UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)

( X )    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934  (Fee Required)
         For the fiscal year ended  March 31, 1998

(   )    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (No Fee Required)

         For the transition period from _______ to _______
                       Commission file number 0-16523
                           Madera International, Inc.
                 (Name of small business issuer in its charter)

        Nevada                                               68-0318289
------------------------                                  ----------------------
(State of incorporation                                   (I.R.S. Employer
        or organization)                                     Identification No.)

    2600 Douglas Road, Suite 1004, Coral Gables, Florida                33134
   -----------------------------------------------------             ----------
   (Address of principal executive offices)                          (Zip Code)

Issuer's telephone number (305) 774-9411  Issuer's fax number (305) 774-9345
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:

                           Common stock, $01 par value
                                (Title of class)
Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Securities  Exchange Act during the  preceding 12 months and
(2) has been subject to such filing requirements for the past 90 days.
( X )  YES    (   ) NO

As of  March  31,  1998,  72,905,669  common  shares  were  outstanding  and the
aggregate  market  value of the common  shares  (based  upon the average bid and
asked  prices  on  such  date)  of the  Registrant  held by  non-affiliates  was
approximately $2,000,000.

Check if there is no disclosure of delinquent  filers in response to item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  IO-KSB or any
amendment to this Form IO-KSB. ( )

Revenues for the fiscal year ended March 31, 1998 totaled $4,500,000.  Documents
incorporated by reference: See Item 13 hereof.

Total number of pages in this document: 15

                                        1

<PAGE>



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

1.   SUMMARY

     Madera International, Inc., a Nevada corporation, merged in February, 1994,
with Weaver Arms Corporation,  its parent  ("Weaver"),  with Weaver changing its
name to "Madera  International,  Inc"  ("Registrant").  The history of Weaver is
contained in prior 10 K's,  which history  includes the detailed  explanation of
Weaver's emergence from Chapter 11 proceeding as Madera International, Inc.

     In  July  1994,   Registrant   entered  into  an   agreement   with  Ramiro
Fernandez-Moris  and his  family to  acquire  assets  held by them in the family
owned  corporation  Forest  and  Environmental  Resources  of the  Amazon,  Inc.
("FEROA").  These  assets  consist  of  478,000  acres of  freely  owned  timber
producing property in Brazil, as well as substantial acreage in Bolivia and Peru
that are long term  concessions.  The value of these properties is based upon an
independent  third  party  appraisal  supplied  as  part  of the  due  diligence
procedure.  The value used is $27,000,000.  In addition to the real property,  a
working  sawmill was also  acquired as part of the  agreement.  This  sawmill is
located in Brazil, and is in operation.  It's appraised value is $2,200,000.  It
has a capacity  of 200 cubic  meters a day.  The final  part of the  acquisition
consists of existing inventory of banac and cedar at cost of $630,000.

     The  consideration  for this  purchase  was  10,000,000  shares  of Class B
Preferred stock, convertible into a maximum of 15,000,000 shares of common stock
to be adjusted by any stock splits and subject to the  production of earnings of
$2,000,000  annually from the assets  acquired.  A finders fee was paid for this
acquisition  amounting to  approximately  five  percent (5%) of the  acquisition
value.  The Preferred  shares issued to the principals for this transaction have
been  converted  into Common shares as of March 3, 1996,  the  Preferred  shares
issued to the finders was converted during the fiscal year ended March 31, 1997.

     January 10, 1995,  Registrant  entered into a letter  agreement  with Ralph
Financial Corporation ("RFC"),  pursuant to which Registrant acquired the rights
to 400,000  hectares of timber  producing  properties  in Brazil in exchange for
12,000,000  newly issued shares of Series C Preferred  Stock with a stated value
of $1.00 per share.  Registrant  determined that the representations made by RFC
were not accurate.  Registrant rescinded the transaction as of December 15, 1995
(See Item 13.b.,  Reports on Form 8-K). The shares issued by Registrant for this
transaction  have been canceled and a judgment in favor of the registrant in the
amount of $200,000  plus legal fees has been obtained  against  Ralph  Financial
Corporation.


                                       2
<PAGE>



     On March 30, 1995,  Registrant  entered into a Timber  Concession  Purchase
Agreement  with Mandarin  Overseas  Investment  Co., Ltd.  ("Mandarin")  for the
acquisition  of a  twenty  three  and one half  percent  (23.5%)  interest  in a
mahogany  rich  concession in Peru.  The  Registrant  had certain  disputes with
Mandarin.  In the  resolution  of those  disputes,  the  Registrant  acquired an
additional  sixty  percent  (60%)  interest,  bringing  the  Registrant's  total
interest to 83.5%.  Then  subsequently,  due to the potential of this  property,
Registrant acquired an additional 14.5% bringing its total ownership to 98%. The
concession  encompasses  30,000 hectares and has approximately 400 million board
feet of  marketable  hardwood in reserve.  The  concession is for ten (10) years
with a renewable  option for an additional ten (10) years,  and a further option
to turn the  concession  into fee ownership for a minimal cost.  The  extraction
rights are approximately 270,000 cubic meters annually.

     The purchase price of this acquisition is one million five hundred thousand
dollars  ($1,500,000).  This amount has been paid with the exception of $423,750
that remains on the books as a liability  until stock is issued  converting  the
liability to equity.  The  Registrant's  Board of Directors  has deferred  stock
issuance until fiscal 1999.

     In May,  1997,  Registrant  purchase an  additional  251,000 acres of prime
timberland close to its freely owned property in Brazil. This additional acreage
is destined for environmental programs that are being established by Registrant.
These  programs  will  be  conducted  in  a  wholly  owned  subsidiary,   Madera
International Environmental, Inc.

BUSINESS

     Registrant specializes in the harvesting and exportation of timber products
from South America to buyers throughout the world. Registrant owns approximately
707,000 acres of prime timber  property in the State of Amazonas,  Brazil.  This
property has abundant  species of commercial  value,  including  Spanish  Cedar,
Banak and Marupa. Harvest is seasonal. Raw materials are transported by river to
the Company's mill, the Froeste Wood Saw Mill, located at Rua de Maio,  Benjamin
Constat,  Amazonas,  Brazil.  At the end of the March 31, 1998 fiscal  year,  an
inventory of  approximately  2 million  board feet of cedar,  marupa,  banak and
mahogany  in various  sizes of rough cut lumber as well as a large  quantity  of
mahogany logs awaiting processing.  Lumber is sold to established  customers who
are members of the National Hardwood Lumber  Association  (NHLA). The NHLA sales
code applies to  established  uniform  practices  in the conduct and  regulation
governing elements of all transactions.

     In May 1995,  Registrant  acquired  an  interest  in  approximately  30,000
hectares  of prime  timber  producing  property  in Peru.  This  land is rich in
mahogany, and revenues have begun and will continue to grow from this area.









                                       3
<PAGE>



     In its first full year of harvesting operation, which has commenced, Madera
is  exercising  full  environmental  controls  in its  operations.  As a result,
limited  harvesting  has  actually  occurred,  instead  registrant  is  actively
purchasing  timber from other  producers  and  preserving  its  reserves.  Thus,
previously  distributed harvesting projections will not come into play until the
existing supply from other producers becomes diminished. The timber will be sold
throughout  the world to  wholesalers  and end users.  The selective  felling of
timber is supported  by a  reforestation  program,  which  includes  surveys and
forest  inventories,  and promotes  preservation and conservation of those areas
affected by the harvesting program.

     In order to realize the maximum return of its timber properties, Registrant
will be  required  to make a  substantial  investment  in its timber  operation.
Registrant  will be dealing with contract labor in the countries in which it has
properties, therefore, will have little responsibility for labor.

     Registrant's  management intends to balance the pursuit of profits with the
needs of the  fragile  environment.  Registrant  is  committed  to an  extensive
reforestation program,  planting more new trees than harvested. This will ensure
that every acre is fully restocked to guarantee a continual  supply of trees for
the future,  while  maintaining  the  precious  wildlife,  water  resources  and
ecosystem of the forest.

     Based on recent prices of comparable  lumber as that found on  Registrant's
property,  initial price  indicators  conservatively  estimated  sales prices of
$1.75  per  board  foot.  It  should  be noted  that  this is an  average  price
considering the mix of hardwoods  being marketed by Registrant.  These estimates
would  generate  sales of $10 Million  U.S. in  Registrant's  first full year of
operation, building to $40 Million U.S. annually in four years.

     Registrant's management has involved itself in the preparation for the year
2000  problem by taking the  following  steps:  First it will  update all of its
computer programs used in financial  preparations and system operations to those
designed to offset this potential problem;  and, Secondly it has affiliated with
PC  Solutions  2000 that has designed  programs to identify  and mend  potential
problems for the year 2000.


Employees

     The  Registrant  has no  employees;  all services are  performed by outside
contractors or officers/directors (see "ITEM 11. EXECUTIVE COMPENSATION").  Most
of the efforts of the  Registrant  will be  performed  by contract  labor in the
particular  country wherein the timber  operations occur. It is anticipated that
several hundred  laborers will be employed in each of the countries in which the
Registrant is actively harvesting and distributing timber and related products.

ITEM  2.  DESCRIPTION OF PROPERTY

     Registrant leases it's office space  (approximately 1,700 square feet) on a
two (2) year  lease at the rate of  $3,155.00  per  month.  The lease  runs from
August 1, 1996 through July 31, 2000.  It is the intent of  registrant  to renew
its lease and maintain these facilities for the near future.

                                       4

<PAGE>



ITEM  3.  LEGAL PROCEEDINGS

     Wrights   Executives,   Inc.,   dba,   Beacon  Hill  Resources  vs.  Madera
International,  Inc., a Nevada  Corporation,  filed on February 7, 1995,  in the
District  Court of the State of Nevada,  County of Cark,  Case No. A 342542 is a
matter whereby the plaintiff alleged that it was owed $125,736.03 resulting from
an agreement entered into by plaintiff and Forest and Environmental Resources of
the Amazon, Inc. ("FEROA"), pursuant to which the plaintiff agreed to loan FEROA
$70,137.00,  with interest to accrue at the rate of one and one-half  percent (1
1/2%) per month.  In furtherance  of the agreement,  FEROA executed a promissory
note in the  amount  of  $88,000.00  on July 2,  1988  in  favor  of  plaintiff.
Plaintiff  alleged that FEROA transferred all of its assets consisting of timber
properties and concessions to defendant, and that stock paid by the defendant in
consideration  of the  transfer  was not  transferred  to  FEROA,  but to Ramiro
Fernandez-Moris,  the chairman of FEROA,  resulting in FEROA becoming insolvent,
and unable to pay its obligation to the plaintiff. A Motion for Summary Judgment
against the Company was  substantiated  on November  27,  1995,  and the Company
ordered to pay the sum of $158,834.00  to the Plaintiff.  Registrant has settled
this  matter on behalf of  Registrant,  Ramiro  FernandezMoris  and  FEROA.  The
settlement  is for  $171,500.00,  payable at a minimum of  $5,000.00  per month,
commencing May 1996, and  continuing  until the debt is paid off.  Plaintiff has
the option to convert into common stock at a 25% discount  from the bid price as
long as the bid price is $0.50 per share or higher.  This  option  applies  only
after the  stock  reaches a bid  price of  $0.50,  and may be  exercised  in any
portion  of the total  value.  This  claim was being  paid by  Registrant  until
Registrant's  Lawyers advised that the judgment was not properly issued at which
time  payments  were stopped and legal issues  again began.  The judgment  still
exists and the balance due is reflected in the financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters  submitted to a vote of security  holders  during the
year ended March 31, 1998.





















                                       5

<PAGE>



                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER  MATTERS

1.   MARKET INFORMATION

     The Company's  Common Stock has been trading in the NASDAQ  Bulletin  Board
since May 13,  1994.  There is no  established  public  trading  market  for the
Company's  Class A warrants  issued  under the Plan.  Bid and ask prices for the
Common  Stock  are  carried  electronically  on  the  National  Daily  Quotation
Service's  Bulletin  Board  originally  under the symbol  "WOOD",  then  changed
arbitrarily by the NASDAQ to "MDIT" under which it now trades. The range of high
and low bids for the  Company's  Common Stock from the periods  indicated are as
set forth in the following table:

                    Fiscal Year Ended March 31, 1998
Quarter  Range   Common Stock - Bid    Common Stock - Asked     Class A Warrants
-------  -----   ------------------    --------------------     ----------------
  1      High          0.06                     0.09                 (1)
         Low           0.06                     0.12                 (1)
  2      High          0.06                     0.09                 (1)
         Low           0.06                     0.09                 (1)
  3      High          0.07                     0.09                 (1)
         Low           0.07                     0.09                 (1)
  4      High          0.12                     0.13                 (2)
         Low           0.07                     0.09                 (2)


(1)  Not quoted.
(2)  Warrants canceled during fourth quarter ended March 31, 1998

Source:  Report  dated  5/12/98 Real Time  Quotes,  from the National  Quotation
Bureau, Incorporated, Cedar Grove, New Jersey

(The foregoing  information is believed to be accurate,  but is not guaranteed.)
The quotations  listed above represent prices between dealers and do not include
retail mark-up,  mark-down or commission and there can be no assurance that they
represent actual transactions.

Market Makers:

         1.       Fahnstock & Co.
         2.       First London Securities Corporation.
         3.       La Jolla Capital Corporation
         4.       M. H. Meyerson & Co.
         5.       Naib Trading Corporation
         6,       Paragon Securities
         7.       Wien Securities

Other Market  Makers  enter and leave the market from time to time.  Cede & Co.,
the largest shareholder, is the clearing agent.

There is presently  no trading  market of any kind for the  Company's  preferred
stock or its warrants..
                                       6

<PAGE>



     As of May 29,  1997,  in excess of  15,000,000  shares of the  Registrant's
common  Stock  were  eligible  for sale  under  Rule  144,  subject  to  certain
limitations  included  in such Rule.  In  general,  under Rule 144, a person (or
persons  whose  shares are  aggregated)  who has  satisfied  a one year  holding
period,  under certain  circumstances,  may sell within any three month period a
number of shares  which does not exceed  the  greater of 1% of the  Registrant's
then  outstanding  Common  Stock or the average  weekly  trading  volume of such
Common Stock during the four  calendar  weeks prior to such sale.  Rule 144 also
permits,  under certain  circumstances,  the sale of shares without any quantity
limitation  by a person who has satisfied a two-year  holding  period and who is
not, and has not been for the preceding  three  months,  an  "affiliate"  of the
Registrant.

     Class A and B warrants issued in connection with the Plan of Reorganization
have been  canceled,  there are  presently  outstanding  3 Million  warrants  to
purchase common stock at $0.06per share.  With the exception of the warrants and
preferred  stock,  there are no other  rights  to  purchase,  or any  securities
convertible into or exchangeable for, shares of the Common Stock of the Company.
Registrant  has two  (2)  classes  of  Preferred  Stock  outstanding  which  are
convertible  into  common  stock  (see  "ITEM 1.  DESCRIPTION  OF  BUSINESS - 1.
SUMMARY").


     The Registrant  has granted  option rights to two parties,  The Wall Street
Group, Inc., for publicity purposes, and to M. H. Meyerson & Co., for investment
banking  services.  Registrant has requested that the option agreement with Wall
Street Group be terminated,  however, as of the date of preparing this document,
it had not been canceled.  There are no other  agreements to register any shares
of the Common Stock of the  Registrant  under the Securities Act of 1933 for any
security holder.

II     HOLDERS

     As of June 30, 1998, there were  approximately  2,800 record holders of the
Registrant's  Common Stock. See  "Description of Securities."  This includes 531
direct holders and approximately 2,300 street holders.

III    DIVIDENDS

     C.  Since  inception,  the  Registrant  has not paid any  dividends  on its
capital stock.

     B. The Registrant does not foresee that it will have the ability to pay any
dividends  on its capital  stock  during the fiscal year ending  March 31, 1999,
Management  however,  is contemplating the possible spin-off of its wholly owned
subsidiary,  Madera  International  Environmental,  Inc  as a  dividend  to  its
shareholders,  if this is approved  it will be  subsequently  announced.  At the
present time, the Registrant's anticipated working capital requirements are such
that it intends to follow a policy of retaining earnings in order to finance the
future   expansion  and  development  of  its  business.   See  "Description  of
Securities."



                                       7

<PAGE>



ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

1.   PLAN OF OPERATION

     The Registrant has set up a network of brokers that are beginning to supply
potential customers for the products to be shipped.  Upon receipt of approval of
product  available for shipment,  Registrant's  staff will inform the brokers of
the product's availability.  At that time, the brokers will inform customers and
the flow of  product  will  begin.  It should be noted that all  customers  that
require  financing for  shipments  will be required to be approved by financiers
before any shipment is arranged.

     Regular   shipments   of  product   commenced   in  1997  to  domestic  and
international customers. Registrant now ships to four customers.

II.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
       OF OPERATIONS

     The Registrant  continues to accumulate  inventory in Brazil. The inventory
now exceeds $3 Million.  Shipments  have begun on a regular  basis,  although it
continues to be difficult to obtain appropriate shipping schedules from shipping
companies.  This is expected to change as  continued  regular  shipping  occurs.
Profit has been demonstrated for several quarters and will continue into the new
fiscal year. The prophecy  discussed in the previous fiscal year is beginning to
materialize.  The accumulated  inventory will be turned into profitable sales as
the current  year  develops.  All  administrative  expenses  are being held to a
minimum and will  continue in that manner.  Based upon the  inquiries  that have
been  generated by the sales  force,  it appears  that the  projected  sales are
approaching their target. The shipments,  however, continue to be dependent upon
financing which the Registrant expects to continue to receive.

     The producing properties now held by the Registrant encompass approximately
707,000 acres.

     The Registrant's working capital resources during the years ended March 31,
1997 and March 31, 1998 have been provided  primarily from two sources:  (1) the
efforts  of  the  Management  of  the  Registrant  in  bringing  capital  to the
Registrant  through  the use of  Private  Placements,  as well as  direct  loans
arranged by Management,  and (2) equity conversions  arranged by it's investment
bankers.  The  commitments  from these sources have led the Company to a working
capital balance at March 31, 1998 of $4,764,242 versus a working capital balance
of $3,017,299 at the 1997 fiscal year end. The increase in working capital as of
March 31, 1998 arises from the increase in inventory and accounts receivable and
directly relates to the new business  activity (See Financial  Statements,  Page
F-2 and Page  F-3).  Stock to be  Issued  and  Loans  from  Insiders,  presently
included in the working  capital  calculation,  will be converted into equity in
the coming  fiscal year,  thus  potentially  improving  the working  capital for
fiscal 1999.


ITEM 7.  FINANCIAL STATEMENTS

     See Pages F-1 through F-15 attached hereto for copies of the audited annual
financial statements of the Company.
                                       8

<PAGE>



ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; Compliance
        With Section 16(a) of the Exchange Act.


                DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
                -----------------------------------------------

Name                 Age               Position
-----------------    ---         ---------------------------------------------
Ramiro Fernandez-                President, Chief Executive Officer, Director,
Moris                68          and Chairman of the Board

Ray Fernandez        42          Executive Vice President -
                                 Sales

Regina Fernandez     37          Secretary

Roman Fernandez-
Moris                40          Vice President and Director

Arthur Mintz         61          Director  (it should be noticed  that Arthur 
                                 Mintz  resigned as a director subsequent  to
                                 the  close  of  the  fiscal  year  and  will  
                                 be  replaced  by an independent director to 
                                 be elected  by the  shareholders  at an
                                 appropriately called annual meeting)


     Mr. Ramiro Fernandez-Moris produced lumber from family owned timberlands in
Cuba until he was forced  into exile by  Castro's  regime.  In 1962,  he founded
Karobi  Lumber  Company in  Florida,  trading  significant  amounts of Banak and
Mahogany logs from Colombia, Equador, and Brazil. In 1968, he organized Tropical
Lumber Company to expand  production to Brazil,  Peru,  and Bolivia.  During the
1962- 1968, 1978-1985, and 1987-1989 periods, Mr. Fernandez-Moris was a supplier
for Georgia Pacific at various locations. Mr. FernandezMoris was Chairman of the
Board and Treasurer of Forest & Environmental Resources of the Amazon, Inc.











                                       9

<PAGE>



     Mrs. Regina Fernandez,  born in Havana, Cuba, and a resident of Miami since
1960,  attended  Miami-Dade  Community College. In 1980, she joined the staff of
1st  Nationwide  Saving  and  in  1982  was  promoted  to  Operations   Manager,
responsible for the supervision of 23 employees. She was the only 1st Nationwide
Savings  employee in Florida to be honored in 1983 and 1984 for  outstanding job
achievements.  In 1985, Mrs. Fernandez was employed by Karobi Lumber,  where she
specialized in organization,  administration,  distributions, and financing, and
was assigned to South American  operations in Brazil, Peru and Bolivia. In 1992,
Mrs.   Fernandez  joined  World  Trade  Services,   heading  lumber  operations,
contracting  lumber sales and procurement from South America as well as domestic
suppliers.  In 1994, she was employed as a Commercial Expert for Bureau Veritas,
N.A., working closely with the international trading industry. On March 2, 1996,
Mrs. Fernandez joined Madera as Secretary.

     Mr. Ramiro (Ray) Fernandez-Moris, Jr. attended the National Hardwood Lumber
Association  Inspection  Training  School in 1976,  specializing in the study of
quality control and the technical  aspects of the lumber  business.  He has been
involved in lumber sales, trading, and marketing for many years.

     Mr. Roman Fernandez-Moris attended the National Hardwood Lumber Association
inspection  training  school in 1976.  He was a supervisor  for Pat Brown Lumber
Co.,  in  Roxboro,  North  Carolina  from 1977 to 1979.  From 1979 to 1984,  Mr.
Fernandez-Moris   was  an  exclusive   contractor  for  Kimball   International,
specializing  in the procurement of tropical  species.  From 1984 until 1986, he
was associated with Georgia Pacific in Savannah,  Georgia.  Mr.  Fernandez-Moris
was  Director  of  Field  Operations  in  Peru  for  Comercial  Maderara  during
1987-1992,  and  served as  President  and  Director  of Forest &  Environmental
Resources of the Amazon, Inc. from May 1993 until August 1994.

     Mr.  Arthur  Mintz,  a lawyer  licensed  to  practice  in state and federal
courts, has over 30 years of business and legal expertise.

     He has been Vice President and General Counsel of Lease Resolution Corp. He
has served as Chairman of the Board,  President,  and General Counsel for Olicon
Imaging Systems,  Inc., AMRR Leasing Corp., and Mobile M.R Venture Ltd. He holds
a J.D. and L.L.B.  from  Northwestern  Law School and a B.A.  from  Northwestern
University.  (Arthur Mintz  resigned as a Director after the close of the fiscal
year)

ITEM 10.  EXECUTIVE COMPENSATION

     No executive officer of the Company earned in excess of $100,000 during the
fiscal year ended March 31, 1998. All executive  officers as a group (5 persons)
received cash compensation of approximately $64,214 during the fiscal year ended
March 31, 1998.  The salaries of officers  will be set by the board of directors
of the  Registrant.  No  officer  will  receive  more  than  $100,000  in annual
compensation until the volume of Registrant's sales exceeds  $5,000,000,  or the
Registrant's  profits  exceed  $250,000 for two successive  quarters,  whichever
first occurs.

     Except for the Stock Option Plan described below, the Company does not have
any formal bonus plans,  stock  option plans or any other  similar  compensation
plans for its executive officers.

                                       10

<PAGE>



     Directors of the Company do not receive any  compensation for attendance at
meetings of the Board of Directors.

     In June 1994,  the  Company  adopted a stock  option  plan (the  "Plan") to
attract and retain qualified persons for positions of substantial responsibility
as officer,  directors,  consultants,  legal  counsel,  and other  positions  of
significance  to the  Company.  The  adoption  of the Plan was  ratified  by the
Company's  shareholders  August 1994,  at the Company's  next Annual  Meeting of
Shareholders. The Plan provides for the issuance of both Incentive Stock Options
and Non-Qualified Stock Options. The Plan, which is administered by the Board of
Directors,  provides  for the  issuance of a maximum of two million  (2,000,000)
options to purchase  shares of common  stock at the market  price on the date of
grant.  Such  options  are  exercisable  over a 10 year  period from the date of
grant. Each option lapses, if not previously exercised,  on the 10th anniversary
of the date of grant or 90 days after the optionee has terminated his continuous
activity  with the  Company,  except that if his  continuous  activity  with the
Company  terminates by reason of his death, such option of the deceased optionee
may be  exercised  within one year after the death of such  optionee,  but in no
event later than five years after the date of grant.  Options  granted under the
Plan to Company employees may not be sold,  pledged,  assigned or transferred in
any  manner  otherwise  than by will or the  laws of  descent  or  distribution.
Options  granted under the Plan to persons who are not Company  employees may be
sold,  pledged,  assigned,  or  transferred to other persons who, at the time of
such sale, pledge, assignment or transfer, qualify as optionees under the Plan.

Compliance with Section 16(a) of Securities Exchange Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity  securities to file with the Securities
and Exchange  Commission  initial reports of ownership and reports of changes in
ownership  of Common  Stock  and  other  equity  securities  of the  Registrant.
Officers,  directors and greater than ten percent  stockholders  are required by
SEC regulation to furnish the Registrant and Exchange with copies of all Section
16(a) forms they file. All of these filing requirements were satisfied.



















                                       11

<PAGE>



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain  information as of June 3, 1996 with
respect to the beneficial  ownership of the Registrant's Common Stock, par value
$.0l per share, by holders of more than 5% of the Registrant's  Common stock, by
each director and executive officer of the Registrant,  and by all directors and
officers of the Registrant as a group.  This  calculation is based only upon the
shares  issued and does not give  effect to Class A Warrants  since there is not
expressed intent to convert the warrants into common stock.


                                                 Number of Shares    Percent of
                                                 Beneficially        Class
    Name of Beneficial Owner and Class           Owned  (1)          (2) (3)
-----------------------------------------        ----------------    -----------
Preferred Stock
Ramiro Fernandez-Moris (1)                        1,000,000             100.00%

Common Stock
Ramiro Fernandez-Moris (1)                       14,900,000              20.44%
Regina Fernandez (1)                                      0               0.00%
Roman Fernandez-Moris (1)                           350,000               0.50%
Ramiro (Ray) Fernandez-Moris, III (1)               128,000               0.20%
Arthur Mintz                                      3,000,000               4.11%

Ramiro Fernandez-Moris (1)                        1,000,000             100.00%

All Directors and Officers as a group
(5 individuals)
Preferred Stock (3)                               1,000,000             100.00%
Common Stock                                     18,378,000              25.21%



     (1) Unless otherwise  indicated,  all shares are beneficially owned and the
sole voting and investing  power is held by the person named in the table above.
The address for each beneficial holder is c/o the Company

     (2)  Based  upon  72,905,669  shares  of  Common  Stock  outstanding.   See
"Description of Securities.


     (3) The Preferred Stock, owned beneficially, is convertible into 51% of the
common  stock   outstanding   in  a  formula  that  includes  the  common  stock
beneficially owned. This conversion can take place only under circumstances that
cause a potential shifting of control.








                                       12

<PAGE>



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Beginning  in  July,  1994  upon  the  acquisition  of  property  from  the
Fernandez-Moris  family,  this  family  has  gradually  assumed  control  of the
Registrant  and is now the  controlling  shareholder  and also in control of the
operations  of the  Registrant.  Additionally,  as required by any negative cash
flows,  the  family  has  consistently  provided  funding  for  the  operations.
Additional  properties  have  been  acquired  from the  family  at  their  cost,
subsequent to the original  acquisition,  which was an arms length  transaction.
These  transactions  are reported in other  sections of this document as well as
the Financial Report of the independent accountants.

     Certain  relationships  that existed  prior to the  Fernandez-Moris  family
assuming  control of the Registrant have been  previously  reported in past 10 K
Reports.  These relationships no longer exist and have not existed for more than
one (1) year.

     Ramiro Fernandez-Moris, President and principal shareholder beneficially of
the Registrant has received  1,000,000  shares of Class D Preferred Stock of the
Registrant.  The  Certificate  of  Designation as filed with the State of Nevada
states that this class of Preferred Stock allows the holder the right to convert
it into a fifty one (51) percent control factor of the voting Common Stock.  The
conversion period is for five (5) years and can only be done in the event of any
of the following: Sale of the Company, Retirement of Ramiro Fernandez-Moris, The
termination of Ramiro  Fernandez-Moris  without cause,  or the expiration of the
five year  period.  These  conversion  privileges  were made to  protect  Ramiro
Fernandez-Moris  who placed his assets  into the  Registrant  at a time when the
stock was selling at a much higher price and to reflect that the existing market
value is lower than the fair market value of the underlying assets.

     Subsequent to year end a new class of Preferred  Stock was created and of 3
Million  authorized  shares, 1 Million shares were issued to Gateway  Industries
Ltd. for services rendered to the company for the previous period.  These shares
are  convertible  into common stock on the basis of 1 share of  Preferred  for 1
share of common.



















                                       13

<PAGE>



ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

a.   The following documents are filed as part of this report:
     NONE



                                                            Page
                                                            Number
(1)  Financial Statements -                                 ------

     Report of Independent Accountants                      F-1

     Balance Sheet at March 31, 1998                        F-2

     Statement of Operations for the Years Ended            F-4
     March 31, 1998 and 1997

    Statement of Changes in Stockholders' Equity            F-5
    for the Years Ended March 31, 1998, and 1997

    Statement of Cash Flows for the Years Ended             F-6
    March 31, 1998 and 1997

    Notes to Financial Statements                     F-7 -F-15

(2) Exhibits to this report are as follows:

 Ex. No.           Description of Document
 -------           -----------------------

b.        Reports on Form 8-K - fourth quarter ended
NONE





















                                       14

<PAGE>



                                   SIGNATURES

     In accordance  with Section 12 of the Securities  Exchange Act of 1934, the
registrant caused this registration  statement to be signed on its behalf by the
undersigned, thereunto duly authorized.

                           MADERA INTERNATIONAL, INC.

Dated:    November 3   , 1998

By: /s/ Ramiro Fernandez-Moris
        Ramiro Fernandez-Moris, Chief Executive Officer

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.


       Signature                            Title                     Date
-------------------------------     ---------------------     -----------------

/s/ Ramiro Fernandez-Moris          President, CEO             November 3,1998
--------------------------
Ramiro Fernandez-Moris
(Principal Executive Officer
and Principal Financial Officer)
Director,and Chairman of the Board


/s/ Roman Fernandez-Moris           Vice President, Director   November 3, 1998
-------------------------
Roman Fernandez-Moris


/s/ Regina Fernandez                Secretary-Treasurer,       November 3, 1998
-------------------------           Chief Financial Officer


















                                       15

<PAGE>



                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                                TABLE OF CONTENTS




                                                                         Page
                                                                         ====
Independent Auditors' Report........................................     F-1

Consolidated Balance Sheet..........................................     F-2

Consolidated Statements of Operations...............................     F-4

Consolidated Statements of Changes in Stockholders' Equity..........     F-5

Consolidated Statements of Cash Flows...............................     F-6

Notes to Consolidated Financial Statements.......................... F-7 - F-16


































                                      F-1
<PAGE>



                                                    Harlan & Boettger, LLP
                                                    Certified Public Accountants

                                                         James C. Harlan III
                                                         William C. Boettger
                                                         P. Robert Wilkinson
                                                         Marshall J. Varano



                          INDEPENDENT AUDITORS' REPORT




To the Board of Directors and Stockholders
of Madera International, Inc. and Subsidiaries:

We have audited the consolidated balance sheet of Madera International, Inc. and
subsidiaries  as of March 31, 1998, and the related  consolidated  statements of
operations,  stockholders'  equity, and cash flows for the years ended March 31,
1998 and 1997. These consolidated financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,   in  all  material   respects,   the   financial   position  of  Madera
International, Inc. and subsidiaries as of March 31, 1998 and the results of its
consolidated  operations  and cash flows for the years  ended March 31, 1998 and
1997 in conformity with generally accepted accounting principles.


/s/ Harlan & Boettger


San Diego, California
June 10, 1998







                                        1

<PAGE>



                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1998



     ASSETS

CURRENT ASSETS
     Cash                                                      $      47,186
     Accounts receivable, net (Note B)                             3,041,123
     Inventory, net (Note C)                                       3,121,978
     Other receivables                                                 2,000
                                                                 ----------- 
         TOTAL CURRENT ASSETS                                      6,212,287

PROPERTY AND EQUIPMENT, net (Note D)                               2,215,859

OTHER ASSETS
     Investment in timber producing
         property (Note E)                                        27,972,394
     Other investment (Note F)                                     1,500,000
     Deposits                                                          5,794
                                                                 ----------- 
         TOTAL OTHER ASSETS                                       29,478,188
                                                                 ----------- 
         TOTAL ASSETS                                            $37,906,334
                                                                 ===========





















The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       F-2

<PAGE>


                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1998
                                   (Continued)



     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                        $     215,097
     Letter of credit (Note H)                                     165,000
     Stock subscriptions payable (Note F)                          423,750
     Accrued expenses                                               49,803
     Income taxes payable (Note I)                                  28,000
     Notes payable - related parties (Note G)                      566,395

         TOTAL CURRENT LIABILITIES                               1,448,045

         TOTAL LIABILITIES                                       1,448,045

COMMITMENTS AND CONTINGENCIES (Note M)                                   -

STOCKHOLDERS' EQUITY (Note J)
     Preferred stock,  convertible Series D 
       $0.01 par value,  100,000,000 shares
       authorized, 1,000,000 shares issued 
       and outstanding 10,000 Common stock,
       $0.01 par value, 250,000,000 shares 
       authorized, 72,905,669 shares issued
       and outstanding                                             729,056
     Additional paid-in capital                                 38,142,505
     Accumulated deficit                                        (2,423,272)
                                                             -------------

TOTAL STOCKHOLDERS' EQUITY                                      36,458,289

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $37,906,334












The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       F-3

<PAGE>

                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                   For the Year Ended March 31,
                                                        1998           1997
                                                   =============   =============
SALES                                              $  4,494,803    $  1,911,241
COST OF SALES                                         2,073,421       1,221,679
                                                   -------------   -------------
GROSS PROFIT                                          2,421,382         689,562
                                                   -------------   -------------
OPERATING EXPENSES
     Legal and professional fees                        375,633
     583,493
     Field operations and travel                         84,463
     40,027
     Administrative and other costs                     415,322         155,879
     Depreciation                                        68,917          66,809
     Consulting-related party                           225,995            -
     Bad debt                                            58,500            -
                                                   -------------   -------------
TOTAL OPERATING EXPENSES                              1,228,830         846,208
                                                   -------------   -------------
INCOME (LOSS) FROM OPERATIONS                         1,192,552        (156,646)
OTHER INCOME (EXPENSES)
     Miscellaneous income                                  -            118,109
     Interest expense                                   (26,882)        (48,578)
     Loss from disposition of assets                       -            (30,954)
                                                   -----------------------------
TOTAL OTHER INCOME (EXPENSES)                           (26,882)         38,577
                                                   -------------   -------------
INCOME (LOSS) BEFORE INCOME TAXES                     1,165,670        (118,069)
INCOME TAXES (Note I)                                    28,000            -
                                                   -----------------------------
NET INCOME (LOSS)                                  $  1,137,670    $   (118,069)
                                                   =============   =============
BASIC EARNINGS (LOSS) PER SHARE (Note L)
     Net income (loss)                             $  1,137,670    $   (118,069)
                                                   =============   =============
     Earnings (loss) per average basic
       common share                                $       .017    $      (.002)
                                                   =============   =============

WEIGHTED AVERAGE BASIC SHARES OUTSTANDING            68,493,582      52,514,943
                                                   -------------   -------------
FULLY DILUTED EARNINGS (LOSS) PER SHARE
     Net income (loss)                             $  1,137,670    $   (118,069)
                                                   =============   =============
     Earnings (loss) per average fully
       diluted common share                        $       .013    $      (.002)
                                                   =============   =============
WEIGHTED AVERAGE FULLY DILUTED SHARES
   OUTSTANDING                                       90,662,473      52,514,943
                                                   =============   =============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
                                       F-4
<PAGE>



                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                     Preferred Stock         Common Stock        Additional
                                   -------------------  ---------------------    Paid-In       Accumulated
                                     Shares    Amount     Shares     Amount      Capital         Deficit        Total
                                   ---------  --------  ----------  ---------   ------------   ------------   -----------
<S>                                  <C>      <C>       <C>          <C>        <C>            <C>            <C>        
BALANCE, March 31, 1996              500,000  $  5,000  41,964,132   $419,640   $ 33,967,741   $ (3,442,873)  $30,949,508

Issuance of stock for cash              -         -      4,250,000     42,500        437,500           -          480,000

Issuance of stock for services          -         -     10,650,100    106,501        546,689           -          653,190

Conversion of preferred stock
   Series B for common stock        (500,000)   (5,000)    702,787      7,028         (2,028)          -             -

Issuance of common stock
   for relief of debt                   -         -      4,000,000     40,000        119,740           -          159,740

Issuance of preferred stock
   Series D for inventory
   (Note J)                        1,000,000    10,000        -          -         2,390,000           -        2,400,000
                                   ---------  --------  ----------  ---------   ------------   ------------   -----------
Net loss                                -         -           -          -              -          (118,069)     (118,069)
                                   ---------  --------  ----------  ---------   ------------   ------------   -----------
BALANCE, March 31, 1997            1,000,000  $ 10,000  61,567,019  $ 615,669   $ 37,459,642   $ (3,560,942)  $34,524,369
                                   ---------  --------  ----------  ---------   ------------   ------------   -----------
Issuance of stock for cash              -         -      3,000,000     30,000        170,000           -          200,000

Issuance of stock for services
   (Note J)                             -         -      6,338,650     63,387        332,863           -          396,250

Issuance of stock for timber
   (Note E)                             -         -      2,000,000     20,000        180,000           -          200,000

Net income                              -         -           -          -              -         1,137,670     1,137,670
                                   ---------  --------  ----------  ---------   ------------   ------------   -----------
BALANCE, March 31, 1998            1,000,000  $ 10,000  72,905,669  $ 729,056   $ 38,142,505   $ (2,423,272)  $36,458,289
                                   =========  ========  ==========  =========   ============   ============   ===========
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       F-5

<PAGE>


                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                    For the
                                                                    Year Ended
                                                                    March 31,
                                                  1998                1997
                                             ---------------    --------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                          $     1,137,670    $     (118,069)
  Adjustments to reconcile net income
    (loss)to net cash used in operating
    activities:
  Stock issued for services rendered                 396,250           653,190
    Recognized loss on impairment of assets          205,000              -
    Allowance for bad debts                           58,500              -
    Depreciation                                      68,917            66,809
  Changes in operating assets and 
    liabilities:
   (Increase) decrease in:
    Accounts receivable                           (2,249,073)         (661,550)
    Inventory                                       (346,060)          114,082
    Other receivables                                 29,882              -
    Other assets                                      15,000           (51,141)
  Increase (decrease) in:
    Accounts payable                                 (13,887)         (191,750)
    Income taxes payable                              28,000              -
    Accrued expenses                                    (375)           (8,176)
                                             ---------------    --------------
NET CASH USED IN OPERATING ACTIVITIES               (670,176)         (196,605)
                                             ---------------    --------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Investments in timberland                         (31,394)             -
   Purchases of property and equipment                (3,500)          (18,085)
                                             ---------------    --------------
NET CASH USED IN INVESTING ACTIVITIES                (34,894)          (18,085)
                                             ---------------    --------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from related party debt                  166,895              -
   Proceeds from letter of credit                    165,000              -
   Payments on related party debt                    (34,000)          (93,556)
   Proceeds from issuance of common stock            200,000           480,000
                                             ---------------    --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES            497,895           386,444
                                             ---------------    --------------
INCREASE (DECREASE) IN CASH                         (207,175)          171,754
CASH, AT BEGINNING OF YEAR                           254,361            82,607
                                             ---------------    --------------
CASH, AT END OF YEAR                         $        47,186    $      254,361
                                             ===============    ==============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       F-6

<PAGE>


                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997


A.       Organization and Summary of Significant Accounting Policies:

         Nature of Operations

         Madera International,  Inc., a Nevada corporation (formerly Weaver Arms
         Corporation) emerged from Chapter 11 Bankruptcy  proceedings on January
         21, 1994. The Company includes two subsidiaries: Asseradora Itaya, Inc.
         ("Itaya")   a   Peruvian    corporation   and   Madera    International
         Environmental,  Inc.  ("Environmental") a Nevada corporation,  together
         ("The Company"). All significant intercompany  transactions and amounts
         have been eliminated in the consolidating process.

         The Company,  in conjunction  with Itaya, is engaged in the harvesting,
         milling and exporting of timber from South  America.  The Company sells
         its products to major lumber distributors throughout the United States.

         Environmental  is  dedicated  to the  conservation  of the Amazon  Rain
         Forest.  Through its three programs 1) own a tree 2) replant a tree and
         3) replant a seedling  for kids,  Environmental  manages  and  replants
         virgin and cleared  timberland in the Brazilian  Amazon  Region.  These
         programs will safeguard  this region from any  commercial  exploitation
         including farming,  ranching,  mining and logging or the removal of any
         fauna or flora for any purpose.

         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 disclosure of contingent  assets and liabilities at the
         date of the financial  statements and reported  amounts of revenues and
         expenses during the reporting periods. Actual results could differ from
         those estimates.  The Company's significant estimates at March 31, 1998
         are property and equipment, investments, and stock issued for services.

         Earnings Per Share

         Earnings  per  share are  provided  in  accordance  with  Statement  of
         Financial  Accounting  Standard  No. 128 (FAS No.  128)  "Earnings  Per
         Share".  Basic  earnings  per share are  computed by dividing  earnings
         available  to common  stockholders  by the weighted  average  number of
         common shares outstanding during the period. Diluted earnings per share
         reflect  per  share  amounts  that  would  have  resulted  if  dilutive
         potential  common stock had been converted to common stock. As required
         by FASB No.  128,  prior  year  earnings  per share  amounts  have been
         restated.  Earnings per share for the year ended March 31, 1997 did not
         change as a result of this restatement.


                                       F-7

<PAGE>
                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997 (Continued)

A.       Organization and Summary of Significant Accounting Policies:(continued)
         Income Taxes

         Income taxes are  provided in  accordance  with  Statement of Financial
         Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes."
         A deferred tax asset or  liability  is recorded  for all net  operating
         loss carryforwards and temporary  differences between financial and tax
         reporting.  Deferred tax expense  (benefit) results from the net change
         during the year of deferred tax assets and liabilities.  The components
         of the deferred tax asset and liability are individually  classified as
         current and non-current based on their characteristics.

         Deferred tax assets are reduced by a valuation  allowance  when, in the
         opinion of management,  it is more likely than not that some portion or
         all of the  deferred  tax assets  will not be  realized.  Deferred  tax
         assets and  liabilities  are adjusted for the effects of changes in tax
         laws and rates on the date of enactment.

         Revenue Recognition
         Revenues  are  recognized  in the period in which  lumber is shipped by
         freight on board (FOB) shipping point in South America.

         Inventory

         Inventory is stated at the lower of cost or market.  Cost is determined
         by the first-in, first-out method.

         Property and Equipment

         Property  and  equipment  are stated at cost or  estimated  fair market
         value on the date of  acquisition.  Depreciation  is provided  over the
         estimated  useful lives of the respective  assets on the  straight-line
         basis  ranging from five to forty  years.  The  Company's  policy is to
         evaluate the  remaining  lives and  recoverability  in light of current
         conditions.  It is reasonably  possible that the Company's  estimate to
         recover the carrying amount of property and equipment will change.

         Nonmonetary Transactions

         The Company records nonmonetary  transactions in accordance with APB-29
         "Accounting for Nonmonetary  Transactions" and SFAS 123 "Accounting for
         Stock-Based   Compensation."   The  transfer  or   distribution   of  a
         nonmonetary  asset or liability is based on the fair value of the asset
         or liability that is received or surrendered, whichever is more clearly
         evident.

         Advertising Costs

         Advertising  costs are  generally  expensed  as  incurred.  Advertising
         expense included in administrative  and other costs was $26,949 for the
         year ended March 31, 1998.

                                       F-8
<PAGE>

                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997
                                   (Continued)

A.       Organization and Summary of Significant Accounting Policies:(continued)

         Cash Equivalents

         For purposes of the statement of cash flows, the Company  considers all
         highly liquid investments  purchased with a maturity of three months or
         less to be cash equivalents.

         Concentrations

         The  Company  sells  a  substantial  portion  of its  products  to four
         customers. Sales to these customers accounted for 85% and 100% of total
         sales  for the years  ended  March  31,  1998 and  1997,  respectively.
         Accounts receivable from these customers were approximately  $2,718,000
         at March 31, 1998.

         Fair Value of Financial Instruments

         The  following  methods  and  assumptions  were used by the  Company to
         estimate the fair values of financial instruments as disclosed herein:

         Cash and cash equivalents:  The carrying amount approximates fair value
         because of the short period to maturity of the instruments.

         Short-term  borrowings:  The carrying  amount  approximates  fair value
         since the debt is estimated based on the interest rates for the same or
         similar  debt  offered  to the  Company  having  the  same  or  similar
         remaining maturities and collateral requirements.

B.       Accounts Receivable:

         Accounts receivable  represent amounts due from sales of timber. In the
         normal  course of business,  the Company  extends  unsecured  credit to
         distributors  located in  California  and  Florida.  Credit is extended
         based  on  an  evaluation  of  the  customer's   financial   condition.
         Collection of invoices  typically  occur between six and nine months of
         shipment.  The Company has not experienced any collection  difficulties
         and  believes  all accounts  are  collectible.  Allowance  for doubtful
         accounts was $58,500 at March 31, 1998. It is reasonably  possible that
         the Company's estimate of allowance for doubtful accounts will change.

C.       Inventory:

         Inventory as of March 31, 1998  consists of varying  sizes of rough cut
         mahogany and cedar lumber awaiting customers orders.

         Inventory consists of the following at March 31, 1998:
                  Raw materials                                    $2,765,404
                  Finished goods                                      356,574

                                       F-9

<PAGE>

                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997
                                   (Continued)

                  Total inventory                                 $3,121,978

D.       Property and Equipment:

         Property and equipment is summarized as follows at March 31, 1998:
              Sawmill - Brazil                                    $2,395,000
              Office furniture and equipment                          21,585
                                                                   2,416,585
              Less accumulated depreciation                         (200,726)
              Property and equipment, net                         $2,215,859

         During the year ended March 31, 1998, an appraisal was performed on the
         sawmill which provided a value that was $205,000 below historical cost.
         Management has elected to write down the asset to its appraised  value.
         Accordingly,  $205,000 was expensed to  Administrative  and other costs
         for the year ended March 31, 1998.

E.       Investment in Timber Producing Property:

         The Company acquired 478,000 acres of timber producing property located
         in Brazil  as well as  substantial  acreage  in Peru that are long term
         concessions from Ramiro Fernandez-Moris and his family.  Management has
         used an appraisal to estimate the fair value of this investment.  It is
         reasonably  possible  that a change in the  estimate  will occur in the
         near term.

         On May 16, 1997 the Company  entered  into an  agreement  with  various
         small  land  owners  in  Brazil  to  purchase  251,000  acres of timber
         producing   property   to  be  used  for  the   operations   of  Madera
         Environmental  construction  program.  In  consideration  for the asset
         acquired,  the Company paid $441,000  through the private  placement of
         2,000,000  common  shares  valued at  $200,000,  and the  issuance of a
         $241,000 notes payable to a related party (Note G). Management has used
         an  appraisal  to  estimate  the fair value of this  investment.  It is
         reasonably  possible  that a change in the  estimate  will occur in the
         near term.

F.       Other Investment:

         In April 1995 the  Company  entered  into an  agreement  with  Mandarin
         Overseas Investment Co., Ltd.,  (Mandarin) a company incorporated under
         the  laws of the  Turks  and  Caicos  Islands,  to  acquire  98% of the
         outstanding  shares  of  Asseradora  Itaya  (Itaya),  a  subsidiary  of
         Mandarin.  Asseradora Itaya is the owner of timber  concessions in Peru
         consisting  of 30,000  hectares  of timber  producing  properties.  The
         concession  is for  ten  (10)  years  with a  renewable  option  for an
         additional ten (10) years,  and a further option to turn the concession
         into fee  ownership  for a minimal  cost.  The  extraction  rights  are
         approximately 270,000 cubic meters annually.

                                      F-10

<PAGE>

                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997
                                   (Continued)



F.       Other Investment: (continued)

         Pursuant to the purchase agreement, the Company and Mandarin agreed the
         purchase  price  shall be  $1,500,000.  During the year ended March 31,
         1996,  the Company issued  5,070,000  shares of its common stock with a
         value of  $1,064,250  as part of this  transaction.  In  addition,  the
         Company is negotiating  with Mandarin the  additional  number of common
         shares to be issued as final payment of $423,750 for this  transaction.
         The $423,750 is reflected in the financial statements of the Company as
         a liability  at March 31,  1998.  Management  has used an  appraisal to
         estimate the fair value of this investment.  It is reasonably  possible
         that a change in the estimate will occur in the near term.

G.       Notes Payable - Related Parties:

         Notes  payable - related  parties at March 31, 1998 are  summarized  as
         follows:

         Notes payable to President of the Company,  bearing interest at 9%, per
         annum;  unsecured;  principal and interest due and payable on demand or
         within one year. Included in accrued expenses is accrued interest of
         $16,268 at March 31, 1998.                                    $241,000

         Notes payable to Shareholder of the Company, bearing interest at 9% per
         annum; secured by 2,500,000 shares of freely traded common stock of the
         Company; principal and interest due and payable on demand or within one
         year. Included in accrued expenses is accrued interest of
         $2,250 at March 31, 1998.                                      150,000

         Notes payable to consultant of the Company, note bearing interest at 9%
         unsecured;  principal  and interest due and payable on demand or within
         one year. Included in accrued expenses is accrued interest of
         $6,567 at March 31, 1998.                                      146,595

         Notes payable to  Vice-President  of the Company bearing interest at 9%
         per annum; unsecured;  principal and interest due and payable on demand
         or within one year. Included in accrued expenses is accrued interest of
         $648 at March 31, 1998.                                         28,800
                                                                    -----------

         Total                                                          566,395

         Less current portion                                          (566,395)

         Notes payable - related parties, net of current portion    $      -
                                                                    ============


                                      F-11

<PAGE>

                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997
                                   (Continued)

H.       Letter of Credit:

         The  Company  has a unsecured  letter of credit  agreement  with a bank
         which  provides  that it may borrow up to $439,000 at the bank's  prime
         rate of interest  plus 2% (10.5% at March 31,  1998) to be used for the
         purchase  and  shipment of lumber.  The letter of credit is due 90 days
         from sight of shipment. At March 31, 1998, $274,000 was available under
         this agreement.

I.       Income Taxes:

         The Company's  total current  income tax provision as of March 31, 1998
         is  comprised  of $28,000  of  federal  alternative  minimum  tax.  The
         Company's  total deferred tax asset as of March 31, 1998 consist of the
         following:

         Deferred tax assets:
         Net operating loss carryforwards                               656,000
         Valuation allowance                                           (656,000)
         Net deferred tax asset                                   $        -
                                                                  ==============

         The valuation  allowance decreased $544,000 during the year ended March
         31, 1998.

         The following is a reconciliation  between expected income taxes at the
         statutory rate of 35% and actual income taxes at March 31, 1998:

         Expected income taxes at statutory rate                  $     408,000

         Benefit of net operating loss carryforward                    (408,000)

         Alternative minimum tax                                         28,000

         Actual income taxes                                      $      28,000
                                                                  ==============

         As of March 31, 1998, the Company had net operating loss carryforwards,
         before any limitations, which expire as follows:

            Year Ending
            March 31,                                                Federal
            -----------                                           --------------
             2010                                                 $     345,461
             2011                                                     1,688,095
             2012                                                       100,500
                                                                  --------------
                                                                  $   2,134,056


                                      F-12

<PAGE>

                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997   (Continued)

J.       Stockholders' Equity:
         Preferred Stock

         During the year ended  March 31,  1997,  the Company  issued  1,000,000
         shares   of   convertible   Series  D   preferred   stock   to   Ramiro
         Fernandez-Moris,  President of the Company,  in exchange for $2,400,000
         of timber  inventory owned by Mr.  Fernandez-Moris  which is located in
         Brazil.  The conversion feature of the preferred stock floats such that
         at the time of conversion a calculation  will be performed to determine
         the exact  number of common  shares that are  necessary to be issued to
         Ramiro  Fernandez-Moris  to  ensure  he has at  least  a 51%  ownership
         interest in the Company.  The  conversion  period is for five years and
         can only be completed if any of the following events occur: sale of the
         Company,  retirement  of Ramiro  Fernandez-Moris,  the  termination  of
         Ramiro  Fernandez-Moris  without  cause,  or the expiration of the five
         year  period.  Holders of the shares of Series D preferred  stock shall
         not be entitled to receive dividends.

         Authorized preferred stock at March 31, 1998 also consists of Series A,
         B and C preferred stock which have various conversion  features for the
         exchange of common stock for each share of preferred stock. As of March
         31, 1998, all outstanding  Series B preferred shares had been converted
         to common stock and Series A and C had been canceled.

         On January 23,  1998,  the  Company  authorized  100,000,000  shares of
         Series  E  preferred  stock.  The  stockholders  are  not  entitled  to
         dividends  and each share may be converted to one share of common stock
         by the holder or the Company.

         Common Stock

         During the year ended  March 31,  1998,  the Company  issued  6,338,650
         shares of common stock in exchange for  consulting  and other  services
         provided.

K.       Stock Options:

         In June 1994,  the Company  adopted a stock option plan (the "Plan") to
         attract and retain  qualified  persons  for  positions  of  substantial
         responsibility as officer, directors,  consultants,  legal counsel, and
         other positions of  significance to the Company.  The Plan provides for
         the issuance of both Incentive  Stock Options and  Non-Qualified  Stock
         Options.  The Plan,  which is  administered  by the Board of Directors,
         provides  for the  issuance  of a maximum  of two  million  (2,000,000)
         options to purchase  shares of common  stock at the market price on the
         date of grant.  Such options are exercisable over a 10 year period from
         the date of grant or 90 days  after the  optionee  has  terminated  his
         continuous  activity  with the Company,  except that if his  continuous
         activity with the Company terminates by reason of death, such option of
         the deceased  optionee may be exercised within one year after the death
         of such optionee, but in no event later than five years after the date

                                      F-13
<PAGE>

                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997
                                   (Continued)

         of grant.  Options granted under the Plan to Company  employees may not
         be sold, pledged,  assigned or transferred in any matter otherwise than
         by will or the laws of descent or  distribution.  Options granted under
         the Plan to persons who are not Company employees may be sold, pledged,
         assigned,  or  transferred  to other  persons  who, at the time of such
         sale,  pledge,  assignment or transfer,  qualify as optionees under the
         Plan. No stock options have been granted at March 31, 1998.


K.       Stock Options: (Continued)

         On January 14, 1998,  the Company  adopted an  additional  stock option
         plan (the "Retainer  Agreement").  The Retainer  Agreement provides for
         the  issuance  of a  maximum  of  $100,000  worth of stock  options  to
         purchase  shares of  common  stock at the  market  price on the date of
         grant. The options are exercisable over a period ending five years from
         the date of grant. There were no stock options granted,  exercised,  or
         outstanding at March 31, 1998.

L.       Earnings Per Share:

         The following  reconciles amounts reported in the financial  statements
         for  earnings  per share for the years  ended  March 31, 1998 and 1997,
         respectively.
<TABLE>
<CAPTION>

                                                           1998                                1997
                                            -----------------------------------   -----------------------------------
                                              Income      Shares     Per-Share    Loss         Shares      Per-Share
                                            ----------  ----------  -----------   ---------   -----------  ----------
         Income (loss)
         available to common
         stockholders basic
<S>                                         <C>         <C>              <C>      <C>          <C>            <C>    
         earnings per share                 $1,137,670  68,493,582       $.017    $(118,609)   52,514,943     $(.002)
                                                                         =====                                 ======
         Effect of dilutive
         preferred stock conversion                  -  22,128,891                        -            -
                                            ----------  ----------                ---------   -----------
         Income (loss)
         available to
         common stockholders
         diluted earnings per
         share                              $1,137,670  90,622,473       $.013    $(118,609)   52,514,943     $(.002)
                                            ==========  ==========  ===========   =========   ===========  ==========
</TABLE>



                                      F-14
<PAGE>


                   MADERA INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1998 AND 1997
                                   (Continued)



M.       Commitments and Contingencies:

         Operating Leases

         The Company  leases  office  facilities  under a operating  lease which
         expires in July 2000. Under the terms of the agreement,  the Company is
         responsible for insurance,  taxes, utilities, and other charges related
         to the office  facilities.  Also, the Company leases housing located in
         Inquitos,  Peru which are on a month to month basis.  The  accompanying
         statement of operations  includes rent expense from operating leases of
         $50,121  and  $12,079  for the year  ended  March  31,  1998 and  1997,
         respectively.  Future  minimum lease  payments due under  noncancelable
         operating leases as of March 31, 1998 are as follows:


                   Year Ending
                     March 31,

                        1999                                        $37,287
                        2000                                         12,622
                                                                   --------
                                                                    $49,909


M.       Commitments and Contingencies: (Continued)

         Litigation

         During the year ended March 31, 1996 the Company was a defendant in two
         legal  proceedings in which both cases resulted in a judgement  against
         the Company. The Company paid $10,000 towards the judgements during the
         year ended  March 31,  1998 and the  remaining  balance of  $116,500 is
         reflected in accounts payable at March 31, 1998.














                                      F-15

<PAGE>

N.       Supplemental Cash Flow Information:

         Supplemental  disclosures of cash flow  information for the years ended
         March 31, 1998, and 1997 are summarized as follows:
                                                   1998                1997
                                              --------------      -------------
         Cash paid for:
         Interest                             $        -          $     48,578
                                              ==============      =============
         Taxes                                $        -          $       -
                                              ==============      =============

         Noncash investing and 
           financing activities:
             Investment acquired with stock
               issuance                       $     200,000       $       -
             Note payable issued for 
               investment                           241,000               -
             Preferred (series D) issued 
               for inventory                           -             2,400,000
             Related parties debt reduced 
               from stock issuance                     -               159,740

O.       Subsequent Events:

         Preferred Stock Series E

         Subsequent to March 31, 1998,  the Company issued  1,000,000  shares of
         convertible  Series E preferred stock to a consultant of the Company in
         exchange  for  consulting  services.  Series  E  preferred  shares  are
         convertible into the Company's common stock on an one for one basis.

         Warrants

         On April 23, 1998, the Company granted warrants for consulting services
         rendered.  The warrants  were granted to purchase  3,000,000  shares of
         common stock, at $.058 per share, with demand and piggy back rights set
         forth in the agreement. Such warrants maybe exercised at any time from

         April 23, 1998 to and including April 23, 2003. The warrants shall vest
         and become  irrevocable as follows:  1,500,000  warrants upon April 23,
         1998 and the  remaining  1,500,000  warrants  180 days after  April 23,
         1998.  None of the warrants  granted have been exercised or canceled as
         of the report date.

         CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

         We consent to the  inclusion  in this Annual  Report Form 10-KSB of our
         report dated June 10, 1998, on our audits of the consolidated financial
         statements  of  Madera   International,   Inc.  and  Subsidiaries  (The
         "Company").

San Diego, California
November 1, 1998

                                      F-16