UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2006
Commission file number 0-25909
Australian Forest Industries
(Exact name of small business issuer as specified in its charter)
Nevada 86-0931332
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Indentification No.)
4/95 Salmon Street, Port Melbourne, Victoria
Australia, 3207
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 011 61 3 8645 4340
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 such filing requirements for the past 90 days. Yes |X|
No |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. The number of shares of the issuer's
outstanding common stock, which is the only class of its common equity, on June
20, 2006 was 257,400,680.
ITEM 1 FINANCIAL STATEMENTS
Description Page No.
FINANCIAL INFORMATION:
Financial Statements
Consolidated Balance Sheets at March 31, 2006 (Unaudited)...................1
Consolidated Statement of Operations (Unaudited)............................2
Consolidated Statements of Cash Flows (Unaudited) ..........................3
Notes to Consolidated Financial Statements (Unaudited)......................4
Item 1. Condensed Financial Statements
AUSTRALIAN FOREST INDUSTRIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2006 2005
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash $ 55,973 $ 127,014
Accounts receivable 2,783,201 1,622,974
Inventory 2,024,004 1,778,340
Prepaid expenses and other 512,572 193,739
Total Current Assets 5,375,750 3,722,067
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of $2,393,479 and $2,402,939 in 2006 and 2005, respectively 15,075,378 13,040,126
OTHER ASSETS
Long-term timber supply contract, net of amortization of $82,734 and
$91,843 in 2006 and 2005, respectively 697,944 794,805
------------ ------------
$ 21,149,072 $ 17,556,998
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft $ 418,506 $ 117,772
Accounts payable 3,937,541 2,690,957
Current portion of capitalized lease obligations 1,076,013 1,076,013
Due to Timberman shareholders 4,947,731 3,213,912
Related party payable 588,645 592,844
Accrued payroll, related taxes and benefits 837,715 599,389
------------ ------------
Total Current Liabilities 11,806,151 8,290,887
OTHER LIABILITIES
Capitalized lease obligations 4,492,432 3,512,882
Deferred capital gain 1,281,683 1,396,481
Due to National Australian Bank 4,692,600 4,818,000
------------ ------------
Total Liabilities 22,272,866 18,018,250
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.001, 5,000,000 shares
authorized, none issued and outstanding
Common stock, par value $0.001, 300,000,000 shares
authorized, 257,400,680 issued and outstanding 257,400 257,400
Additional paid-in capital 4,503,417 4,503,417
Accumulated other comprehensive income 272,706 333,619
Accumulated deficit (6,157,317) (5,555,688)
------------ ------------
Total Stockholders' Equity (1,123,794) (461,252)
------------ ------------
Total Liabilities and Stockholders' Equity $ 21,149,072 $ 17,556,998
============ ============
See accompanying notes to financial statements.
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AUSTRALIAN FOREST INDUSTRIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended
March 31,
------------------------------
2006 2005
------------- -------------
(Restated)
REVENUE - SALES $ 3,449,112 $ 3,306,566
COSTS AND EXPENSES
Cost of goods sold 1,794,836 3,036,222
Selling, general and administrative 2,060,123 732,744
Provision for doubtful accounts 131,864
Interest expense 201,098 125,261
Depreciation and amortization 140,007 198,759
------------- -------------
Total Costs and Expenses 4,327,928 4,092,986
------------- -------------
OPERATING LOSS (878,816) (786,420)
NON-OPERATING INCOME
Other income 92,500 3,904
Interest income 81,625
Gain on disposal of assets 103,062
------------- -------------
Total Non-Operating Income 277,187 3,904
------------- -------------
NET LOSS $ (601,629) $ (782,516)
============= =============
Net Loss per share (Basic and Diluted) $ (0.01) $ (0.01)
============= =============
Weighted Average Common Shares Outstanding 257,400,680 257,400,680
============= =============
See accompanying notes to financial statements.
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AUSTRALIAN FOREST INDUSTRIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended
March 31,
----------- -----------
2006 2005
----------- -----------
(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (601,629) $ (782,516)
Adjustments to reconcile net income to cash flows used
in operating activities:
Depreciation 129,854 198,759
Amortization of Timber contract 10,153
Amortization of leaseback gain 81,625
Changes in operating activities:
(Increase) decrease in prepaid expenses 5,555 116,240
(Increase) decrease in inventories (245,664) (116,981)
(Increase) decrease in receivables (1,160,228) (920,468)
(Increase) decrease in related party receivable (45,260)
Increase (decrease) in accounts payable and other liabilities 1,246,584 723,305
Increase (decrease) in bank overdraft 300,734 531,983
Increase (decrease) in related party payable (4,199)
Increase (decrease) in accrued payroll 238,326 33,281
Increase (decrease) in taxes payable (324,387)
----------- -----------
Net Cash (Used in) Provided by Operating Activities (323,276) (261,657)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital additions (2,424,654) (79,551)
Disposition of capital assets 103,062
----------- -----------
Net Cash Used in Investing Activities (2,321,592) (79,551)
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from shareholders 1,733,819 (8,724)
Capital leases 979,550 196,366
National Australian bank loan (125,400) (50,920)
----------- -----------
Net Cash Provided by (Used In) Financing Activities 2,587,969 136,722
EFFECT OF EXCHANGE RATES ON CASH (14,142) 8,980
----------- -----------
(DECREASE) INCREASE IN CASH (71,041) (195,506)
CASH AT BEGINNING OF PERIOD 127,014 225,189
----------- -----------
CASH AT END OF PERIOD $ 55,973 $ 29,683
=========== ===========
See accompanying notes to financial statements.
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AUSTRALIAN FOREST INDUSTRIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary in
order to make the financial statements not misleading have been
included. Results for the three months ended March 31, 2006 are not
necessarily indicative of the results that may be expected for the
year ending December 31, 2006. For further information, refer to the
financial statements and footnotes thereto included in Australian
Forest Industries' annual report on Form 10-KSB for the year ended
December 31, 2005.
NOTE 2 - LOAN TO TIMBERMANS GROUP (RELATED PARTY)
During the three months ended March 31, 2006, the company received
an additional $1,733,819 from Timberman investors.
NOTE 3 - CAPITALIZED LEASE OBLIGATIONS
During the three months ended March 31, 2006, the Company purchased
$3,900,000 in new equipment of which $1,981,000 was financed under
capitalized leases over a five year period.
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PART II
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit Index
Exhibit 31.1 Certification of Chief Executive Officer
Exhibit 31.2 Certification of Chief Financial Officer
Exhibit 32.1 Certification of Chief Executive Officer
Exhibit 32.1 Certification of Chief Financial Officer
b. Reports on Form 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AUSTRALIAN FOREST INDUSTRIES
/s/ Michael Timms
- -------------------------------
Name: Michael Timms
Title: CEO, President and Chairman of the Board
Date: June 21, 2006
/s/ Colin Baird
- --------------------------------
Name: Colin Baird
Title: Chief Financial Officer
Date: June 21, 2006
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