 2007. In the event that creditors or
litigants, if any, were to attempt to collect it is unlikely that stockholders,
as equity holders, would receive some or any return of investment, because
creditors would be paid first.
5
A SEGMENT OF OUR BUSINESS FOCUSES ON GOVERNMENT AGENCIES IS A LIMITED NUMBER OF
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POTENTIAL CUSTOMERS, AND IF WE CANNOT OBTAIN GOVERNMENT CONTRACTS, WE MAY NOT
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EARN REVENUES.
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Obtaining government contracts may involve long purchase and payment cycles,
competitive bidding, qualification requirements, delays or changes in funding,
budgetary constraints, political agendas, extensive specification development,
price negotiations and milestone requirements. Each government agency also
maintains its own rules and regulations with which we must comply and which can
vary significantly among agencies. Governmental agencies also often retain some
portion of fees payable upon completion of a project and collection of these
fees may be delayed for several months.
WE ARE SUBJECT TO SUBSTANTIAL COMPETITION AND WE MUST CONTINUE TO FOCUS ON
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PRODUCT DEVELOPMENT TO REMAIN COMPETITIVE.
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We are subject to significant competition that could harm our ability to gain
business and increase the price pressure on the boats we offer. We face
competition from a variety of firms. Moreover, we may not have sufficient
resources to undertake the continuing research and development necessary to
remain competitive. Competitors may attempt to independently develop similar
designs or duplicate our products or designs. We or our competitors may
intentionally or unintentionally infringe upon or misappropriate products or
proprietary information. In the future, litigation may be necessary to enforce
intellectual property rights or to determine the validity and scope of the
proprietary rights of others. Any such litigation could be time consuming and
costly. We operate under three licensing agreements with the owner of the
patented progress for the 12' and 15' fire rescue boats, as well as the "water
pump" patent for the boat. Any patent or patents sub-licensed to us relating to
current or future products may be challenged, invalidated, or circumvented or
the rights granted there under may not be held valid if subsequently challenged.
Our boat designs are based on technological and design innovation. Consequently,
the life cycles of some of our products can be relatively short. Our success
depends significantly on our ability to establish and maintain a competitive
position in this field. Our products may not remain competitive in light of
technological developments by others. Our competitors may succeed in discovering
and developing technology before we do that would render our technology, and
hence our products, obsolete and noncompetitive.
We are a small company in terms of employees, technical and research resources
and capital. We are expected to have significant research and development, sales
and marketing, and general and administrative expenses for several years. These
amounts may be expended before any commensurate incremental revenue from these
efforts may be obtained. These factors could hinder our ability to meet changes
in the boat industry as rapidly or effectively as competitors with substantially
more resources.
6
THE BOAT INDUSTRY IS VERY COMPETITIVE, WHICH MAY HAVE AN ADVERSE AFFECT ON
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PROFITS IF SALES FAILS SHORT OF OUR GOALS
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The boat industry is very competitive and competition is increasing in both the
United States and abroad. We may not be able to compete successfully against
either current or future competitors. Many of our competitors have substantially
greater financial, technical and marketing resources, larger customer bases,
longer operating histories, greater name recognition and more established
relationships in the industry than we do. As a result, these companies may be
able to develop and expand their market share more rapidly, adapt to changes in
customer requirements more quickly, take advantage of acquisition and other
opportunities more readily, and devote greater resources to the marketing and
sale of their products than we can. In addition, competition could result in
significant price erosion, reduced revenue, lower margins or loss of market
share, any of which would significantly harm our business. If we are unable to
successfully compete, we will be unable to achieve our business plan.
COMMERCIALIZATION OF OUR PROPOSED NEW PRODUCTS COULD FAIL IF IMPLEMENTATION OF
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OUR SALES AND MARKETING STRATEGY IS UNSUCCESSFUL.
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A significant sales and marketing effort will be necessary to achieve the level
of market awareness and sales needed to achieve profitability from sales of our
new products. We currently have only limited sales and marketing experience,
both in the United States and abroad, which may limit our ability to
successfully develop and implement our sales and marketing strategy. We need to:
|X| Hire and train sales and marketing personnel; |X| Manage geographically
dispersed operations; and |X| Encourage customers to purchase products.
If we fail to successfully create and implement a sales and marketing strategy
it could result in increased costs and net losses with resulting potential
failure of the Company.
WE MUST COMPLY WITH ENVIRONMENTAL REGULATIONS OR WE MAY HAVE TO PAY EXPENSIVE
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PENALTIES OR CLEAN UP COSTS.
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We are subject to federal, state, local and foreign laws, and regulations
regarding protection of the environment, including air, water, and soil. Our
manufacturing business involves the use, handling, storage, and contracting for
recycling or disposal of, hazardous or toxic substances or wastes, including
environmentally sensitive materials, such as batteries, solvents, lubricants,
degreasing agents, gasoline and resin. We must comply with certain requirements
for the use, management, handling, and disposal of these materials. We do not
maintain insurance for pollutant cleanup and removal. If we are found
responsible for any hazardous contamination, we may have to pay expensive fines
or penalties or perform costly clean-up. Even if we are charged, and later found
not responsible, for such contamination or clean up, the cost of defending the
charges could be high.
7
IF WE DO NOT COMPLY WITH GOVERNMENT REGULATIONS, WE MAY BE UNABLE TO SHIP OUR
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PRODUCTS OR MAY HAVE TO PAY EXPENSIVE FINES OR PENALTIES.
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We are subject to regulation by county, state, and federal governments,
governmental agencies, and regulatory authorities from several different
countries. If we fail to obtain regulatory approvals or suffer delays in
obtaining regulatory approvals, we may not be able to market our products and
services, and generate revenues. Further, we may not be able to obtain necessary
regulatory approvals. Although we do not anticipate problems satisfying any of
the regulations involved, we cannot foresee the possibility of new regulations,
which could adversely affect our business. Our products are subject to export
limitations and we may be prevented from shipping our products to certain
nations or buyers.
WE RELY ON PROPRIETARY DESIGNS AND RIGHTS AND IF WE HAVE TO LITIGATE THOSE
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RIGHTS, OUR EXPENSES COULD SUBSTANTIALLY INCREASE.
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Our intellectual property is important to our business. We rely on a combination
of license rights, trade secret laws, confidentiality procedures, and
contractual provisions to protect our intellectual property. The patents and
patents-pending protect and enhance the construction of the sleek, progressive
"V" and double pad-bottomed "V-hull" boat. The hull is designed so that as water
hits the hull, it flows to the next convenient degree, creating a lift and
literally raising the boat to the top of the water. The progressive "V" hull
gives the boats excellent stability and handling at low and high speeds,
extraordinary tracking for precision handling, and reliability when utilized in
emergency and natural disaster situations.
Our success and ability to compete depend, in part, on the protection of our
designs and technology. In addition, our technology could infringe on patents or
proprietary rights of others. We have not undertaken or conducted any
comprehensive patent infringement searches or studies. If any third parties hold
any conflicting rights, we may be required to stop making, using or selling our
products or to obtain licenses from and pay royalties to others. Further, in
such event, we may not be able to obtain or maintain any such licenses on
acceptable terms, if at all. We may need to engage in future litigation to
enforce intellectual property rights or the rights of customers, to protect
trade secrets or to determine the validity and scope of proprietary rights of
others, including customers. This litigation could result in substantial costs
and diversion of resources and could materially and adversely affect our results
of operations.
WE WILL NEED SIGNIFICANT ADDITIONAL FUNDS FOR OPERATIONS AND PRODUCT MARKETING
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AND DEVELOPMENT, WHICH WE MAY NOT BE ABLE TO OBTAIN.
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The expansion and development of our business will require significant
additional capital. We intend to seek substantial additional financing in the
future to fund the growth of our operations, including funding the significant
capital expenditures necessary for us to provide service in our targeted
markets. We may be unable to obtain any future equity or debt financing on
acceptable terms or at all. A market downturn or general market uncertainty will
adversely affect our ability to secure additional financing. If we are unable to
obtain additional capital or are required to obtain it on terms less
satisfactory than what we desire, we will need to delay deployment of our new
products or take other actions that could adversely affect our business,
prospects, operating results and financial condition. To date, our cash flow
from operations has been insufficient to cover our expenses and capital needs.
Our current capital resources have been expended and we need additional capital
to continue expansion, which we may not be able to obtain, and failure to obtain
could impair or curtail operations.
8
THE PRIMARY BUSINESS LOCATION THE COMPANY OPERATES FROM MAY HAVE AN ADVERSE
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EFFECT ON THE COMPANY'S PERFORMANCE
-----------------------------------
Our principal place of business is located at 255 S. Leland Norton Way, San
Bernardino, California 92408, and consists of 11,000 sq. ft., which we rent from
Lasera Technologies, Inc. on a month to month basis. Beginning October 1, 2006,
the Company began paying Lasera Technologies a sum of $3,000 per month for the
space. Management anticipates that this arrangement will be suitable for our
needs for the foreseeable future. If we were to terminate or if this arrangement
was terminated, we would have to move our operations to another location which
is feasible, cost effective, and has building codes that would allow for the
manufacturing of boats.
THE ECONOMY CAN HAVE AN ADVERSE AFFECT ON OUR COMPANY
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We are susceptible to fluctuations in the economy. If fewer boats are purchased
in response to general slowdowns in the economy, our business could be adversely
affected. Sales of recreational boats generally fluctuate with the economy.
Fluctuations in the market for recreational boats could cause fluctuations in
our operating results and a decline in the growth of the recreational boats
market could have a material and adverse effect on our business, financial
condition, and results of operations.
INTERNATIONAL TRADE SITUATIONS WITH OUR COMPANY CAN HAVE AN AFFECT ON OUR
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BUSINESS
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The hulls for our Vortex recreational boats are manufactured in China. The
United States has designated China as a most favored nation, which has resulted
in low tariffs on imports into the United States from China. Each year, the
United States reconsiders the renewal of China's status as a most favored
nation. If import tariffs or taxes increase because the United States does not
renew or even revokes China's most favored nations status, or for any other
reason, our cost of goods would substantially increase, and our business,
financial condition, and results of operations would likely be adversely
affected.
CHANGES IN INTERNATIONAL POLITICAL, SOCIAL AND ECONOMIC ENVIRONMENT MAY AFFECT
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OUR FINANCIAL PERFORMANCE.
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Our financial performance may be affected by changes in China's political,
social and economic environment. We expect to be able to cost-effectively
produce our Vortex recreational boats, in part, by manufacturing the hulls for
our boats in China. The role of the Chinese central and local governments in the
Chinese economy is significant. Chinese policies toward economic liberalization,
and laws and policies, foreign investment, currency exchange rates and other
matters could change, resulting in greater restrictions on our ability to do
business and operate our manufacturing facilities in China. The Chinese
government could impose surcharges, increase our tax rates, or revoke, terminate
or suspend our operating licenses without compensating us. Confrontations have
occurred between the military and civilians. If for these or any other reason,
we lose our ability to manufacture our products in China, or our cost of doing
business in China increases, our business, financial condition, and results of
operations would be materially and adversely affected.
RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK
-----------------------------------------------------------
The Securities and Exchange Commission has adopted a number of rules to regulate
"penny stock." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4,
15g-5, 15g-6, 15g-7 and 15g-9 under the Securities Exchange Act of 1934, as
amended.
9
"Penny Stocks" are stocks:
|X| with a price of less than $5.00 per share;
|X| that are not traded on a "recognized" national exchange;
|X| whose price are not quoted on the NASDAQ automated Quotation at not less
than $5.00 per share;
|X| issuers with net tangible assets of less than $2 million (if the issuer has
been in continuous operation less than three years)
The requirements affecting brokers affecting trades in our shares, which are
discussed in the Risk Factors, reduce the potential market for our shares by
reducing the number of potential investors. This will make it more difficult for
investors in our common stock to sell shares to their parties or to otherwise
dispose of them. This, in turn, could cause stock price to decline, and this
impediment to trading could cause difficulty to our stock to ever develop any
consistency in volume, or any substantial volume, which negatively affects
liquidity of the shares and which may adversely affect our share price.
INVESTORS SHOULD BE AWARE OF THE RISKS IN THE MARKET FOR PENNY STOCKS AND THE
--------------------------------------------------------------------------------
POSSIBILITIES OF FRAUD AND ABUSE.
--------------------------------
Stockholders should be aware that, according to SEC, the market for penny stocks
has suffered in recent years from patterns of fraud and abuse. Such patterns
include (i) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer; (ii)
manipulation of prices through prearranged matching of purchasers and sales and
false and misleading press releases; (iii) "boiler room" practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (iv) excessive and undisclosed bid-ask differentials and markups
by selling broker-dealers; and (v) the wholesale dumping of the same securities
by promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. Our management is aware of the abuses that have
occurred historically in the penny stock market. The Company will not be able to
control any of such patterns.
WE EXPECT OUR STOCK PRICE TO BE VOLATILE WHICH COULD CAUSE INVESTMENT LOSSES TO
--------------------------------------------------------------------------------
PURCHASERS OF OUR STOCK.
-----------------------
The trading price of our common stock is likely to be highly volatile. Our stock
price could fluctuate widely in response to many factors, including the
following:
|X| Our historical and anticipated quarterly and annual operating results;
|X| Announcements of new products or services by us or our competitors or new
competing technologies;
|X| Investors perceptions of us and investments relating to the boat industry;
|X| Developments in the boat industry;
|X| Technological innovations;
|X| Changes in pricing made by us, our competitors or providers of alternative
services;
|X| The addition or loss of business customers;
|X| Variations between our actual results and analyst and investor
expectations;
|X| Condition or trends in the boat industry, including regulatory
developments;
|X| Announcements by us of significant acquisitions, strategic partnerships,
joint ventures or capital commitments;
|X| Additions or departures of key personnel; and
|X| General market and economic conditions.
10
In addition, in recent years the stock market in general, and the Over-the-
Counter Bulletin Board Market, in particular, have experienced extreme price and
volume fluctuations. These fluctuations have often been unrelated or
disproportionate to the operating performance of these companies. These market
and industry factors may materially and adversely affect our stock price,
regardless of our operating performance.
"PENNY STOCK" RULES MAY MAKE BUYING OR SELLING OUR SECURITIES DIFFICULT.
-----------------------------------------------------------------------------
Trading in our securities is subject to the SEC's "penny stock" rules, described
above and trading in our securities will continue to be subject to the penny
stock rules for the foreseeable future. The SEC has adopted regulations that
generally define a penny stock to be any equity security that has a market price
of less than $5.00 per share, subject to certain exceptions. These rules require
that any broker-dealer who recommends our securities to persons other than prior
customers and accredited investors must, prior to the sale, make a special
written suitability determination for the purchaser and receive the purchaser's
written agreement to execute the transaction. Unless an exception is available,
the regulations require the delivery, prior to any transaction involving a penny
stock, of a disclosure schedule explaining the penny stock market and the risks
associated with trading in the penny stock market. In addition, broker-dealers
must disclose commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities they offer. The
additional burdens imposed upon broker-dealers by such requirements may
discourage broker-dealers from recommending transactions in our securities,
which could severely limit the liquidity of our securities and consequently
adversely affect the market price for our securities.
WE WILL NEED TO RAISE ADDITIONAL FUNDS WHICH COULD DILUTE THE SHARES
--------------------------------------------------------------------
We need to raise additional funds through public or private debt or equity
financing to be able to fully execute our business plan. Any additional capital
raised through the sale of equity may dilute your ownership interest. We may not
be able to raise additional funds on favorable terms, or at all. If we are
unable to obtain additional funds, we will be unable to execute our business
plan.
OUR SECURITIES HAVE BEEN THINLY TRADED ON THE OVER-THE-COUNTER BULLETIN BOARD,
--------------------------------------------------------------------------------
WHICH MAY NOT PROVIDE LIQUIDITY FOR OUR INVESTORS.
-------------------------------------------------
Our securities are quoted on the Over-the-Counter Bulletin Board. The
Over-the-Counter Bulletin Board is an inter-dealer, over-the-counter market that
provides significantly less liquidity than the NASDAQ Stock Market or national
or regional exchanges. Securities traded on the Over-the-Counter Bulletin Board
are usually thinly traded, highly volatile, have fewer market makers and are not
followed by analysts. The Securities and Exchange Commission's order handling
rules, which apply to NASDAQ-listed securities, do not apply to securities
quoted on the Over-the-Counter Bulletin Board. Quotes for stocks included on the
Over-the-Counter Bulletin Board are not listed in newspapers. Therefore, prices
for securities traded solely on the Over-the-Counter Bulletin Board may be
difficult to obtain and holders of our securities may be unable to resell their
securities at or near their original acquisition price, or at any price.
11
INVESTORS MUST CONTACT A BROKER-DEALER TO TRADE OVER-THE-COUNTER BULLETIN BOARD
--------------------------------------------------------------------------------
SECURITIES AND AS A RESULT, YOU MAY NOT BE ABLE TO BUY OR SELL OUR SECURITIES AT
--------------------------------------------------------------------------------
THE TIMES THAT YOU MAY WISH
---------------------------
Even though our securities are quoted on the Over-the-Counter Bulletin Board,
the Over-the-Counter Bulletin Board may not permit our investors to sell
securities when and in the manner that they wish. Because there are no automated
systems for negotiating trades on the Over-the-Counter Bulletin Board, they are
conducted via telephone. In times of heavy market volume, the limitations of
this process may result in a significant increase in the time it takes to
execute investor orders. Therefore, when investors place market orders an order
to buy or sell a specific number of shares at the current market price it is
possible for the price of a stock to go up or down significantly during the
lapse of time between placing a market order and its execution.
FUTURE SALES OF OUR COMMON STOCK BY RESTRICTED SHAREHOLDERS COULD HAVE A
--------------------------------------------------------------------------------
DEPRESSIVE EFFECT ON THE MARKET PRICE FOR OUR STOCK
---------------------------------------------------
We currently have 31,988,541 shares of common stock outstanding as of June 29,
2007, Subject to restrictions on transfer referred to below, all other shares of
common stock which we have not registered as "restricted securities" as defined
under the Securities Act (1934) and in the future may be sold in compliance with
Rule 144 under the Securities Act or pursuant to a registration statement filed
under the Securities Act. Rule 144 generally provides that a person holding
restricted securities for a period of one year may sell every three months in
brokerage transactions or market-maker transactions an amount equal to the
greater of (i) one percent (1%) of our issued and outstanding common stock or
(ii) the average weekly trading volume of the common stock during the four
calendar weeks prior to the sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation by a person
who is not an affiliate of the company and who has satisfied a two year holding
period. The sale of substantial numbers of these shares, whether pursuant to
Rule 144 or pursuant to a registration statement, may have a depressive effect
on the market price of our common stock by causing the supply exceeding demand.
In addition, sales of significant amounts of restricted shares held by Mr.
Madhava Rao Mankal and Mr. Daniel Medina, who own a total of 22,344,000 shares
of common stocks, or the prospect of these sales, could adversely affect the
market price of our common stock.
WE MAY ISSUE SHARES TO RAISE CAPITAL OR FOR SERVICES IN THE FUTURE AT A PRICE
--------------------------------------------------------------------------------
LOWER THAN THAT PAID BY CURRENT INVESTORS AND SUCH ACTIONS WOULD BE DILUTIVE,
--------------------------------------------------------------------------------
EVEN HIGHLY DILUTIVE, OF CURRENT OUTSTANDING SHARES, WHICH WOULD ADVERSELY
--------------------------------------------------------------------------------
AFFECT MARKET VALUES.
--------------------
We will need to raise substantial additional capital and may issue shares for
cash, services, or acquisitions at a price less than that paid by current
owners, as needs arise. This poses a risk for investors in that there is no
protection for them against such dilutive issuances, which could ultimately
adversely affect the market and price for our shares, if a market ever develops.
12
OUR OPERATING RESULTS IN FUTURE PERIODS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY
--------------------------------------------------------------------------------
AND MAY FAIL TO MEET OR EXCEED THE EXPECTATIONS OF SECURITIES ANALYSTS OR
--------------------------------------------------------------------------------
INVESTORS, AND THIS COULD AFFECT OUR MARKET PRICE.
-------------------------------------------------
Our annual and quarterly operating results are likely to fluctuate significantly
in the future due to numerous factors, many of which are outside of our control.
These factors include many of which are discussed in other risk factors; such as
low revenues, competition, failure to approve products proposed, lack of
additional capital, management changes, and intellectual property infringement
claims to extremely high operating costs. If our operating results are
negatively affected by any of these factors, our operating results in future
periods could fail to meet or exceed the expectations of securities analysts or
investors. In that event, any trading price of our common stock would decline.
WE MAY BE UNABLE TO OBTAIN THE ADDITIONAL CAPITAL REQUIRED TO EXPAND OUR
--------------------------------------------------------------------------------
BUSINESS. WE MAY HAVE TO CURTAIL OUR BUSINESS IF WE CANNOT FIND ADEQUATE
--------------------------------------------------------------------------------
FUNDING, RESULTING ULTIMATELY IN BUSINESS FAILURE.
-------------------------------------------------
Our ability to grow depends significantly on our ability to expand our
operations through internal growth and by acquiring other companies or assets
that require significant capital resources. We may need to seek additional
capital from public or private equity or debt sources to fund our growth and
operating plans and respond to other contingencies such as:
|X| Shortfalls in anticipated revenues or increases in expenses;
|X| The development of new services; or
|X| The expansions of our operations, including the recruitment of additional
personnel.
We cannot be certain that we will be able to raise additional capital in the
future on terms acceptable to us or at all. If alternative sources of financing
are insufficient or unavailable, we may be required to modify our growth and
operating plans in accordance with the extent of available financing. Any
additional equity financing may involve substantial dilution to our then
existing stockholders.
OUR PRINCIPAL OFFICERS AND DIRECTORS OWN 70% OF OUR STOCK WHICH, IF VOTED IN A
--------------------------------------------------------------------------------
BLOCK WILL BE A CONTROLLING INTEREST AND INVESTORS WILL HAVE A LIMITED VOICE IN
--------------------------------------------------------------------------------
OUR MANAGEMENT.
--------------
Messrs. Daniel Medina and Madhava Rao Mankal, officers and directors of the
Company, beneficially own approximately 70% of our outstanding common stock. As
a result, Messrs. Medina and Mankal have the ability to control substantially
all matters submitted to our stockholders for approval, including:
|X| Election of our board of directors;
|X| Removal of any of our directors;
|X| Amendment of our certificate of incorporation or bylaws; and
|X| Adoption of measures that could delay or prevent a change in control or
impede a merger, takeover or other business combination involving the
company.
As a result of their ownership and positions with little additional support,
Messrs. Mankal and Medina are able to influence all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions.
13
ITEM 2. DESCRIPTION OF PROPERTIES
The Company's principal place of business is located at 255 S. Leland Norton
Way, San Bernardino, California 92408. The Company subleases 11,000 square foot
of space at a rate of $3,000 per month from Lasera Technologies, Inc. The
Company uses the space to assemble boats and fiberglass lay-up. It is
anticipated that this arrangement will be suitable for the Company's needs for
the foreseeable future.
The Company's mailing address is 10088 6th Street, Suite G, Rancho Cucamonga,
California 91730. The Company pays nominal rent of $50 rent for the use of this
mailing address.
ITEM 3. LEGAL PROCEEDINGS
As of April 30, 2007, the Company, nor any members of management were not a
party to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Medina International Holdings, Inc. is quoted on the
Over-the-Counter Bulletin Board (OTCBB) and the trading symbol is MIHI.OB. The
Company began trading on the OTCBB in May 2006. There may never be substantial
activity in the market and if there is substantial activity, such activity may
not be maintained, and no prediction can be made as to what prices may prevail
in market.
As of the date of this report, there had been trading or quotation of the
Company's common stock. The range of high and low trade quotations for each
fiscal quarter since the last report, as reported by the National Quotation
Bureau Incorporated, was as follows:
2006 High Low
---- ---- ---
July 31, 2005 No Quote No Quote
October 30, 2005 No Quote No Quote
January 31, 2006 No Quote No Quote
April 30, 2006 No Quote No Quote
2007 High Low
---- ---- ---
July 31, 2006 No Quote No Quote
October 31, 2006 No Quote No Quote
January 31, 2007 0.34 0.20
April 30, 2007 0.40 0.20
As of April 30, 2007, there were 88 shareholders of record of the Company's
common Stock.
14
DIVIDEND POLICY
The Company has not declared or paid any cash dividends on its common stock and
does not anticipate paying dividends for the foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES
The Company made the following unregistered sales of its securities from May 1,
2004 through April 30, 2007.
Number of
Date Title Shares Purchase/Holder Consideration
---- ----- ------ --------------- -------------
11/15/04 Common Stock 12,000,000 Madhava Rao Mankal $1,200
11/15/04 Common Stock 12,000,000 Daniel F. Medina $1,200
12/14/05 Common Stock 120,000 Business Associates $120
9/26/05 Common Stock 23,700 Business Associates $11,801
9/26/05 Common Stock 15,609 Independent Directors Services
9/26/05 Common Stock 25,000 Business Associate $12,500
9/26/05 Common Stock 20,000 Point of View License utilization
11/14/05 Common Stock 800 Business Associate Royalty Fee
11/18/05 Common Stock 1,000,000 Business Associate Manufacturing Services
11/18/05 Common Stock 71,000 Business Associates Services
11/18/05 Common Stock 18,750 Independent Directors Services
11/18/05 Common Stock 350 Business Associate Rent
11/18/05 Common Stock 13,332 Point View License utilization
3/24/06 Common Stock 50,000 Genesis Companies 500,000 shares of Genesis
Group, Inc. Companies Group, Inc.
3/7/06 Common Stock 18,750 Independent Directors Services
3/7/06 Common Stock 600 Business Associates Rent
3/7/06 Common Stock 60,000 Business Associates $30,000
3/7/06 Common Stock 240,000 Business Associates Services
3/7/06 Common Stock 800 Business Associates Royalty Fee
3/15/06 Common Stock 50,000 Business Associates Services
3/15/06 Common Stock 310,000 Business Associates Services
3/15/06 Common Stock 125,000 Business Associates Services
4/27/06 Common Stock 22,000 Business Associates $11,000
4/27/06 Common Stock 1,200 Business Associates Royalty Fee
4/27/06 Common Stock 80,000 Business Associates Services
8/5/06 Common Stock 125,000 Business Associates Services
9/21/05 Common Stock 50,000 Business Associates Consulting Services
9/21/06 Common Stock 50,000 Business Associates Services
9/21/06 Common Stock 18,750 Independent Directors Services
9/21/06 Common Stock 300 Business Associates Rent
9/21/06 Common Stock 1,200 Business Associates Royalty Fee
9/21/06 Common Stock 50,000 Business Associates Services
9/21/06 Common Stock 100,000 Business Associates Conversion of $18,700 of debt
10/3/06 Common Stock 100,000 Business Associates $50,000
10/3/06 Common Stock 20,000 Business Associates Consulting Services
10/25/06 Common Stock 500,000 Business Associates Consulting Services
2/12/07 Common Stock 18,750 Independent Directors Services
2/12/07 Common Stock 150 Business Associate Rent
2/12/07 Common Stock 2,000 Business Associate License Royalty
2/22/07 Common Stock 200,000 Business Associates $50,000
15
EXEMPTION FROM REGISTRATION CLAIMED. The sale by the Company of its
unregistered securities was made by Registrant in reliance upon Section
4(2) of the Securities Act of 1933, as amended. The corporation, which
purchased the unregistered securities, was known to the Company and its
management, through pre-existing business relationships. The purchaser was
provided access to all material information, which it requested, and all
information necessary to verify such information and were afforded access
to management of the Company in connection with the purchase. The purchaser
of the unregistered securities acquired such securities for investment and
not with a view toward distribution acknowledging such intent to the
Company. All certificates or agreements representing such securities that
were issued contained restrictive legends, prohibiting further transfer of
the certificates or agreements representing such securities, without such
securities either being first registered or otherwise exempt from
registration in any further resale or disposition.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY AND FORWARD LOOKING STATEMENTS
In addition to statements of historical fact, this Form 10-KSB contains
forward-looking statements. The presentation of future aspects of Medina
International Holdings, Inc. ("Medina International Holdings, Inc." the
"Company" 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 the Company's actual results to be materially
different from any future results expressed or implied by Medina International
Holdings, Inc. in those statements. Important facts that could prevent Medina
International Holdings, Inc. from achieving any stated goals include, but are
not limited to, the following:
Some of these risks might 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; and (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.
16
The Company undertakes 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,
including the Quarterly Reports on Form 10-QSB and Annual Report on Form 10-KSB
filed by the Company and any Current Reports on Form 8-K filed by the Company.
RESULTS OF OPERATION FOR THE YEAR ENDED APRIL 30, 2007 AS COMPARED TO YEAR ENDED
APRIL 30, 2006.
The Company did not recognize any revenues during the fiscal years ended April
30, 2007 and 2006. The Company did not recognize any revenues, as the Company is
in the process of manufacturing fire and rescue boats for sale.
We expect the trend of losses to continue for the foreseeable future as we
attempt to commerce some business.
OPERATING EXPENSES
The Company incurred total operating expenses of $628,399 for the year ended
April 30, 2007, as compared to operating expenses $1,039,501 for the year ended
April 30, 2006. The decrease of $411,103 in operating expenses is primarily a
result of a decrease of $508,313stock compensation expenses compared to the year
ended April 30, 2006. The operating expenses for the year ended April 30, 2007,
primarily included $38,290 in professional fees, $485,000 in stock compensation
and $105,109 in general and administration expenses. The operating expenses for
the year ended April 30, 2006, which included $17,185 in profession fees,
$993,313 in stock compensation and $29,003 for general and administration
expenses.
The Company recognized an interest expense of $18,594 for the year ended April
30, 2007, compared to an interest expense of $63 for the year ended of April 30,
2006. The increase of $18,531 is due to an increase of funds loaned to the
Company. For the year ended April 30, 2007, the Company recognized other income
of $1,529, compared to $52 for the year ended April 30, 2006. The increase of
$1,477 was due to a one time commission received on the sale of some parts and
equipment that Company was unable to use.
NET LOSS
The Company recognized a net loss of $649,321 for the year ended April 30, 2007,
compared to a net loss of $1,039,512 for the year ended April 30, 2006. The
decrease of $390,191 was due to the $411,103 decrease in operating expenses,
caused by the $508,313 decrease in stock compensation expense. The net loss per
share for the year ended April 30, 2007 was $0.022 compared to $0.037 for the
year ended April 30, 2006.
LIQUIDITY AND CAPITAL RESOURCES
As of April 30, 2007, the Company had $5,136 in cash, an inventory (consisting
of two recreational boat hull and decks, three 15' fire rescue jet engines) of
$54,557, and fixed assets (consisting of molds for the 12', 15' and 21' fire
rescue jet) of $320,465. The Company's total current liabilities were $465,630
as of April 30, 2007, which was represented mainly accounts payable and accrued
interest payable of $144,737, advances from customers of $20,500, lines of
credits totaling $28,805 and short-term loans from stockholders totaling
$261,588. At April 30, 2007, the Company's current liabilities exceeded current
assets by $405,819.
17
As of April 30, 2006, the Company had $1,968 in cash, an inventory (consisting
of two recreational boat hull and decks) totaling $11,428, and fixed assets
(consisting of molds for 21' fire rescue jet) totaling $188,910. The Company's
total current liabilities were $252,540 as of April 30, 2006, which was
represented mainly by accounts payable and accrued interest payable of $79,784,
lines of credits totaling $25,765, note payable totaling $17,000, and short-term
loans from stockholders totaling $129,991. At April 30, 2006, the Company's
current liabilities exceeded current assets by $238,344.
The Company used $105,915 in operating activities for the year ended April 30,
2007 compared to $13,283 for year ended April 30, 2006. The Company used cash of
$131,554 in investing activities during the year ended April 30, 2007 on the
manufacturing of molds for the fire and rescue watercrafts. For the year ended
April 30, 2006, the Company had used cash $213,910 for manufacturing of the
molds for the fire and rescue watercrafts. During the year ended April 30, 2007,
the Company obtained $240,637 from financing activities, which included the
$3,040 increase in the lines of credits held by the Company and $131,597
obtained in short-term loans from stockholders of the Company. In addition, the
Company sold shares of its common stock for $96,000. At the year ended April 30,
2007, the Company obtained $240,637 through its financing activities.
The Company has an accumulated deficit, as of April 30, 2007, of $1,787,113
compared to the year ended April 30, 2006 of $1,137,192. 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 the Company from accomplishing the goal of
expanding operations. There is no assurance, however, that without funds we the
Company will ultimately be able to carry out its business. No commitments to
provide additional funds have been made by the Company's management or other
stockholders. Accordingly, there can be no assurance that any additional funds
will be available to the Company to cover its expenses as they are incurred.
Irrespective of whether the Company's cash assets prove to be inadequate to meet
its operational needs, the management might seek to compensate providers of
services by issuances of stock in lieu of cash.
GOING CONCERN
The Company's auditor has issued a "going concern" qualification as part of his
opinion in the Audit Report. There is substantial doubt about the ability of the
Company to continue as a "going concern." The Company has no revenue, limited
capital, debt in excess of $465,630, no significant cash, minimal other assets,
and no capital commitments.
CRITICAL ACCOUNTING POLICIES
Management is required to make judgments, assumptions and estimates that affect
the amounts reported when we prepare financial statements and related
disclosures in conformity with generally accepted accounting principles in the
United States. Note, "Summary of Significant Accounting Policies," to the
financial statements for the fiscal year ended April 30, 2007 describes the
significant accounting policies and methods used in the preparation of our
financial statements. Estimates are used for, but not limited to, our accounting
for contingencies, inventory valuation, goodwill and intangible asset
impairments, restructuring costs, and income taxes. Actual results could differ
from these estimates.
18
ITEM 7. FINANCIAL STATEMENTS
Please refer to pages F-1 through F-11.
ITEM 8 CHANGES IN ACCOUNTANTS AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 8a CONTROLS AND PROCEDURES
EVALUATION OF INTERNAL AND DISCLOSURE CONTROLS
The management of the company 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 have 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 small business issuers 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 fourth fiscal quarter that has
materially affected or is reasonable likely to materially affect, the small
business issuers internal control over financial reporting.
ITEM 8B. OTHER INFORMATION
None.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND COMPLIANCE WITH
SECTION 16(A)
The directors and executive officers of the Company, as of June 29, 2007, are as
follows:
Name Age Position
---- --- --------
Daniel Medina 52 President Chief Executive Officer
& Director
Madhava Rao Mankal 55 Chief Financial Officer
Mike Swanson 50 Director
Tony Eishet 49 Director
Arun Madhav 45 Director
Our success depends on the performance of our two officers and directors, Mr.
Medina and Mr. Mankal. We do not have "key person" life insurance policies on
any of our employees nor do we have employment agreements for fixed terms with
any of our employees. Any of our employees, including any member of our
management team, may terminate his or her employment with us at any time. Given
our early stage of development, we depend on our ability to retain and motivate
high quality personnel, especially our officers. Our future success also depends
on our continuing ability to identify, hire, train and retain highly qualified
technical, sales, marketing and customer service personnel. Moreover, the boat
industry has a high level of employee mobility and aggressive recruiting of
skilled personnel. We may be unable to continue to employ our key personnel or
to attract and retain qualified personnel in the future.
19
BIOGRAPHIES OF OFFICERS AND DIRECTORS
Set forth below is a brief description of the background of our officers and
directors, based upon information provided by them to us.
DANIEL MEDINA, PRESIDENT AND DIRECTOR
Mr. Medina worked as a Sales Representative and Production Manager with
Rosemary's Draperies from 1973-1985. Daniel Medina owned Lavey Craft Boat Co.
from 1985-1992. Mr. Medina was also a partner in California Cool Custom Boats
from 1992- June 1997. He worked as the designer and manufacturer of all of their
boats. Mr. Medina served as Director of Sales and Marketing and Production
Manager for Sonic Jet Performance, Inc. from October 1999 to October 2001 and
successfully increased the company revenue by 50%. He has extensive experience
in every phase of sales, marketing and manufacturing. Mr. Medina also serves as
an officer and director of Genesis Companies Group, Inc.
MADHAVA RAO MANKAL, CHIEF FINANCIAL OFFICER AND DIRECTOR
Mr. Mankal has more than 28 years of experience as an executive. He served as
President and the Chief Financial Officer of Force Protection, Inc. (formerly
Sonic Jet Performance, Inc.) from May 1999 to December 2003. He served as a
director of Force Protection, Inc. until September 30, 2004. He has over 25
years of senior financial management experience, including the positions of
controller, chief financial officer and financial advisor. Mr. Mankal has his
Chartered Accountant and Cost Accountant certifications from India. He has
received a Certified Management Accountant in the Untied States. He is member of
the Institute of Chartered Accountants of India, Institute of Cost and Works
Accountants of India and Institute of Management Accountants in the United
States. He has Bachelor Degree in Commerce from Bangalore University. Mr.
Mankal also serves as an officer and director of Genesis Companies Group, Inc.
MICHAEL SWANSON, DIRECTOR
Michael Swanson has worked for the City of Orange Fire Department since 1983 and
his present position is as Fire Captain. Prior to that, he worked for the
Federal Fire Department for the last four years. He is an active member of the
Orange Fire Department Medical Core Committee, the Safety Committee and Physical
Fitness Committee. He is also a member of the International Association of Fire
Fighters Local 2386, and is a member of the California Professional
Firefighters. In 1990, Mr. Swanson was a recipient of the Valor Award from the
Orange Rotary Club, for his actions in saving the life of a child. Mr. Swanson
is a Certified Instructor at the Saddleback College Paramedic School, where he
has served as a Spinal Immobilization Instructor, Advanced Airway Instructor,
Emergency Technician Instructor, State Paramedic, State Fire Officer (on going),
Haz Mat, Trench, Swift Water, Confined Space First Responder (on going).
TONY A. ESHIET, DIRECTOR
Mr. Eshiet has been the Chief Operating Officer of HollyTouch Corporation, since
August 2001. Prior to that, Mr. Eshiet was the Executive Vice President and
Financial Center Manager of CITIBANK from June 2000 to August 2001. Prior to
joining Citibank, Mr. Eshiet was the Vice-President and Branch Manager of WELLS
FARGO BANK from September 1991 to June 2000, where he managed high-level
branches in Century City, Long Beach and Monterey Park in California. Mr. Eshiet
was recognized as a "Circle of Stars Performer" on many occasions, he has also
received Wells Fargo's "Golden Coach Award" given to the top Branch Manager in
sales and customer service. Mr. Eshiet has a Bachelor of Science degree in
Banking and Finance from Johnson C. Smith University in Charlotte, North
Carolina, where he was honored as an "Outstanding Student of the Year". Mr.
Eshiet received his Master Degree in Business Administration (M.B.A) from the
University of Phoenix. Mr. Eshiet holds a number of licenses in the financial
and investment field, including his Series 7, Series 24, Series 63 and also Life
and Health. Mr. Eshiet serves on Corporate Board of Directors of S & P
Investment Inc. and American Film Venture Group.
20
ARUN MADHAV, DIRECTOR
Mr. Madhav is the founder and director of Eka Technologies, Inc., a product
design and development company, since May 2003. Prior to starting Eka
Technologies, Inc., Arun held various positions at Interlink Electronics, Inc.
from April 1997 through May 2003. Among those positions he was the Director of
Product Marketing at Interlink Electronics, Inc. (LINK). During his tenure at
Interlink, he introduced several new and innovative products ranging from
radio-frequency remotes to signature pads. Prior to Intelink, he introduced new
system level products in the field of Non-Destructive testing for companies,
such as Physical Acoustics, Nuson and Ultran Laboratories. Mr. Madhav has a BS
in Mechanical Engineering from Bangalore University, an MS in Engineering
Science and Mechanics from Virginia Tech, and an MBA from California State
University, Northridge.
EMPLOYMENT AGREEMENTS
At this time, none of the officers of the Company or any of its employees are
subject to employment agreements.
BOARD OF DIRECTORS
Our Board of Directors consists of 5 individuals, two of whom are officers of
the Company. Directors are elected to the Board of Directors for a 1 year term
and are elected on an annual basis. Executive officers are appointed by the
board of directors on an annual basis and serve until their successors have been
duly elected and qualified. There are no family relationships among any of our
directors, officers or key employees.
RESOLUTION OF CONFLICTS OF INTEREST
Currently, the Company does not have a procedure, in place, which would allow
our officers or directors to resolve potential conflicts in an arms-length
fashion. Accordingly, they will be required to use their discretion to resolve
them in a manner which they consider appropriate.
Further, we do not have a procedure in place with regard to any intellectual
property that an officer or director might develop in another business. The
policy and the exception is that, if it is related to the business of our
company, it belongs to the Company. Although our officers and directors have
indicated that they are not involved in any intellectual property development
(IP) outside of our company, our position would be that, if it is not related to
our company's business, we would not assert any ownership claim to such IP.
We are not aware of any apparent conflict with any other business or venture in
which any employee, officer or director may be involved. All of the officers and
directors have indicated that they do not have any business interests in any
business, suppliers, subcontractor, or sales entity that directly or indirectly
competes with our company.
AUDIT COMMITTEE FINANCIAL EXPERT
We currently do not have an audit committee financial expert serving on our
audit committee.
21
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation paid
by the Company to the President and the Company's two most highly compensated
executive officers for the fiscal years ended April 30, 2005, 2006, and 2007 the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
None equity Nonqualified
incentive deferred
Stock Option plan compensation All other
Salary Bonus awards awards compensation earnings compensation Total
Name & Position Year ($) ($) ($) ($) ($) ($) ($) ($)
---------------- ------ ---------- -------- -------- --------- --------------- --------------- --------------- ----------
Daniel Medina, 2007 $ 0 $ 0 $ -0- $ -0- $ -0- $-0- $-0- $ 0
President & 2006 $ 0 $ 0 $ -0- $ -0- $ -0- $-0- $-0- $ 0
Director(1) 2005 $ 0 $ 0 $ 1,200 $ -0- $ -0- $-0- $-0- $ 0
---------------- ------ ---------- -------- -------- --------- --------------- --------------- --------------- ----------
Madhava Rao 2007 $ 0 $ 0 $ -0- $ -0- $ -0- $ -0- $ -0- $ 0
Mankal, CFO & 2006 $ 0 $ 0 $ -0- $ -0- $ -0- $ -0- $ -0- $ 0
Director(1) 2005 $ 0 $ 0 $ 1,200 $ -0- $ -0- $ -0- $ -0- $ 0
---------------- ------ ---------- -------- -------- --------- --------------- --------------- --------------- ----------
(1) Messrs. Medina and Mankal received 12,000,000 shares at a price of $0.0001
(par value) per share.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
--------------------------------------------
The following table sets forth certain information concerning outstanding equity
awards held by the Company's executive officers for the fiscal year ended April
30, 2007 the "Named Executive Officers":
------------ -------------------------------------------------------------- ---------------------------------------
Option Awards Stock awards
------------ -------------------------------------------------------------- ---------------------------------------
Equity
incentive
Equity plan
incentive awards:
Equity plan Market
incentive Market awards: or
plan value Number payout
awards: Number of of value
Number of of shares unearned of
Number of Number of securities shares of shares, unearned
securities securities underlying or units units or shares,
underlying underlying unexercised Option units of other units
unexercised unexercised unearned exercise Option of stock rights or
Name options options (#) options price expiration stock that that others
(#) unexercisable (#) ($) date that have have not rights
exercisable have not vested that
not vested (#) have
vested ($) not
(#) vested
($)
------------ ------------ -------------- ------------ --------- ----------- --------- -------- ---------- ---------
Daniel -0- -0- -0- $ -0- - -0- $ -0- -0- -0-
Medina
------------ ------------ -------------- ------------ --------- ----------- --------- -------- ---------- ---------
Madhava -0- -0- -0- $ -0- - -0- $ -0- -0- -0-
Rao Mankal
------------ ------------ -------------- ------------ --------- ----------- --------- -------- ---------- ---------
22
On May 20, 2005, the Board of Directors approved the issuance of 10 shares of a
Series A Preferred Convertible Stock to Messrs. Medina and Mankal, each. At this
time the shares of the Series A Preferred Convertible Stock have not been issued
to Messrs. Medina and Mankal.
STOCK OPTION AND AWARD PLAN
We have adopted the 2006 Medina International Holdings, Inc. Stock Option and
Compensation Award Plan (the "Plan"), which was approved by the board of
directors on August 28, 2006 to obtain and retain the services of the types of
employees, consultants and directors who will contribute to the Company's long
range success and to provide incentives which are linked directly to increases
in share value which will incur to the benefit of all stockholders of the
Company.
Under the Plan, 2,000,000 shares of common stock shall be reserved and available
for issuance. Stock reserved thereunder may consist, in whole or in part, of
authorized and unissued shares of treasury shares. The plan shall be
administered by either (i) the Board, or (ii) a committee appointed by the
Board. No stock options were granted or exercised during the fiscal year ended
April 30, 2006, other than 2,000,000 shares approved for issuance and registered
on Form S-8. During the year ended April 30, 2007, the Company issued a total
100,000 shares under the Plan to consultants engaged by the Company.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year End
Option/SAR Values
No options were exercised during the fiscal years ended April 30, 2007 and 2006.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARS at
Options/SARS at FY-End ($)(1)
FY-End
------------------ ------------------
Shares
Acquired
on Value
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- --- --- ------------- -------------
Daniel Medina 0 0 -/0 $-/0
Madhav Rao Mankal 0 0 -/0 $-/0
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
23
DIRECTOR COMPENSATION
The following table sets forth certain information concerning compensation paid
to the Company's directors during the year ended April 30, 2007:
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
Fees earned Nonqualified
or paid in Stock Option Non-equity deferred
Name cash awards ($) awards ($) incentive compensation All other Total
($) plan earnings compensation ($)
compensation ($) ($)
($)
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
Daniel Medina $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
Madhava Rao $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
Mankal
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
Tony Eshiet(1) $ -0- $ 6,250 $ -0- $ -0- $-0- $ -0- $ -0-
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
Michael Swanson $ -0- $ 6,250 $ -0- $ -0- $ -0- $ -0- $ -0-
(1)
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
Arun Madhav(1) $ -0- $ 6,250 $ -0- $ -0- $ -0- $ -0- $ -0-
----------------- ------------- ------------- ------------- --------------- --------------- ---------------- ------------
(1) During the year ended April 30, 2007, the independent directors of the
Company, Messrs. Eshiet, Swanson and Madhav were issued a total of 37,500 shares
or 12,500 shares each. The shares were issued at a price of $0.50 per share for
total compensation of $18,750.
The other compensation consists of the individual's salary for his services as
an officer of the Company for the year ended April 30, 2007.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Section 16(a) of the Exchange Act, requires our officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership of our company
equity securities with the SEC and NASDAQ. Officers, directors and greater-than
10% shareholders are required by the SEC regulation to furnish the Company with
copies of all Section 16(a) that they file.
The following table sets forth certain information regarding the beneficial
ownership of outstanding shares of our common stock as of June 29, 2007 on a
fully diluted basis, by (a) each person known by us to own beneficially 5% or
more of our outstanding shares of common stock, (b) our directors, Chief
Executive Officer, Chief Financial Officer and executive officers named in
"MANAGEMENT--Director and Executive Compensation," and (c) all our directors and
executive officers as a group
24
Name, Address & Nature of
Beneficial Owner Title of Class Amount Percent of Class(1)
---------------- -------------- ------ ----------------
---------------------------- -------------------------- -------------------------- --------------------------
Daniel Medina,
President, CEO & Director
11564 E. Beverly Blvd. Common Stock 11,099,000 34.69%
Whittier, CA 90601
---------------------------- -------------------------- -------------------------- --------------------------
Madhava Rao Mankal, Common Stock 11,245,000 35.15%
Chief Financial Officer &
Director
7476 Sungold Ave.
Corona, CA 92880
---------------------------- -------------------------- -------------------------- --------------------------
Mike Swanson,
Director
5059 Quail Run Rd #7 Common Stock 42,703 0.13%
Riverside, CA 92507
---------------------------- -------------------------- -------------------------- --------------------------
Tony Eshiet,
Director
10088 6th Street, Ste G Common Stock 42,703 0.13%
Rancho Cucamonga, CA 90730
---------------------------- -------------------------- -------------------------- --------------------------
Arun Madhav,
Director
3637 Flordale Court Common Stock 44,703 0.14%
Thousand Oaks, CA 90360
---------------------------- -------------------------- -------------------------- --------------------------
Officers and Directors, as Common Stock 22,474,109 70.24%
a group (5 individuals)
---------------------------- -------------------------- -------------------------- --------------------------
(1) Based on 31,988,541 shares of common stock issued and outstanding on
June 29, 2007.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's officers and directors, and persons who own more
than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership of equity securities of the
Company with the Securities and Exchange Commission and NASDAQ. Officers,
directors and greater-than 10% shareholders are required by the Securities and
Exchange Commission regulation to furnish the Company with copies of all Section
16(a) filings. At the time of this filing, Messrs. Eshiet, Madhav and Swanson
were delinquent in filing Form 4s reporting changes in their ownership position
of the Company.
25
PART IV
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has adopted a policy under which any consulting or finders fee that
may be paid to a third party or affiliate for consulting services to assist
management in evaluating a prospective business opportunity would be paid in
stock and/or in cash. Any such issuance of stock would be made on an ad hoc
basis. Accordingly, the Company is unable to predict whether or in what amount
such a stock issuance might be made.
Although there is no current plan in existence, it is possible that the Company
will adopt a plan to pay or accrue compensation to its officers and directors
for services related to seeking business opportunities and completing a merger
or acquisition transaction.
Although management has no current plans to cause the Company to do so, it is
possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Year Ended April 30, 2007
During the fiscal year ended April 30, 2007, we issued a total of 37,500 shares
of our restricted stock to our independent directors, Messrs. Eshiet, Swanson
and Madhav for their services as directors. Each director received 12,500 shares
of our restricted common stock. The shares were issued at a price of $0.50 per
share, a premium to the then market price of $0.20 per share. The total
compensation value of the shares was $18,750.
During the year ended April 30, 2007, Mr. Medina, the President and a Director
of the Company advanced the Company a total of $81,527 in funds to support our
continuing operations. The advances are due on demand and accrues interest at
8.5%.
During the year ended April 30, 2007, Mr. Mankal, the Chief Financial Officer
and a Director of the Company, advanced the Company a total of $180,067 in funds
to support our continuing operations. The advances are due on demand and accrues
interest at 8.5%.
Year Ended April 30, 2006
During the fiscal year ended April 30, 2006, we issued a total of 37,500 shares
of our restricted common stock to our independent directors, Messrs. Eshiet,
Swanson and Madhav for their services as directors. Each director received
12,500 shares of our restricted common stock. The shares were issued a price of
$0.50 per shares, a premium to the market price. The total compensation of the
shares was $18,750.
26
During the year ended April 30, 2006, Mr. Medina, the President and a Director
of the Company advanced the Company a total of $63,948 in funds to support our
continuing operations. The advances have no due date and accrued interest at
8.0%.
During the year ended April 30, 2006, Mr. Mankal, the Chief Financial Officer
and a Director of the Company, advanced the Company a total of $66,042 in funds
to support our continuing operations. The advances have no due date and accrued
interest at 8%.
ITEM 13. EXHIBITS
The following documents are filed as a part of this Report.
(i) Financial Statements. See Index to Financial Statements and Schedule on
page F-2 of this Report.
(ii) Exhibits. The following is a complete list of exhibits filed as part of
this Form 10-KSB. Exhibit numbers correspond to the numbers in the Exhibit
Table of Item 601 of Regulation S-B.
EXHIBIT NO. DESCRIPTION
3.1 The Articles of Incorporation of the Company (2)
3.4 Amended Bylaws of Colorado Community Broadcasting (2)
3.8 Certificate of Designation of Series A Convertible Preferred
Stock (3)
10.0 Agreement of Cooperation; Purchase/Supply of "Vortex" Boats and
mutual Understanding, dated August 13, 2005 (4)
10.1 Water Pump License Agreement, dated January 24, 2006 (4)
10.2 License Agreement, dated June 15, 2006 (5)
10.3 Consulting Agreement with Frank F. Fahim, dated June 15, 2006 (6)
10.4 Consulting Agreement with Christopher Smith, dated July 7, 2006
(6)
10.5 Consulting Agreement with Haung I. San, June 18, 2006 (6)
10.6 Consulting Agreement with Walter Wright, June 28, 2006 (6)
10.7 2006 Medina International Holdings, Inc. Stock Option and
Compensation Award Plan (6)
21 Subsidiaries of the Company (1)
31 Certifications pursuant to Section 302 of the Sarbanes-Oxley Act
(1)
32 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act
(1)
(1) Filed herewith.
(2) Incorporated by reference to the Company's Registration
Statement No. 000-27211, filed with the SEC on
September 11, 1999.
(3) Incorporated by reference to the Company's Current
Report on Form 8-K, filed with the SEC on May 23, 2005.
(4) Incorporated by reference to the Company's Current
Report on Form 8-K, filed with the SEC on January 30,
2006.
(5) Incorporated by reference to the Company's Current
Report on Form 8-K, filed with the SEC on July 14,
2006.
(6) Incorporated by reference to the Company's Registration
Statement on Form S-8, filed with the SEC on September
14, 2006.
27
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
General. Jaspers + Hall, PC is the Company's principal auditing/ accountant
firm. The Company's Board of directors has considered whether the provisions of
audit services is compatible with maintaining Jaspers + Hall, PC's independence.
Audit Fees. Jaspers + Hall billed $1,500 for review services and $2,500 audit
fee in the fiscal year ended April 30, 2006 and billed $1,500 for review
services, $2,500 in audit fees and services for the fiscal year ended April 30,
2007.
There were no other fees in 2006 or 2007 paid to Auditors or Auditors
affiliates.
The Company's Board acts as the audit committee and had no "pre-approval
policies and procedures" in effect for the auditors engagement for the audit
years 2006 and 2007.
28
FINANCIAL STATEMENTS
TABLE OF CONTENTS
PAGE
-------
INDEPENDENT AUDITOR'S REPORT............................ F-1
BALANCE SHEET................................................F-2
STATEMENT OF OPERATIONS .....................................F-3
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)..................F-4
STATEMENT OF CASH FLOWS......................................F-5
NOTES TO FINANCIAL STATEMENTS................................F-6
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Financial Statements
April 30, 2007
JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
9175 Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099
REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM
To the Board of Directors
of Medina International Holdings, Inc. and subsidiary
We have audited the accompanying consolidated balance sheets of Medina
International Holdings, Inc. and its subsidiary as of April 30, 2007, and 2006,
and the related consolidated statements of operations, cash flows, and changes
in stockholders' equity for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Medina International
Holdings, Inc. and its subsidiary at April 30, 2007, and 2006, and the results
of its operations and its cash flows for the years then ended 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 described in Note 1 to the
financial statements, conditions exists which raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also discussed in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
July 18, 2007
/s/Jaspers + Hall P. C.
F-1
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
APRIL 30,
2007 2006
-------------- ---------------
ASSETS:
Current Assets:
Cash $ 5,136 $ 1,968
Inventory 54,557 11,428
Prepaid Expenses - 800
Other Receivables 118 -
-------------- ---------------
Total Current Assets 59,811 14,196
Other Assets:
Investment 25,000 25,000
-------------- ---------------
Total Other Assets 25,000 25,000
Fixed Assets:
Mold (12', 15' and 21') 320,465 188,910
-------------- ---------------
Total Fixed Assets 320,465 188,910
-------------- ---------------
TOTAL ASSETS $ 405,276 $ 228,106
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Commitments and Contingencies
Current Liabilities:
Accounts payable and accrued interest $ 144,737 $ 79,784
Lines of credit and Credit cards 28,805 25,765
Customer deposit 20,500 -
Note payable, current 10,000 17,000
Related parties - short-term borrowings from shareholders 261,588 129,991
-------------- ---------------
TOTAL CURRENT LIABILITIES 465,630 252,540
-------------- ---------------
Stockholders' Equity (Deficit):
Preferred stock, $.001 par value, 10,000 shares authorized, unissued
Class A Preferred stock $0.001par value, 50 shares authorized and none issued or outstanding - -
Common stock, $.0001 par value, 100,000,000
shares authorized, 30,324,541and 28,988,391
shares issued and outstanding 3,032 2,899
Additional paid-in capital 1,697,101 1,110,459
Shares committed to be issued 30,625 -
Subscription to be received (4,000) -
Deficit accumulated during the development stage (1,787,113) (1,137,792)
-------------- ---------------
Total Stockholders' Equity (Deficit) (60,355) (24,434)
-------------- ---------------
-------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 405,276 $ 228,106
============== ===============
The accompanying notes are an integral part of the financial statements.
F-2
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
March 16, 1998
Year Ended (Inception) to
April 30, April 30,
------------------------------------
2007 2006 2007
----------------- ---------------- ---------------
INCOME $ - $ - $ 25,000
OPERATING EXPENSES:
Professional Fees 38,290 17,185 147,153
Bank Charges 809 270 1,585
Telephone 3,592 2,647 8,678
Travel 10,355 10,799 25,374
Settlement of debt - - 17,000
Stock compensation 37,500 993,313 1,058,212
Research and Development 25,000 - 25,000
Consultant Expenses 447,500 - 447,500
Other Administrative Expenses 64,940 - 64,940
Miscellaneous expenses 414 15,287 20,235
----------------- ---------------- ---------------
Total Operating Expenses 628,399 1,039,501 1,815,676
----------------- ---------------- ---------------
Other Income(Expense)
Interest expense (18,594) (63) (19,160)
Other Expenses (3,856) - (3,856)
Other income 1,529 25,052 26,580
----------------- ---------------- ---------------
Net Other Income(Expense) (20,922) 24,989 3,563
----------------- ---------------- ---------------
Net Loss from Operations $ (649,321) $ (1,039,512) $(1,787,113)
================= ================ ===============
Weighted average number of
shares outstanding 29,589,285 28,329,556
Net Loss Per Share $ (0.022) $ (0.037)
================= ================
The accompanying notes are an integral part of the financial statements.
F-3
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Deficit Accum.
Additional Shares During the
Common Stock Paid-In Committed to Subscription Development
Shares Amount Capital Be issued Receivable Stage Totals
---------- ------------------ ---------------------- ------------- -----------
Balance - March 16, 1998 - $ - $ - $ - $ - $ - $ -
Stock issued for services 2,400,000 240 1,760 - - - 2,000
Stock issued for cash 300,000 30 24,970 - (10,500) - 14,500
Net loss for year (2,793) (2,793)
---------- ------- ---------- ---------- ----------- ------------- -----------
Balance - April 30, 1999 2,700,000 270 26,730 - (10,500) (2,793) 13,707
---------- ------- ---------- ---------- ----------- ------------- -----------
Cash payment of subscription
receivable - - - - 10,250 - 10,250
Net loss for year - - - - - (5,253) (5,253)
---------- ------- ---------- ---------- ----------- ------------- -----------
Balance - April 30, 2000 2,700,000 270 26,730 - (250) (8,046) 18,704
---------- ------- ---------- ---------- ----------- ------------- -----------
Net loss for year - - - - - (21,426) (21,426)
---------- ------- ---------- ---------- ----------- ------------- -----------
Balance - April 30, 2001 2,700,000 270 26,730 - (250) (29,472) (2,722)
---------- ------- ---------- ---------- ----------- ------------- -----------
Net income for year - - - - - 4,881 4,881
---------- ------- ---------- ---------- ----------- ------------- -----------
Balance - April 30, 2002 2,700,000 270 26,730 - (250) (24,591) 2,159
---------- ------- ---------- ---------- ----------- ------------- -----------
Net loss for year - - - - - (4,610) (4,610)
---------- ------- ---------- ---------- ----------- ------------- -----------
Balance - April 30, 2003 2,700,000 270 26,730 - (250) (29,201) (2,451)
---------- ------- ---------- ---------- ----------- ------------- -----------
Net loss for year - - - - - (7,397) (7,397)
---------- ------- ---------- ---------- ----------- ------------- -----------
Balance - April 30, 2004 2,700,000 270 26,730 - (250) (36,598) (9,848)
---------- ------- ---------- ---------- ----------- ------------- -----------
Stock issued for services 24,120,000 2,412 - - - - 2,412
Subscription receivable - - (250) - 250 - -
Net loss for year - - - - - (61,682) (61,682)
---------- ------- ---------- ---------- ----------- ------------- -----------
Balance - April 30, 2005 26,820,000 2,682 26,480 - - (98,280) (69,118)
---------- ------------------ ---------- --------------------------------------
Stock issued for services 1,954,109 195 976,860 - - - 977,055
Stock issued for royalties 3,600 1 1,799 - - - 1,800
Stock issued for rent 1,250 - 625 - - - 625
Stock issued for license 33,332 3 16,663 - - - 16,666
Stock issued for
consideration 50,000 5 24,995 - - - 25,000
Stock issued for cash 126,100 13 63,037 - - - 63,050
Net loss for year - - - - - (1,039,512) (1,039,512)
---------- ------- ---------- ---------- ----------- ------------- -----------
Balance - April 30, 2006 28,988,391 2,899 1,110,459 - - (1,137,792) (24,434)
========== ======= ========== ========== =========== ============= ===========
Stock issued for services 670,000 67 334,933 - - - 335,000
Stock issued for consulting 225,000 22 112,478 - - - 112,500
Stock issued for royalties 3,200 0 1,600 - - - 1,600
Stock issued for rent 450 0 225 - - - 225
Stock issued to Directors 37,500 4 18,746 - - - 18,750
Stock issued for conversion
of loan 100,000 10 18,690 - - - 18,700
Stock issued for cash 100,000 10 49,990 - (4,000) - 46,000
Stock issued for cash 200,000 20 49,980 - - - 50,000
Shares to be committed to
be issued - - - 30,625 - - 30,625
Net loss for year - - - - - (649,321) (649,321)
---------- ------- ---------- ---------- ----------- ------------- -----------
Balance - April 30, 2007 30,324,541 $ 3,032 $1,697,101 $ 30,625 $ (4,000) $ (1,787,113) $ (60,355)
========== ======= ========== ========== =========== ============= ===========
The accompanying notes are an integral part of the financial statements.
F-4
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
March 16, 1998
Year Ended (Inception) to
April 30, April 30,
------------------------------------
2007 2006 2007
---------------- ----------------- ----------------
Cash Flows From Operating Activities:
Net (Loss) $ (649,321) $ (1,039,512) $ (1,787,113)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock issued for services 498,700 996,146 1,497,259
Stock issued in lieu of debt 18,700 - 18,700
Changes in assets and liabilities:
Increase in inventory (43,129) (11,428) (54,557)
(Decrease) in prepaid expenses 800 (800) 0
Increase in other receivables (118) - (118)
Customer Deposit 20,500 - 20,500
Increase in accounts payables 64,954 17,311 144,737
---------------- ----------------- ----------------
560,407 1,001,229 1,626,521
---------------- ----------------- ----------------
Net Cash Used in Operating Activities (88,914) (38,283) (160,592)
---------------- ----------------- ----------------
Cash Flows From Investing Activities:
Increase in fixed assets (131,555) (188,910) (320,465)
---------------- ----------------- ----------------
Net Cash Used in Investing Activities (131,555) (188,910) (320,465)
---------------- ----------------- ----------------
Cash Flow From Financing Activities:
Increase in lines of credit 22,662 25,765 48,427
Proceeds from note payable (7,000) 17,000 10,000
Proceeds (payments) from advances by shareholders 111,975 123,166 241,966
Issuance of common stock for cash 96,000 63,050 185,800
---------------- ----------------- ----------------
Net Cash Provided By Financing Activities 233,637 228,981 486,193
---------------- ----------------- ----------------
Increase (Decrease) in Cash 3,168 1,788 5,136
Cash and Cash Equivalents - Beginning of period 1,968 180 0
---------------- ----------------- ----------------
Cash and Cash Equivalents - End of period $ 5,136 $ 1,968 $ 5,136
================ ================= ================
Supplemental Cash Flow Information:
Interest paid $ - $ - $ -
Taxes paid $ - $ - $ -
100,000 Shares issued for conversion of loans $ 17,000 $ - $ 17,000
Accured interest payable $ 1,700 $ - $ 1,700
The accompanying notes are an integral part of the financial statements.
F-5
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TTHE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. GENERAL
Medina International Holdings, Inc. ("the Company") was formed in 1998 as
Colorado Community Broadcasting, Inc. and the Company changed the name of the
business in 2005 to Medina International Holdings, Inc. The Company intended to
purchase low power television licenses or stations and planned to broadcast
local programming mixed with appropriate national programming.
The Company plans to manufacture and sell Recreational and Commercial boats. The
Company has designed and built a mold for 21' Commercial Fire Rescue boats. The
Company has acquired the licenses to manufacture 12' and 15' Fire Rescue boats.
In addition, the Company has acquired the license to manufacture and sell 22'
Recreational boats (vortex). The Company is in the process of manufacturing the
21' Fire Rescue which was developed internally by the Company.
The Company formed Medina Marine, Inc. as and wholly owned subsidiary of the
company. Medina Marine was incorporated in the State of California on May 22,
2006 to produce Fire Rescue, Rescue and Recreational boats.
The Company owns the rights to the following websites:
www.medinamarine.com
www.medinainternationalholdings.com
www.medinaih.com
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.
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 April 30, 2007,
the company's current liabilities exceeded its current assets by $405,820. Also,
the Company's operations generated no income during the current period ended and
the company's accumulated deficit is $1,787,113.
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 April 30, 2007 towards management of liabilities
and improving our 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 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.
F-6
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company has not earned significant revenue from planned principal
operations. Accordingly, the Company's activities have been accounted for as
those of a "Development Stage Company" as set forth in Statement of Financial
Accounting Standards No. 7 ("SFAS"). Among the disclosures required by SFAS 7
are that the Company's financial statements of operations, stockholders' equity
(deficit) and cash flows disclose activity since the date of the Company's
inception.
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 AND CASH EQUIVALENTS
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 April 30th, 2007, the Company had $5,136 in cash or cash
equivalents.
INVENTORY
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist of finished goods and raw materials.
Property & Equipment
Capital assets are stated at cost. Equipment consisting of molds are stated 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.
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 APB 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
collectibility 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.
F-7
ISSUANCE OF SHARES FOR SERVICE
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, 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.
FOREIGN CURRENCY TRANSLATION AND HEDGING
The Company is exposed to foreign currency fluctuations due to international
trade. The management does not intend to enter into forward exchange contracts
or any derivative financial investments for trading purposes. The management
does not currently hedge foreign currency exposure.
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 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. INVENTORY
As of April 30, 2007, inventory consisted of the following:
Parts - Vortex Recreational Boat - $11,428
Finished Goods - 17,380
Work in Progress - 25,749
--------
Total - $54,557
--------
NOTE 4. INVESTMENT
Medina International Holdings, Inc. and it's subsidiary have invested $25,000 in
the exchange of 500,000 shares of the restricted common stock of Genesis
Companies Group, Inc. Messrs. Medina and Mankal, directors and officers of the
Company also serve as officers and directors of Genesis Companies Group, Inc..
The 500,000 shares represents 3% of the issued and outstanding common shares of
Genesis Companies Group, Inc.
These securities are carried at their estimated fair value of $25,000 based upon
the amount paid for the shares, due to the fact that there is not a trading
market for the Genesis Companies Group, Inc. shares. Because there is not a
trading market for the shares, the Company is unable to recognize any gains or
losses on the value of the shares and has classified the shares as a long term
asset.
F-8
NOTE 5. FIXED ASSETS
At April 30, 2007, fixed assets consisted of the following:
Mold - 21' Fire/Rescue boat - $ 268,535
Mold - 15' Fire/Rescue boat - 46,802
Mold - 15' Fire/Rescue boat - 5,128
-------------
Total Fixed Assets $ 320,465
-------------
NOTE 6. LINE OF CREDIT
At April 30, 2007, the Company has an Advanta credit card totaling $10,000,
under which the Company may borrow on an unsecured basis since the year 2005 on
an interest rate of 16.99% with a payment due date on the 18th of every month.
The outstanding balance for this credit card was $9,779.
At April 30, 2007, Medina Marine, Inc. has a demand bank line of credit from
Bank of America totaling $15,000, under which the Company may borrow on an
unsecured basis since the year 2006 on an interest rate of 20.25% with a payment
due date on the 29h of every month.. The outstanding balance for this credit
card was $14,228.
At April 30, 2007, Medina Marine, Inc. has a credit card from Wells Fargo Bank
totaling $5,000, under which Medina Marine, Inc. may borrow on an unsecured
basis since the year 2006 on an interest rate of 16.24% with a payment due date
on the 110h of every month.. The outstanding balance for this credit card was
$4,798.
NOTE 7. NOTE PAYABLE
At April 30, 2007, the Company had an unsecured note payable with an unrelated
party in the amount of $10,000, which bears an 8% interest repayable within 15
months or with an option to convert the amount of the note payable into the
Company's common stock at $0.25 per share.
NOTE 8. SHAREHOLDERS' LOANS
At April 30, 2007, Shareholders' loans consisted of the following:
Shareholder's loan from shareholder of the Company, unsecured,
8.5% interest per annum, due on demand $ 81,521
Shareholder's loan from shareholder of the Company, unsecured
8.5% interest per annum, due on demand 180,067
--------------
Total $ 261,588
--------------
F-9
NOTE 9. STOCKHOLDERS' EQUITY
COMMON STOCK
At April 30, 2007, the Company has authorized for issue, 100,000,000 shares of
Common Stock with a par value of $0.0001. At April 30, 2007, the Company had
30,324,541 shares of its common stock issued and outstanding.
STOCK TRANSACTIONS
During the year ended April 30, 2007, the Company has issued restricted
shares pursuant to exemptions from registration under Section 4(2), 4(6)
and regulation D as follows:
During the year ended April 30, 2007, the Company issued 670,000 shares of
its restricted common stock to unrelated parties for services valued at
$335,000.
During the year ended April 30, 2007, the Company issued a total of 37,500
shares of its restricted common stock to its three independent directors
(Messrs. Eshiet, Swanson and Madhav) as compensation for their services as
directors. The shares had a total value of $18,750 ($0.50 per share).
During the year ended April 30, 2007, the Company issued a total of 600
shares of its restricted common stock as payment of rent on a mail box,
totaling $300.
During the year ended April 30, 2007, the Company issued a total of 3,200
shares of its restricted common stock as payment of royalty fees totaling
$1,600. The shares were issued at a premium of the market price of $0.50
per share.
In October 2006, the Company issued 100,000 shares of its restricted common
stock for $50,000 cash. The shares had a purchase price of $0.50 per share,
a premium from the market price of $0.00 per share of its $.0001 par
value common stock for cash in the amount of $50,000:
In March 2007, the Company issued 200,000 shares of its restricted common
stock for $50,000 cash. The shares had a purchase price of $0.25 per share,
a premium from the market price of $0.20 per share.
In September 2006, the Company issued 100,000 shares of its restricted
common stock as settlement on an outstanding debt of $18,700.
During the year ended April 30, 2007, the Company issued 225,000 shares of
its restricted common stock for consulting service to an unrelated third
party with an estimated value of $112,500.
F-10
NOTE 10. COMMITMENTS
Rental Leases
The Company rents 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.
LICENSES
1. In February 2005, we signed a license agreement ("the Vortex License") with
Mr. Mardikian to manufacture and sell our Vortex boats. The Vortex License
has a term of 5 years and provides an option to renew by the Company, as
long as the Company is not in default on the terms of the license
agreement. The Vortex License grants the Company an exclusive right to use
the design in Vortex boats. The Vortex License provides for royalty
payments equal to 2% of the gross sales, less sales returns for a period of
5 years. The Vortex License also requires a minimum license payment of $200
per calendar quarter.
2. In January 2006, we signed a license agreement ("the Water Pump License")
with Mr. Mardikian to use his water pump patent (United States Patent
6,343,964) in the fire and rescue boats designed by us. The license has a
term of 5 years and provides an option to renew by the Company, as long as
the Company is not in default on the terms of the Water Pump License. The
Water Pump License grants us to a non-exclusive right to use the patent in
the manufacturing of both the 15' Rescue and the 21' Rescue boats. The
Water Pump License provides for a royalty payment equal to 1% of the gross
sales, less sales returns, up to January 31, 2008, at which time the
royalty payment will increase to 1.5% of the gross sales, less sales
returns, till January 31, 2011. The Water Pump License does require a
minimum payment of $600 per every six-month period.
3. In June 2006, we signed a license agreement ("15' Rescue Design License")
with Mr. Mardikian to use his design for the manufacturing of our 15'
Rescue boats. The 15' Rescue Design License has a term of 5 years and
provides an option to renew by the Company, as long as we are not in
default of any of the terms of the 15' Rescue Design License. The 15'
Rescue Design License grants us a non-exclusive right to use the design of
the 15' Rescue boat through out the world. The 15' Rescue Design License
provides for a royalty payment equal to 2% of the gross sales, less sales
return for the period of 5 years. The 15' Rescue Design License provides
for a minimum $100.00 monthly payment.
F-11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEDINA INTERNATIONAL HOLDINGS, INC.
(a Colorado corporation)
Date: July 5, 2007 By:_______________________________________
Daniel F. Medina, President, Director
& Chief Finacial Officer
Date: July 5, 2007 By:________________________________________
Madhava Rao Mankal,
Chief Financial Officer &
Chief Accounting Officer
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Date: July 5, 2007 By:________________________________________
Daniel F. Medina, President & Director
& Chief Financial Officer
Date: July 5, 2007 By:________________________________________
Madhava Rao Mankal, Chief Financial
Officer & Director
Date: July 5, 2007 By:________________________________________
Tony Eshiet, Director
Date: July 5, 2007 By:________________________________________
Arun Madhav, Director
Date: July 5, 2007 By:________________________________________
Michael Swanson, Director
29