UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------------
FORM 10Q/A
Amendment No. 1
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(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended July 31, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission 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) (IRS Employer ID Number)
1802 Pomona Rd., Corona, CA 92880
-----------------------------------------------
(Address of principal executive offices)
909-522-4414
--------------------------
(Registrant's Telephone number)
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 past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X ] No []
Indicate by check mark whether the registrant is a large accelerated file, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do
not check if a smaller reporting company) Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [ X]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of August 25, 2012, there were 55,890,117 shares of the registrant's common
stock issued and outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
----
Consolidated Balance Sheets - July 31, 2012 and April 30, 2012 F-1
Consolidated Statements of Operations -
Three months ended July 31, 2012 and 2011 F-2
Consolidated Statements of Cash Flows -
Three months ended July 31, 2012 and 2011 F-3
Consolidated Statement of Changes in Stockholders' Equity (Deficit) F-4
Notes to Consolidated Financial Statements F-5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk - 3
Not Applicable
Item 4. Controls and Procedures 3
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 4
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 4
-Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable 4
Item 4. Mine Safety Disclosures 4
Item 5. Other Information - Not Applicable 4
Item 6. Exhibits 5
SIGNATURES 6
PART I. - FINANCIAL INFORMATION
EXPLANATORY NOTE
Medina International Holdings, Inc., (the "Company"), is filing this amendment
to its quarterly report on Form 10-Q/A for the period ended July 31, 2012 filed
with the Securities and Exchange Commission on September 11, 2012, for the
purpose of furnishing XBRL Interactive Data Files as Exhibit 101 in accordance
with Rule 405 of Regulation S-T.
This amendment does not reflect events occurring after the original filing.
Except for the foregoing amended information, this Form 10-Q/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.
MEDINA INTERNATIONAL HOLDINGS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 31, April 30,
2012 2011
(Unaudited) (Audited)
-----------------------------
ASSETS
Current assets
Cash $ 31,569 $ -
Receivables 237,718 237,718
Reserve (237,718) (237,718)
-----------------------------
Total receivables - -
Inventory 99,640 224,566
-----------------------------
Total current assets 131,209 224,566
-----------------------------
Property and equipment 765,189 753,332
Accumulated depreciation (465,742) (441,206)
-----------------------------
Total property and equipment 299,447 312,126
-----------------------------
Other assets
Prepaid expenses and deposits 9,468 9,468
-----------------------------
Total assets $ 440,124 $ 546,160
=============================
LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 621,686 $ 684,678
Accrued liabilities 116,326 458,947
Short term debt 125,265 132,614
Bank overdraft - 192
Customer deposit 360,470 428,891
Stock committed to be issued 500 -
Notes payable 110,500 90,500
Related party payable 50,000 57,500
Related parties - short term 1,028,558 683,041
-----------------------------
Total current liabilities 2,413,305 2,536,363
Total liabilities 2,413,305 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 360,000 360,000
Series B preferred stock, $0.001 par value, 100 shares authorized,
20 shares issued and outstanding 20,000 20,000
Common stock, $0.0001 par value: 500,000,000 shares authorized
55,890,117 shares issued and outstanding, respectively 5,589 5,589
Additional paid-in capital 4,880,270 4,880,270
Accumulated deficit (7,239,040) (7,256,062)
-----------------------------
Total shareholders' equity (deficit) (1,973,181) (1,990,203)
-----------------------------
Total liabilities and shareholders' equity (deficit) $ 440,124 $ 546,160
=============================
The accompanying notes are an integral part of these financial statements.
F-1
MEDINA INTERNATIONAL HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
July 31,
2012 2011
------------------------------------
Sales, net $ 642,755 $ 300,662
Cost of Goods Sold 463,426 177,292
------------------------------------
Gross profit (loss) 179,329 123,370
------------------------------------
General and administrative expenses 105,500 477,290
Selling and marketing expenses 41,237 26,198
Write-off of assets - -
------------------------------------
Income (loss) from operations 32,592 (380,118)
------------------------------------
Other income - -
Interest expense (15,570) (52,012)
------------------------------------
Net other Income (loss) (15,570) (52,012)
------------------------------------
Net Income (Loss) from operations $ 17,022 $ (432,130)
====================================
Net loss per share:
Basic $ 0.00 $ (0.01)
====================================
Diluted $ 0.00 $ (0.01)
====================================
Weighted average number of shares outstanding:
Basic 55,890,117 51,208,323
====================================
Diluted 55,890,117 51,208,323
====================================
The accompanying notes are an integral part of these financial statements.
F-2
Medina International Holdings, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
For the Three Months Ended July 31, 2012
(Unaudited)
Preferred Stock Preferred Stock Additional
Common Stock Series A Series B Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Totals
-------------------------------------------------------------------------------------------
Balance - April 30, 55,890,117 5,589 30 360,000 20 20,000 4,880,270 $ (7,256,062) $(1,990,203)
2012
Net income (loss) - - - - - - - 17,022 17,022
--------------------------------------------------------------------------------------------
Balance - July 31, 255,890,117 5,589 30 360,000 20 20,000 4,880,270 $ (7,239,040) $(1,973,181)
2012
==============================================================================================
The accompanying notes are an integral part of these financial statements.
F-3
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three Months Ended
July 31,
2012 2011
--------------------------------
Cash flows from operating activities:
Net income (loss) $ 17,022 $ (432,130)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Common stock expenses 500 245,000
Depreciation expenses 24,536 41,854
Write-off of fixed assets - -
Changes in operating assets and liabilities:
Decrease (Increase) in accounts receivable - (20,053)
Decrease (Increase in other receivable - (2,108)
Decrease (Increase) in inventory 124,926 35,486
Increase (Decrease) in accounts payable (62,992) 117,913
Increase (Decrease) in accrued liabilities 3,445 73,205
Increase (Decrease) in customer deposits (68,421) (147,695)
(Increase) decrease in prepaid expenses - -
--------------------------------
Total adjustments 21,994 343,602
--------------------------------
Net cash received (used) in operating activities 39,016 (88,528)
--------------------------------
Cash flow from investing activities:
Purchase of property and equipment (11,857) -
--------------------------------
Total cash flow used in investing activities (11,857) -
--------------------------------
Cash flows from financing activities:
Bank overdraft (192) -
Proceeds (Payments) from notes payable 20,000 86,797
Proceeds (Payments) from related party note payable (7,500) (6,401)
Proceeds (Payments) from related party note payable shareholders (549) -
Proceeds (Payments) on lines of credit & credit cards (7,349) (4,505)
Proceeds from stock subscription - -
--------------------------------
Total cash flow provided (used) by financing activities 4,410 75,891
Net increase (decrease) in cash and cash equivalents 31,569 (12,637)
Cash and cash equivalents - beginning of period - 17,353
--------------------------------
Cash and cash equivalents - end of period $ 31,569 $ 4,716
================================
Supplemental disclosure of cash flow information:
Interest Paid $ 15,570 $ 17,012
================================
Taxes Paid $ - $ -
================================
Supplemental schedule of noncash investing and financing activities:
Stock issued from services $ 30,513 $ 245,000
================================
The accompanying notes are an integral part of these financial statements.
F-4
MEDINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JULY 31, 2012
(Unaudited)
NOTE 1 - BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
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 signed an agreement to acquire 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, 2010 changed its name to Harbor Guard Boats, Inc.
Presentation of Interim Information
-----------------------------------
In the opinion of the management of the Company, the accompanying unaudited
financial statements include all normal adjustments considered necessary to
present fairly the financial position and operating results of the Company for
the periods presented. The financial statements and notes are presented as
permitted by Form 10-Q, and do not contain certain information included in the
Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2012.
It is management's opinion that when the interim financial statements are read
in conjunction with the April 30, 2012 Annual Report on Form 10-K, the
disclosures are adequate to make the information presented not misleading.
Interim results are not necessarily indicative of results for a full year or any
future period. 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
subsidiaries, Medina Marine, Inc., Harbor Guard Boats, Inc. All intercompany
balances and transactions have been eliminated in consolidation.
F-5
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 July 31, 2012,
the Company's current liabilities exceeded its current assets by $2,282,159.
Also, the Company's operations generated $642,755 revenue during the current
period ended and the Company's accumulated deficit is $7,239,085.
Management has taken various steps to revise its operating and financial
requirements, which we believe are sufficient to provide the Company with the
ability to continue on in the subsequent year. Management devoted considerable
effort during the period ended July 31, 2012 towards management of liabilities
and improving our operations. Management believes that the above actions will
allow the Company to continue its operations through the next fiscal year.
The future success of the Company is likely dependent on its ability to attain
additional capital to develop its proposed products and ultimately, upon its
ability to attain future profitable operations. There can be no assurance that
the Company will be successful in obtaining such financing, or that it will
obtain positive cash flow.
NOTE 2 - SUMMARY OF 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 three wholly
owned subsidiaries, Harbor Guard Boats, Inc. and Medina Marine, 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.
F-6
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.
Revenue Recognition
Revenue Recognition is recognized when earned. The Company's revenue recognition
policies are in compliance with ASC 650 "Revenue Recognition." 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 accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary. At July 31, 2012 and April 30, 2012, the Company had $237,718
in its allowance for doubtful accounts.
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 stated at
cost. 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.
Long Lived Assets
The Company adopted codification ASC 350 "Accounting for the Impairment or
Disposal of Long-Lived Assets", 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.
F-7
Comprehensive Loss
Accounting principles generally require that recognized revenue, expenses, gains
and losses be included in net income. Certain statements, however, require
entities to report specific changes in assets and liabilities, such as
unrealized gains and losses on available-for-sale securities, as a separate
component of the equity section of the balance sheet. Such items, along with net
income, are components of comprehensive income.
Issuance of Shares for Service
The Company accounts for employee and non-employee stock awards, 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
Disclosures about fair value of financial instruments, requires that the Company
disclose estimated fair values of financial instruments. The carrying amounts
reported in the statements of financial position for current assets and current
liabilities qualifying, as financial instruments are a reasonable estimate of
fair value.
Foreign Currency Translation And Hedging
The Company is exposed to foreign currency fluctuations due to international
trade. The management does not intend to enter into forward exchange contracts
or any derivative financial investments for trading purposes. The management
does not currently hedge foreign currency exposure.
Basic And Diluted Net Loss Per Share
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's products were sold domestically and internationally. The Company
does not separate sales activities into different operating segments.
Recently issued accounting pronouncements
There were accounting standards and interpretations issued during the three
months ended July 31, 2012, none of which are expected to have a material impact
on the Company's financial position, operations or cash flows.
F-8
NOTE 3. INVENTORY
As of July 31, 2012, inventory consisted of the following:
Inventory Cost
--------- ----
Parts $ 0
Work-in-Progress 99,640
Finished Goods 0
----------------
Total Inventory $ 99,640
================
NOTE 4. FIXED ASSETS
As of July 31, 2012, fixed assets consisted of the following:
Property and Equipment Cost
---------------------- ----
Machinery and equipment; including molds & tools $672,502
Computers 13,535
Furniture & fixture 2,537
Office equipments 4,540
Fire Extinguisher 500
Intangible Assets 71,575
------------------
Total Property and Equipment 765,189
Less accumulated depreciation (465,742)
------------------
Fixed Assets, Net $299,447
==================
NOTE 5. SHORT-TERM DEBT
As of July 31, 2012, Short term debts consisted of the following:
Financial Institutions
----------------------
Citi bank $ 94,866
Wells Fargo bank 8,000
Credit Cards 22,379
-------------------
Total Short Term debt $ 125,265
===================
F-9
At July 31, 2012, the Company has a line of credit totaling $100,000, under
which the Company may borrow on an unsecured basis since the year 2008 at an
interest rate of 8.75.% with monthly payments due. The outstanding balance for
this loan was $94,886.
At July 31, 2012, the Company originally borrowed $11,024.92 from Wells Fargo
bank as equipment loan repayable in monthly installments over a period of 60
monthly installments of $212.
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 6. RELATED PARTY TRANSACTION
The Company has various license agreements with a related party allowing its
technology to be utilized in the manufacture of its boats. The license
agreements typical provide for $1,500 royalty payment on every boat manufactured
by the company except on boats manufactured where Mr. Albert Mardikian's patents
are not used.
NOTE 7. CUSTOMER DEPOSIT
Deposit from customers at the end of quarter ended July 31, 2012 consists of the
following:
Deposit for commercial boats $ 339,970
Deposit for recreational boats 20,500
-----------
Total $ 360,470
===========
NOTE 8. NOTE PAYABLE
Deposit from customers at the end of quarter ended July 31, 2012 consists of the
following:
Notes payable - related party $ 50,000
Notes payable - others 110,500
-----------
Total $160,500
===========
At July 31, 2012, 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 repayable. Interest accrued to date $14,000.
At July 31, 2012, the Company had an unsecured convertible note payable with an
unrelated party in the amount of $90,500, which bears at 8-22% interest and is
currently due. The note is convertible at the holders' option (principal &
interest) in full or part into common stock at 60% of the average of the three
lowest market bid prices on the Company's common stock from the previous 10
days' quotes. The Company recognized a $95,000 beneficial conversion expense
during the year ended April 30, 2012 with an offset to additional paid in
capital.
NOTE 9. SHAREHOLDERS' LOANS
At July 31, 2012, Shareholders' loans consisted of the following:
Daniel Medina, President & Director $256,444
Madhava Rao Mankal, Chief Financial Officer & Director 241,330
-------
Total $497,774
========
F-10
Shareholder's loan from shareholder of the Company, unsecured, 10% interest per
annum, due on demand.
NOTE 9. STOCKHOLDERS' EQUITY
During the quarter ended July 31, 2012, the Company did not issue any shares of
its common stock.
NOTE 10. COMMITMENTS AND CONTINGENCIES
Rental Leases
The Company signed a 3 year lease for 11,900 square feet building in the city of
Corona, in the state of California, effective April, 2010. The address for this
location is 1802 Pomona Rd, Corona, CA 92880. This building is owned by
unrelated parties. The lease expires on March 31, 2013, and calls for monthly
payments initially of $2,600 per month plus costs, escalating over the term of
the lease to $6,000 per month plus costs.
The Company has various license agreements with a related party allowing its
technology to be utilized in the manufacture of its boats. The license
agreements typical provide for $1,500 royalty payment on every boat manufactured
by the company except on boats manufactured where Mr. Albert Mardikian's patents
are not used.
NOTE 11 - SUBSEQUENT EVENTS
On August 31, 2012, the Board of Directors of the Company authorized the
creation of a new series of its Preferred Stock. On August 28, 2012, the Company
amended its Articles of Incorporation to designate the Series C Convertible
Preferred Stock. The Series C Convertible Preferred Stock ("Series C Preferred
Stock") has 500 authorized shares. At the time of this filing no shares of the
Series C Preferred Stock have been issued.
The holders of the Series C Preferred Stock have a voting right equal to that of
the common stock holders in any matter that the common stock holders of the
Company are able to vote upon. The Series C Preferred Stock is equal to such
number of votes as shall be equal to the aggregate number of shares of common
stock into which such holder's shares of Series C Stock are convertible
immediately after the close of business on the record date determined for any
vote.
The Series C Preferred Stock is convertible into shares of the Company's
restricted common stock. The Series C Preferred Stock will convert at a rate of
1 share of Series C Preferred Stock for 62,500 shares of the Company's common
stock.
The Company has evaluated it activities subsequent to the period ended July 31,
2012, through September 05, 2012 and found no reportable subsequent events.
F-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The independent registered public accounting firm's report on the Company's
financial statements as of April 30, 2012, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
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 engages approximately six full time employees. Our President and
Chief Financial Officer have been engaged on full time to work with Harbor Guard
Boats, Inc.
On August 31, 2012, the Board of Directors of the Company authorized the
creation of a new series of its Preferred Stock. On August 28, 2012, the Company
amended its Articles of Incorporation to designate the Series C Convertible
Preferred Stock. The Series C Convertible Preferred Stock ("Series C Preferred
Stock") has 500 authorized shares. At the time of this filing no shares of the
Series C Preferred Stock have been issued.
The holders of the Series C Preferred Stock have a voting right equal to that of
the common stock holders in any matter that the common stock holders of the
Company are able to vote upon. The Series C Preferred Stock is equal to such
number of votes as shall be equal to the aggregate number of shares of common
stock into which such holder's shares of Series C Stock are convertible
immediately after the close of business on the record date determined for any
vote.
The Series C Preferred Stock is convertible into shares of the Company's
restricted common stock. The Series C Preferred Stock will convert at a rate of
1 share of Series C Preferred Stock for 62,500 shares of the Company's common
stock.
1
Our securities are currently not liquid. There are limited market makers in our
securities and it is not anticipated that any market will develop for our
securities until such time as we successfully implement our business plan of
producing and marketing our Fire and Rescue boats. We presently have no liquid
financial resources to offer such a candidate and must rely upon an exchange of
our stock to complete such a merger or acquisition.
RESULTS OF OPERATION
Results Of Operations For The Three-Month Period Ended July 31, 2012 Compared To
The Same Period Ended July 31, 2011
The Company recognized $642,755 in revenues during the three months ended July
31, 2012 compared to $300,662 during the three months ended July 31, 2011. This
resulted in an increase of sales over the prior period of $342,092. We sold two
boats during the quarter ended July 31, 2012, one of which was aluminum, with a
higher sale price compared to two during the quarter ended July 31, 2011.
During the three months ended July 31, 2012 general and administrative expenses
decreased by $371,790 or 77.89% to $105,500 compared to $477,290 for the quarter
ended July 31, 2011. Selling and marketing expenses increased by $15,039 to
$41,237 for the quarter ended July 31, 2012 compared to $26,198 for the quarter
ended July 31, 2011. The increase is mainly due to increase in sales commission
for the quarter ended July 31, 2012 caused by the increase in sales.
During the three months ended July 31, 2012 interest expense decreased by
$36,442 or 70.06% to $15,570 compared to $52,012 for the period ended July 31,
2011. This decrease is due to interest expense amount of $35,000 on account of
the loss on the conversion feature of the loan agreement for the quarter ended
July 31, 2011.
During the three months ended July 31, 2012, the Company recognized a net income
of $17,022 compared to a net loss of $432,130 for the quarter ended July 31,
2011. The increase of $449,152 was due to the write off of the cost of the
3,000,000 shares valued at $219,600 originally issued towards the acquisition of
51% of Wintec Protective Systems, Inc., cost of administration expenses of
Wintec Protective Systems, Inc., and legal expenses. In March 2012, the Company
entered into a Settlement Agreement and Mutual Release, which terminated the
original purchase agreements and as a result Wintec Protective Systems, Inc. is
no longer a subsidiary of the Company.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 2011, we had total current assets of $131,209, consisting of cash of
$31,569 and $99,640 in inventory. At July 31, 2012, the Company had current
liabilities of $2,413,305. At July 31, 2012, the Company has a working capital
deficit of $2,282,096. The Company will need to raise capital through loans or
private placements in order to carry out any operational plans.
During the three months ended July 31, 2012, the Company provided $39,016 from
its operating activities. The Company used $11,857 for purchase of equipment.
The Company used $4,410 through financing activities during the three months
ended July 31, 2011.
During the three months ended July 31, 2011, the Company used $88,528 from its
operating activities. The Company had $4,716 in cash at July 31, 2011. The
Company used $75,891 through financing activities during the three months ended
July 31, 2011.
2
At July 31, 2011, 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 repayable. Interest accrued to date $14,000.
At July 31, 2012, the Company had an unsecured convertible note payable with an
unrelated party in the amount of $90,500, which bears at 8-22% interest and is
currently due. The note is convertible at the holders' option (principal &
interest) in full or part into common stock at 60% of the average of the three
lowest market bid prices on the Company's common stock from the previous 10
days' quotes.
Going Concern
The independent registered public accounting firm's report on the Company's
financial statements as of April 30, 2012, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
Short Term.
On a short-term basis, we do not generate any revenue or revenues sufficient to
cover operations. Based on prior history, we will continue to have insufficient
revenue to satisfy current and recurring liabilities as we continue to develop
our operations. For short term needs we will be dependent on receipt, if any, of
offering proceeds.
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 our management or other stockholders.
Accordingly, there can be no assurance that any additional funds will be
available to us to allow it to cover our expenses as they may be incurred.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
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) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
3
As required by SEC Rule 15d-15(b), our Chief Executive 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 the end of the period
covered by this report. Based on the foregoing evaluation, our Chief Executive
Officer has concluded that our disclosure controls and procedures are not
effective in timely alerting them to material information required to be
included in our periodic SEC filings and to ensure that information required to
be disclosed in our periodic SEC filings is accumulated and communicated to our
management, including our Chief Executive Officer, to allow timely decisions
regarding required disclosure as a result of the deficiency in our internal
control over financial reporting discussed below.
Management's assessment of the effectiveness of the small business issuer's
internal control over financial reporting is as of the quarter ended July 31,
2012. 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.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended July 31, 2012, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS -
NONE
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES -
NONE
ITEM 4. MINE SAFETY DISCLOSURES. .
NOT APPLICABLE.
ITEM 5. OTHER INFORMATION
NONE.
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ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act
Exhibit 31.2 Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act
Exhibit 32.2 Certification of Principal Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act
Exhibit 101.INS XBRL Instance Document (1)
Exhibit 101.SCH XBRL Taxonomy Extension Schema Document (1)
Exhibit 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (1)
Exhibit 101.LAB XBRL Taxonomy Extension Label Linkbase Document (1)
Exhibit 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document (1)
(1) Pursuant to Rule 406T of Regulation S-T, this interactive data
file is deemed not filed or part of a registration statement or
prospectus for purposes of sections 11 or 12 of the Securities
Act of 1933, is deemed not filed for purposes of section 18 of
the Securities Exchange Act of 1934, and otherwise is not
subject to liability under these sections.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MEDINA INTERNATIONAL HOLDINGS, INC.
(Registrant)
Dated: September 17, 2012 By: /s/ Daniel Medina
--------------
Daniel Medina, President
Dated: September 17, 2012 By: /s/ Madhava Rao Mankal
------------------
Madhava Rao Mankal, Chief Financial
Officer (Principal Accounting Officer)
6