UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended October 31, 2007
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ______________
Commission File Number 000-27211
MEDINA INTERNATIONAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1469319
------------------------------------- ------------------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
10088 6th Street, Suite G, Rancho Cucamonga, CA 91730
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 522-4414
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]
Number of shares issued and outstanding of the registrant's class of common
stock as of December 6, 2007: 31,988,541 shares of common stock
The Company did recognize revenues for the quarter ended October 31, 2007.
Transitional Small Business Disclosure Format: Yes [_] No [X]
Page
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TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets -October 31, 2007 and December 31, 2006 F-2
Statements of Operations -
Three months and six months ended October 31, 2007 and 2006
and From March 16, 1998 (Inception) to October 31, 2007 F-3
Statements of Cash Flows -
Six months ended October 31, 2007 and 2006 and From March 16,
1998 (Inception) to October 31, 2007 F-4
Notes to Financial Statements F-5
Item 2. Management's Discussion and Analysis 1
Item 3. Controls and Procedures 2
Item 3A(T). Controls and Procedures 3
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 3
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
- Not Applicable 3
Item 3. Defaults Upon Senior Securities - Not Applicable 3
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 3
Item 5. Other Information 3
Item 6. Exhibits 3
SIGNATURES 4
PART I
ITEM 1. FINANCIAL STATEMENTS
JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
9175 Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Medina International Holdings, Inc. and Subsidiary
We have reviewed the accompanying consolidated balance sheets of Medina
International Holdings, Inc. and Subsidiary as of October 31, 2007 and 2006 and
the related consolidated statements of operations for the three and six-months
ended October 31, 2007 and 2006 and the related consolidated statements of cash
flows for the six-months ended October 31, 2007 and 2006. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the objective of which is the expression of an opinion regarding the
financial statements as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, conditions
exists which raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/Jaspers + Hall, PC
---------------------
Jaspers + Hall, PC
December 6, 2007
F-1
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheets
October 31, April 30,
2007 2007
(Unaudited) (Audited)
--------------------------
ASSETS
Current Assets:
Cash $ - $ 5,136
Other receivables 118 118
Inventory 61,837 54,557
------------ -------------
Total current assets 61,955 59,811
------------ -------------
Fixed Assets:
Watercraft molds 342,941 320,465
Office equipment 20,740 -
Manufacturing tools 12,249 -
------------ -------------
375,930 320,465
Accumulated depreciation (28,623) -
------------ -------------
Total fixed assets 347,307 320,465
------------ -------------
Other Assets:
Advance - vendor 24,000 -
Investment in Genesis Companies Group, Inc. 25,000 25,000
------------ -------------
Total other assets 49,000 25,000
------------ -------------
TOTAL ASSETS $ 458,262 $ 405,276
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank Overdraft $ 3,645 $ -
Accounts payable 149,121 121,179
Accrued interest 38,277 23,018
Lines of Credit 14,739 28,805
Customer Deposit 20,500 20,500
Notes payable 10,000 10,000
Related Parties - short-term borrowings from shareholders 296,799 261,588
------------ -------------
Total current liabilities 533,081 465,630
Stockholders' equity (deficit):
Preferred stock, $.00001 par value, 10,000,000 shares
authorized, none issued and outstanding - -
Common stock, $0.00001 par value, 100,000,000 shares
authorized, 31,988,541 and 30,324,541 shares
issued and outstanding on October 31, 2007
and April 30, 2007 3,199 3,032
respectively
Additional paid-in capital 2,122,185 1,697,102
Shares committed to be issued 329,904 30,625
Subscription receivable (1,000) (4,000)
Accumulated deficit during the development stage (2,529,107) (1,787,113)
------------ -------------
Total stockholders' equity (deficit) (74,819) (60,354)
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 458,262 $ 405,276
============ =============
See accountants' review report and notes to these consolidated financial
statements.
F-2
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended March 16, 1998
October 31, October 31, (Inception) to
2007 2006 2007 2006 October 31, 2007
-------------------------------- ---------------------------------- ------------------
Revenues $ - $ - $ 192,800 $ - $ 217,800
Cost of Goods Sold - - 86,994 - 86,994
-------------------------------- ---------------------------------- ------------------
Gross Profit - - 105,806 - 130,806
Operating expenses:
Selling Expense 9,119 - 35,872 - 35,628
Administrative expenses 81,621 487,365 796,669 512,253 2,612,588
-------------------------------- ---------------------------------- ------------------
Loss from operations (90,740) (487,365) (726,735) (512,253) (2,517,410)
Other income (expense):
Interest income - - - - 26,580
Interest expense, related party (7,489) (6,731) (15,259) (7,624) (38,277)
-------------------------------- ---------------------------------- ------------------
Total Other income (expense): (7,489) (6,731) (15,259) (7,624) (11,697)
Net loss $ (98,229) $ (494,096) $ (741,994) $ (519,877) $ (2,529,107)
================================ ================================== ==================
Weighted average number of
common shares outstanding 31,988,541 29,330,184 31,533,190 29,159,288
================================ ==================================
Net loss per share $ (0.003) $ (0.017) $ (0.024) $ (0.018)
================================ ==================================
See accountants' review report and notes to these consolidated financial
statements.
F-3
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
March 16, 1998
Six Months Ended (Inception) to
October 31, October 31,
2007 2006 2007
---------------- -------------- ----------------
Cash flows from operating activities:
Net loss $ (741,994) $ (519,877) $ (2,529,107)
---------------- -------------- ----------------
Adjustments to reconcile net loss to net
cash used in operating activities:
Common stock issued in exchange
for consulting 692,529 457,625 2,189,788
Settlement of debt 2,000 17,000 20,700
Depreciation 28,623 - 28,623
Changes in operating assets and
liabilities: - - -
Increase in other receivable - - (118)
Increase in inventory (7,280) (18,768) (61,837)
Decease in prepaid expenses - 500 -
Increase in accounts payable 27,402 8,472 149,121
Increase in accrued interest 15,259 - 38,277
Increase in customer deposits - 20,500 20,500
---------------- -------------- ----------------
Total adjustments 758,533 485,329 2,385,054
---------------- -------------- ----------------
Net cash received from (used in)
operating activities 16,539 (34,548) (144,053)
---------------- -------------- ----------------
Cash flows from investing activities:
Purchase of fixed assets (22,476) (66,877) (375,930)
---------------- -------------- ----------------
Net cash used in investing activities (22,476) (66,877) (375,930)
---------------- -------------- ----------------
Cash flows from financing activities:
Bank overdraft 3,645 - 3,645
Proceeds from notes payables, related party 2,222 67,598 296,799
Proceeds from note payable - - 10,000
Proceeds from lines of Credit (14,066) 1,039 14,739
Proceeds from the issuance of common stock 9,000 33,000 194,800
---------------- -------------- ----------------
Net cash provided by financing activities 801 101,637 519,983
---------------- -------------- ----------------
Net (decrease) increase in cash and cash
equivalents (5,136) 212 -
Cash and cash equivalents - beginning of period 5,136 1,968 -
---------------- -------------- ----------------
Cash and cash equivalents - end of period $ - $ 2,180 $ -
================ ============== ================
Supplemental disclosure of cash flow information:
Interest Paid $ - $ - $ -
================ ============== ================
Taxes paid $ - $ - $ -
================ ============== ================
Stock issued for compensation $ 629,529 $ 457,625 $ 2,189,788
Non-cash financing and investing activities:
Increase in office equipment and tools,
related party, note payable $ 32,989 $ - $ 32,989
================ ============== ================
Advance to vendor in exchange for shares
issued of 150,000 $ 24,000 $ - $ 24,000
================ ============== ================
See accountants' review report and notes to these consolidated financial
statements.
F-4
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2007
(Unaudited)
Note 1. BASIS OF PRESENTATION, BUSINESS, AND MANAGEMENTS PLANS:
BASIS OF PRESENTATION:
Presentation of Interim Information:
The accompanying condensed consolidated financial statements include the
accounts of Medina International Holdings, Inc., a Colorado corporation (the
Company), and its wholly-owned subsidiary, Medina Marine, Inc. (Medina Marine).
All significant inter-company accounts and transactions have been eliminated in
consolidation.
In the opinion of the management of the Company, the accompanying unaudited
consolidated financial statements include all material adjustments, including
all normal and recurring adjustments, considered necessary to present fairly the
financial position and operating results of the Company for the periods
presented. The financial statements and notes are presented as permitted by Form
10-QSB, and do not contain certain information included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended April 30, 2007. It is the
Company's opinion that when the interim financial statements are read in
conjunction with the April 30, 2007 Annual Report on Form 10-KSB, the
disclosures are adequate to make the information presented not misleading.
Interim results are not necessarily indicative of results for a full year or any
future period.
Development Stage Company
The Company has not earned any significant revenues from its limited principal
operations. Accordingly, the Company's activities have been accounted for as
those of a "Development Stage Enterprise" as set forth in Financial Accounting
Standards Board Statement No. 7 ("SFAS 7"). Among the disclosures required by
SFAS 7 are that the Company's financial statements be identified as those of a
development stage company, and that the statements of operation, stockholders'
equity (deficit) and cash flows disclose activity since the date of the
Company's inception.
Business
The Company's business activities are focused on the design, manufacturing and
sale of recreational and commercial boats through its wholly-owned subsidiary,
Medina Marine,. The Company intends to focus its efforts on marketing its
commercial watercraft to fire, rescue and law enforcement agencies and those
other agencies involved in water rescue and water patrol.
Management's Plan
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.
In the Company's Annual Report on Form 10-KSB for the fiscal year ended April
30, 2007, the Report of the Independent Registered Public Accounting Firm
includes an explanatory paragraph that describes substantial doubt about the
Company's ability to continue as a going concern. The Company's interim
financial statements for the six months ended October 31, 2007 have been
prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of
business. The Company's operations generated income of $192,800 during the six
months ended October 31, 2007. On October 31, 2007, the Company's accumulated
deficit is $2,529,107 and its current liabilities exceed current assets by
$471,126.
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 six months ended October 31, 2007 towards management of
liabilities and improving the Company's operations. Management believes that the
above actions will allow the Company to continue its operations through the next
fiscal year.
The future success of the Company is likely 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
attain positive cash flow from operations.
Note 2. Summary of Significant Accounting Policies:
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.
Issuance of Shares for Services
The Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable.
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.
Basic and Diluted Net Loss per Share
Net loss per share is calculated in accordance with the Statement of Financial
Accounting Standards No. 128 (SFAS No. 128), "Earnings per Share". SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB No. 15). Net loss per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period. Common stock equivalents are not included in diluted loss per share
to the extent that their inclusion would be ant-dilutive.
International trade and currency risks
The company is involved in export trade to other nations and is subject to
numerous risks. These risks involve in increase of freight cost, demurrages in
foreign ports, and collections of invoice amounts from international customers.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid
Financial Instruments, which amends SFAS 133, Accounting for Derivative
Instruments and Hedging Activities, and SFAS 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities - a replacement
of FASB Statement No. 125. SFAS 155 allows financial instruments that contain an
embedded derivative and that otherwise would require bifurcation to account for
as a whole on a fair value basis, at the holder's election. SFAS 155 also
clarifies and amends certain other provisions of SFAS 133 and SFAS 140. SFAS 155
is effective for the Company for all financial instruments issued or acquired
after the beginning its fiscal year ending April 30, 2008. The adoption of SFAS
155 did not have an impact on the Company's financial statements.
In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty
in Income Taxes - An Interpretation of FASB Statement No. 109, (FIN 48). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 also prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return that results in a
tax benefit. Additionally, FIN 48 provides guidance on de-recognition, income
statement classification of interest and penalties, accounting in interim
periods, disclosure, and transition. This interpretation is effective for the
Company on May 1, 2007. The adoption of FIN 48 did not have a material impact on
the Company's consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosures about fair
value measurements. This statement applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 is effective for
the Company for its fiscal year beginning on May 1, 2008. The Company is
currently assessing the impact the adoption of SFAS No. 157 may have on its
consolidated financial statements.
Note 3. Inventory:
At October 31, 2007, inventory consisted of the following:
Finished Goods: $ 4,986
Parts 30,620
Work in progress 26,231
-------
Total Inventory $ 61,837
=======
Note 4. Fixed Assets:
At October 31, 2007, fixed assets consisted of the following:
Mold - 12' Fire/Rescue boat (WIP)- $ 7,628
Mold - 15' Fire/Rescue boat - 66,778
Mold - 21' Fire/Rescue boat - 268,535
Office Equipment- 20,740
Manufacturing Tools - 12,249
----------------
Total Fixed Assets $375,930
================
The Company purchased office equipment and manufacturing tools valued at $32,790
from Mr. Daniel Medina, the president and director of the Company during first
quarter ended July 31, 2007 on account.
Note 5. Advance - Vendor:
The Company has entered into an agreement with Mr. Jesse Solano, to fabricate
upholstery for watercrafts in exchange for 150,000 shares of restricted common
stock of the Company. The Company valued the stock, in accordance with the
agreement at $0.20 per share. As of October 31, 2007, the vendor advance
consisted of $24,000.
Note 6. Investment:
The Company purchased 500,000 shares of the common stock of Genesis Companies
Group, Inc. in exchange for 50,000 shares of the Company's common stock valued
at $25,000 ($0.50 per share).
Note 7. Line of Credit:
The Company has a demand bank line of credit totaling $15,000, under which the
Company may borrow on an unsecured basis at the bank's prime rate. As of October
31, 2007, there was no outstanding balance under this line of credit.
The Company has a demand bank line of credit totaling $10,000, under which the
Company may borrow on an unsecured basis at the bank's prime rate. As of October
31, 2007, $9,701 was outstanding under this line of credit.
Medina Marine has a credit card credit limit of $5,000, under which Medina
Marine may borrow on an unsecured basis at the bank's prime rate. As of October
31, 2007, $5,038 was owed on the credit card.
Medina Marine has a credit card with a credit limit of $500, under which Medina
Marine may borrow on an unsecured basis at the bank's prime rate. As of October
31, 2007, there was no outstanding balance on the credit card.
Note 8. Notes Payable:
On October 31, 2007, Notes payable consisted of a $10,000 loan from an
individual payable on demand at 8% interest per annum.
Note 9. Related Party - Short-term Borrowings:
At October 31, 2007, short-term borrowings from related parties consisted of the
following principal amounts:
President and director $ 95,583
CFO and director 201,216
----------
Total $ 296,799
=========
These notes are unsecured; bear interest at 8.5%, and due on demand.
Note 10. Stockholders' Deficit:
The Company issued 1,664,000 shares of its restricted common stock during the
six months ended October 31, 2007. As of October 31, 2007, the Company has
31,988,541 shares of its common stock issued and outstanding. The following
presents the purpose of stock issuance during the six months ended October 31,
2007:
Shares Issued Value
------------- ------
Stock issued for consulting 1,600,000 $400,000
Stock issued for royalties 2,500 500
Stock issued Directors 37,000 18,750
Stock issued for cash 24,000 6,000
------------- --------
Total 1,664,000 $425,250
Shares Committed
During the six months ended October 31, 2007.These shares have been valued at
closing market on the date of issuance unless stated otherwise the Company has
committed to issuing the following shares, which had not been issued on October
31, 2007.
- 18,750 shares of common stock to be issued to directors as compensation.
The shares have a total value of $4,688 ($0.25 per share).
- 18,750 shares of common stock to be issued to directors as compensation.
The shares have a total value of $1,312 ($0.07 per share).
- 2,500 shares of common stock to be issued as payment on licensing royalty
fees. The shares have a total value of $500 ($0.20 per share).
- 7,200 shares of common stock to be issued as payment on licensing royalty
fees. The shares have a total value of $504 ($0.07 per share).
- 70, 000 shares of common stock to be issued for cash of $7,000. The shares
will have an issuance price of $0.20 per share.
- 108,000 shares of common stock to be issued in connection with services
provided by third parties. The shares have a total value of $21,600 ($0.20
per share).
- 150,000 shares of common stock to be issued in connection with services
provided by third parties. The shares have a total value of $30,000 ($0.20
per share).
- 1,350 shares of common stock to be issued in connection with services
provided by third parties. The shares have a total value of $300 ($0.22 per
share).
- 50,000 shares of common stock to be issued in connection with services
provided by third parties. The shares have a total value of $24,000 ($0.48
per share).
- 20 shares of Series A Preferred Stock to be issued to two of the Company's
directors for a purchase price of $240,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS
-------------
Cautionary Statement Concerning Forward-Looking Statements
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
Results of Operation
Results of operations for the three months ended October 31, 2007 compared to
the same period ended October 31, 2006
Sales
We did not recognize any revenue during the three months ended October 31, 2007
and 2006.
Operating Expenses
The Company incurred total operating expenses of $90,740 for the three months
ended October 31, 2007, as compared to operating expenses $487,365 for the three
months ended October 31, 2006. The operating expenses for the three months ended
October 31, 2007, primarily included $1,313 in stock compensation and $80,308 in
general and administration expenses and $9,119 in marketing expenses. The
operating expenses for the three months ended October 31, 2006 included $447,500
in stock compensation and $39,865 for general and administration expenses. The
decrease of $396,625 is attributable to the decrease in the Company's stock
compensation expenses over the prior period.
The Company recognized interest expense of $7,489 for the three months ended
October 31, 2007, compared to an interest expense of $6,731 for the three months
ended of October 31, 2006. The increase of $758 is due to an increase of funds
loaned to the Company.
Net Loss
The Company recognized a net loss of $98,229 for the three months ended October
31, 2007, compared to a net loss of $494,096 for the three months ended October
31, 2006. The decrease of $395,867 was due to the $446,187 decrease in operating
expenses. The net loss per share for the three months ended October 31, 2007 was
$0.003 compared to $0.017 for the quarter ended October 31, 2006.
Results of operations for the six months ended October 31, 2007 compared to the
same period ended October 31, 2006
Sales
We generated $192,800 in revenue during the six months ended October 31, 2007
compared to $0 for the six months ended October 31, 2006. The $192,800 in
revenue was through the sale of two fire rescue jet boats.
Cost of Sales
The cost of sales for the six months ended October 31, 2007 was $ 86,994. The
Company did not incur any cost of sales during the six months ended October 31,
2006.
Operating Expenses
The Company incurred total operating expenses of $726,735 for the six months
ended October 31, 2007, as compared to operating expenses $512,253 for the six
months ended October 31, 2006. The increase of $214,482 in operating expenses is
primarily a result in an increase of $666,000 in stock compensation expenses
compared to $447,500 for the six months ended October 31, 2006. The operating
expenses for the six months ended October 31, 2007, primarily included $666,000
in stock compensation and $130,669 in general and administration expenses and
$35,872 in marketing expenses. The operating expenses for the six months ended
October 31, 2006, primarily included $447,500 in stock compensation and $64,753
for general and administration expenses.
The Company recognized interest expense of $15,259 for the six months ended
October 31, 2007, compared to an interest expense of $7,624 for the six months
ended of October 31, 2006. The increase of $7,635 is due to an increase of funds
loaned to the Company.
Net Loss
The Company recognized a net loss of $741,994 for the six months ended October
31, 2007, compared to a net loss of $519,877 for the six months ended October
31, 2006. The increase of $222,117 was due to increase in stock compensation
expense. The net loss per share for the six months ended October 31, 2007 was
$0.024 compared to $0.018 for the six months ended October 31, 2006.
LIQUIDITY AND CAPITAL RESOURCES
As of October 31, 2007, the Company had no cash, an inventory (consisting of
parts for Vortex and 15' Fire Rescue watercraft and 21' Fire Rescue Boat) of
$61,837 and fixed assets (consisting of molds for the 12', 15' and 21' fire
rescue jet, office equipment and manufacturing tools) of $375,930. The Company's
total current liabilities were $533,081 as of October 31, 2007, which was
represented mainly accounts payable and accrued interest payable of $187,398,
advances from customers of $20,500, lines of credits totaling $14,739 and
short-term loans from stockholders totaling $296,799. At October 31, 2007, the
Company's current liabilities exceeded current assets by $469,126.
The Company received $16,539 from operating activities for the six months ended
October 31, 2007 compared to using $34,548 for the six month period ended
October 31, 2006.
The Company used cash of $22,476 in investing activities during the six month
period ended October 31, 2007 on molds. For the six month period ended October
31, 2006, the Company had used cash $66,877 for manufacturing of the molds for
the fire and rescue watercrafts.
For the six month period ended October 31, 2007, the Company under financing
activities repaid lines of credit, which led to the $14,066 decrease in the
lines of credits held by the Company. In addition, the Company sold shares of
its common stock valued at $9,000 for the quarter ended October 31, 2007. For
the six month period ended October 31, 2006, the Company borrowed $2,222 under
financing activities.
The Company has an accumulated deficit, as of October 31, 2007 of $2,529,107
compared to October 31, 2006 of $1,657,669.
The Company does not have capital sufficient to meet its cash needs, including
the costs of compliance with the continuing reporting requirements of the
Securities Exchange Act of 1934. Management will have to seek loans or equity
placements to cover such cash needs and cover outstanding payables. Lack of
existing capital may be a sufficient impediment to prevent us from accomplishing
the goal of expanding operations. There is no assurance, however, that without
funds we will ultimately be able to carry out our business. We will need to
raise additional funds to expand our business activities in the future, and
prepare a private offering memorandum to attempt to raise operating capital. No
commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow us to cover our expenses as they may be
incurred. Irrespective of whether our cash assets prove to be inadequate to meet
our operational needs, we might seek to compensate providers of services by
issuances of stock in lieu of cash.
Plan of Operation
The Company has one full time employee. We intend to develop strategies for the
growth of our business, both nationally and internationally through the
formulation of strategic enterprise partnerships, cooperative alliances and
joint ventures. We would search out those business relationships which allow us
to augment our current design and manufacturing capabilities and thereby expand
our market opportunities. In addition, we will seek out relationships that would
allow us to increase our marketing, sales and delivery capabilities.
ITEM 3. CONTROLS AND PROCEDURES
--------------------------------
a. Evaluation of Disclosure Controls and Procedures:
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;
October 31, 2007 and have concluded that the disclosure controls, internal
controls and procedures are adequate and effective based upon their evaluation
as of the evaluation date.
b. Changes in Internal Control over Financial Reporting:
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 last fiscal quarter that has
materially affected or is reasonable likely to materially affect, the small
business issuers internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS -
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NONE
ITEM 2. CHANGES IN SECURITIES -
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NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES -
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NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
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NONE.
ITEM 5. OTHER INFORMATION -
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The Company has signed a letter of intent for an exclusive licensing agreement
with Nexgen E2 Ltd, a Canadian Corporation, on November 1, 2007 to acquire the
knowledge and license to sell patented back packs, fire engine cannon, helmets
and other fire resistant accessories. This exclusive licensing agreement will
take effect after the Company has met its obligations to pay an amount of
$125,000.
ITEM 6. EXHIBITS -
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The following is a complete list of exhibits filed as part of this Form 10-QSB.
Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of
Regulation S-B.
31.1 Certification by the Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act. 31.2 Certification by the Chief
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1 Certification by the Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act. 32.2 Certification by the Chief
Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MEDINA INTERNATIONAL
HOLDINGS, INC.
(Registrant)
Dated: December 17, 2007 By: /s/Daniel Medina
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Daniel Medina, President
By: /s/Madhava Rao Mankal
----------------------
Madhava Rao Mankal,
Chief Financial Officer