UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended September 30, 2004
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______ to __________
Commission File Number: 0-25909
Australian Forest Industries f/k/a Multi-Tech International Corp.
-----------------------------------------------------------------
(Exact name of Small Business Issuer in its Charter)
Nevada 86-0931332
------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9974 Huntington Park Drive, Strongsville, OH 44136
------------------------------------------------------
(Address of principal executive offices)
(440) 759-7470
--------------------------
(Issuer's telephone number)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes |X| No |_|
State the number of shares outstanding for each of the issuer's classes of
Common Stock as of the last practical date:
Common Stock, $0.001 par value per share, 257,400,680 outstanding as of November
5, 2004 Preferred Non-Voting Stock, $0.001 par value per share, none outstanding
as of November 5, 2004 Transactional Small Business Disclosure Format
Yes |_| No |X|
Multi-Tech International, Corp.
TABLE OF CONTENTS
Item 1. Financial Statements
Balance Sheet (unaudited)............................ F-1
Statements of Operations (unaudited)................. F-2
Statements of Cash Flows (unaudited)................. F-3
Notes to Financial Statements..................... F-4 to F-8
Item 2. Management's Discussion and Analysis of Plan of Operation
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote
of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I. FINANCIAL INFORMATION
MULTI -TECH INTERNATIONAL, CORP
(A DEVELOPMENT STAGE COMPANY)
INTERIM BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
ASSETS 2004 2003
------ ---- ----
(UNAUDITED) (AUDITED)
------------ ------------
CURRENT
Cash $ -- $ 19
Prepaid assets and sundry assets 23
------------ ------------
Total Current Assets $ -- 42
------------ ------------
FIXED
Equipment -- --
Office furniture -- --
Leasehold improvements -- --
Vehicle -- --
------------ ------------
Total Fixed Assets -- --
------------ ------------
OTHER
Patent rights -- --
------------ ------------
Total Other Assets -- --
------------ ------------
TOTAL ASSETS $ -- $ 42
============ ============
LIABILITIES 2004 2003
------------ ------------
CURRENT
Accounts payable $ -- $ 124,559
Accrued Expenses and Other Current Liabilities -- 150,000
Loans payable -- 10,951
Loan from a shareholder 15,907 --
Note payable -- 15,275
------------ ------------
Total Current Liabilities 15,907 300,785
------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock, authorized 5,000,000
shares, par value $0.001 - issued and
outstanding - none -- --
Common Stock,authorized 100,000,000
shares, par value $0.001 - issued and
outstanding - 80,000,000 (12-31-03 - 16,851,920) 80,000 16,852
Additional paid in capital 10,358,992 9,975,845
Donated Capital 818,871 818,871
Deficit accumulated during development stage (11,273,770) (11,112,311)
------------ ------------
Total Stockholders' Equity (15,907) (300,743)
------------ ------------
Total Liabilities and Stockholders' Equity $ -- $ 42
========== ============
MULTI -TECH INTERNATIONAL, CORP
(A DEVELOPMENT STAGE COMPANY) INTERIM
STATEMENT OF OPERATIONS (UNAUDITED)
FROM
Sept 21, 1998
Three Months Three Months Nine Months Nine Months (INCEPTION)
Ended Ended Ended Ended to
Sept. 30, 2004 Sept. 30, 2003 Sept. 30, 2004 Sept. 30, 2003 Sept. 30, 2004
---------- ---------- ---------- ------------ ------------
REVENUE $ -- $ -- $ -- $ 4,280 $ 4,477
---------- ---------- ---------- ------------ ------------
EXPENSES
Selling, general and administrative
expenses 13,582 64,674 161,459 205,550 11,578,247
---------- ---------- ---------- ------------ ------------
------------
Total Operating Expenses 13,582 64,674 161,459 205,550 11,578,247
---------- ---------- ---------- ------------ ------------
NET LOSS BEFORE UNDERNOTED ITEM (13,582) (64,674) 161,459 (201,270) (11,573,770)
GAIN ON SETTLEMENT OF DEBT -- -- -- -- 300,000
---------- ---------- ---------- ------------ ------------
NET INCOME (LOSS) FROM OPERATIONS $ (13,582) $ (64,674) $ (161,459) $ (201,270) $(11,273,770)
========== ========== ========== ============ ============
Weighted average number of
shares outstanding 80,000,000 40,366,267 26,666,667 40,366,267
---------- ---------- ---------- ------------ ------------
Net income (loss) per share $ (0.00) $ (0.00) $ (0.01) $ (0.00)
FROM
Sep 21, 1998
Nine Months Nine Months (INCEPTION)
Ended Ended to
Sept. 30, 2004 Sept. 30, 2003 Sept. 30, 2004
-------------- -------------- --------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (161,459) $ (201,270) $ (11,273,770)
--------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income (loss) to net cash in operating activities:
Services received for Common Shares 6,295 3,350 9,759,594
Depreciation and Amortization - 4,586 -
Changes in assets and liabilities
(Increase) Decrease in prepaid expenses 23 4,825 -
Write-down of Fixed Assets (26,226) - -
Increase in Accrued Expenses (150,000) 132,432 -
Increase in accounts payable (124,559) 53,271 -
--------------------------------------------------------------------------------------------------------------------
Cash Used In Operating Activities (455,926) (2,806) (1,514,176)
--------------------------------------------------------------------------------------------------------------------
Cash Flow From Financing Activities
Increase in loans payable - 125 -
Stock issued on account of purchase
of assets - - -
Note payable on account of purchase
of assets - (4,528) -
Issuance of common stock for cash 440,000 - 679,398
Donated capital - - 818,871
Increase in Loan from Director 15,907 - 15,907
--------------------------------------------------------
Cash Provided by Financing Activities 455,907 (4,403) 1,514,176
--------------------------------------------------------------------------------------------------------------------
Cash Flow From Investing Activities
Purchase of fixed assets - - -
Disposal of fixed assets - 7,287 -
Acquisition of marketable securities - - -
Acquisition of patent rights - - -
--------------------------------------------------------------------------------------------------------------------
Cash Used In Investing Activities - 7,287 -
--------------------------------------------------------------------------------------------------------------------
Increase (Decrease) In Cash $ (19) $ 78 $ -
--------------------------------------------------------------------------------------------------------------------
Cash Balance at beginning of period $ 19 $ - $ -
Net increase (decrease) in cash (19) 78 -
--------------------------------------------------------
Balance at end of period $ - $ 78 $ -
------------------------------------------------------------========================================================
MULTI-TECH INTERNATIONAL, CORP.
STATEMENT OF CHANGES IN STOCK HOLDERS' EQUITY
FROM SEPTEMBER 21, 1998(INCEPTION) TO SEPTEMBER 30, 2004
(UNAUDITED)
Deficit
Accumulated
Common Additional During Total
Stock Paid-In Donated Development Stockholders'
Shares Amount Capital Capital Stage Equity
--------- ------------- ------------- ----------- ----------- -------------
September 21, 1998-
issued for cash 3,000,000 $ 3,000 $ 5,016 $ -- $ -- $ 8,016
Net loss for year ended
December 31, 1998 -- -- -- -- (6,841) (6,841)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
December 31, 1998 3,000,000 $ 3,000 $ 5,016 $ -- $ (6,841) $ 1,175
--------- ------------- ------------- ----------- ----------- -------------
February 28, 1999- issued
from sale of public
offering 767,000 767 37,591 -- -- 38,358
Net loss for year ended
December 31, 1999 -- -- -- -- (28,815) (28,815)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
December 31, 1999 3,767,000 $ 3,767 $ 42,607 $ -- $ (35,656) $ 10,718
--------- ------------- ------------- ----------- ----------- -------------
March 10, 2000- issued
for cash 3,000,000 3,000 27,000 -- -- 30,000
March 28, 2000- issued
for services 1,675,000 1,675 2,929,575 -- -- 2,931,250
April 24, 2000- issued for
advertising services 1,000,000 1,000 1,199,000 -- -- 1,200,000
June 5, 2000- issued for
services 200,000 200 119,800 -- -- 120,000
June 15, 2000- issued for
services 944,220 944 376,744 -- -- 377,688
July 21, 2000- issued for
services 500,000 500 134,500 -- -- 135,000
July 21, 2000- issued for
services 2,000,000 2,000 538,000 -- -- 540,000
July 14, 2000- issued
for services 575,000 575 154,675 -- -- 155,250
August 7, 2000- issued
for services 660,000 660 184,140 -- -- 184,800
September 13, 2000-
issued for services 760,000 760 212,040 -- -- 212,800
November 9, 2000-
issued for services 5,000,000 5,000 1,395,000 -- -- 1,400,000
December 22, 2000-
issued for services 5,720,500 5,720 1,596,020 -- -- 1,601,740
Shareholder donated
capital -- -- -- 730,936 -- 730,936
Net Loss for year ended
December 31, 2000 -- -- -- -- (4,391,448) (4,391,448)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
December 31, 2000 25,801,720 $ 25,801 $ 8,909,101 $ 730,936 $ (4,427,104) $ 5,238,734
--------- ------------- ------------- ----------- ----------- -------------
Deficit
Accumulated
Common Additional During Total
Stock Paid-In Donated Development Stockholders'
Shares Amount Capital Capital Stage Equity
--------- ------------- ------------- ----------- ----------- -------------
March 2, 2001- issued for
services 10,890,000 10,890 479,160 -- -- 490,050
April 11, 2001- issued for
services 22,625,000 22,625 181,000 -- -- 203,625
April 11, 2001- sold shares
to qualified investor 12,500,000 12,500 57,500 -- 70,000
May 15, 2001- sold shares
to qualified investor 12,500,000 12,500 57,500 70,000
June 1, 2001- issued for
services 3,500,000 3,500 171,500 -- -- 175,000
Shareholder paid expenses
of business -- -- -- 87,935 -- 87,935
2001- issued restricted
shares 6,601,633 6,602 -- -- 6,602
Net Loss for year ended
December 31, 2001 -- -- -- -- (6,455,933) (6,455,933)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
December 31, 2001 94,418,353 94,418 9,855,761 818,871 (10,883,037) (113,987)
--------- ------------- ------------- ----------- ----------- -------------
November 15, 2002- Reverse
Stock Split (14.525:1) (87,917,971) (87,918) 87,918 -- -- --
--------- ------------- ------------- ----------- ----------- -------------
Write-offf of shareholder
loan to the Company -- -- -- -- --
Balances-post stock split 6,500,382 6,500 9,943,679 818,871 (10,883,037) (113,987)
December 9, 2002- issued
for asset purchase 30,320,552 30,321 -- -- 30,321
December 9, 2002- issued
for services 4,087,000 4,087 4,087 -- -- 8,174
Net Loss for year ended
December 31, 2002 -- -- -- -- 87,033 87,033
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
December 31, 2002 40,907,934 $ 40,908 $ 9,947,766 $ 818,871 $ (10,796,004) $ 11,541
January 15, 2003- cancelled
consulting services of
GCD Investments, LLC (500,000) (500) (500) (1,000)
January 15, 2003- cancelled
consulting services of
Rodney R. Schoemann (150,000) (150) (150) (300)
April 8, 2003- issued for
services 70,000 70 70 140
--------- ------------- ------------- ----------- ----------- -------------
April 8, 2003- issued for
services 100,000 100 100 200
--------- ------------- ------------- ----------- ----------- -------------
Deficit
Accumulated
Common Additional During Total
Stock Paid-In Donated Development Stockholders'
Shares Amount Capital Capital Stage Equity
--------- ------------- ------------- ----------- ----------- -------------
May 20, 2003-issued for
services 30,000 30 30 60
--------- ------------- ------------- ----------- ----------- -------------
May 20, 2003- issued for
services 2,000,000 2,000 2,000 4,000
--------- ------------- ------------- ----------- ----------- -------------
May 20, 2003-issued for
services 200,000 200 200 400
--------- ------------- ------------- ----------- ----------- -------------
-------------
May 20, 2003- issued for
services 100,000 100 100 200
--------- ------------- ------------- ----------- ----------- -------------
June 9, 2003-cancelled
consulting contract (2,000,000) (2,000) (2,000) (4,000)
--------- ------------- ------------- ----------- ----------- -------------
June 24, 2003- issued for
services 500,000 500 500 1,000
--------- ------------- ------------- ----------- ----------- -------------
June 28, 2003- issued per
employment contract 400,000 400 400 800
--------- ------------- ------------- ----------- ----------- -------------
June 30, 2003- issued per
termination agreement 500,000 500 500 1,000
Net Loss for six months
ended June 30, 2003 (136,596) (136,596)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
June 30, 2003 42,157,934 $ 42,158 $ 9,949,016 $ 818,871 $ (10,932,600) $ (122,555)
--------- ------------- ------------- ----------- ----------- -------------
July 9, 2003- issued for
services 50,000 50 50 100
July 10, 2003- issued for
services 125,000 125 125 250
August 10, 2003- issued for
services 125,000 125 125 250
September 10 2003- issued
for services 125,000 125 125 250
Net Loss for three months
ended Sept. 30, 2003 (64,674) (64,674)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
September 30, 2003 42,582,934 42,583 9,949,441 818,871 (10,997,274) (186,379)
--------- ------------- ------------- ----------- ----------- -------------
Deficit
Accumulated
Common Additional During Total
Stock Paid-In Donated Development Stockholders'
Shares Amount Capital Capital Stage Equity
--------- ------------- ------------- ----------- ----------- -------------
November 11, 2003- issued
for services 100,000 100 100 200
November 13, 2003- voided
contract with
AlphaCom, Inc. (30,320,552) (30,321) -- -- -- (30,321)
November 13, 2003- issued
for cash 4,604,538 4,605 18,418 23,023
November 13, 2003- issued
for services 1,000,000 1,000 9,000 10,000
November 13, 2003- issued
as loan incentive 150,000 150 150 300
December 30, 2003- shares
returned by consultant (200,000) (200) (200) (400)
December 30, 2003- shares
returned by consultant (65,000) (65) (65) (130)
December 30, 2003- shares
returned by consultant (1,000,000) (1,000) (1,000) (2,000)
Net Loss for three months
ended Dec. 31, 2003 (115,037) (115,037)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
December 31, 2003 16,851,920 16,852 9,975,844 818,871 (11,112,311) (300,744)
--------- ------------- ------------- ----------- ----------- -------------
February 11, 2004- issued
for services 1,000,000 1,000 1,000 2,000
February 11, 2004- issued
for services 2,000,000 2,000 2,000 4,000
February 11, 2004- issued
for services 128,080 128 128 256
March 5, 2004- issued
for loan incentive 20,000 20 20 40
Net Loss for three months
ended March 31, 2004 (57,080) (57,080)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
March 31, 2004 20,000,000 20,000 9,978,992 818,871 (11,169,391) (351,528)
--------- ------------- ------------- ----------- ----------- -------------
Deficit
Accumulated
Common Additional During Total
Stock Paid-In Donated Development Stockholders'
Shares Amount Capital Capital Stage Equity
--------- ------------- ------------- ----------- ----------- -------------
May 6, 2004 - sold 60,000,000
to qualified investor 60,000,000 60,000 380,000 440,000
Net Loss for three months
ended June 30, 2004 (90,797) (90,797)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
June 30, 2004 80,000,000 $ 80,000 $ 10,358,992 $ 818,871 $ (11,260,188) $ (2,325)
Net Loss for three months
ended September 30, 2004 (13,582) (13,582)
--------- ------------- ------------- ----------- ----------- -------------
Balances as at
September 30, 2004 80,000,000 $ 80,000 $ 10,358,992 $ 818,871 $ (11,273,770) $ (15,907)
AUSTRALIAN FOREST INDUSTRIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS AT September 30, 2004
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
Australian Forest Industries (the "Company") was incorporated on
September 21, 1998 under the laws of the State of Nevada. The Company was
originally incorporated under the name of Oleramma Inc.
On April 28, 1999, the Company changed its name to BuckTV,Com, Inc. on
the basis that the Company would market consumer products through an Interactive
Web site. The Company's primary business operations are to engage in any lawful
activity. The Company again changed its name in November 2002 to Multi-Tech
International, Corp and again on October 13, 2004 to its present name to more
accurately describe the direction in which the Company had taken.
The Company traded on the OTC-BB as "MLTI" and now trades as "AUFI".
On October 22, 2004 the Company acquired Integrated Forest Products Pty
Ltd. in exchange for 240,000,000 shares of restricted common stock.
The Company's fiscal year end is December 31.
Development Stage Enterprise
The Company had no revenues through September 30, 2004. The Company has
just commenced operations as an Australian timber enterprise. The Company's
activities have been accounted for as those of a "Development Stage Enterprise"
as set forth in Financial Accounting Standards Board Statement No. 7 ("SFAS 7").
Among the disclosures required by SFAS 7 are that the Company's financial
statements be identified as those of a development stage company, and that the
statements of operations, stockholders' equity(deficit) and cash flows disclose
activity since the date of the Company's inception.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
These financial statements are presented on the accrual method of
accounting in accordance with generally accepted accounting principles accepted
in the United States. In the opinion of management, these interim financial
statements include all adjustments necessary in order to make them not
misleading.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities
F-4
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results may differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and investments,
purchased with an original maturity date of three months or less, to be cash
equivalents.
Income Taxes
The Company accounts for income taxes under SFAS No. 109, which requires
the asset and liability approach to accounting for income taxes. Under this
method, deferred assets and liabilities are measured based on differences
between financial reporting and tax bases of assets and liabilities measured
using enacted tax rates and laws that are expected to be in effect when
differences are expected to reverse.
Net earnings (loss) per share
Basic and diluted net loss per share information is presented under the
requirements of SFAS No. 128, Earnings per Share. Basic net loss per share is
computed by dividing net loss by the weighted average number of shares of common
stock outstanding for the period, less shares subject to repurchase. Diluted net
loss per share reflects the potential dilution of securities by adding other
common stock equivalents, including stock options, shares subject to repurchase,
warrants and convertible preferred stock, in the weighted-average number of
common shares outstanding for a period, if dilutive. All potentially dilutive
securities have been excluded from this computation, as their effect is
anti-dilutive.
Fair Value of Financial Instruments
The carrying amount of cash, marketable securities, prepaid expenses and
sundry assets, accounts payable, loans payable, and notes payable are considered
to be representative of their respective fair values because of the short-term
nature of these financial instruments
Recently Issued Accounting Standards
In November 2002, the FASB issued Interpretation, or FIN, No. 5,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, including
Indirect Guarantees of Indebtedness of Others." FIN 45 elaborates on the
existing disclosure requirements for most guarantees, including residual value
guarantees issued in conjunction with operating lease agreements. It also
clarifies that at the time a company issues a guarantee, the company must
recognize an initial
F-5
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
liability for the fair value of the obligation it assumes under the guarantee
and must disclose that information in its interim and annual financial
statements. The initial recognition and measurement provisions apply on a
prospective basis to guarantees issued or modified after December 31, 2002. The
disclosure requirements are effective for the financial statements of interim or
annual periods ending after December 15, 2002. Our adoption of FIN 45 will not
have a material impact on our results of operations and financial position.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation -- Transition and Disclosure." This statement amends
SFAS 123, "Accounting for Stock-Based Compensation," to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this statement
amends the disclosure requirements of SFAS 123 to require prominent disclosures
in both annual and interim financial statements about the method of accounting
for stock-based accounting for employee compensation and the effect of the
method used on reported results.
The Company is currently evaluating whether to adopt the fair value based
method.
In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities." FIN No. 46 requires that unconsolidated variable interest
entities be consolidated by their primary beneficiaries. A primary beneficiary
is the party that absorbs a majority of the entity's expected losses or residual
benefits. FIN No. 46 applies immediately to variable interest entities created
after January 31, 2003 and to existing variable interest entities in the periods
beginning after June 15, 2003. Our adoption of FIN No. 46 will not have a
material impact on our results of operations and financial position.
On April 30, 2003 the FASB issued Statement No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities." The Statement
amends and clarifies accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities
under Statement 133. The amendments set forth in Statement 149 improve financial
reporting by requiring that contracts with comparable characteristics be
accounted for similarly. In particular, this Statement clarifies under what
circumstances a contract with an initial net investment meets the characteristic
of a derivative as discussed in Statement 133. In addition, it clarifies when a
derivative contains a financing component that warrants special reporting in the
statement of cash flows. This Statement is effective for contracts entered into
or modified after June 30, 2003.
F-6
On May 15, 2003 the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". The
Statement improves the accounting for certain financial instruments that, under
previous guidance, issuers could account for as equity. The new Statement
requires that those instruments be classified as liabilities in statements of
financial position. In addition to its requirements for the classification and
measurement of financial instruments in its scope, Statement 150 also requires
disclosures about alternative ways of settling the instruments and the capital
structure of entities, all of whose shares are mandatorily redeemable. Most of
the guidance in Statement 150 is effective for all financial instruments entered
into or modified after May 31, 2003.
The company believes that none of the recently issued accounting standards
will have a material impact on the financial statements.
3. MARKETABLE SECURITIES
Management determines the appropriate classification of investments in
debt and equity securities at the time of purchase and re-evaluates such
designation as of each subsequent balance sheet date. Securities for which the
Company has the ability and intent to hold to maturity are classified as "held
to maturity". Securities classified as "trading securities" are recorded at fair
value. Gains and losses on trading securities, realized and unrealized, are
included in earnings and are calculated using the specific identification
method. Any other securities are classified as "available for sale."
At September 30, 2004 the Company had no Marketable Securities.
4. CAPITAL STOCK TRANSACTIONS
On May 6, 2004 60,000,000 shares of common stock were issued to a
qualified investor for $440,000.On October 14, 2004 the Board of Directors filed
a "Certificate of Amendment to the Articles of Incorporation amending the
authorized common shares from 100,000,000 shares to 300,000,000 shares of common
stock, while retaining the authority to issue 5,000,000 shares of preferred
stock. On October 1, 2004 the Company affected a 1:200 reverse stock split
thereby having 400,000 shares outstanding from the 80,000,000 shares previously
outstanding. As a result of the split, an additional 680 shares were issued to
shareholders who had less than one share as a result of the split. On October
22, 2004, 240,000,000 shares of common stock were issued to Timbermans Group PTY
Ltd of Port Melbourne, Victoria, Australia in exchange for approximately
$60,000,000 of timber assets. Also, 17,000,000 shares of common stock were
issued for services in connection with that transaction.
5. INCOME TAXES
There has been no provision for U.S. federal, state, or foreign income
taxes for any period because the Company has incurred losses in all periods and
for all jurisdictions.
F-7
5. INCOME TAXES (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
deferred tax assets are as follows:
Deferred tax assets
Net operating loss carry forwards $11,273,770
Valuation allowance for deferred tax assets (11,273,770)
------------
Net deferred tax assets $ -
------------
Realization of deferred tax assets is dependent upon future earnings, if
any, the timing and amount of which are uncertain.
Accordingly, the net deferred tax assets have been fully offset by a
valuation allowance. As of September 30, 2004, the Company had net operating
loss carry forwards of approximately $11,273,770 for federal and state income
tax purposes. These carry forwards, if not utilized to offset taxable income
begin to expire in 2013.
Utilization of the net operating loss may be subject to substantial annual
limitation due to the ownership change limitations provided by the Internal
Revenue Code and similar state provisions. The annual limitation could result in
the expiration of the net operating loss before utilization.
6. GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates continuation
of the Company as a going concern.
The future success of the Company is likely dependent on its ability to
attain additional capital to develop its proposed technologies and ultimately,
upon its ability to attain future profitable operations. There can be no
assurance that the Company will be successful in obtaining financing, or that it
will attain positive cash flow from operations.
F-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Certain statements in this Quarterly Report on Form 10-QSB, our audited
financial statements for the fiscal year ended December 31, 2003 as filed in our
annual report on Form 10-KSB, as well as statements made by us in periodic press
releases, oral statements made by our officials to analysts and shareholders in
the course of presentations about ourselves, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause the actual results, performance
or achievements of us to be materially different from any future results,
performance or achievements expressed or implied by the forward looking
statements. Such factors include, among other things, (1) general economic and
business conditions; (2) interest rate changes; (3) the relative stability of
the debt and equity markets; (4) competition; (5) the availability and cost of
our products; (6) demographic changes; (7) government regulations particularly
those related to automatic vehicle location industry; (8) required accounting
changes; (9) equipment failures, power outages, or other events that may
interrupt Internet communications; (10) disputes or claims regarding our
proprietary rights to our software and intellectual property; and (11) other
factors over which we have little or no control.
Background and Organization
Multi-Tech International, Corp., a developmental stage company,
hereinafter referred to as "the Company", "we" or "us", was originally organized
by the filing of Articles of Incorporation with the Secretary of State of the
State of Nevada on September 21, 1998 under the name Oleramma, Inc. The Articles
of Incorporation authorized the issuance of one hundred five million
(105,000,000) shares, consisting of one hundred million (100,000,000) shares of
Common Stock at par value of $0.001 per share and five million (5,000,000)
shares of Preferred Stock at par value of $0.001. As of September 30, 2004, we
had 80,000,000 shares of Common Stock outstanding, and no Preferred Stock issued
or outstanding.
On May 6, 2004 60,000,000 shares of common stock were issued to a
qualified investor for $440,000.On October 14, 2004 the Board of Directors filed
a "Certificate of Amendment to the Articles of Incorporation amending the
authorized common shares from 100,000,000 shares to 300,000,000 shares of common
stock, while retaining the authority to issue 5,000,000 shares of preferred
stock. On October1, 2004 the Company affected a 1:200 reverse stock split
thereby having 400,000 shares outstanding from the 80,000,000 shares previously
outstanding. As a result of the split, an additional 680 shares were issued to
shareholders who had less than one share as a result of the split. On October
22, 2004 240,000,000 shares of common stock were issued to Timbermans Group PTY
Ltd of Port Melbourne, Victoria, Australia in exchange for $60,000,000 of timber
Assets. Also, 17,000,000 shares of common stock were issued for services in
connection with the timber transaction.
On November 17, it is expected that the current Board of Directors will
appoint five persons to the Board and immediately resign after such
appointments.
We were a company that hoped to develop a genetically engineered Pima
cotton seed, with a virus fatal to the bollworm. It was our hope to enter the
marketplace as the first genetically engineered Pima cotton, which is
genetically superior in combating infestations. Unfortunately we were not able
to achieve our original goals and on December 31, 2000 we changed our name to
BUCKTV.COM, Inc. pursued and began a new direction. At this time our principal
business strategy was to market consumer products through an Interactive
Website, and to promote this Website through commercial radio promotions, and
Internet search engines, utilizing the talent and skills of a famous
radio/television personality. However, this was unsuccessful and we began a
search for new opportunities.
On November 15, 2002, pursuant to an Asset Purchase Agreement (the
"Agreement") we acquired all the assets of AlphaCom, Inc. ("AlphaCom"), setting
a new strategic direction for the Company, and changed the name of the Company
to Multi-Tech International, Inc. and new management joined the Company. On
November 13, 2003 it was mutually agreed to void this agreement. On October 22,
2004, we changed our name to Australian Forest Industries in contemplation of
the completion of our acquisition of Integrated Forest Products Pty Ltd. Our
symbol also changed to "AUFI."
Asset Purchase Agreement
Pursuant to the Agreement we issued a total of 30,320,552 shares of our
Common Stock (the "Shares") and a promissory note in the amount of $4,319,000
payable to AlphaCom representing 74.1 percent of our outstanding shares of
Common Stock in exchange for all of the assets of AlphaCom including all
business and technologic developments and licensing and marketing rights to such
assets. The Shares are being held in escrow for 12 months pursuant to the terms
of the Agreement, and are subject to downward adjustment based upon financial
contingencies set forth in the Agreement. The acquisition has been accounted for
under purchase method accounting. As a condition to the closing we affected a
1-for-14.525 reverse split of our Common Stock in November 2002.
This Agreement was voided by both parties on November 13, 2003 and the
note was cancelled and the issuance of the shares was also cancelled.
Lack of Liability Coverage
We do not maintain any liability coverage. In the event of any claim
against us or any of our assets we may not have the resources to defend the
Company, which could have a material adverse effect on the future prospects.
The Company has not achieved revenues or profitability to date, however,
with the acquisition of the Australian timber operation we anticipate a
profitable fourth quarter. Although, we anticipate such profitability, there can
be no assurances that the Company can achieve or sustain profitability or that
the Company's operating losses will not increase in the future. As of September
30, 2004, the Company had an accumulated deficit of Eleven million two hundred
and sixty thousand one hundred and eighty-eight ($11,260,188) dollars.
Liquidity and Capital Resources
Although we anticipate significant revenues from our timber operation, the
Company's capital requirements have historically consisted of funding operations
and capital expenditures through the sale of common stock and the exchange of
common stock for services.
Net cash used in operating activities for the nine months ended September
30, 2004 was $(455,926) compared with cash used in operating activities for the
six months ended September 30, 2003 of $(2,806).
The Company's working capital deficiency is currently $15,907 compared
with $300,743 at the year-end. The greatest portion of the deficiency relates to
accounts payable and accrued operating expenses.
Prior to the acquisition of the timber enterprise, the Company had no
material commitments for capital expenditures. The extent of such expenditures
will be disclosed once the consolidated financial statements are completed.
CURRENT BOARD OF DIRECTORS AND OFFICERS
Dr. David F. Hostelley, CPA Board of Directors Interim President,
Secretary/Treasurer, and CFO.
Dr. Dennis Byrne Board of Directors Assistant Secretary
The Board of Directors anticipates appointing five persons who have
already been nominated by the majority shareholder on November 17, 2004. Once
that has occurred, the current Board will resign from all capacities.
ITEM 3. CONTROLS AND PROCEDURES
Within 90 days prior to the date of this report under the supervision and
participation of certain members of the Company's management, including the
President and the Principal Financial Officer, the Company completed an
evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures (as defined in Rules 13a - 14 and 15d - 14c to the
Securities Exchange Act of 1934, as amended). Based on this evaluation, the
Company's President and Principal Financial Officer believe that the disclosure
controls and procedures are effective with respect to timely communicating to
them and other members of management responsible for preparing periodic reports
all material information required to be disclosed in this report as it relates
to the Company.
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
Not Applicable.
ITEM 2. Changes in Securities and Use of Proceeds
The sale of sixty million (60,000,000) common shares (restricted) on May 6, 2004
for $440,000 cash allowed the Company to pay all of its then outstanding debts
as well as costs of the transaction. Upon completion of the transaction the
Company had no assets and no liabilities. As a result of this stock sale Mr.
Jeffrey Reade now controls seventy-five percent (75%) of the Company's voting
stock.
On October 14, 2004 the Board of Directors filed a "Certificate of Amendment to
the Articles of Incorporation amending the authorized common shares from
100,000,000 shares to 300,000,000 shares of common stock, while retaining the
authority to issue 5,000,000 shares of preferred stock. On October 1, 2004 the
Company affected a 1:200 reverse stock split thereby having 400,000 shares
outstanding from the 80,000,000 shares previously outstanding. As a result of
the split, an additional 680 shares were issued to shareholders who had less
than one share as a result of the split. On October 22, 2004, 240,000,000 shares
of common stock were issued to Timbermans Group PTY Ltd of Port Melbourne,
Victoria Australia in exchange for $60,000,000 of timber assets. Also,
17,000,000 shares of common stock were issued for services in connection with
the timber transaction.
ITEM 3. Defaults upon Senior Securities
Not Applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
On April 4, 2004 management sought approval to sell either common stock,
preferred stock, or a combination to raise capital for the company. Written
approval was received from shareholders representing 14,172,580 shares or
70.8629% of the outstanding shares. On May 6, 2004 the Company was able to sell
sixty million (60,000,000) restricted common shares to a qualified investor. On
September 21, 2004, the Company filed a definitive information statement with
the United States Securities and Exchange Commission with respect to the
Australian timber exchange transaction.
ITEM 5. Other Information
Not Applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification by Dr. David F. Hostelley, President and Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification by Dr. David F. Hostelley, President and Principal
Financial Officer, pursuant to 18 U.S.C. Section 1350, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
On May 12, 2004, the Company reported on Form 8-K the issuance of
60,000,000 shares of restricted common stock to Mr. Jeffrey Revell-Reade in
exchange for $440,000. As a result of such stock issuance Mr. Reade now controls
75% of the Company's voting stock.
On September 1, 2004, Timbermans Group Pty Ltd, an Australian company,
entered into an agreement to exchange all of the issued and outstanding shares
of its wholly-owned subsidiary, Integrated Forest Products Pty Ltd, also an
Australian company, for 240,000,000 shares of common stock of the Company. That
transaction is expected to close on November 17, 2004.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 15, 2004 Australian Forest Industries
By: /s/ Dr. David F. Hostelley
-----------------------
Dr. David F. Hostelley,
President and Principal
Financial Officer