UNITED STATES
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(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, 2013.
[ ] 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.)
191 Kettering Dr., Ontario, CA 91761
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 522-4414
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Securities registered pursuant to Section 12(b) of this Act:
Title of each class Name of each exchange on which registered
Common stock OTC: Bulletin Board
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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Title of each class
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]
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 [ ] No [X]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 229.405 of
this chapter) is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer Small
reporting company [X ] (Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).
Yes [ ] No [X]
State issuer's revenues for its most recent fiscal year: $1,355,179
There were 55,890,117 shares of the Registrant's common stock outstanding as of
April 30, 2013. The aggregate market value of the 18,787,116 shares of common
stock held by non-affiliates of the Registrant is approximately $563,613 based
on the closing market price of $0.03 per share on April 30, 2013.
DOCUMENTS INCORPORATED BY REFERENCE
None
MEDINA INTERNATIONAL HOLDINGS, INC.
2013 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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ITEM DESCRIPTION PAGE
Part I
Item 1. Description of Business 1
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 13
Item 2. Description of Property 13
Item 3. Legal Proceedings 13
Item 4. Mine and Safety Disclosures 13
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder 13
Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of Financial Condition and 15
Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 22
Item 8. Financial Statements and Supplementary Data F-1 - F-15
Item 9. Changes in and Disagreements With Accountants on Accounting and 23
Financial Disclosure
Item 9A. Controls and Procedures 23
Item 9A(T) Controls and Procedures 24
Item 9B. Other Information 25
Part III
Item 10. Directors, Executive Officers, Corporate Governance 25
Item 11. Executive Compensation 29
Item 12. Security Ownership of Certain Beneficial Owners and Management 31
and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and 32
Director Independence
Item 14. Principal Accounting Fees and Services 33
Part IV
Item 15. Exhibits, Financial Statement Schedules. 34
Signatures 35
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EXPLANATORY NOTE
Medina International Holdings, Inc., (the "Company"), is filing this Amendment
to its Annual Report on Form 10-K for the year ended April 30, 2013 filed with
the Securities and Exchange Commission on August 13, 2013, for the sole purposes
of amending Item 6 of Part I to include the financial summary information and
the heading of the statement of operations included in Part II, Item 8of this
filing.
This Amendment does not reflect events occurring after the Original Filing
except as noted above. Except for the foregoing amended information, this Form
10-K/A continues to speak as of the date of the Original Filing and the Company
has not otherwise updated disclosures contained therein or herein to reflect
events that occurred at a later date.
FORWARD-LOOKING STATEMENTS
In addition to historical information, some of the information presented in
this Annual Report on Form 10-K contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Although Medina International Holdings, Inc., ("Medina" or the "Company,"
which may also be referred to as "we," "us" or "our") believes that its
expectations are based on reasonable assumptions within the bounds of its
knowledge of its business and operations, there can be no assurance that actual
results will not differ materially from these expectations. Such forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those anticipated, including but not limited
to, its ability to reach satisfactorily negotiated settlements with its
outstanding creditors and raise debt and/or equity to fund negotiated
settlements with its creditors and to meet its ongoing operating expenses.
Cautionary statements regarding the risks, uncertainties and other factors
associated with these forward-looking statements are discussed on page 5 below.
You are urged to carefully consider these factors, as well as other information
contained in this Annual Report on Form 10-K and in our other periodic reports
and documents filed with the Securities and Exchange Commission ("SEC").
PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
Medina International Holdings, Inc. ("Medina," "we," "us," "Company") was
incorporated on June 23, 1998 in the state of Colorado as Colorado Community
Broadcasting, Inc. In 2005, the Company changed its name to Medina International
Holdings, Inc. Our corporate offices are located at 191 Kettering Dr., Ontario,
California, 91761, and our telephone number is (909) 522-4414.
Medina manufactures products and services to assist emergency and defense
organizations and personnel. Our products are manufactured by the Company's
wholly owned subsidiary Harbor Guard Boats, Inc. The Company's securities are
traded on Over-the-Counter-Bulletin-Board (OTCBB) under the symbol, "MIHI."
In 2004, there was a change of management. At that time, Messrs. Daniel F.
Medina and Mr. Madhava Rao Mankal were appointed as the President and Chief
Financial Officer, respectively, and were also appointed as directors of the
Company. In 2005, the board and the shareholders approved the name change to
Medina International Holdings, Inc. Since these organizational restructurings,
we have pursued a business plan that focuses on watercraft manufacturing for
rescue, emergency, and defense operations, as well as, recreational uses.
Medina Marine, Inc. was formed in the State of California, on May of 2006, as a
wholly owned subsidiary for the sole purpose of manufacturing watercrafts. Since
inception, Medina Marine has sold three fiberglass watercrafts, two in the
United States and one abroad. Presently it is not an operating Company.
The Company acquired Harbor Guard Boats, Inc. (Formerly called Modena Sports
Design, LLC) as a wholly owned subsidiary of the company on June 18, 2008 and is
incorporated in the State of California since 2003 to produce fire rescue,
rescue and recreational boats. Harbor Guard Boats currently has eleven (12)
models of commercial and recreational watercrafts, ranging from 15' to 37' in
length.
Harbor Guard Boats ("HGB") designs, manufactures, and markets high-performance,
hand-laid fiberglass and aluminum commercial watercrafts ranging from 15' to
37', which are utilized by fire, search & rescue, emergency, patrol, military
and defense organizations. These watercrafts combine innovative designs with
power, safety, handling and stability to create superior products designed to
protect and save lives.
The Company owns the rights to the following websites:
www.medinaih.com
www.harborguardboats.com
1
Our Company operates under non-exclusive licenses for the following patents:
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Patent No. Date
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U.S. 6,620,003 9/16/2003
U.S. 7,004,101 2/28/2006
U.S. 6,168,481 1/2/2001
Landing Craft Pending
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Agreements
Entry into Settlement Agreement
On February 10, 2012, Medina International Holdings, Inc. ("the Company"), its
subsidiaries, Modena Sports Design, LLC, Harbor Guard Boats, Inc., its officers
and directors, Madhava Rao Mankal and Daniel Medina, entered into a Settlement
Agreement and Mutual Release ("the Settlement Agreement") with Albert Mardikian,
MGS Grand Sport, Inc., and Mardikian Design and Associates ("the Mardikian
Parties"). The Settlement Agreement is connection with the lawsuit filed by Mr.
Mardikian, as discussed below.
On December 28, 2010, Albert Mardikian and MGS Grand Sport, Inc., filed a
Complaint for breach of contract; money lent; account stated; accounting;
declaratory relief; fraud and deceit; breach of fiduciary duty; conversion; and
involuntary dissolution in Superior Court of the State of California, County of
Orange against Medina International Holdings, Inc.; Modena Sports Design, LLC;
Harbor Guard Boats, Inc.; Madhava Rao Mankal; and Danny Medina.
Mr. Mardikian and MGS Grand Sport, Inc. were seeking monetary damages exceeding
$1 million as well as punitive damages in unspecified amounts and a dissolution
of the Company. Mr. Mardikian was a Director and significant shareholder of the
Company.
The Settlement Agreement provides that the Mardikian Parties shall grant the
Company's subsidiary, Harbor Guard Boats, Inc. a License to make, have made,
develop, sell, promote, distribute and market commercial and governmental boats
utilizing U.S. Patent Nos. 6,620,003, 6,343,964 and 7,004,101. Such License will
have a 5 year term from the effective date of the Settlement Agreement. The
License will provide for a royalty payment of $1,500 per boat during the term of
the License.
The Settlement further provides, that all molds, inventory, tools, machinery,
parts, drawings, manuals and other materials acquired from the Mardikian parties
remain the property of the Company and that any trademarks will remain the
property of Harbor Guard Boats, Inc.
The Settlement Agreement provides for a the Company and Harbor Guard Boats to
pay the Mardikian Parties up to $250,000 starting January 1, 2012, as a
contingency payment. The contingency payment is based on the collective sale of
the boats manufactured per calendar year using the 24' and 26' mold provided by
Mr. Albert Mardikian. If 4 or less boats are manufactured the Company does not
have to pay the contingency payment. If 5 or more boats are manufactured using
the 24' and 26' mold provided by Mr. Albert Mardikian, the Company shall make
payments towards the contingency payment as set forth in the Settlement
Agreement.
Further, the Settlement Agreement provides for the Company and Harbor Guard
Boats to pay off a credit line that Mr. Mardikian is a signatory totaling
$94,932 and the payments are to be made as set forth in the Settlement
Agreement.
Pursuant to the Settlement Agreement, once the contingency payments made by the
Company and Harbor Guard Boats total $250,000 and the credit line has been paid
in full, the Mardikian Parties will return to the Company 5,500,000 shares of
the Company's common stock held by the Mardikian Parties.
On March 13, 2012, all the parties to the litigation filed a request to dismiss
the litigation in its entirety.
2
Agreement with Wintec Protective Systems, Inc.
On June 28, 2011, Medina International Holdings, Inc. entered into a
Contribution and Exchange Agreement with WinTec Protective Systems, Inc.
("WinTec.") As part of the Contribution and Exchange Agreement, the Company
agreed to issue 3,000,000 shares of its restricted common stock in exchange for
20,400,000 shares of the common stock of WinTec. As a result of such exchange,
the Company holds 51% of the issued and outstanding common stock of WinTec,
making WinTec a subsidiary of the Company.
As part of the Contribution and Exchange Agreement, the Company has agreed to
register the 3,000,000 shares issued with the Securities and Exchange Commission
("SEC") for resale by WinTec. If any of the following occur:
(i) the Registration Statement is not filed on or before the Required
Filing Date,
(ii) the Registration Statement is not declared effective on or before the
Required Effective Date, or
(iii)the Registration Statement is declared effective but cease to be
effective for a period of time which shall exceed three hundred and
sixty five (365) days in the aggregate per year (defined as a period
of 365 days commencing on the date the Registration Statement is
declared effective)
then the Company will be required to pay WinTec an amount equal to one-half
percent (0.5%) of the fair market value of the 3,000,000 shares of the Company's
common stock on the first business day after the non-registration event and for
each subsequent thirty (30) day period (pro rata for any period less than thirty
(30) days) which are subject to such Non-Registration Event.
Entry in Settlement Agreement - Disposition of Subsidiary
On March 28, 2012, ROK Global, PLC ("ROK") entered into a Settlement Agreement
and Mutual Release ("the Settlement Agreement") with Medina International
Holdings, Inc. ("the Company"), Wintec Protective Systems, Inc. ("Wintec"), Mr.
Daniel Medina, and Mr. Madhava Mankal Rao. Mr. Medina and Mankal are officers
and directors of the Company.
In 2011, the Company, Wintec and ROK entered into agreements that provided for
the Company to provide funding to Wintec and to contribute 3,000,000 shares of
its common stock in exchange for 20,400,000 shares of Wintec. As a result of the
agreements, Wintec had become the Company's 51% held subsidiary.
The Settlement Agreement provides for the agreements entered into in 2011 to be
terminated and cancelled, effective immediately. All parties agree to the
termination of the agreements without remedy and resolve each party of any
claims or liabilities arising out of such agreements. As a result of the
termination, Wintec is no longer a subsidiary of the Company. The Company
transferred back to Wintec the 20,400,000 shares of Wintec in exchange for $1.
Wintec transferred 3,000,000 shares of the Company's common stock issued in
2011, in exchange for $1.
Wintec per agreement to pay to the Company $237,718 within two years of the date
of the Settlement Agreement;
Product Description
We manufacture commercial and recreational watercrafts under our wholly owned
subsidiary Harbor Guard Boats, Inc. Our commercial products are utilized by
fire, search & rescue, patrol, emergency, military and defense departments,
while the recreational products are targeted towards leisure and sports inclined
individuals.
3
Commercial Boats - The Company currently has ten (10) commercial watercraft
models, ranging from 15' to 37' in length.
-------------------------------------- --------- ----------------- ----------------- -----------------
Watercraft Fire Rescue Aluminum Fiber Glass
Rescue
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15' Interceptor X X
20' Interceptor X X X
21' Firecat X X X
24' Firehawk/Defender X X X
30' Firehawk/Defender X X X X
37' Firehawk/Defender X X X X
-------------------------------------- --------- ----------------- ----------------- -----------------
Recreational Boats - The Company currently has 2 recreational
watercraft models for sale.
Our watercraft products are made out of fiberglass and Aluminum materials. In
addition to durability and improved speeds, the use of fiberglass means that any
repairs or damage to the interior or exterior of the craft can be easily
repaired. Our products incorporate a platform, which prevents the boats from
flooding, providing a greater stability for our products.
All of our watercrafts either use jet propulsion, I/O and Out Boards for their
power. The use of jet engines allows the watercraft to operate in shallow
waters. In addition, the jet engines provide a greater safety to the rescuers
and those being rescued. Our jet propulsion watercrafts allow the crew members
to get extremely close to the victims without the worry of causing further
injury to those being rescued. The use of I/O and Outboard engines are installed
mainly in 24' and up models. In addition, some of our models are designed to
accommodate multiple or mixture of the above mentioned engine types, taking into
consideration safety and agility.
The water pump used in our products uses water retrieved from the bottom of the
boat and sprays water at 750-3000 gallons per minute, without compromising the
stability of the craft. MCD System allows the water intake to be diverted to
water pump for spraying.
Our innovative watercraft designs allow us to market our products to fire and
rescue departments, as well as to defense and military departments.
Competition
Our products compete with those companies that are already established in the
industry. Our competition may have established dealerships in the United States
and other parts of the world, which may give them an advantage over our company.
In addition, our competitors may have good relations with the government and its
personnel and a proven track record, which may adversely affect our sales
efforts. An established competition to our company may have resources and man
power to expand into other cities and countries and offer their products at
lower prices.
Our competitors build similar rescue watercraft, though they may use different
materials in the construction of their products, such as inflatable and metal.
We believe that the use of the jet propulsion, I/O, and Outboard engines and the
innovations in our designs provide greater stability, which will provide us with
an advantage over our current competition.
There is greater competition for our recreational products than there are for
our rescue and fire rescue watercrafts. The recreational industry is larger than
the fire and rescue industry and our competitors in the recreational boat
industry have an established clientele and may have far greater resources than
we have at this time.
4
Sales and Marketing
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Units Sold for the year ended April 30,
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2013 2012
Department Type No. Sold Percentage No. Sold Percentage
Fire Department 6 100% 3 88%
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Total 6 100% 3 100%
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The Company has begun aggressively marketing its products throughout the United
States and around the world. By working with independent sales agents, the
Company has been able to expand its reach into agencies worldwide that are
looking for watercrafts for search and rescue, defense, and emergency purposes.
Our watercrafts are sold to departments, such as Fire, Police, Defense,
Emergency, and Volunteer Fire Departments. Most of our sales have come from Fire
Department in the United States and abroad; however, there is an increasing
potential for sales opportunities in other departments and market segment as
well.
Our Company seeks to constantly expand dealers in the U.S. and around the world.
Currently we have dealers in United States to represent the following states:
Michigan, Wisconsin, Illinois, South Carolina, North Carolina, Georgia, New
York, New Jersey, Puerto Rico and Connecticut.
In addition, we have established dealer relations in the following
countries/region: Caribbean, India, Middle East, Turkey, and South America.
Our commercial boat marketing strategy includes displaying and demonstrating our
products at regional, national and international shows throughout the United
States, and advertising our products in industry magazines and on the Internet.
ITEM 1A. RISK FACTORS
The ownership of the Company's securities involves certain risk factors,
including without limitation, lack of liquidity, various conflicts of interest,
and economic and market risks. An investment in the Company's common stock
involves a number of risks. The risks discussed in this document could
materially and/or adversely affect our business, financial condition and results
of operations and cause the trading price of our common stock to decline
significantly.
Risks in Equity
We expect our stock price to be volatile which could cause a complete loss of
investment 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, but not
limited to the following:
a) our historical and anticipated quarterly and annual operating results;
b) announcements of new products or services by us or our competitors or new competing
technologies;
c) investors' perceptions of us and investments relating to the watercraft and/or defense industry;
d) developments in the watercrafts and/or defense industry;
e) technological innovations;
f) failure to diversify;
g) changes in pricing made by us, our competitors or providers of alternative/substitute services;
h) the addition or loss of business customers;
i) variations between our actual results and analyst and investor expectations;
j) condition or trends in the boat industry, including regulatory developments;
k) announcements by us of significant acquisitions, strategic partnerships, joint ventures or capital
commitments;
l) additions or departures of key personnel; and
m) general market and economic conditions.
5
In addition, in recent years the stock market in general, and the
Over-The-Counter 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 markets
and industry factors may materially adversely affect our stock price, regardless
of our operating performance.
The stock market, from time-to time, has experienced significant price
and volume fluctuations that have particularly affected the market prices for
the common stock of similar companies. These broad market fluctuations may
adversely affect the market price of the Company's common stock. In the past,
following periods of volatility in the market price of a particular company's
securities, securities class action litigation has been instituted. There can be
no assurance that such litigation will not occur in the future with respect to
the Company. Such litigation, regardless of its outcome, would result in
substantial costs and a diversion of management's attention and resources, which
could have a material adverse effect upon the company's business, results of
operations, and financial condition.
In the past, the trading price of the Company's common stock has
experienced substantial volatility. Sales of substantial amounts of common stock
in the public market could adversely affect prevailing market prices. As of
April 30, 2013, we had 55,890,117 shares of common stock outstanding, of which
approximately 18,887,116 shares of common stock is or will be freely tradable,
other than restrictions imposed upon our affiliates. The freely tradable shares,
along with the contractually restricted shares, are significantly greater in
number than the daily average trading volume of our shares. If the selling
stockholders, or the holders of the freely tradable shares, were to sell a
significant amount of our common stock in the public market, the market price of
our common stock would likely be significantly and adversely affected.
Penny Stock Reform Act. In October 1990, congress enacted the "Penny
Stock Reform Act of 1990" (the "90 Act") to counter fraudulent practices common
in Penny Stock transactions. Rule 3a51-1 of the Exchange Act defines "Penny
Stock" as an equity security that is not among other things;
a) a reported security (i.e., listed on certain national securities
exchanges):
b) a security registered or approved for registration and traded on a
national securities exchange that meets certain guidelines, where the
trade is effected through the facilities of that national exchange;
c) a security listed on NASDAQ;
d) a security of an issuer that meets certain minimum financial
requirements ("net tangible assets" in excess of $2,000,000 if the
issuer has been continuously operating for less than three (3) years),
or "average return" of at least $6,000,000 for the last three years;
or
e) a security with a price of at least $5.00 per share for the
transaction in question or that has a bid quotation (as defined in the
rule) of at least $5.00 per share.
Under rule 3a51-1, the Company's common stock falls within the
definition of "Penny Stock," pursuant to the 90 Act, broker-dealers, prior to
effecting a transaction in a Penny Stock, are required to provide investors with
written disclosure documents containing information concerning various aspects
of the market for Penny Stocks as well as specific information about the Penny
Stock and the transaction involving the purchase and sale of that stock (e.g.,
price quotes and broker-dealer and associated person compensation). Subsequent
to the transaction, the broker is required to deliver monthly or quarterly
statements containing specific information about the Penny Stock. These added
disclosure requirements will most likely negatively affect the ability of
purchasers herein to sell their shares in the secondary market.
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 the investor's 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.
6
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 amount of 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.
Our securities have been thinly traded on the Over-The- Counter Market, Pink
Sheets which may not provide liquidity for our investors
Our securities are quoted on the Over-the-Counter-Bulletin-Board (OTCBB), under
the symbol MIHI. Securities traded on the Over-The-Counter Market 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 OTCBB
markets. Quotes for stocks included on the OTCBB market are not listed in
newspapers. Therefore, prices for securities traded solely on the OTCBB 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.
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 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
As of April 30, 2013, we had 55,890,117 shares of common stock outstanding,
subject to restrictions on transfer referred to below, all other shares of
common stock which we have not registered are considered "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 six months 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 one 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
to exceed demand.
In addition, sales of significant amounts of restricted shares held by Mr.
Madhava Rao Mankal, CFO and Director of the Company and Mr. Daniel Medina,
President and Director of the Company, and Mr. Albert Mardikian who own a total
of 36,488,001 shares of our Company's common stocks, or the prospect of these
sales, could adversely affect the market price of our common stock.
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 the
company's 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.
7
Risks in General Operations
We rely upon licenses in the manufacturing of our boats
We manufacture our boats under various licenses; the loss of any could impair
our business. Mr. Albert Mardikian, holds the patents on the designs we use to
build our products. If we breach the license agreement, it may seriously impair
our ability to manufacture the boats and we may not be able to successfully
implement our business plan. License is for a certain period of time. If Mr.
Mardikian is unwilling to renew the licenses, it may impair our ability to
manufacture the boats and we may not be able to successfully implement our
business plan.
We rely on proprietary designs and rights and if we have to litigate those
rights, our expenses could substantially increase
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. Our success and
ability to compete depends, 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 a third party holds 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 adversely affect our results of operations.
We depend on our suppliers and if we cannot obtain certain components for our
products, we might have to develop alternative designs that could increase our
costs
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 adversely affect our business,
through the results of 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
operations.
Our ability to successfully commercialize our products will depend on, among
other things, our ability to manufacture and sell our products 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.
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 for 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 products.
8
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
materially adversely affect our stock price. We experienced net losses of
$417,276 for the year ended April 30, 2013. At April 30, 2013, we had an
accumulated deficit of $7,673,338.
The impact of market fluctuations in money markets, financial stability and
financing costs could adversely affect our profitability.
Most of our expenses and capital spending are transacted in the U.S. 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 agreements. The majority
of the company's investments may be in short-term instruments and therefore
subject to fluctuations in U.S. interest rates. Our financing arrangements will
be periodically renewed and an increase in interest rates may result in higher
interest charges to us. Due to the uncertain nature of such, we cannot provide
assurance 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
generate enough cash from operations to sustain our business we may have to
liquidate assets or curtail our operations.
The accompanying financial statements have been prepared assuming we will
continue as a going concern. Conditions exists 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 provide assurance or
guarantee that additional capital and/or debt financing will be available 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 part or all of
your investment.
We will need significant additional funds for operations and product marketing
and development, which we may not be able to obtain
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 products 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 it could impair
or curtail operations.
Our current liabilities exceed our current assets by a significant amount, which
could put stockholder/investors at serious risk of or loss of their investment
At April 30, 2013, we had current liabilities of $2,875,058 and $206,383 in
current assets. As of April 30, 2013, we have a working capital deficit of
approximately $2,668,675. 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 their investment, because creditors would be
paid first.
9
A segment of our business focuses on government agencies, limited number of
potential customers, and if we cannot obtain government contracts, we may not
earn revenues
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, varying significantly among agencies,
with which we must adhere to. Government 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 must comply with environmental regulations or we may have to pay expensive
penalties or clean up costs
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 these
charges could be high.
If we do not comply with government regulations, we may be unable to ship our
products or may have to pay expensive fines or penalties
We are subject to regulation by United States governments (county, state,
federal governments, government agencies, etc.), and regulatory authorities from
foreign nations. 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.
Risks in sales/marketing
We are subject to substantial competition and we must continue to focus on
product development to remain competitive.
We are subject to significant competition that could harm our ability to gain
business and increase the pressure on prices on our products. 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. 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 might render our technology, and
hence making our products, obsolete and noncompetitive.
10
We are a small company in terms of employees, technical and research resources
and capital. We expect 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.
Commercialization of our current and future products could fail if
implementation of our sales and marketing strategy is unsuccessful
A significant sales and marketing effort will be necessary in order to achieve
the level of market awareness to realize profitability from sales of our current
and future 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:
a) hire and train sales and marketing personnel; b) manage
geographically dispersed operations; c) encourage customers to
purchase our products.
If we fail to successfully create and implement our sales and marketing
strategy, it could result in increased costs and net losses, resulting in
potential failure of the company.
Success dependent on market acceptance. Our Company's success is
dependent on the market acceptance of our products. Despite the increasing
demand for commercial boats, market acceptance of the company's products will be
dependent, among other things, upon its quality, ease of use, speed,
reliability, and cost effectiveness. Even if the advantages of our products are
established, we are unable to predict how quickly, if at all, our products will
be accepted in the marketplace.
Risks in management
We rely upon key employees to proceed with our business plans
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 and Director and Mr.
Madhava Rao Mankal, Chief Financial Officer and Director.
Our principal officers and directors own 66.39% 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. Medina and Mankal, officers and directors of the Company beneficially
own approximately 66.39% of our outstanding common stock as of April 20, 2013.
As a result, Messrs. Medina and Mankal have the ability to control substantially
all matters submitted to our stockholders for approval, including:
a) election of our board of directors;
b) removal of any of our directors;
c) amendment of our certificate of incorporation or bylaws; and
d) 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, Messrs. Medina and Mankal are able
to influence all matters requiring stockholder approval, with little additional
support, including the election of directors and approval of significant
corporate transactions.
11
Conflicts of interest ---- The board of directors of the Company is
subject to various conflicts of interest arising out of their relationship with
the company. The officers and directors of the Company will devote such time, as
they deem necessary to the business and affairs of the Company. Officers and
directors of the Company are required by law to deal fairly and in good faith
with the company and they intend to do so. However, in any company, there are
certain inherent conflicts between the officers and directors and the investors,
which cannot be fully mitigated. Because the officers and directors will engage
in activities independent of the company, some of these activities may conflict
with those of the company. Thus, the officers and directors may be placed in the
position where their decisions could favor their own activities or other
activities with which they are associated over those of the Company. Officers
and directors of the company may engage in business separately from activities
on behalf of the company or client entities for which the Company also provides
services to.
Limitations on directors' and officers' liability. The Company's
articles of incorporation provide, as permitted by governing Colorado law, that
a director or officer of the Company shall not be personally liable to the
company, or its shareholders, for monetary damages for breach of his or her
fiduciary duty of care as a director or officer, with certain exceptions. In
addition, the company has agreed to indemnify its officers and directors to the
fullest extent permitted by Colorado law. Such provisions may discourage
stockholders from bringing a lawsuit against directors for breaches of fiduciary
duty and may also have the effect of reducing the likelihood of derivative
litigation against directors and officers even though such action, if
successful, might otherwise have benefited the company's stockholders. In
addition, a stockholder's investment in the company may be adversely affected to
the extent that the company, pursuant to such provisions, pays costs of
settlement and damage awards against the company's officers or directors.
12
ITEM 1B. Unresolved Staff Comments
None
ITEM 2. DESCRIPTION OF PROPERTIES
As of April 30, 2013, we did not own any properties. We moved our Company's
activities, including all subsidiaries, from Corona, California to Ontario,
California during in April 2013. Our management signed a three-year lease for a
13,045 sq. ft. building in the city of Ontario, California, effective May 1,
2013. The address for this location is 191 Kettering Dr., Corona, CA, 91761.
This building is owned by unrelated parties. The lease to the Ontario facility
expires on June 30, 2016, and calls for monthly payments, initially at $5,610.00
per month plus $495.00 costs, escalating over the term of the lease to $5,950
per month plus costs.
ITEM 3. LEGAL PROCEEDINGS
As of April 30, 2009, neither the Company nor any member of management was a
party to any legal proceedings.
ITEM 4. MINE AND SAFETY DISCLOSURES.
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) market and the trading symbol for the
Company's common stock is MIHI. The Company's common stock began trading on the
Over-the-Counter-Bulletin-Board (OTCBB) in May of 2006.
As of the date of this report, the Company's common stock has been thinly
traded. 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 for our 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, were as follows:
------------------------- ------------- -------------
High Low
------------------------- ------------- -------------
Year ended April 30,
2013
First Quarter $0.09 $0.09
Second Quarter $0.09 $0.01
Third Quarter $0.04 $0.01
Fourth Quarter $0.03 $0.03
Year ended April 30,
2012
First Quarter $0.21 $0.01
Second Quarter $0.18 $0.01
Third Quarter $0.08 $0.01
Fourth Quarter $0.06 $0.01
------------------------- ------------- -------------
13
Dividend Policy
We have never paid nor declared any cash dividends on our common stock. We do
not expect to pay any cash dividends on our common stock in the foreseeable
future. Payment of future dividends, if any, will be at the discretion of the
Board of Directors and will depend on our financial position, results of
operations, capital requirements, restrictions contained in current or future
financing instruments, and other factors the Board considers relevant.
Recent Sales of Unregistered Securities
The Company issued/committed 200,000 unregistered securities during the fiscal
year ended April 30, 2013. The following presents the purpose for the issuance
of unregistered securities:
------------------------------------------ ------------------------- -------------------------------------
Person/Entity No. of Common Stock Purpose
------------------------------------------ ------------------------- -------------------------------------
Board of Directors 200,000 Fees for two independent Directors
------------------------------------------ ------------------------- -------------------------------------
Exemption from Registration Claimed
The sale, if any, 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 was
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.
14
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected historical financial data derived from the
audited Consolidated Financial Statements for three years. This information
should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations, as well as the audited
Consolidated Financial Statements and the Notes thereto.
During the year ended April 30,
2013 2012 2011
---- ---- ----
Operating Results
Net Sales $ 1,355,179 $ 419,397 $ 1,542,436
Gross Margin $ 282,078 76,658 512,531
Net Loss $(417,276) $(1,246,686) $ (566,022)
Balance Sheet
Total assets $ 467,579 $ 546,160 $ 580,285
Total debt $2,875,058 2,536,363 2,825,258
Total Stockholders' equity $(2,407,479) $ (1,990,203) $(2,244,973)
Cash Flows
Net cash received (used) by operating activities $ 36,891 $ (415,545) $ 14,295
Net cash used by investing activities $ (32,301) $ (107,034) $ (33,158)
ITEM 7. 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-K contains
forward-looking statements. The presentation of future aspects of Medina
International Holdings, Inc. ("Medina International Holdings, Inc.,""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:
15
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 and/or profits;
(d) Inadequate capital to continue or expand its business;
(e) Inability to raise additional capital or financing to implement its
business plans;
(f) Failure to achieve a business;
(g) Rapid and significant changes in markets;
(h) Litigation or legal claims and allegations by outside parties; and
(i) 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.
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-Q and Annual Report on this Form 10-K
filed by the Company and any Current Reports on Form 8-K filed by the Company.
Overview
We are in the business of delivering products and services to aid organizations
and service personnel who risk their lives to save others. We design,
manufacture, test, deliver, and support fire rescue, rescue, and patrol
watercrafts (commercial) to increase the effectiveness and efficiency of the
mission of our users. Our products are sold to fire, search & rescue, emergency,
police, defense, and military departments in the United States and abroad. Fire
departments are our largest customers and we rely heavily on government funded
departments to achieve sales and continue our operations.
The Company owns the rights to the following websites:
www.medinaih.com
www.medinainternationalholdings.com
www.harborguardboats.com
Key Challenges
We face numerous challenges to sustain operations. We have identified some of
the challenges we continue to face:
a) Continuing to expand our customer base both domestically and
internationally;
b) Continuing to meet or exceed customer's price expectations;
c) Continuing to build brand name both domestically and internationally;
d) Continuing to provide quality customer support;
e) Competing with established competitors;
f) Continuing the development of new products; and
g) Reducing internal control weaknesses over financial reporting and
disclosure.
16
The main uncertainty about our operations is whether we will continue to receive
orders for our commercial products. Our potential customers rely on federal
grants or other government budgets to receive funds to purchase equipment.
Depending on the size of aid received, service personnel purchase equipment(s)
for their departments. The size of the aid received by these departments creates
a demand for our product, in terms of price and features. The timing of the
funds cannot be predicted for our prospective international customers. The size
of the aid cannot be predicted; hence we will be unable to forecast our outlook
for the coming fiscal year.
Strategy
Our strategy is to not only manufacture high quality watercrafts, but also to
seek and/or develop innovative products to assist emergency and defense
personnel and departments to become more efficient and effective in their
mission. In addition, our strategy includes the following:
a) Capitalize on the demand for commercial and recreational watercrafts;
b) Build long-term relationships with business partners and stakeholders while providing profitability for our
investors;
c) Develop and expand strategic partnerships;
d) Identify new products and markets to meet changing customer requirements;
e) Retain and provide opportunities for growth for our employees;
Results of Operations
The following discussion and analysis is based on our consolidated statements of
operations, which reflect our results of operations for the years ended April
30, 2013 and 2012, as prepared in accordance with generally accepted accounting
principles in the United States of America ("GAAP").
The following tables present our results of operations for the two years ended
April 30, 2013 and 2012, as well as the percentage changes from year to year.
---------------------------------------- ----------------------------------------- --- ---------------- --- ------------------
For the year ended April 30, Dollar Change Percentage Change
---------------------------------------- ----------------------------------------- --- ---------------- --- ------------------
2013 2012 2013 vs. 2012 2013 vs. 2012
Sales, net $1,355,179 $419,397 $935,782 223.12%
Cost Of Sales 1,073,101 342,739 730,704 213,20%
-------------------- --- ---------------- --- ---------------- --- -----------------
Gross Profit 282,078 76,658 205,420 267.97%
General and administrative expenses 562,147 1,089,619 (527,472) (48.41)%
Selling and marketing expenses 99,259 63,435 35,824 56.47%
-------------------- --- ---------------- --- ---------------- --- ------------------
Loss from operations (379,328) (1,076,396) 697,068 64.76%
Other income 26,805 17,164 9,641 56.17%
Interest expense ( 64,753) ( 187,454) 122,701 65.46%
-------------------- --- ---------------- --- ---------------- --- ------------------
Net other (loss) income (37,948) (170,290) 132,342 77.15%
Loss before income tax (expense) $ (417,276) $(1,246,686) $829,410 66.53%
benefit
Income tax (expense) benefit - - -
-------------------- --- ---------------- --- ---------------- --- ---------------
Net Loss from Operations $ (417,276) $(1,246,686) $829,410 66.53%
---------------------------------------- -------------------- --- ---------------- --- ---------------- --- ------------------
17
2013 Compared to 2012
Net Sales
--------------------------------- ------------------------------- - --------------- -- ----------------
Revenue For the Years Ended April 30, Dollar Change Percent Change
--------------------------------- ------------------------------- - --------------- -- ----------------
2013 2012 2013 vs. 2012 2013 vs. 2012
Number of Boats 6 3 3 100%
Boat Sales, net $ 1,349,142 $ 403,515 $945,627 234.34%
Spare parts and logistics 6,037 15,882 (9,845) (61.99%)
Total $ 1,355,179 $ 419,397 $ 935,782 223.12%
--------------------------------- -------------- ---------------- - --------------- -- ----------------
Our sole source of revenue since our inception is attributable to commercial
watercrafts. Our company sold six watercrafts and earned $1,349,142 in revenues
for the year ended April 30, 2013 as compared to three watercrafts and $403,515
in earned revenues for the year ended April 30, 2012. Since most of our sales
consist of commercial watercrafts, we do not anticipate offering discounts or
other sales incentives.
The increase in sales for the year ended April 30, 2013 of $945,627 or 234.34%,
was primarily due to an increase in watercrafts sold.
Cost of sales
Costs of sales are costs to produce our product and generally consist of direct
materials, direct labor and production overhead.
-------------------------------------- ---------------------------------- -------------- ----------------
For the year ended April 30, Dollar Change Percentage
Change
-------------------------------------- ---------------------------------- -------------- ----------------
2013 2012 2013 vs 2012 2013 vs 2012
Cost of sales $ 1,073,101 $ 342,739 $730,704 213.20%
Gross profit $ 282,078 $ 76,658 $205,420 267.97%
Gross profit as a percentage of net
sales 26.29% 22.39%
-------------------------------------- ----------------- ---------------- -------------- ----------------
The increase in cost of goods sold for the year ended April 30, 2013 of $730,704
or 213.20%, was primarily due to the increase in sales. Our cost of goods sold
comprise of direct material, direct labor, and production overhead which
includes depreciation. Increase in gross profit for the year ended April 30,
2013 of $205,420 or 267.97% was mainly due to increase in sales. We include
royalty payments, for the use of the patents, as part of the production
overhead.
General and administrative expenses.
-------------------------------------------- ------------------------------ ----------------- ----------------------
General and Administrative Expenses For the year ended April 30, Dollar Change Percentage Change
-------------------------------------------- ------------------------------ ----------------- ----------------------
2013 2012 2013 vs. 2012 2013 vs. 2012
General and Administrative Expenses $ 562,147 $ 1,089,619 $527,472 48.41%
-------------------------------------------- ---------------- ------------- ----------------- ----------------------
18
General and administrative expenses included, but not limited to:
a) Professional fees for legal, accounting, consulting, and development
activities;
b) Public company related expenditures;
c) Stock compensation for services rendered to the Company;
d) Management salaries
e) Compensation expenses; and
f) Payroll taxes
The decrease in general and administrative expenses for the year ended April 30,
2013 of $527,472 or 48.41%, was mainly due to the decrease in professional fees
compared to $114,380 for legal fees incurred during period ended April 30, 2012
due to the settled lawsuit brought by one of our major shareholder and board
member, Mr. Albert Mardikian. Also reduction is due to non issue of any shares
during the year for services compared to 10 preferred shares series A issued to
two officers, 20 preferred shares Series B issued to consultant and 200,000
common shares of the company issued to independent board members, in the
aggregate amount of $152,463. Provision for investment in Wintec Protective
systems, Inc. in the amount of $237,718 for the period ended April 30, 2012
compared to none for the year ended April 30, 2013.
Selling and marketing expenses
-------------------------------------------- ------------------------------ ----------------- ----------------------
Selling and Marketing Expenses For the year ended April 30, Dollar Change Percentage Change
-------------------------------------------- ------------------------------ ----------------- ----------------------
2013 2012 2013 vs. 2012 2013 vs. 2012
Selling and Marketing Expenses $ 99,259 $ 63,435 $ (35,824) 56.47%
-------------------------------------------- ---------------- ------------- ----------------- ----------------------
Selling expenses included:
a) Commission paid to sales personnel;
b) Traveling expenses related to sales;
c) Freight expenses and
d) Marketing expenditures.
The increase in selling and marketing expenses of $35,824 or 56.47%, during the
year ended April 30, 2013 compared to that for the year ended April 30, 2012,
was primarily due to commission on sales and freight associated with sales. Due
to the increase in unit sales of our products during the year ended April 30,
2013, we incurred $66,072 in commission expenses and $21,898 in freight as
compared to $18,886 in commission and 13,948 in freight during the year ended
April 30, 2012.
Other Income and Expenses
-------------------------------------------- ------------------------------ ----------------- ----------------------
Other Income (Expenses) For the year ended April 30, Dollar Change Percentage Change
-------------------------------------------- ------------------------------ ----------------- ----------------------
2013 2012 2013 vs. 2012 2013 vs. 2012
Other Income $ 26,805 $ 17,164 $9,641 56.17%
Other Expense $(64,753) $(187,454) $ 122,701 65.46%
-------------------------------------------- ---------------- ------------- ----------------- ----------------------
Other income consisted of cancellation of debt by our vendors.
19
Other Expense consists of interest expense on notes payable, credit cards, line
of credits and shareholders' loans. Our other expenses decreased by $122,701 or
65.46%, during the year ended April 30, 2013, primarily due to the decrease of
beneficial interest on short-term debt from Asher capital in the amount of
$90,500.
Net Loss
------------------------------------------ -------------------------------- ----------------- ----------------------
Net Loss For the year ended April 30, Dollar Change Percentage Change
------------------------------------------ -------------------------------- ----------------- ----------------------
2013 2012 2013 vs. 2013 2013 vs. 2012
Net Loss $ (417,276) $ (1,246,686) $ 829,410 66.53%
------------------------------------------ ----------------- -------------- ----------------- ----------------------
Based on the explanations described above, our net loss of $1,246,686 for the
year ended April 30, 2012 decreased by $829,410, or 66.53%, to $417,276 for the
year ended April 30, 2013.
Liquidity and Capital Resources
----------------------------------------------------------------- ------------------------------------
Cash Flow For the Years Ended April 30,
----------------------------------------------------------------- ------------------------------------
2013 2012
Net cash provided by (used in) operating activities $ 36,891 $(415,545)
Net cash provided by (used in) investing activities $ (32,301) $(420,045)
Net cash provided by (used in) financing activities $ (1,956) $ 509,726
----------------------------------------------------------------- ------------------ -----------------
As of April 30, 2013, we had $2,635 cash on hand, an inventory of $193,748 and
net fixed assets of $242,522. As of April 30, 2013, our total current
liabilities were $2,875,058, which were represented mainly by accounts payable
of $656,903, accrued liabilities of $709,981, deposits from customers of
$538,583, short-term debt of $128,842, notes payable of $110,500 to unrelated
party, notes payable to related party of $50,000 and short-term borrowings from
shareholders totaling $663,121. At April 30, 2013, our current liabilities
exceeded current assets by $2,668,675.
As of April 30, 2012, we had no cash on hand, an inventory of $224,566 and net
fixed assets of $312,126. As of April 30, 2012, our total current liabilities
were $2,536,363, which were represented mainly by accounts payable of $684,678,
accrued liabilities of $458,947, deposits from customers of $428,891, short-term
debt of $132,614, notes payable to unrelated parties of $90,500, notes payable
due to related party in the amount of $57,500 and short-term borrowings from
shareholders totaling $683,041. At April 30, 2012, our current liabilities
exceeded current assets by $2,311,797.
Our operations provided $36,891 in operating activities for the year ended
April 30, 2013 compared to that of $420,045 used for year ended April 30, 2012.
For the year ended April 30, 2013, we had invested $37,301 for equipment,
designs & drawings and mold compared to $107,034 for the year ended April 30,
2012.
20
Financing activity used $1,956 in operating activities for the year ended
April 30, 2013 compared to that of $509,726 used for year ended April 30, 2012.
$221,000 accrued payroll was transferred back from notes payable to shareholders
to accrued payroll during the year ended April 30, 2013.
During the year ended April 30, 2013, Company received $20,000 from unrelated
party as notes payable compared to $95,000 received for the year ended April 30,
2012. During the year ended April 30, 2013, Company received no investment from
sale of securities compared to $150,000 received for the year ended April 30,
2012.
The Company had an accumulated deficit, as of April 30, 2013, of $7,673,338
compared to that for the year ended April 30, 2012, of $7,256,062.
Subsequent Events
None
Going Concern
The Company's auditors have issued a "going concern" qualification as part of
their opinion in the Audit Report. There is substantial doubt about the ability
of the Company to continue as a "going concern." The Company has limited
capital, debt in excess of $2,668,675, minimal other assets, and no capital
commitments.
Off-Balance Sheet Arrangements
In accordance with the definition under SEC rules, the following qualify as
off-balance sheet arrangements:
a) Any obligation under certain guarantees or contracts;
b) A retained or contingent interest in assets transferred to an
unconsolidated entity or similar entity or similar arrangement that
serves as credit, liquidity, or market risk support to that entity for
such assets;
c) Any obligation under certain derivative instruments; and
d) Any obligation under a material variable interest held by the
registrant in an unconsolidated entity that provides financing,
liquidity, market risk, or credit risk support to the registrant, or
engages in leasing, hedging, or research and development services with
the registrant.
The following will address each of the above items pertaining to the Company.
As of April 30, 2013, we did not have any obligation under certain guarantees or
contracts as defined above.
As of April 30, 2013, we did not have any retained or contingent interest in
assets as defined above.
As of April 30, 2013, we did not hold derivative financial instruments, as
defined by FASB statement No. 133.
21
Accounting for Derivative Instrument and Hedging Activities, as amended.
As of April 30, 2013, we did not participate in transactions that generate
relationships with unconsolidated entities or financial partnerships, such as
entities often referred to as structured finance or special purpose entities
("SPEs"), which would have been established for the purpose of facilitating
off-balance sheet arrangements or other contractually narrow or limited
purposes. As of April 30, 2013 and 2012, we were not involved in any
unconsolidated SPE transactions.
Dividends
We have never paid nor declared any cash dividends on our common stock. We do
not expect to pay any cash dividends on our common stock in the foreseeable
future. Payment of future dividends, if any, will be at the discretion of the
Board of Directors and will depend on our financial position, results of
operations, capital requirements, restrictions contained in current or future
financing instruments, and other factors the Board considers relevant.
Short Term
On a short-term basis, we have not generated revenues sufficient to cover
operations. Based on our Company's prior history, we may continue to have
insufficient revenues to satisfy current and recurring liabilities.
Need for Additional Financing
We do not have capital sufficient to meet our cash needs. We will have to seek
loans or equity placements to cover such cash needs. 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 us to allow us to cover our expenses as they may be
incurred.
We will need substantial additional capital to support our continuing
operations. We continue to operate at a net loss. We have no committed source
for any funds as of the date hereof. No representation is made that any funds
will be available when needed. In the event funds cannot be raised when needed,
we may not be able to carry out our business plan, may never achieve significant
sales, and could fail in business as a result of these uncertainties.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency
The majority of our business is denominated in U.S. dollars and fluctuations in
the foreign currency markets will have a minimal effect on our business for the
foreseeable future.
22
Commodity Prices
We are exposed to market risk from changes in commodity prices. The cost of our
products could increase and if the prices of fiberglass and/or aluminum increase
significantly, it will further decrease our ability to attain profitable
operations. We are not involved in any purchase commitments with any of our
vendors.
Insurance
We are exposed to several risks, including fire, earthquakes, theft, and key
person liabilities. We do not carry any insurance for these risks, other than
general liability insurance, which will adversely affect our operations if any
of these risks materialize.
ITEM 8. FINANCIAL STATEMENTS
The audited financial statements of the Company for the years ended April 30,
2012 and 2011 appear as pages F-1 through F-16, at the end of the document.
ITEM 9 CHANGES IN ACCOUNTANTS AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A CONTROLS AND PROCEDURES
EVALUATION OF INTERNAL AND DISCLOSURE CONTROLS
Management's Annual Report on Disclosures Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), Mr. Daniel Medina, our President and Mr.
Madhava Rao Mankal our Chief Financial Officer, carried out an evaluation under
the supervision and with the participation of our management, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of April 30, 2013.
23
The Company, under the supervision and with the participation of the Company's
management, including the Company's Principal Executive Officer and Chief
Financial Officer, performed an evaluation of the effectiveness of the design
and operation of the Company's disclosure controls and procedures as of April
30, 2013. Based on that evaluation, the Principal Executive Officer and Chief
Financial Officer concluded that, because of the material weakness in internal
control over financial reporting described below, the Company's disclosure
controls and procedures were not effective as of April 30, 2013.
ITEM 9(A)T. INTERNAL CONTROLS AND PROCEDURES
Management's Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Our internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. Our internal control over financial
reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions
and dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that our receipts and expenditures are being made only in
accordance with authorizations of our management and
directors; and
(iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
our assets that could have a material effect on our financial
statements.
Internal control over financial reporting cannot provide absolute assurance of
achieving financial reporting objectives because of its inherent limitations,
including the possibility of human error and circumvention by collusion or
overriding of controls. Accordingly, even an effective internal control system
may not prevent or detect material misstatements on a timely basis. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions or
that the degree of compliance with the policies or procedures may deteriorate.
Management's assessment of the effectiveness of the small business issuer's
internal control over financial reporting is as of the year ended April 30,
2013. We believe that internal control over financial reporting is not effective
because of the small size of the business. We have not identified any, current
material weaknesses considering the nature and extent of our current operations
and any risks or errors in financial reporting under current operations.
24
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. Attestation Report of the
Registered Public Accounting Firm. Attestation Report of the Registered Public
Accounting Firm.
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this annual report.
Changes in Internal Control over Financial Reporting.
We have made no changes in our internal control over financial reporting that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND COMPLIANCE WITH
SECTION 16(A)
All directors of the Company hold office until the next annual meeting of the
security holders or until their successors have been elected and qualified. The
officers of the Company are appointed by the board of directors and hold office
until their death, resignation or removal from office.
The Company's directors and executive officers, their ages, and positions held
are as follows:
---------------------------------------- -------- -----------------------------------------------
Name Age Position
---------------------------------------- -------- -----------------------------------------------
Daniel Medina 59 President & Director
Madhava Rao Mankal 62 Chief Financial Officer & Director
John Erich Lewis 47 Director
Mike Gallo 55 Director
Erik P. Wolf 38 Director
25
Our success mainly depends on the performance of Mr. Medina and Mr. Mankal. We
do not have "key person" life insurance policies on any of our employees. 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. We may be unable to continue to employ our key personnel or
to attract and retain qualified personnel in the future.
Biographies of Officers and Directors
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 30 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 United States. He is a fellow
of the Institute of Chartered Accountants of India, fellow of the Institute of
Cost and Works Accountants of India and a member of the Institute of Management
Accountants in the United States. He holds a Bachelors Degree in Commerce from
Bangalore University.
26
MIKE GALLO, Director
Mr. Gallo began his professional career as an Officer in the United States Air
Force, managing Military Airlift Command facility design and operations at
Norton Air Force Base in San Bernardino, California. In 1989, Mr. Gallo served
as the Director of Program Control for the TRW Launch Services Organization. In
1993 Mr. Gallo co-founded Kelly Space & Technology, Inc. (KST), a commercial
Reusable Launch Vehicle (RLV), aerospace, energy and homeland security
technology development company where he serves as President and Chief Executive
Officer. Mr. Gallo also serves as a Director for Global Energy Systems, LLC, KST
subsidiary, formed to implement its energy-related lines of business. Mr. Gallo
provides leadership to the commercial, civil and military space community as a
founding member, the past Chairman and current Chief Financial Officer (CFO) of
the California Space Authority (CSA), an organization that serves as the space
policy advisor to the State of California and represents California's diverse
space enterprise community. Mr. Gallo also serves as the Arrowhead Section
Chairman of the American Institute of Aeronautics and Astronautics (AIAA). Mr.
Gallo is the past Chairman and current Vice Chairman of the Community Action
Partnership of San Bernardino County (CAPSBC) providing key services and support
to our low income community. He is also the Past Chairman of the Board for the
San Bernardino Area Chamber of Commerce, founding member and School Board
Chairman of the Norton Space and Aeronautics Academy (NSAA), a newly formed K-12
San Bernardino County Charter School and is an Executive Board Member of the
California Workforce Association (CWA). As the past Chairman and current Vice
Chairman of the San Bernardino County Workforce Investment Board (WIB), Mr.
Gallo is focused on the implementation of key strategic workforce, economic
development and education objectives to enable our region to compete for
targeted high-growth industry clusters with an exceptionally qualified
workforce.
JOHN ERICH LEWIS, Director
John Erich Lewis has 26 years of experience in management of various aviation
operations and government related programs. As the Program Manager and Quality
Assurance Manager of the Kelly Space & Technology, Inc. Jet and Rocket Test
Facility, Dr. Lewis is responsible for the implementation of government
contracts and technical demonstrations of Kelly's technologies. Along with
Kelly, Dr. Lewis co founded the nonprofit Technical Employment Training Inc. and
serves as the Executive Director providing training and job placement in the
machine trades for the displaced workforce. Prior to Kelly, Dr. Lewis was at
Gulfstream Aerospace where he managed special projects regarding Lean
Manufacturing on the production line, specializing in the aircraft electrical
system assembly methods. This included sequence of production planning, manpower
requirements and design of electrical installations in the corporate jets. Prior
to Gulfstream Dr. Lewis worked with Lockheed-Martin providing direct support of
U.S. Army units as a consultant to civilian and U.S. Army personnel.
Additionally, he held flight status as a civilian and performed test flights on
refurbished military aircraft. Dr. Lewis earned a Ph.D. in Aviation Management
from Corllins University, a Masters of Aeronautical Science in Aviation
Management, a Masters in Aviation System Safety and a Bachelor of Science in
Professional Aeronautics from Embry-Riddle Aeronautical University. He also
holds a minor in Aviation Safety and is a licensed aircraft Airframe and
Powerplant mechanic. Dr. Lewis served in the U.S. Army as a volunteer with
Special Operations, he served with the 160th Special Operations Aviation
Regiment (Airborne) as a Blackhawk helicopter crewchief assigned to temporary
duty stations throughout the world performing classified missions with elite,
multi-national armed forces and completing training at the Army's Airborne
Infantry School, Air Assault School, Tactical Transport Helicopter Repair School
and the JFK Special Warfare Center and School. Dr. Lewis is a decorated combat
veteran during his participation in Operation Just Cause in Panama, and
Operation Desert Shield and Desert Storm in the Middle East. Dr. Lewis is a life
member in the VFW.
27
ERIK P. WOLF, Director
Since May 2004, Mr. Wolf has worked as IP Litigation and Prosecution Associate
with Wang, Hartmann, Gibbs & Cauley, PC, in Newport Beach, California. In his
career he has been responsible for not only assisting in the management of the
firm's southern California office, but also has been responsible for supervising
both patent and commercial litigation, patent and trademark prosecution and
other intellectual property related work. From October 2003 through May 2004, he
worked as a Litigation Associate with Kolar and Associates in Orange,
California.
In May 1997, Mr. Wolf received a Bachelor of Science in Mechanical Engineering
from Resellaer Polytechnic Institute in Troy, New York. In May 2001, he received
his Juris Doctorate from the Whittier Law School in Costa Mesa, California.
Employment Agreements
The Company has entered into employment agreements for a five year term,
commencing on July 1st, 2008, with each of the key executive officers. The
current annual compensation for the Company's executive officers is as follows:
Mr. Daniel Medina, President and Director, $168,000
Mr. Madhava Rao Mankal, CFO and Director, $168,000
However, due to the lack of revenues and availability of cash, executive
officers have received some of their compensation in the form of Common Stock of
the Company and/or have accrued their compensation to be paid when cash is
available.
BOARD OF DIRECTORS
Our Board of Directors consists of five (5) individuals, two of whom are
officers of the Company. Directors are elected to the Board of Directors for a
one (1) year term or until the next shareholders meeting. There are no family
relationships among any of our directors, officers or key employees.
The Company's Board of Directors is currently working on establishing the
following committees for the following purposes:
1) Audit Committee - Oversees the work of the Company's accounting and internal
audit processes. The committee is directly responsible for the appointment,
compensation, retention, and oversight of the Company's independent auditors.
2) Compensation Committee - The Compensation Committee stays informed as to
market levels of compensation and, based on evaluations, recommends compensation
levels and systems to the Board. The Compensation Committee recommends to the
Board the compensation of the Chief Executive Officer and determines the
compensation of the other executive officers.
28
3) Nominating and Corporate Governance Committee - The Governance and Nominating
Committee is responsible for recommending to the Board individuals to be
nominated as directors. The committee evaluates new candidates and current
directors.
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, our officers and directors 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 our 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. Our board of directors is currently
seeking qualified financial expert and/or members to establish an independent
Audit Committee.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation paid
by the Company to the President, Chief Financial Officer, and the Company's most
highly compensated executive officers for the fiscal years ended April 30, 2013,
2012, and 2011 the "Named Executive Officers"):
------------------------------------------------------------------------------------------------------------------------------------
SUMMARY EXECUTIVES COMPENSATION TABLE
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
Name & Position Year Salary Bonus Stock Option None Nonqualified All other Total
awards awards Equity deferred compensation
incentive compensation
plan earnings
compensation
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
($) ($) ($) ($) ($) ($) ($) ($)
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ -------------------------------
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
Daniel Medina, 2013 $168,000 $- $- $- $- $- $- $168,000
President &
Director
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
2012 $127,000 $- $60,000 $- $- $- $- $187,000
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
2011 $168,000 $- $- $- $- $- $- $168,000
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
Madhava Rao 2013 $148,000 $- $- $- $- $- $-
Mankal, CFO &
Director
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
2012 $126,000 $- $60,000 $- $- $- $- $186,000
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
2011 $157,500 $- $- $- $- $- $- $157,500
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
---------------- ----- --------- -------- --------- -------- ------------ ------------ ------------ --------------------------------
29
Stock Option and Award Plan
We have adopted the 2006 Medina International Holdings, Inc. Stock Option and
Compensation Award Plan (the "Plan"), which was approved by the board of
directors on August 28, 2006 to obtain and retain the services of the types of
employees, consultants and directors who will contribute to the Company's long
range success and to provide incentives which are linked directly to increases
in share value which will incur to the benefit of all stockholders of the
Company.
Under the Plan, 2,000,000 shares of common stock shall be reserved and available
for issuance. Stock reserved under the plan may consist, in whole or in part, of
authorized and unissued shares of treasury shares. The plan shall be
administered by either (i) the Board, or (ii) a committee appointed by the
Board.
No options were issued or exercised during the fiscal years ended April 30, 2013
and 2012.
------------------------------------------------------------------------------------------------------------------------------------
Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR values
------------------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SAR
Options/SARS at FY-End at FY-End ($)
------------------------------------------------- ------------ ---------- ------------------------------ ---------------------------
Name Shares Value Exercisable/Unexercisable Exercisable/Unexercisable
------------------------------------------------- ------------ ---------- ------------------------------ ---------------------------
Daniel Medina, Director & President $ - $ - $ - $ -
------------------------------------------------- ------------ ---------- ------------------------------ ---------------------------
Madhava Rao Mankal, Director & CFO $ - $ - $ - $ -
------------------------------------------------- ------------ ---------- ------------------------------ ---------------------------
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
30
DIRECTOR COMPENSATION
The following table sets forth certain information concerning compensation paid
to our directors for services as directors, but not including compensation for
services as officers reported in the "Summary Executives Compensation Table"
during the year ended April 30, 2013:
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
Non
Fees qualified,
earned Options non-equity
or paid Stock awards plan incentive
in cash awards ($) compensation earnings Deferred All other
Name ($) (1) ($) ($) compensation($) ($) Total
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
Daniel Medina, Director $ - $ - $ - $ - $ - $ - $ -
& President
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
Madhava Rao Mankal, $ - $ - $ - $ - $ - $ - $ -
Director & CFO
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
Mike Gallo, Director $ - $3,850 $ - $ - $ - $ - $ 3,850
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
John Erich Lewis, $ - $3,850 $ - $ - $ - $ - $ 3,850
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
Erik P. Wolf, Director $ - $ - $ - $ - $ - $ - $ -
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
Total $ - $ 7,700 $ - $ - $ - $ - $ 7,700
-------------------------- ---------- ------------- --------------- ------------ ------------------- ----------- ----------------
(1) The Company issued 100,000 shares to Mr. Mike Gallo and 100,000 to John
Erich Lewis toward services as Directors of the Company for the year
ended April 30, 2013, valued at $7,700. These shares were valued based
on the closing market price at the time of issuance.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
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 April 30, 2013, by (a)
each person known by us to own beneficially 5% or more of our outstanding shares
of common stock, (b) our directors, Principal Executive Officer, Chief Financial
Officer and other executive officers named in "MANAGEMENT--Director and
Executive Compensation," and (c) all our directors and executive officers as a
group.
31
The percentages are based on 55,890,117 shares of common stock issued and
outstanding as of April 30, 2013.
-------------------------------------------------------------- ------------- --------------- ---------------
Name, Address & Nature of Beneficial Owner Title of Shares Percent of
Class Class
-------------------------------------------------------------- ------------- --------------- ---------------
Daniel Medina, Director & President Common Stock 12,220,667 21.87%
------------- --------------- ---------------
191 Kettering Dr., Ontario, CA 91761
-------------------------------------------------------------- ------------- --------------- ---------------
-------------------------------------------------------------- ------------- --------------- ------------
Madhava Rao Mankal, Director & CFO Common Stock 12,271,667 21.96%
------------- --------------- ---------------
191 Kettering Dr., Ontario, CA 91761
-------------------------------------------------------------- ------------- --------------- ---------------
-------------------------------------------------------------- ------------- --------------- ---------------
Mike Gallo, Director, Common Stock 193,750 0.35%
------------- --------------- ---------------
294 South Leland Norton Way, San Bernardino, CA 92408
-------------------------------------------------------------- ------------- --------------- ---------------
-------------------------------------------------------------- ------------- --------------- ---------------
John Erich Lewis, Director Common Stock 421,250 0.75%
------------- --------------- ---------------
191 Kettering Dr., Ontario, CA 91761
-------------------------------------------------------------- ------------- --------------- ---------------
-------------------------------------------------------------- ------------- --------------- ---------------
Erick Wolf, Director Common Stock 0 0.00%
191 Kettering Dr., Ontario, CA 91761
------------- --------------- ---------------
Albert Mardikian, CEO, Harbor Guard Boats, Inc. Common Stock 11,995,667 21.46%
------------- --------------- ---------------
45 Goleta Ave, Corona Del Mar, CA 92625
-------------------------------------------------------------- ------------- --------------- ---------------
-------------------------------------------------------------- ------------- --------------- ---------------
Total Officers & Directors, as a group (5 Individuals) 37,103,001 66.39%
-------------------------------------------------------------- ------------- --------------- ---------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has adopted a policy under which any consulting or finder's 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 largely
unforeseeable terms of a future agreement with an unidentified business entity.
32
Transactions with Management and Others
Year Ended April 30, 2013
The Company issued/committed 200,000 unregistered securities during the fiscal
year ended April 30, 2013. The following presents the purpose for the issuance
of unregistered securities:
------------------------------------------ ------------------------- -------------------------------------
Person/Entity No. of Common Stock Purpose
------------------------------------------ ------------------------- -------------------------------------
Board of Directors 200,000 Fees for two independent Directors
------------------------------------------ ------------------------- -------------------------------------
No other shares were issued and/or committed during the year ended April 30,
2013.
Year Ended April 30, 2012
At April 30, 2012, the Company had 30 shares of Series `A' Preferred Stock
issued and outstanding. Mr. Mankal and Mr. Medina, CFO and President of the
Company, were issued further 5 shares each of Series `A' preferred stock.
During the year period ended April 30, 2012, the Company has issued 20 Series
`B' Preferred shares to unrelated party in exchange for watercraft designs.
During the year period ended April 30, 2012, the Company issued 200,000 shares
of its common stock to its independent directors, at various fair values for a
total amount of $10,463.
During the year ended April 30, 2012, the Company issued 650,000 shares of its
common stock in exchange for services, at the rate of $0.03/ share or $20,050,
to three individuals.
During the year ended April 30, 2012, the Company issued 2,929,620 shares in
lieu of conversion of debt in the amount of $47,462.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
General
Ronald R. Chadwick, P.C. is the Company's principal auditing/ accountant firm.
The Company's Board of directors has considered whether the provisions of audit
services are compatible with maintaining Ronald R. Chadwick, P.C.'s
independence.
Audit Fees.
Ronald R. Chadwick, P.C. billed $4,500 for review services and $15,903 audit fee
in the fiscal year ended April 30, 2013. Audit and Review fees for the year
ended April 30, 2012 was $11,828 and for the year ended April 30, 2012 was
$9,157.
There were no other fees in 2013 and 2012 paid to Auditors or Auditors
affiliates.
33
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 2013 and 2012.
PART IV
ITEM 15. EXHIBITS
The following is a complete list of exhibits filed as part of this Form 10K.
Exhibit number corresponds to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.
Exhibit Description of Document
31.1 Certification by Chief Executive Officer. *
31.2 Certification by Chief Financial Officer. *
32.1 Section 906 Certification by Chief Executive Officer*
32.2 Section 906 Certification by Chief Financial Officer*
--------------- ---------------------------------------------------------------------- ---------------------
101.INS XBRL Instance Document Filed Herewith
101.SCH XBRL Taxonomy Extension Schema Document Filed Herewith
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed Herewith
101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed Herewith
101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed Herewith
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed Herewith
--------------- ---------------------------------------------------------------------- ---------------------
---------------
* Filed herewith.
34
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Medina International Holdings, Inc.
Ontario, California
I have audited the accompanying consolidated balance sheets of Medina
International Holdings, Inc. as of April 30, 2013 and 2012, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit 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. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Medina
International Holdings, Inc. as of April 30, 2013 and 2012, and the consolidated
results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements the Company has suffered recurring losses from operations
and has a working capital deficit that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Aurora, Colorado /s/Ronald R. Chadwick, P.C.
--------------------------
July 22, 2013 RONALD R. CHADWICK, P.C.
F-1
MEDINA INTERNATIONAL HOLDINGS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30, April 30,
2013 2012
(Audited) (Audited)
------------------------------
ASSETS
Current assets
Cash $ 2,635 $ -
Inventory 193,748 224,566
Receivables 247,718 237,718
Reserve (237,718) (237,718)
------------------------------
Total receivables 10,000 -
------------------------------
Total current assets 206,383 224,566
------------------------------
Fixed Assets: 768,957 753,332
Accumulated depreciation (526,435) (441,206)
------------------------------
Total property and equipment 242,522 312,126
------------------------------
Prepaid expenses 18,674 9,468
------------------------------
Total assets $ 467,579 $ 546,160
==============================
LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 656,903 $ 684,678
Accrued liabilities 709,981 458,947
Short term debt 128,842 132,614
Bank overdraft 9,428 192
Customer deposit 538,583 428,891
Stock committed to be issued 7,700 -
Notes payable 110,500 90,500
Related party payable 50,000 57,500
Related parties - short term borrowings from shareholders 663,121 683,041
------------------------------
Total current liabilities 2,875,058 2,536,363
------------------------------
Shareholders' equity (deficit)
Preferred stock 10,000,000 shares authorized Series A preferred stock,
$0.01 par value, 50 shares authorized,
30 shares issued and outstanding as on April 30, 2013 and 2012 360,000 360,000
Series B preferred stock, $0.01 par value, 100 shares authorized,
20 shares issued and outstanding as on April 30, 2013 and 2012 20,000 20,000
Common stock, $0.0001 par value: 500,000,000 shares authorized
55,890,117 and 55,890,117 shares issued and outstanding as on
April 30, 2013 and 2012 5,589 5,589
Additional paid-in capital 4,880,270 4,880,270
Accumulated deficit (7,673,338) (7,256,062)
------------------------------
Total Medina International Holdings, Inc. shareholders' equity (deficit) (2,407,479) (1,990,203)
------------------------------
Total liabilities and shareholders' equity (deficit) $ 467,579 $ 546,160
==============================
The accompanying notes are an integral part of these financial statements.
F-2
MEDINA INTERNATIONAL HOLIDNGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended
April 30,
2013 2012
-----------------------------------
Sales, net $ 1,355,179 $ 419,397
Cost of Goods Sold 1,073,101 342,739
-----------------------------------
Gross profit (loss) 282,078 76,658
-----------------------------------
General and administrative expenses 562,147 1,089,619
Selling and marketing expenses 99,259 63,435
Write-off of assets - -
-----------------------------------
Income (loss) from operations (379,328) (1,076,396)
-----------------------------------
Other income - Gain on debt relief 24,874 17,164
Other income 1,931 -
Interest expense (64,753) (187,454)
-----------------------------------
Net other Income (loss) (37,948) (170,290)
-----------------------------------
Loss before income tax (expense) benefit (417,276) (1,246,686)
Income tax (expense) benefit - -
-----------------------------------
Net loss from operations $ (417,276)$ (1,246,686)
===================================
Net loss per share:
Basic $ (0.01)$ (0.02)
===================================
Diluted $ (0.01)$ (0.02)
===================================
Weighted average number of shares outstanding:
Basic 55,890,117 52,803,323
===================================
Diluted 55,890,117 52,803,323
===================================
The accompanying notes are an integral part of these financial statements.
F-3
Medina International Holdings, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
For the Years Ended April 30, 2013 and 2012
Preferred Stock Preferred Stock
Common Stock Series A Series B
Shares Amount Shares Amount Shares Amount
-----------------------------------------------------------------------------------------
Balance - April 30, 2011 51,110,497 $ 5,111 20 $240,000 - $ -
Stock issued to Directors 200,000 20
Stock issued to Directors 10 120,000 20 20,000
Shares issued for services 650,000 65
Shares issued for cash 1,000,000 100
Shares issued on conversion of debt 2,929,620 293
Beneficial Loan conversion Expense
Settlement of Lawsuit
Net loss
------------------------------------------------------------------------------------
Balance - April 30, 2012 55,890,117 5,589 30 360,000 20 20,000
Net income (loss) - - - - - -
------------------------------------------------------------------------------------
Balance - January 31, 2013 55,890,117 5,589 30 360,000 20 20,000
====================================================================================
The accompanying notes are an integral part of these financial statements.
F-4
Medina International Holdings, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
For the Years Ended April 30, 2013 and 2012
(continued)
Additional
Paid-in Accumulated
Capital Deficit Totals
------------------------------------------
Balance - April 30, 2011 $ 3,519,292 $ (6,009,376) $ (2,244,973)
Stock issued to Directors 10,443 10,463
Stock issued to Directors 24,712 164,712
Shares issued for services 19,985 20,050
Shares issued for cash 149,900 150,000
Shares issued on conversion of debt 47,169 47,462
Beneficial Loan conversion Expense 95,000 95,000
Settlement of Lawsuit 1,013,769 1,013,769
Net loss (1,246,686) (1,246,686)
-----------------------------------------------
Balance - April 30, 2012 4,880,270 $ (7,256,062) $ (1,990,203)
Net income (loss) - (417,276) (417,276)
-----------------------------------------------
Balance - January 31, 2013 4,880,270 $ (7,673,338) $ (2,407,479)
===============================================
The accompanying notes are an integral part of these financial statements.
F-5
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended
April 30,
2013 2012
-----------------------------
Cash flows from operating activities:
Net income (loss) $ (417,276)$ (1,246,686)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Common stock expenses 7,700 30,514
Depreciation expenses 91,680 119,892
Gain on debt relief 24,874 17,164
Loss on sale of asset 224 -
Beneficial loan conversion - 119,712
Preferred A stock issued for services - 120,000
Preferred B stock issued for services - 20,000
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable - 5,890
Decrease (increase) in other receivable - (1,686)
Decrease (increase) in inventory 30,818 (124,927)
Increase (Decrease) in accounts payable (52,649) 116,054
Increase (Decrease) in accrued liabilities 251,034 189,953
Increase (Decrease) in customer deposits 109,692 190,396
(Increase) decrease in prepaid expenses (9,206) 23,679
-----------------------------
Total adjustments 454,167 826,641
-----------------------------
Net cash (used) received in operating activities 36,891 (420,045)
-----------------------------
Cash flow from investing activities:
Purchase of property and equipment (37,301) (107,034)
Sale of asset 5,000 -
-----------------------------
Total cash flow used in investing activities (32,301) (107,034)
-----------------------------
Cash flows from financing activities:
Bank overdraft 9,236 192
Proceeds (Payments) from notes payable 20,000 95,000
Proceeds (Payments) from related party note payable (7,500) (4,577)
Proceeds (payments) from related party note shareholders (19,920) 265,221
Proceeds (Payments) on lines of credit & credit cards (3,772) 3,890
Proceeds from stock subscriptions - 150,000
-----------------------------
Total cash flow provided (used) by financing activities (1,956) 509,726
Net increase (decrease) in cash and cash equivalents 2,634 (17,353)
Cash and cash equivalents - beginning of period - 17,353
-----------------------------
Cash and cash equivalents - end of period $ 2,634 $ -
=============================
Supplemental disclosure of cash flow information:
Interest Paid $ 16,812 $ 28,897
=============================
Taxes Paid $ - $ -
=============================
Supplemental schedule of noncash investing and financing activities:
Stock issued for services $ 7,700 $ 30,513
=============================
Stock issued for debt $ - $ 44,500
=============================
Stock subsciptions payable $ - $ 2,962
=============================
Paid in capital in legal settlement $ - $ 1,013,769
=============================
The accompanying notes are an integral part of these financial statements.
F-6
Medina International Holdings, Inc. and
Subsidiaries
Notes to the Consolidated Financial Statements
April 30, 2013 and 2012
NOTE 1. GENERAL
Medina International Holdings, Inc. ("Company," "Medina," "we," "us," "our") was
incorporated in 1998 as Colorado Community Broadcasting, 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 changed the name of the business in 2005 to Medina International
Holdings, Inc.
The Company, under its two wholly owned subsidiaries, Harbor Guard Boats, Inc.
and Medina Marine, Inc., plans to manufacture and sell recreational and
commercial boats. The Company formed Medina Marine, Inc., as a wholly owned
subsidiary of the Company, on May 22, 2006 to manufacture and sell fire rescue,
rescue and recreational boats.
The Company acquired Modena Sports Design, LLC, as a wholly owned subsidiary of
the Company on June 18, 2008. Modena Sports Design, LLC was formed in the State
of California in 2003 to produce fire rescue, rescue and recreational boats.
Modena Sports Design, LLC reorganized as a California corporation on January 7,
2011 and changed its name to Harbor Guard Boats, Inc.
Going Concern
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, 2013,
the Company's current liabilities exceeded its current assets by $2,668,675.
Also, the Company's operations generated $1,355,179 in revenue during the year
ended April 30, 2013 and the Company's accumulated deficit was $7,673,338.
Management devoted considerable effort during the period ended April 30, 2013
towards management of liabilities and improving operations. Management has taken
various steps to revise its operating and financial requirements, and it
believes that the above actions will allow the Company to continue its
operations through the next fiscal year.
F-7
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.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation and Consolidation
The accompanying consolidated financial statements of Medina International
Holdings, Inc. and its subsidiaries were prepared in accordance with generally
accepted accounting principles in the United States of America ("GAAP") and
include the assets, liabilities, revenues, and expenses of our two wholly owned
subsidiaries, Medina Marine, Inc. and Harbor Guard Boats, Inc. All intercompany
balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of our consolidated financial statements in conformity with GAAP
requires the use of estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the consolidated financial statements, and the reported amounts
of revenues and expenses during the reporting periods. Significant estimates and
assumptions are used for, but are not limited to;
1) Revenue recognition;
2) Allowance for doubtful accounts;
3) Inventory costs;
4) Asset impairments;
5) Depreciable lives of assets;
6) Income tax reserves and valuation allowances;
7) Fair value of stock options;
8) Allocation of direct and indirect cost of
sales;
9) Contingent liabilities; and 10) Warranty liabilities.
Future events and their effects cannot be predicted with certainty; accordingly,
our accounting estimates require exercise of judgment. We base our estimates on
historical experience, available market information, appropriate valuation
methodologies, and on various other assumptions that we believe to be
reasonable. We evaluate and update our assumptions and estimates on an ongoing
basis and may employ outside experts to assist in our evaluation, when
necessary. Actual results could differ materially from these estimates.
F-8
Revenue Recognition
Revenue Recognition is recognized when earned. The Company's revenue recognition
policies are in compliance with Staff Accounting Bulletin (SAB) 104. Sales
revenue is recognized at the date of shipment to customers when a formal
arrangement exists, the price is fixed or determinable, the delivery is
completed, no other significant obligations of the Company exist and
collectability is reasonably assured. Payments received before all of the
relevant criteria for revenue recognition are satisfied, are recorded as
unearned revenue.
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.
Accounts receivable
The Company reviews its accounts receivables accounts periodically for
collectability and establishes an allowance for doubtful accounts and records
bad debt expense when deemed necessary.
Inventory
We carry our inventories at the lower of their cost or market value. Cost is
determined using first-in, first-out ("FIFO") method. Market is determined based
on net realizable value. We also provide due consideration to obsolescence,
excess quantities, and other factors in evaluating net realizable value.
Fixed Assets
Capital assets are stated at cost. Equipment consisting of molds is estimated at
the date of acquisition of Harbor Guard Boats. Depreciation of fixed assets is
provided using the straight-line method over the estimated useful lives (3-7
years) of the assets. Expenditures for maintenance and repairs are charged to
expense as incurred.
----------------------------------- -------------
Property and Equipment No. of Years
----------------------------------- -------------
Molds 7
Manufacturing Tools 5
Computers 3
Furniture 3
Manufacturing tool HGB -Used 3
Office Equipments 3
Office Phone 3
----------------------------------- -------------
F-9
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"), now codified in ASC 350,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 ASC
350. ASC 350 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.
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.
At April 30, 2013 and 2012 the Company had net operating loss carry forwards of
approximately $7,673,338 and $7,256,062, respectively, which begin to expire in
2033. The deferred tax asset of approximately $1,533,744 and $1,450,617 in 2013
and 2012 respectively, created by the net operating losses have been offset by a
100% valuation allowance. The change in the valuation allowance in 2013 and 2012
was $831,127 and $249,255.
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-10
Issuance of Shares for Service
The Company accounts for employee and non-employee stock awards under ASC 718,
whereby equity instruments issued to employees for services are recorded based
on the fair value of the instrument issued and those issued to non-employees are
recorded based on the fair value of the consideration received or the fair value
of the equity instrument, whichever is more reliably measurable.
Fair Value of Financial Instruments
FASB ASC 825 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 Translations 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. Management does
not currently hedge foreign currency exposure.
Basic and Diluted Net Loss per Share
Net loss per share is calculated in accordance with FASB ASC 105. 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.
Products and Services, Geographic Areas and Major Customers
The Company earns revenue from the sale of recreational and commercial boats.
The Company sells its products within United States and abroad. The Company does
not separate sales activities into different operating segments and/or
geographic areas.
Recently issued accounting pronouncements
In June 2011, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Codification ("ASC") 105, "Generally Accepted Accounting
Principals" (formerly Statement of Financial Accounting Standards ("SFAS") No.
168, "The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles"). ASC 105 establishes the FASB ASC as the single
source of authoritative nongovernmental U.S. GAAP. The standard is effective for
interim and annual periods ending after September 15, 2011. We adopted the
provisions of the standard on September 30, 2011, which did not have a material
impact on our financial statements. There were various other accounting
standards and interpretations issued in 2011, none of which are expected to have
a material impact on the Company's financial position, operations or cash flows.
F-11
NOTE 3. Related Party Transactions
As of April 30, 2013, we had no related party transactions.
NOTE 4. Trade Receivables
As of April 30, 2013 and 2012, we had no trade receivables:
NOTE 5. Inventory
As of April 30, 2013 and 2012, inventory consisted of the following:
---------------------------- ----------------------------------
Inventory For the years ended April 30,
---------------------------- ----------------------------------
2013 2012
---- ----
Materials $ - $ -
Work in progress 193,748 224,566
Finished goods - -
--------------- ---------------
Total inventory $193,748 $224,566
---- ----------------------- --------------- -- ---------------
NOTE 6. Other Receivables
--------------------------------- --------------------------------
Other Receivables For the years ended April 30,
--------------------------------- --------------------------------
2013 2012
---- ----
Disposal of Subsidiary $237,718 $237,718
Reserve (237,718) (237,718)
Sale of Spray booth 10,000 -
-------------- --------------
Total Receivables $10,000 $0
------- ------------------------- -------------- -- --------------
At April 30, 2013 and 2012, the Company has provided reserve in the amount of
$237,718 due to non availability of Financial statement of Wintec Protective
Systems, Inc.
Entry in Settlement Agreement - Disposition of Subsidiary
On March 28, 2012, ROK Global, PLC ("ROK") entered into a Settlement Agreement
and Mutual Release ("the Settlement Agreement") with Medina International
Holdings, Inc. ("the Company"), Wintec Protective Systems, Inc. ("Wintec"), Mr.
Daniel Medina, and Mr. Madhava Mankal Rao. Mr. Medina and Mankal are officers
and directors of the Company.
In 2011, the Company, Wintec and ROK entered into agreements that provided for
the Company to provide funding to Wintec and to contribute 3,000,000 shares of
its common stock in exchange for 20,400,000 shares of Wintec. As a result of the
agreements, Wintec had become the Company's 51% held subsidiary.
F-12
The Settlement Agreement provides for the agreements entered into in 2011 to be
terminated and cancelled, effective immediately. All parties agree to the
termination of the agreements without remedy and resolve each party of any
claims or liabilities arising out of such agreements. As a result of the
termination, Wintec is no longer a subsidiary of the Company. The Company
transferred back to Wintec the 20,400,000 shares of Wintec in exchange for $1.
Wintec transferred 3,000,000 shares of the Company's common stock issued in
2011, in exchange for $1.
Wintec per agreement to pay to the Company $237,718 within two years of the date
of the Settlement Agreement, which we have reserved at 100% of total receivable
due to non availability of Financial Statements of Wintec Protective Systems,
Inc.
NOTE 7. Fixed Assets
At April 30, 2013 and 2012, fixed assets consisted of the following:
------------------------------------- --------------------------------
Fixed Assets For the years ended April 30,
------------------------------------- --------------------------------
2013 2012
Machinery and equipment;
including molds & tools $657,345 $630,159
Computers 13,535 13,535
Furniture 2,537 2,537
Office equipments 4,540 3,286
Fire Extinguisher Intangible 500 500
Asset-Drawings 90,500 90,5000
20' Fire Rescue WIP
- 38,305
Total property and equipment 768,957 753,332
Less accumulated depreciation (526,435) (441,206)
-------------- -------------
Fixed Assets, net $ 242,522 $312,126
----- ------------------------------- -------------- --- -------------
NOTE 8. Prepaid Expenses
As of April 30, 2013 and April 30, 2012, prepaid expenses included operating
expenses and a vendor deposit in the amount of $18,674 and $9,468, respectively.
NOTE 9. Accrued Liabilities
Our accrued liabilities for the years ended April 30, 2013 and 2012 were as
follows:
---------------------------------------- -------------------------------------------------------
Accrued Liabilities For the years ended April 30,
---------------------------------------- -------------------------------------------------------
2013 2012
---- ----
Payroll tax $ 2,528 $ -
Interest - shareholders' loan 94,093
70,371
Interest - related party 8,113 14,000
Interest - note payable 28,668
7,179
Accrued payroll 548,676 354,324
Warranty liabilities 27,903 13,073
---------------------- -----------------------------
Total accrued liabilities $ 709,981 $458,947
------ --------------------------------- ---------------------- -- -----------------------------
F-13
NOTE 10. Short-Term Debt
-------------------------------------- -------------------------------
Short-term debt For the years ended April 30,
-------------------------------------- -------------------------------
2013 2012
---- ----
Loan - Financial Institution $ 94,887 $ 94,932
Credit card 33,955 37,682
------------ ---------------
Total short-term debt $128,842 $132,614
------ ------------------------------- ------------ -- ---------------
The Company has a loan from a financial institution, under which the Company may
borrow up to $100,000 on an unsecured basis at an interest rate of 8.75% with
monthly payments due. As of April 30, 2013 and 2012, the outstanding balance for
this loan was $94,887 and $94,932 respectively.
The Company's remaining credit cards carry various interest rates and require
monthly payments, and are substantially held in the name of or guaranteed by
related parties.
NOTE 11. Risk Management Activities
Foreign Currency
The majority of the Company's business is denominated in U.S. dollars and
fluctuations in the foreign currency markets will have a minimal effect on the
Company's business activities.
Commodity Prices
The Company is exposed to market risk from changes in commodity prices. The cost
of the Company's products could increase if the prices of fiberglass and/or
aluminum increase significantly, further decreasing the Company's ability to
attain profitable operations. The Company is not involved in any purchase
commitments with any of our vendors.
Insurance
The Company is exposed to several risks, including fire, earthquakes, theft, and
key person liabilities. The Company does not carry any insurance for these
risks, other than general liability insurance, which will adversely affect the
Company's operations if any of these risks materialize.
F-14
NOTE 12. Customer Deposit
Deposits from customers consisted of the following for the years ended April 30,
2013 and April 30, 2012:
------------------------------- -------------------------------
Customer Deposit For the years ended April 30,
------------------------------- -------------------------------
2013 2012
---- ----
Deposit for $518,083 $408,391
commercial boats
------------- --------------
Deposit for recreational boats 20,500 20,500
------------- --------------
Total customer deposit $538,583 $428,891
------ ------------------------ ------------- -- --------------
NOTE 13. Notes Payable
------------------------------------------ -------------------------------------
Notes Payable For the years ended April 30,
------------------------------------------ -------------------------------------
2013 2012
Note payable - related party $ 50,000 $57,500
Note payable - others 110,500 90,500
--------------- ------------------
Total notes payable $ 160,500 $148,000
------ ----------------------------------- --------------- -- ------------------
At April 30, 2013, the Company had an unsecured note payable to Mr. Srikrishna
Mankal, son of Madhava Rao Mankal, CFO of the Company, in the amount of $50,000,
which bears an 8% interest per annum and currently due. Interest accrued to date
on this note payable is $8,113. Due to negotiation with Mr. Srikrishna Mankal,
the accrual for interest on the said loan was mutually agreed to cease from
August 1, 2012.
At April 30, 2013, the Company had an unsecured convertible note payable with an
unrelated party in the amount of $110,500, which bears at 8-22% interest and is
currently due. Convertible at the holders' option (principal & interest) in full
or part into common stock at 60% three lowest average 3 out of 10 day. Company
recognized $95,000 of beneficial conversion expense during the year ended April
30, 2012 with an offset to additional paid in capital.
F-16
NOTE 14. Shareholder Loans
At April 30, 2013, Shareholder loans consisted of the following:
------------------------------------ --------------------------------
Shareholders' Loans For the years ended April 30,
------------------------------------ --------------------------------
2013 2012
Daniel Medina, President $354,143 $ 360,628
Madhava Rao Mankal, CFO 308,978 253,896
------------- ---------------
Total shareholders' loan $663,121 $ 683,041
------ ----------------------------- ------------- -- ---------------
Shareholder loans are unsecured, bear interest at 8 - 10% per annum, and are due
on demand. From time to time, shareholders are involved in funding operations.
These funds are provided and collected on an as needed basis.
NOTE 15. Stockholders' Equity
Common Stock
The Company has been authorized to issue, 100,000,000 shares of common stock
with a par value of $0.0001. The Company had 55,890,117 shares of its common
stock issued and outstanding on April 30, 2013 and 2012, respectively.
During the year period ended April 30, 2012, the Company issued 200,000 shares
of its common stock to its independent directors, at various fair values for a
total amount of $10,463.
During the year ended April 30, 2012, the Company issued 650,000 shares of its
common stock in exchange for services, at the rate of $0.03/ share or $20,050,
to three individuals.
During the year ended April 30, 2012, the Company issued 2,929,620 shares in
lieu of conversion of debt in the amount of $47,462.
Preferred Stock
The Company has been authorized to issue 10,000,000 shares of preferred stock
with a par value of $.01, out of which 50 shares have been designated as
convertible Series A preferred stock ("Series A"). The Series A has a stated
value $12,000 per share, each one share of Series A is convertible into 1% of
the outstanding common shares at the time of conversion, may be converted at
anytime, is redeemable by the Company in whole or in part at anytime at a price
equal to the greater of (a) $12,000 per share or (b) the market value of the
common stock into which the Series A is convertible, has preferential
liquidation rights to common stock subject to a 150% of invested capital, and
has voting rights equal to common stock in an amount equal to the number of
shares that Series A could be converted into.
F-17
At April 30, 2012, the Company had 30 shares of Series `A' Preferred Stock
issued and outstanding. Mr. Mankal and Mr. Medina, CFO and President of the
Company, were issued further 5 shares each of Series `A' preferred stock.
During the year period ended April 30, 2012, the Company has issued 20 Series
`B' Preferred shares to unrelated party in exchange for watercraft designs.
Series B Convertible, Redeemable Preferred Stock; 100 shares designated; $1,000
per share stated value; Each one share of Series B is convertible into 0.20% of
the outstanding common shares at time of conversion; convertible at any time;
Redeemable by the Company in whole or in part at any time, at a price equal to
the greater of (a) $1,000 per share or (b) the market value of the common into
which the Series B is convertible on the date of redemption. Preferential
liquidation rights to common, whereby Series B would receive up to150% of
invested capital upon liquidation; voting rights equal to common, in an amount
of shares that Series B could be converted into.
Stock Subscriptions Payable
None
NOTE 16. Commitments
Operating Leases
As of April 30, 2013, we did not own any properties. We moved our Company's
activities, including all subsidiaries, from Corona, California to Ontario,
California during April 2013. Our management signed a three-year lease for a
13,045 sq. ft. building in the city of Ontario, California, effective May 1,
2013. The address for this location is 191 Kettering Dr., Corona, CA, 91761.
This building is owned by unrelated parties. The lease to the Corona facility
expires on June 30, 2016, and calls for monthly payments, initially at $5,610.00
per month plus $495.00 costs, escalating over the term of the lease to $5,950
per month plus costs.
Our consolidated contractual obligations as of April 30, 2013, are as follows:
--------------------------------------------------- -----------------
Operating Lease Obligation Amount
--------------------------------------------------- -----------------
April 30, 2014 67,320
April 30, 2015 67,320
April 30, 2016 67,320
-----------------
Total operating lease obligation $213,180
------- ------------------------------------------- -----------------
The Company has license agreements with a Mr. Albert Mardikian, related party
allowing its technology to be utilized in the manufacture of its boats, along
with $1,500 towards royalty payments.
F-18
NOTE 17. Litigation
Entry into Settlement Agreement
On February 10, 2012, Medina International Holdings, Inc. ("the Company"), its
subsidiaries, Modena Sports Design, LLC, Harbor Guard Boats, Inc., its officers
and directors, Madhava Rao Mankal and Daniel Medina, entered into a Settlement
Agreement and Mutual Release ("the Settlement Agreement") with Albert Mardikian,
MGS Grand Sport, Inc., and Mardikian Design and Associates ("the Mardikian
Parties"). The Settlement Agreement is in connection with the lawsuit filed by
Mr. Mardikian, as discussed below.
On December 28, 2010, Albert Mardikian and MGS Grand Sport, Inc., filed a
Complaint for breach of contract; money lent; account stated; accounting;
declaratory relief; fraud and deceit; breach of fiduciary duty; conversion; and
involuntary dissolution in Superior Court of the State of California, County of
Orange against Medina International Holdings, Inc.; Modena Sports Design, LLC;
Harbor Guard Boats, Inc.; Madhava Rao Mankal; and Danny Medina.
Mr. Mardikian and MGS Grand Sport, Inc. were seeking monetary damages exceeding
$1 million as well as punitive damages in unspecified amounts and a dissolution
of the Company. Mr. Mardikian was a Director and significant shareholder of the
Company.
The Settlement Agreement provides that the Mardikian Parties shall grant the
Company's subsidiary, Harbor Guard Boats, Inc. a license to make, have made,
develop, sell, promote, distribute and market commercial and governmental boats
utilizing U.S. Patent Nos. 6,620,003, 6,343,964 and 7,004,101. Such License will
have a 5 year term from the effective date of the Settlement Agreement. The
License will provide for a royalty payment of $1,500 per boat during the term of
the License.
The Settlement further provides, that all molds, inventory, tools, machinery,
parts, drawings, manuals and other materials acquired from the Mardikian parties
remain the property of the Company and that any trademarks will remain the
property of Harbor Guard Boats, Inc.
The Settlement Agreement provides for a the Company and Harbor Guard Boats to
pay the Mardikian Parties up to $250,000 starting January 1, 2012, as a
contingency payment. The contingency payment is based on the collective sale of
the boats manufactured per calendar year using the 24' and 26' mold provided by
Mr. Albert Mardikian. If 4 or less boats are manufactured the Company does not
have to pay the contingency payment. If 5 or more boats are manufactured using
the 24' and 26' mold provided by Mr. Albert Mardikian, the Company shall make
payments towards the contingency payment as set forth in the Settlement
Agreement.
Further, the Settlement Agreement provides for the Company and Harbor Guard
Boats to pay off a credit line that Mr. Mardikian is a signatory totaling
$94,932 and the payments are to be made as set forth in the Settlement
Agreement.
Pursuant to the Settlement Agreement, once the contingency payments made by the
Company and Harbor Guard Boats total $250,000 and the credit line has been paid
in full, the Mardikian Parties will return to the Company 5,500,000 shares of
the Company's common stock held by the Mardikian Parties.
On March 13, 2012, all the parties to the litigation filed a request to dismiss
the litigation in its entirety.
F-19
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:September 6, 2013 By:____________________________
Daniel F. Medina,
President & Director
Date: September 6, 2013
By:___________________________
Madhava Rao Mankal,
Chief Financial Officer & Director
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: Septermber 6, 2013 By:___________________________
Daniel F. Medina,
President & Director
Date: September 6, 2013 By:___________________________
Madhava Rao Mankal,
Chief Financial Officer & Director
Date: September 6, 2013 By:___________________________
Erich Lewis,
Director
Date: September 6, 2013 By:____________________________
Mike Gallo,
Director
Date: September 6, 2013 By:____________________________
Erik P. Wolf,
Director
35