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simultaneously
filing Amendment No. 1 (the “Amended Annual Report”) to the Annual Report
on Form 10-KSB for the year ended December 31, 2005
and
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providing
you with a copy of the Amended Annual Report marked to show changes from
the Annual Report on Form 10-KSB that was filed on May 19,
2006.
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1.
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We
have confirmed with EDGAR Filer Support that the name change is
effective.
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2.
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We
have updated the Amended Annual Report to clarify that we earn revenue
from one product, Structural Radiata Pine Timber
(lumber). Sales are recorded when a customer is
invoiced. While we sold more timber in 2005 (68,000 m3) than in
2004 (48,000 m3), an approximate 13% decline in the selling price of
timber impacted our revenue.
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3.
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Our
Amended Annual Report has been modified to note that while the cost of
logs has remained constant, the quality of timber, which is measured by
the recovery of structural timber from a given log, has
declined. Additionally, direct and indirect labor costs have
increased 19.6% from 2004 to 2005.
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4.
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We
have expanded our discussion of liquidity and capital
resources. Historically, our major shareholder, Timbermans
Group Pty. Ltd. (“Timbermans Group”), has covered any shortfall in working
capital. As of December 31, 2005, there were no liabilities
associated with our working capital deficit that were past
due.
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5.
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The
date has been corrected and a reference to the restatement has been
incorporated into the opinion. Footnote A of the Notes to
Financial Statements has been expanded to include the disclosure required
by paragraph 37 of APB 20.
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6.
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The
receivable from related parties of $273,175 relates to the net effect of
transactions between the Company and Timbermans Group, which is the
Company’s majority shareholder. In 2004, the net cash advances
between the two entities were $613, 473 which was offset by the assignment
of the timber contract which was negotiated by the Timbermans
Group. We have further restated the financial statements to
offset the receivable against the amount due to the Timbermans Group
shareholders who advance funds to the company leaving a remaining balance
of $386,835 due to the Timbermans Group shareholders at December 31,
2004.
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7.
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We
reclassified part of the 2005 non-operating income section and included
the amortization of the gain on the sale and leaseback transaction in
operating income. See restatement Note K for explanation of
changes. The gain on disposal of assets relates to gains other
than the gain on the sale/leaseback of equipment and accordingly is
considered non-operating income.
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8.
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We
have revised this statement based upon the changes discussed in item 7
above.
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9.
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The
columns in the Edgar version have been aligned for the amended
filing.
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10.
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We
have expanded Note C to the Financial Statements to explain the $5,307,400
investment made by Timbermans Group in the Company in
2004.
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11.
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We
have expanded the revenue recognition policy to include the criteria in
Staff Accounting Bulletin Topic
13:A:1
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12.
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In
2003, the Timbermans Group entered into an agreement with the Australian
Government for the right to harvest the last significant undeveloped pine
forest in Eastern Australia. It then borrowed money from a
group of investors and the National Australian bank to purchase a pine
sawmilling and timber facility to process the harvested lumber through the
Company. Both the Timbermans Group and the Company are under
common control. The Timbermans Group by itself cannot repay its
loans without financial support from the Company, and the Company will
absorb the losses of the activities and will receive any future
returns. All of the assets of Integrated Forest Products
including goodwill was pledged to secure the loan the Timbermans Group
made to purchase the Company. The common control Directors and
Officers guaranteed the loan. As such, we concluded that the
Timbermans Group is a variable interest entity and the Company is the
primary beneficiary and therefore must be consolidated in the financial
statements under FIN 46R.
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13.
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The
Timbermans Group paid cash for the Long-Term Log Supply
Contract. The disclosure was erroneously included under
operating. It is now included under
Investing.
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14.
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We
have expanded Note G to the Financial Statements to clarify the terms and
conditions of the $790,000 guarantee with the South Wales
government. Since this is a guarantee, amounts have been
recorded in the Financial
Statements.
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15.
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We
have disclosed the terms and conditions of all financial agreements in
Note G to the Financial Statements.
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16.
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We
have revised the disclosure and have restated the 2005 Financial Statement
to reflect the amortization of the gain over a 30 year period, the life of
the related assets as called for by SFAS
98.
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17.
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Disclosure
of the change in accountant as it appears in Item 8 of Form 10-K for the
year ended December 31, 2005, filed on May 19, 2005, satisfies all
disclosure requirements.
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18.
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We
have added the following sentence to Item 8A, (a)(ii): “The Company's
management, including the CEO and CFO believe that our system of
disclosure controls and procedures provide reasonable assurance that
information required to be disclosed in our periodic reports filed under
the Exchange Act is, in fact, being
disclosed.”
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19.
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We
have revised the revised certifications to conform with the language that
is required by Item 601(b)(31) of Regulation
S-B.
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20.
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We
are in the process of amending our quarterly report on Form 10-QSB for the
period ending March 31, 2005 and will file it shortly
hereafter. We intend to revise the certifications per your
instructions.
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21.
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We
are in the process of amending our quarterly report on Form 10-QSB for the
period ending March 31, 2005 and will file it shortly
hereafter. We intend to include the following statements in
Item 2 of that amended Form 10-QSB:
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22.
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We are in the process of amending
our quarterly report on Form 10-QSB for the period ending March 31, 2005
and will file it shortly hereafter. We intend to include the
following statements in Item 3 of that amended Form
10-QSB:
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23.
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We
are in the process of amending our quarterly report on Form 10-QSB for the
period ending March 31, 2005 and will file it shortly
hereafter. We intend to revise the financial statements to add
the disclosure relating to SFAS
123R
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24.
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With
this letter, we are simultaneously filing the restated financials for the
year ended December 31, 2005 in the Amended Annual Report. We
will also file a current report on Form 8-K providing the required
disclosure under Item 4.02 thereof for the quarters ended March 31,
2005, June 30, 2005 and September 30,
2005.
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27.
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We
note your comment and understand its
importance.
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