1. business and industrial

COVER SHEET
6 2 3 2 3
M A G N UM
HO L D I NG S ,
I NC .
(Company's Full Name)
1 7
G E N E R A L
S A N
MA L V A R
A N T O N I O ,
S T .,
P A S I G
B A R A N G A Y
C I T Y
(Business Address : No. Street City / Town / Province)
ARSENIO C. CABRERA, JR.
(6 3 2) 8 1 3 7 1 1 1
Contact Person
1 2
Month
3
Company Telephone Number
SEC 17-A
1
Day
Month
FORM TYPE
Fiscal Year
Day
Annual Meeting
Secondary License Type, If Applicable
Amended Articles Number/Section
Dept. Requiring this Doc.
Total Amount of Borrowings
4
7
7
Domestic
Total No. of Stocholders
To be accomplished by SEC Personnel concerned
File Number
LCU
Document I.D.
Cashier
Foreign
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-A
ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES
REGULATIONS CODE AND SECTION 141 OF CORPORATION CODE OF THE
PHILIPPINES
1. For the calendar year ended December 31, 2006
2. SEC Identification Number
62323
3. BIR Tax Identification No. 050-000-889-223
4. Exact name of issuer as specified in its charter
5.
MAGNUM HOLDINGS, INC.
Philippines
6.
Province, Country or other jurisdiction of
incorporation or organization
7. No. 17 Malvar St., Brgy. San Antonio, Pasig City
Address of principal office
(SEC Use Only)
Industry Classification Code:
Postal Code
8.
(632)-848-29-15
Issuer's telephone number, including area code
9.
NOT APPLICABLE
Former name, former address, and former fiscal year, if changed since last report.
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA
Title of Each Class
Common Stock
Number of Shares of Common Stock
Outstanding and Amount of Debt Outstanding
85,040,000 shares
11. Are any or all of these securities listed on Stock Exchange.
Yes [ X ]
No [ ]
If yes, state the name of such stock exchange and the classes of securities listed therein
Philippine Stock Exchange
Common stock
12. Check whether the registrant:
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder
or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of The
Corporation Code of the Philippines during the preceding twelve (12) months (or for such
shorter period that the registrant was required to file such reports);
Yes [ X ]
No [ ]
(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [ X ]
No [ ]
13. Aggregate market value of the voting shares held by non-affiliates: P 386,630,159 as at 3.30.07
DOCUMENTS INCORPORATED BY REFERENCE
A portion of the Company’s 2006 Annual Report to Stockholders is hereto attached,
incorporated by reference into Part II, Item 6 and item 7 of this report.
1
PART I - BUSINESS AND GENERAL INFORMATION
Item 1. Business
Description of Business
MAGNUM HOLDINGS, INC. was incorporated in the Philippines and registered with the
Securities and Exchange Commission on July 9, 1975.
The Company’s primary purpose is to acquire by purchase, exchange, assignment, gift or
otherwise and to hold, own and use for investment or otherwise, and to sell, assign, transfer,
exchange, lease, let, develop, mortgage, pledge, traffic, deal in, and with, and otherwise operate,
manage, enjoy and dispose of any and all properties of every kind and description and wherever
situated, as and to the extent permitted by law, including, but not limited to, buildings, tenements,
warehouses, factories, edifices and structures and other improvements and bonds, debentures,
promissory notes, shares of capital stock or other securities or obligations, created, negotiated or
issued by any corporation, association, or other entity, foreign or domestic and while the owner,
holder or possessor hereof, to exercise all the rights, powers and privileges of ownership or any
other interest therein, including the right to receive, collect and dispose of , any and all rentals,
dividends, interest and income, derived there from, and the right to vote on any proprietary or other
interest, on any shares of capital stock, and upon any bonds, debentures, or other securities,
debentures, or other securities having voting power, so owned or held: and provided that it shall
not engage in the business of an open-end or closed-end investment company as defined in the
Investment Company Act (RA 2629)
Sale and Purchase Agreement with Sagarmatha, Inc.
On March 23, 2000 the major stockholders, Magnum (Guemsey) LTD and Magnum Enterprises
SDB VHD entered into a conditional sale and purchase agreement with Sagarmatha, Inc. selling all
its interest on the Company to the latter. The said conditional sale and purchase agreement was
consummated on July 11, 2000 through a cross sale of 60,600,000 shares of the Company. In
compliance with the Revised Securities act Sagarmatha, Inc. conducted a tender offer for the
24,440,000 common shares of the company not covered by the negotiated sale. The tender offer
was conducted for the period June 06 to July 04, 2000. In 2002 to 2003, Sagarmatha sold
31,200,000 shares (of which 25,950,000 were purchased by Elizabeth Louise Armstrong) the sale
reduced the ownership interest of Sagarmatha, Inc. to 34.45%.
Development After Acquisition by Sagarmatha, Inc.
The unfavorable economic condition since August 2000 did not warrant an aggressive stance
towards investing and trading in the stock exchange. This business situation gives the company no
choice but to be very cautious from investing and trading because of the unpredictable
profitability. The temporary discontinuance of the company’s operation did not warrant the
acquisition of assets nor the hiring of personnel. The personnel requirement is accommodated by
its shareholder Sagarmatha, Inc. The seconded number of employees of MHI was two (2) in 2004,
two (2) in 2005 and two (2) in 2006.
The market research conducted by the company showed that the economic situation will not be
stable for a continuing profitable business operation. For this reason, the Company will still
refrain from investing at least in the next six (6) months.
2
Item 2. Properties
The Company does not own any property (such as real estate, plant and equipment, mines, patent,
etc). There is no planned acquisition of properties in the next twelve (12) months.
The Company has rented an office space in Barangay San Antonio, Pasig City. The lease rate is
pegged at P5,000 per month. However, on the last month of the year, the Company has transferred
and occupied a small portion of an office owned by a stockholder.
Item 3. Legal Proceedings
For the past six (6) years, the issuer has not come into possession of any information on any
material pending legal proceedings of the following nature, which any of its directors and
executive officers is a party to or of which any of their property is subject.
1. Any Bankruptcy Petition
2. Conviction by Final Judgment
3. Being subject to any order, judgment or decree
4. Violation of a Securities or Commodities Law or Regulation
Item 4. Submission of Matters to a Vote of Security Holders
The current Directors and officers were appointed during the Board of Director’s Meeting held on
21 February 2007, which was reported under SEC Form 17-C submitted on the same date.
PART II - OPERATIONAL AND FINANCIAL INFORMATION
(A) Market for Registrant's Common Equity and Related Stockholder Matters
Market Information
The principal market for the shares of stock of MHI is the Philippine Stock Exchange.
Closing Market price as at 30 March 2007 is pegged at P 9.40.
The high and low sales prices of each quarter within the last two years are as follows:
Year 2006
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
Low
P0.88
0.88
2.20
3.90
P 0.88
0.88
1.50
3.70
P2.00
1.00
1.00
1.00
P1.90
1.00
1.00
1.00
Source : Technistock
Year 2005
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
3
(2) Holders
The number of shareholders of record as of December 31, 2006 was 477.
Common shares outstanding as of December 31, 2006 were 85,040,000.
Top 20 stockholders as of December 31, 2006:
1.
2.
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
PCD Nominee Corp. (Filipino)
Elizabeth Louise Armstrong
Jimmy Soo
PCD Nominee Corp. (Non-Filipino)
Delia Dulay
Daniel Ongchoco
Narciso Dungog
Erwein John Catoto
Melchor Rodriguez
Hermelita Salom
Nicanor Jorge
Leonardo Perez
Chee Sum Yeong
Crispin Go
Rowena Aloc
Victoria Chavez
Arsenio Exconde
Yolanda Gao
Angelina Jesus
Ma. Diahn Daphne Jaucian
No of Shares Held % of Total
46,360,830
54.52
25,950,000
30.52
3,000,000
3.53
2,995,000
3.52
1,350,000
1.59
336,667
0.40
200,000
0.24
140,000
0.16
110,000
0.13
100,000
0.12
80,000
0.09
50,000
0.06
30,000
0.04
21,000
0.02
20,000
0.02
20,000
0.02
20,000
0.02
20,000
0.02
20,000
0.02
20,000
0.02
Top 20 stockholders as of February 28, 2007:
1.
2.
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
PCD Nominee Corp. (Filipino)
Elizabeth Louise Armstrong
Jimmy Soo
PCD Nominee Corp. (Non-Filipino)
Narciso Dungog
Erwin Catoto
Melchor Rodriguez
Leonardo Perez
Chee Sum Yeong
Crispin Go
Rowena Aloc
Victoria Chavez
Arsenio Exconde
Yolanda Gao
Ma. Diahn Daphne Jaucian
Angelina Jesus
David Kho
N F Papanicolan
Eloisa Tantoco
Erlinda Abacan
No of Shares Held
% of Total
48,150,497
56.62%
25,950,000
30.52%
3,000,000
3.53%
2,995,000
3.52%
210,000
0.25%
140,000
0.16%
110,000
0.13%
50,000
0.06%
30,000
0.04%
21,000
0.02%
20,000
0.02%
20,000
0.02%
20,000
0.02%
20,000
0.02%
20,000
0.02%
20,000
0.02%
20,000
0.02%
20,000
0.02%
20,000
0.02%
10,000
0.01%
4
( 3)
Dividends
There were no dividends declared in the previous and current years.
(4)
Recent Sales of Unregistered Securities
For the period 2003 to 2006, the company has no sale of any unregistered securities.
PART III – FINANCIAL INFORMATION
(A) Management's Discussion and Analysis or Plan of Operation.
On 21 February 2007, the Board of Director approved the following:
1.
2.
3.
4.
5.
Change the corporate name to ”NiHAO Mineral Resources International, Inc.” and amend
Article 1 of the Articles of Incorporated and the By Laws. The “Ni” in the proposed
corporate name is the chemical symbol of nickel;
The conversion of the primary purpose to include the exploration, development, operation
of mineral properties and the mining of metallic and non-metallic minerals including but
not limited to nickel, gold, copper and the like;
To increase the capital stock from P100million to P700 million and stock rights offering
to comply with the requirements of SEC for the minimum amount of capital to be
subscribed and paid up by the MHI stockholders. The Board likewise authorized
Management to formulate the terms and conditions for the stock rights offering;
Waiver of stock rights;
Conversion of stockholders advances of HDI Securities, Inc. and Jerry C. Angping in the
aggregate amount of P 4,699,465.00 into equity and issuance of 4,669,465 shares from
the unissued portion of MHI’s authorized capital stock.
For 2007, the principal stockholders are to provide the necessary funds to cover the various scheduled
activities of the Company.
Financial Condition – 2006 and prior years
In order to sustain the “necessary” expenses that has to be incurred by a going concern that has
temporarily suspended its commercial operation, a bilateral agreement so approve in the Board
Resolution, was reach between the Company and Sagarmatha, Inc. one of its shareholders, such that the
latter will temporarily advance the payment of the suspended operation expenses pending resumption
of the company’s operation. Starting 2006 these advances are interest bearing.
In November 30, 2006, the Company was able to settle the outstanding advances from Sagarmatha, Inc.
Funds were provided by the principal stockholders and will be considered as deposit on future
subscription.
As of December 31,2006 and 2005
Total assets increased by 22% or P0.010 million from P 0.044 million in 2005 to P0.054 million in
2006. The increase is due to additional advances made by the stockholder.
Total expenses for the year increased by 17% or P0.132million due to interest charges on advances and
fines and penalties imposed due to non-submission of reports to government agencies.
5
As of December 31, 2005 and 2004
Total assets decreased by 8% or P0.004 million from P0.048 million in 2004 to P0.044 million in 2005.
The net decrease is due to the decrease in cash in bank of P0.006 million and the increase in advances
of P0.002 million.
The decrease in cash in bank of P0.006 million is accounted for as follows:
Funds provided by:
Advances from Sagarmatha, Inc.
Funds used for:
Net loss from operations
Advances for official business
Payment of accounts payable & accrual
Decrease in Cash in Bank
791,600
788,694
2,247
6,953
797,894
(
6,294)
As of December 31, 2004 and 2003
Total assets decreased by 52% or by P0.051 million from P0.100 million in 2003 to P0.048 million in
2004. The net decrease is due to the decrease in cash in bank of P0.089 million and increase in
advances of P0.038 million.
The decrease in cash in bank of P0.089 million is accounted for as follows:
Fund provided by:
Increase in accounts payable & accrued expenses
Advances from Sagarmatha, Inc.
Total
Funds used for:
Operating losses
Advances for official business
Total
Net decrease in cash in bank
11.633
628,028
639,661
691,286
37,753
729,039
89,378
Results Of Operation
The operations of the Company has been suspended since August 2000. The suspension is for the
purpose of minimizing the losses occasioned by unfavorable business conditions. Henceforth, the
losses sustained by the Company purely represents suspended operations cost and expenses of a going
concern.
For the years ended December 31, 2006 and 2005
The net loss during the year amounted to P 0.921 million or equivalent to P 0.011 loss per share. The
net loss during the year increased by P0.132 million or by 17% and the net loss per share increased by
P.002 per share or by 22% compared to the immediately preceding year.
6
The increase in cost and expenses by P 0.132 million is accounted for as follows:
Increase (Decrease)
Amount
%
Professional Fees
Meetings & Conferences
Transportation
Interest Expense
Rent
Fines and Penalties
Taxes & licenses
Communication
Miscellaneous
3,960
( 349)
43,026
72,979
(5,000)
42,300
( 5,456)
(32,697)
13,250
Net increase in cost and expenses
132,013
1.74%
- 0.23%
85.81%
100.00%
- 8.33%
100.00%
-100.00%
-100.00%
47.90%
For the years ended December 31, 2005 and 2004
The net loss during the year amounted to P 0.79 million or equivalent to P 0.009 loss per share. The
net loss during the year increased by P0.097 million or by 14% and the net loss per share increased by
P.001 per share or by 11% compared to the immediately preceding year.
The increase in cost and expenses by P 0.120 million is accounted for as follows:
Increase (Decrease)
Amount
%
Professional Fees
Meetings & Conferences
Transportation
Annual listing maintenance fee
Utilities
Communication
Taxes & licenses
Supplies
Miscellaneous
10,000
31,722
(35,155)
110,000
(50,916)
19,935
9,118
(14,172)
16,676
Net increase in cost and expenses
97,208
1.45%
4.59%
-5.09%
15.91%
- 7.37%
2.88%
1.32%
- 2.05%
2.41%
The increase in cost and expenses is primarily due to uncontrollable cost and expenses.
The Company is continuously controlling its expenses in order to reduce the losses occasioned by the
temporary suspension of operations. As soon as the business conditions become profitably attractive,
the company plans to make investments and actively trade at the stock exchange.
7
Key Performance Factors:
For the Years Ended
December 31
2006
2005
Debt to Equity Ratio
Current Ratio
Loss per share
(1.0112)
(1.0114)
0.2159
0.0455
P 0.011
P0.009
Debt to Equity Ratio:
This ratio is determined by dividing the total liabilities into the total stockholders
equity. The ratio measures the leverage on borrowed capital.
Current Ratio:
The ratio is computed by dividing the current assets into the current liabilities. The
ratio measures the company’s ability to pay maturing obligations.
Financial Statements
Audit report enclosed
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
None
PART IV - CONTROL AND COMPENSATION INFORMATION
(A) (1) Directors and Executive Officers of the Registrant
The following persons are the directors and officers who have been nominated to serve as
directors and officers until the next annual meeting of stockholders or until their successors, if
any, are elected.
Office
Director, Chairman of the Board
Director, President
Corporate Secretary
Treasurer & Compliance
Officer
Independent Director
Director
Director
Director
Name
Khrisnamurti Africano
Delfin S. Castro, Jr.
Arsenio Cabrera, Jr.
Citizenship
Filipino
Filipino
Filipino
Age
70
41
46
Simmon C. Dee
Felix Ang
Brandon Chia Tzu Chern
Eugenio R. Esguerra
Edison D. Go
Filipino
Filipino
Singaporean
Filipino
Filipino
52
47
29
48
50
KHRISNAMURTI A. AFRICANO, Chairman of the Board, Filipino
Atty. Africano, 70 years old, holds a Master of Laws from the Harvard Law School and a
Bachelor of Laws degree Magna Cum Laude at the Far Eastern University. He was elected as
Chairman of the Board on 21 February 2007. He is currently the Legal Consultant of Angping &
Associates Securities, Inc.
8
DELFIN S. CASTRO, Jr. Director/President, Filipino
Mr. Castro, 40 years old, holds a Masters in Business Administration and a Bachelor of
Science Degree in Business Administration from the University of the Philippines. He was
elected as President on 21 February 2007. He was formerly the Global Portfolio Manager for
Private Equities of a fund management company - United Resources Asset Management, Inc.
He was also a Senior Assistant Vice President of Asiatrust Bank, Inc. handling restructuring of
loans and rehabilitation of companies, and was head of the bank’s acquired assets. His other
past positions include as Senior Consultant in the Management Services Division of SGV &
Co. handling mergers and acquisitions, and Engagement Director for Palo Alto Consultants
Asia, Inc.
ARSENIO C. CABRERA, Director/Corporate Secretary, Filipino
Atty. Cabrera, 46 years old, a member of the Philippine Bar, holds a Bachelor of Laws
(Second Honors) and a Bachelor of Science in Legal Management from the Ateneo de Manila
University. Mr. Cabrera is a Senior Partner of Herrera Teehankee Faylona & Cabrera Law
Offices. He was elected as a Director of the Company on 30 November 2006. He is currently
the General Counsel of Systems Technology Institute, Inc., Corporate Secretary of
GEOGRACE Resources Philippines, Inc., Adamson & Adamson, Inc., Global Clark Assets
Corporation, Clark Field Medical Services, Inc., Mountain Ridge Executive Resorts &
Corporate Center, Inc., AAPC Philippines, Inc., Calatagan Bay Realty, Inc., Canlubang Golf
and Country Club, Inc., DLS-STI College of Health Professions, Inc., Foundation for
Filipinos, Inc., Lorenzo Shipping Corporation, Northcroft Lim (Philippines) Inc., People’s
Shrine Foundation, Inc. Renaissance Condominium Corporation, Rinaldi Structural
(Philippines), Inc., Sonak Holdings, Inc., Trend Developers, Inc., Villa Development
Corporation and WVC Development Corporation.
SIMON C. DEE, Director, Filipino
Mr. Dee, 52 years old, obtained his degree in Industrial Management Engineering from De La
Salle University. He has been in the cargo transport business for almost 30 years. He is
President of Transmodal Forwarders Corporation, Interisland Container Transport and Leasing
Corporation, and Icon Reefer Corporation. He is also a director of Kabayan Realty, and
Landbase Realty. He has also held marketing positions in First Base Industries Corporation ,
Sulpicio Lines ad Worldwide Electronics Corporation.
FELIX R. ANG
Mr. Ang, 47 years old, is President of CATS Motors, Inc., CATS Automobile Corporation,
CATS Asian Cars, Inc. and Felton Properties. He is also a director of Bit Stream
Entertainment, Inc., Best Forms, Inc., and Sound Stream Entertainment, Inc.
BRADON CHIA TZU CHERN, Director, Filipino
Mr. Chern, 29 years old, is a graduate of Bachelor of Laws at the National University of
Singapore. He was elected as Director of the company on 21 February 2007. He is currently
the Operations Manager (International) of HDI Group/Macroserve Pte. Ltd.
9
EUGENIO R. ESGUERRA, Director, Filipino
Mr. Esguerra, 49, holds a Masters Degree of Applied Science in Mineral Exploration from the
University of New South Wales in Australia and a Bachelor of Science in Geology from
Mapua Institute of Technology. He was elected as Director on 21 February 2007. He is
currently a Consulting Geologist at RT Minerals Corporation, Rizal Cement Corporation,
Diamond Group Development Corp. and Ko’s Partners Mining Company, a Consulting
Engineering Geologits at Robinson Homes and Shell Philippines. He was formerly a
Consulting Geologist at Didipio Gold/Copper Project, Climax Mining, an Engineering
Geologist at Katahira Engineers International, a Project Geologist at Nettitsu Mining
Consultant, a Consulting Geologist at Palmer Resources in Canada, and Exploration Geologist
at Stellar Metals also in Canada . He was also formerly a Geologits at Mines and Geosciences
Bureau.
EDISON GO, Director, Filipino
Mr. Go, 50 attended De La Salle University, major in Business Management. He was elected
as Director on 21 February 2007. He is currently the General Manager of Shine Manila
Customs’ Brokerage, Proprietor of EDG Trucking and G.D. Edison Laboratories, President of
Vertical Fertilizer Chemical Corporation and Grapeseeds of Wonder Corp., Managing Partner
of Sofast Chemical Fertilizer Corporation and Director of Netpak Philippines, Inc.
(2)
Identify Significant Employee
No person, who is not a director or an executive officer, is expected to make a significant
contribution to the business of the Company. Neither is the business highly dependent on
the services of certain key personnel.
(c)
Family Relationships
No family relationships up to the fourth civil degree either by consanguinity or affinity
exist among the directors, executive officers or persons nominated or chosen by the
Company to become directors or executive officers.
(d)
Involvement in Certain Legal Proceedings
To the knowledge and/or information of the Company, the above named directors and
executive officers of the Company are not, presently or during the last five (5) years up to
the present date, involved or have been involved in: (a) any bankruptcy petition filed by
or against any business of which such person was a general partner or executive officer;
(b) any conviction by final judgment, in a criminal proceeding, domestic or foreign, or
being subject to a pending criminal proceeding, domestic or foreign, excluding traffic
violations and other minor offenses; (c) being subject to any order, judgment, or decree,
not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
domestic or foreign, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities, commodities or
banking activities; and (d) being found by a domestic or foreign court of competent
jurisdiction (in a civil action), the Commission or comparable foreign body, or a domestic
or foreign Exchange or other organized trading market or self regulatory organization, to
have violated a securities or commodities law or regulation, and the judgment has not
been reversed, suspended, or vacated.
10
(B)
Executive Compensation
SUMMARY COMPENSATION TABLE
Name and Principal Position
Year
2007 (est)
Salary
Annual Compensation
Bonus
Other
2,210,000
========
========
0
========
0
========
0
========
0
========
Delfin Castro, Jr., President
Claudine del Rosario, Vice President
Gina Pasion, Controller
Arlene Mendoza, Legal Officer
Bertrand Yao, Executive Assistant
No executive compensation
•
2004-2006
Compensation of Directors and Chairman
The Directors and the Chairman of MHI are not receiving any compensation directly or
indirectly for any services provided.
•
Employment Contracts and Termination of Employment and Change-in-control
Arrangement
There are no special arrangements as to the employment contract of any executive officer
such that said officer will be compensated upon his resignation, retirement or other
termination from the Company or its subsidiaries, or as may result from a change-incontrol except as provided by law.
11
(C) Security Ownership of Certain Beneficial Owners and Management as of December 31, 2005
Name and address
of record owner
Type of Class
and relationship
with owner
Common
PCD Nominee Corp
Name of
Beneficial Owner
and relationship
with Record owner
Citizenship
Percent
Filipino
46,360,830
54.52%
Filipino
18,539,130
21.80%
R & L Investments
675 Lee St. Mandaluyong City
Filipino
6,222,500
7.32%
Angping & Associates
20/F The Peak, 107 LP Liveste St.
Salcedo Village, Makati City
Filipno
5,121,385
6.02%
MDR Securities, Inc.
Unit 1806, 8F Medical Plaza Ortigas Bldg, Pasig City
Filipino
4,894,330
5.76%
Singaporean
25,950,000
30.52%
G/F, Makati Stock Exchange Bldg. Ayala Avenue ,
Makati City
Name of PCD participant owning more than 5%
HDI Securites, Inc.
11F Ayala Tower I, Ayala Avenue, Makati City
Common
No. of
Shares Held
Elizabeth Louise Kim Armstrong
Jannov Plaza, 2295 Pasong Tamo Ext.
Makati City
Note 1 PCD Nominee Corporation is a wholly owned subsidiary of Philippine Central
Depository, Inc. (PCD) and is the registered owner of the shares in the book of the Company’s
transfer agent. The participants of the PCD are the beneficial owner of such shares. PCD
holds the shares on behalf of their clients.
( 2 ) Security Ownership of Management
Type of Class
Name of Beneficial Owner
Common shares
Khrisnamurti A. Africano
Delfin S. Castro, Jr
Felix Ang
Eugene Esguerra
Simmon Dee
Brandon Chia Tzu Chem
Edison Go
Arsenio Cabrera , Jr.
All Directors and executive
officers as a group
(D)
Amount & nature
of beneficial
ownership
R
R
R
R
R
R
R
R
0
0
1,000
0
1,000
0
1,000
0
3,000
Citizenship
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Percent
of
class
0.0000%
0.0000%
0.0012%
0.0000%
0.0012%
0.0000%
0.0012%
0.0000%
0.0035%
Certain Relationships and Related Transactions
No family relationships up to the fourth civil degree either by consanguinity or affinity exist
among the directors, executive officers or persons nominated or chosen by the Company to
become directors or executive officers.
12
PART V – CORPORATE GOVERNANCE
(a)
Due to the fact that there has been no commercial operations of the Company and its
subsidiaries and considering that the Company currently has only one (1) employee, there has
been no specific mechanism/evaluation system formulated by the Board to measure
compliance with the Manual.
(b)
The Company elects at least one (1) independent Director. The Company also ensures that all
the nominees to the Board possess none of the disqualifications prescribed by the Manual on
Corporate Governance. The Company has an Audit Committee which is tasked to review the
Audited Financial Statements.
(c)
In view of the restraints discussed in item (a) above, MHI cannot be fully compliant with the
provisions of the Manual.
(d)
As soon as the Company has regular commercial operations, it shall strengthen the system
already in place to ensure full compliance with the Manual.
PART VII - EXHIBITS AND SCHEDULES
(A)
Exhibits and Reports on SEC Form 17-C
(a) Exhibits - See accompanying index to Exhibits ( Page 15 )
•
The other exhibits, as indicated in the Index to Exhibits are either not applicable to
the Company or require no answer.
(b) Reports on SEC Form 17-C
Date of Report - 06 December 2006
Item Reported
Item 9 – Resignation of directors/Election of Directors and Officer
The Board of Directors accepted the resignations of Messrs. Toribio U. Reyes III,
Jose Abad Santos III and Edmundo T. Gocudo as Directors. The Board elected Messrs.
Francis H. Suarez, Simon C. Dee and Edison D. Go as new directors of MHI to serve as
such for the ensuing year and until the election and disqualification of their successors.
The Board likewise accepted the resignations of Mr. Toribio U. Reyes, III as Chairman
and Treasurer, Ms. Leonor Cabarus as President and Atty. Perfecto Mirador as Corporate
Secretary. The Board elected Mr. Francis H. Suarez Jr. as Chairman and Treasurer, Mr.
Simmon C. Dee as President and Compliance Officer and Atty. Arsenio C. Cabrera, Jr. as
Corporate Secretary/ Corporate Information Officer.
Date of Report - 19 December 2006
Item Reported
Item 4 – Resignation of directors/
The company received a letter dated 15 December 2006 from Mr. Benson J. Te
indicating his irrevocable resignation as Independent Director. The resignation of Mr. Te
was not due to any disagreement with MHI on any matter relating to the Company’s
operations.
13
MAGNUM HOLDINGS, INC.
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
FORM 17-A
Financial Statements
Statement of Management's Responsibility For Financial Statements
Report of Independent Public Accountants
Balance Sheets as of December 31 , 2006 and 2005
Statements of Expenses for the years ended December 31, 2006 and 2005
Statements of Changes in Capital Deficiency for the years ended
December 31, 2006 and 2005
Statements of Cash Flow for the years ended December 31, 2006 and 2005
Notes to Financial Statement
Supplementary Schedules
Report of Independent Public Accountants on Supplementary Schedules
A. Marketable Securities - ( Current Marketable Equity Securities
and Short - term Cash Investments )
B. Amounts Receivable from Directors, Officers, Employees, Related
Parties and Principal Stockholders ( Other than Affiliates )
C. Non-Current Marketable Equity Securities, Other Long-term
Investments, and Other Investments
D. Indebtedness to Unconsolidated Subsidiaries and Affiliates
E. Property, Plant and Equitment
F. Accumulated Depreciation
G. Deferred charges - Other Assets
H. Long-Term Debt
I. Indebtedness to Affiliates and related parties
(Long-term Loans from Related Companies)
J. Guarantees of securities of other Issuers
K. Capital Stock
16
17-18
19
20
21
22
23-27
28
NA
NA
NA
NA
NA
NA
NA
29
NA
30
15
MAGNUM HOLDINGS, INC.
BALANCE SHEETS
December 31
2006
Notes
ASSETS
Current
Cash
Non-current
Advances to officers and employees
2
2005
P
14,000
P
4,327
P
40,000
54,000
P
40,000
44,327
P
64,841
P
95,046
2, 4, 9
LIABILITIES AND CAPITAL DEFICIENCY
LIABILITIES
Current
Accounts payable and accrued expenses
Non-current
Advances from shareholders
CAPITAL DEFICIENCY
The notes on pages 7 to 11 are an integral part of these financial statements.
2, 5
2, 4
4,806,098
4,870,939
(4,816,939)
P
54,000
3,845,512
3,940,558
(3,896,231)
P
44,327
MAGNUM HOLDINGS, INC.
STATEMENTS OF EXPENSES
Years Ended December 31
2006
2005
Notes
EXPENSES
Professional fees
Listing fees
Meetings and conferences
Transportation
Interest expense
Rent
Fines and penalties
Taxes and licenses
Communication
Others
NET LOSS
BASIC LOSS PER SHARE
P
2,7
The notes on pages 7 to 11 are an integral part of these financial statements.
P
231,960
220,000
152,280
93,166
72,979
55,000
42,300
12,112
40,911
920,708
P
P
228,000
220,000
152,629
50,140
60,000
17,568
32,697
27,661
788,695
P
0.011
P
0.009
MAGNUM HOLDINGS, INC.
STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY
Notes
SHARE CAPITAL
Par value, P1 per share
Authorized share-100,000,000
P 100,000,000
Issued and outstanding - 85,040,000 shares
Additional paid-in capital
DEFICIENCY
Balance, beginning of year
Net loss
Balance, end of year
6
6
Years Ended December 31
2006
2005
P 85,040,000
190,000
85,230,000
P 85,040,000
190,000
85,230,000
89,126,231
920,708
90,046,939
88,337,537
788,694
89,126,231
P (4,816,939)
P (3,896,231)
The notes on 7 to 11 are an integral part of these financial statements.
MERCADO CALDERON JARAVATA & CO. 5
MAGNUM HOLDINGS, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31
2006
2005
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Changes in operating asset and liabilities:
Increase in other current asset
Decrease in accounts payable and accrued expenses
Net cash used in operating activities
P
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances from shareholders
NET INCREASE (DECREASE) IN CASH
CASH, BEGINNING OF YEAR
2
CASH, END OF YEAR
2
P
920,708
P
788,695
30,205
950,913
2,247
6,953
797,895
960,586
791,600
9,673
(6,295)
4,327
10,622
14,000
P
4,327
The notes on pages 7 to 11 are an integral part of these financial statements.
MERCADO CALDERON JARAVATA & CO. 6
MAGNUM HOLDINGS CORPORATION
NOTES TO FINANCIAL STATEMENTS
1.
Corporate information
Magnum Holdings, Inc. was incorporated in the Philippines and registered with the Securities and
Exchange Commission on July 9, 1975 under SEC Reg. No 62323. The Company’s primary purpose is to
acquire by purchase, exchange, assignment, gift or otherwise, and to hold, own and used for investment
or otherwise, and to sell, assign, operate or dispose any and all properties of every kind and description as
to the extent permitted by law.
The registered office address of the Company is No. 17 Gen. Malvar Street, Brgy. San Antonio, Pasig
City.
The Company’s personnel requirement is being accommodated by its shareholder, Sagarmatha, Inc. since
the Company is not actively trading.
These financial statements have been approved and authorized for issuance by the Company’s Board of
Directors on March 17, 2006
2.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of the financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of presentation
The Company’s financial statements have been prepared in accordance with Philippine Financial
Reporting Standards (PFRS). The term PFRS includes all PFRS, Philippine Accounting Standards (PAS)
and interpretation, which have been approved by the Accounting Standards Council (now called Financial
Reporting Standards Council or FRSC).
The policies set out below have been consistently applied to both years presented.
The preparation of financial statements in conformity with PFRS requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in the process of applying the
Company’s accounting policies. Actual results may ultimately differ from these estimates.
New standards, amendments and interpretations effective 2006 and onwards
The following standards, amendments, and interpretations which are mandatory for accounting periods
beginning on or after January 1, 2006, unless otherwise stated, are not adopted and not relevant to the
Company’s operations.
Philippine Accounting Standards
•
•
•
•
PAS 19
PAS 39
PAS 39
PAS 39
Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures
Cash Flow Hedge Accounting of Forecast of Intragroup Transactions
The Fair Value Option
Financial Guarantee Contracts
Philippine Financial Reporting Standards
• PFRS 4 Financial Guarantee Contracts
• PFRS 6 Exploration for and Evaluation of Mineral Resources
MERCADO CALDERON JARAVATA & CO. 7
MAGNUM HOLDINGS, INC. Notes to Financial Statements – December 31, 2006 Philippine Interpretation
• IFRIC 4
• IFRIC 5
• IFRIC 7
• IFRIC 8
• IFRIC 9
• IFRIC 10
Determining whether an Arrangement Contains a Lease
Rights to Interests arising from Decommissioning, Restoration and Environmental
Rehabilitation Funds
Applying the Restatement Approach under PAS 29 Financial Reporting in
Hyperinflationary Economies
Scope of PFRS 2
Reassessment of Embedded Derivatives
Interim Financial Reporting and Impairment (effective on or after November 1, 2006)
Related party and related party transactions
Related party relationships exist when one party has the ability to control, directly or indirectly
through one or more intermediaries, the other party or exercise significant influence over the other
party in making financial and operating decisions. Such relationships also exist between and/or
among entities, which are under common control with the reporting enterprise and its key
management personnel, directors, or its shareholders. In considering each possible related party
relationship, attention is directed to the substance of the relationship, and not merely the legal
form.
Transactions between related parties are accounted for at arm’s length prices or on terms similar to
those offered to non-related entities in an economically comparable market.
Functional and presentation currency
Items include in the financial statements of the Company are measured using the currency of the primary
economic environment in which the entity operates (the Philippine peso). The financial statements are
presented in Philippine peso, which is the Company’s functional and presentation currency.
Financial risk management
The Company’s activities expose it to a variety of financial risks: credit risk and liquidity risk. The
Company’s overall risk management program seeks to minimize potential adverse effects on the financial
performance of the Company.
The policies for managing specific risks are summarized below:
Liquidity risk
In the management of liquidity, the Company monitors and maintains a level of cash deemed adequate by
the management to finance the Company’s operations and mitigate the effects of fluctuation in cash flows.
Credit risk
The Company’s establishes credit limits at the level of the individual borrower and corporate relationship.
Financial assets and liabilities
The carrying amounts of the financial assets (receivables and other non-current assets) and financial
liabilities (payables and accrued expenses) recorded in the financial statements represents their respective net
fair values.
Cash
Cash includes money and any other negotiable instruments that are payable in money and acceptable by
the bank for deposit and immediate credit. Cash is valued at face value.
Accounts payable and accrued expenses
Accounts payable and accrued expenses are recognized in the period in which the related money are
received or when a legally enforceable claim against the Company is established.
MERCADO CALDERON JARAVATA & CO. 8
MAGNUM HOLDINGS, INC. Notes to Financial Statements – December 31, 2006 Expense recognition
Expenses are recognized when incurred.
Basic loss per share
Basic loss per share is determined by dividing net loss by the total number of shares of stocks issued and
outstanding during the year.
Income taxes
Income tax payable on profits, based on the applicable tax laws, is recognized as an expense in the period
in which profit arise.
3.
Going concern uncertainties
The accompanying financial statements have been prepared on the assumption that the Company will
continue as a going concern. However, the following factors, among others, indicate that the Company
may not be able to continue as a going concern:
•
The Company incurred losses of P920,708; P788,695 and P691,286 and capital deficiency of
P4,816,939, P3,896,231 and P3,107,537 for the years ended December 31, 2006, 2005 and
2004 respectively, as shown in its financial statements.
• The losses were attributed primarily to the poor trading conditions caused by financial instability
affecting the region as well as representing the cost of maintaining and safeguarding the Company’s
assets and resources. As of balance sheet date, there is no sign of a favorable market condition.
The Company is dependent on the continuing support of its major stockholders, Sagarmatha, Inc.
The Company has taken the cautious stance in 2006 and 2005 due to political uncertainties. Depending on
how political events will finally unfold, the Company will trade securities to full trading operation
immediately upon generating the funds that would be derived from the issuance of the remaining
14,960,000 unissued shares.
The above statements do not include any adjustments that might result from the outcome of the above
uncertainties.
4.
Related entities and related party transactions
Below shows the confirmed balances of related party transactions:
Related party
Sagarmatha, Inc.
Officers and employees
Amount owed by
related parties
2005
2006
Amount owed to related
party
2005
2006
P 4,806,098
P 40,000
P
3,845,512
P 40,000
There was no movement in the amount owed by the officers and employees. The amount owed to
stockholder represents non-interest bearing advances from Samargatha, Inc. which the latter temporarily
advance for the necessary expenses of the Company’s suspended operational expenditure pending
resumption of commercial operation. A bilateral agreement so approved in the Board Resolution, was
reach between the Company and Sagarmatha, Inc. one of its shareholders, such that the latter will
temporarily advance the payment of the suspended operation expenses pending resumption of the
company’s operation. These advances are non-interest bearing. Sagarmatha, Inc. also provided the
Company with a sort of petty cash fund deposited in the Company’s current account in the amount of
about P100,000. The fund is replenished upon request of the Company.
MERCADO CALDERON JARAVATA & CO. 9
MAGNUM HOLDINGS, INC. Notes to Financial Statements – December 31, 2006 5.
Accounts payable and accrued expenses
This account consists of accounts payable and accrued professional fees of P12,112 and P52,729
respectively.
6. Issued capital
The Company’s authorized capital stock is P100,000,000 divided into 100,000,000 shares with a par value
of P1 per share. Total subscribed and paid-up capital stock is P85,040,000 as of December 31, 2006.
There are 477 stockholders of the Company as of December 31, 2006. Below are the percentages of total
shares outstanding held by each stockholder:
Stockholders
Corporate
Individual
Individual
7.
Filipino
Filipino
Foreign
Total shares
Percent
45,893,830
10,169,170
28,977,000
85,040,000
53.97%
11.96%
34.07%
100.00%
Basic loss per share
Computation of loss per share is shown below.
2005
2006
Net loss for the year
Total outstanding shares
Basic loss per share
8.
P 920,708
85,040,000
P
0.011
P
788,694
85,040,000
P
0.009
Key management assumptions
Short range financial plan
The Company is working on the documentation of the stock rights to be issued from the unissued shares in
the amount of P14,960,000. The proceeds from the issuance of stock rights shall be used for the
following:
•
•
To eliminate the deficit P4,816,939 as of December 31, 2006.
The cash inflow to be generated by the stockrights shall be used to finance the outstanding
advances from Samargatha, Inc. in the amount of P4,806,098 and the balance will be available
for working capital.
The Company does not expect stable improvement in business condition at least in the next six months.
9.
Significant accounting judgments and estimates
Estimates
The key assumptions concerning the future and other sources of estimation uncertainty at the balance
sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.
Estimated allowance for probable losses on receivables
The Company evaluates the possibility of losses that may arise out of the non-collection of receivables
based on a certain percentage of the outstanding balance of receivable and on an evaluation of the current
MERCADO CALDERON JARAVATA & CO. 10
MAGNUM HOLDINGS, INC. Notes to Financial Statements – December 31, 2006 status of the account. However, as of December 31, 2006, no allowance for probable losses was provided
for, as the accounts were deemed fully collectible.
Asset impairment
Impairment on assets occurs whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The factors that the company considers important which could
trigger an impairment review include the following:
• significant underperformance relative to the expected historical or projected future operating
results;
• significant changes in the manner of use of the acquired assets or the strategy for overall
business; and
• significant negative industry or economic trends.
An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell. The fair value less
costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction while value in
use is the present value of estimated future cash flows expected to arise from the continuing use of an asset
and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets
or, if it is not possible, for the cash-generating unit to which the asset belongs.
In determining the present value of estimated future cash flows expected to be generated from the
continued use of the assets, the Company is required to make estimates and assumptions that can
materially affect the financial statements.
The Company has no property and equipment to be tested for impairment as of December 31, 2006 and
2005.
10. Additional disclosure requirements by SRC Rule 68
Under the following disclosure requirements by the SRC Rule 68, the company has neither an existing plan
nor transaction involving the following:
●
●
●
●
●
●
●
Preferred shares
Pension and retirement plans
Profit sharing and other similar plans
Capital stock optioned, sold or offered for sale to directors, officers and key
employees
Warrants or rights outstanding
Defaults
Key management personnel compensation
11. Other matters
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the
current year.
MERCADO CALDERON JARAVATA & CO. 11
MAGNUM HOLDINGS, INC.
Schedule A
MARKETABLE SECURITIES ( Current Marketable Equity Securities and
Other Short-Term Cash Investments)
As of December 31, 2006
Name of issuing entity
and association
of each issue (1)
NONE
Number of shares
of principal amount
of bonds and notes
Amount shown
in the balance
sheet*(2)
NONE
NONE
Value based on
market quotation at
balance sheet date (3)
Income
received and
accrued
NONE
MAGNUM HOLDINGS, INC.
Schedule I
Indebtedness to Affiliates and Related Parties (Long-term Loans from Related Companies)
As of December 31, 2006
Name of Affiliate (1)
Balance at beginning
of period
Balance at end of period (2)
NONE
NONE
NONE
MAGNUM HOLDINGS, INC.
Schedule K
SHARE CAPITAL
As of December 31, 2006
Title
of issue
(2)
Number of
shares
authorized
Number of shares
issued and
outstanding at
shown under
related balance
sheet caption
Common
100,000,000
85,040,000
Number of shares
shares reserved
for options,
warrants,
conversion
& other rights
14,960,000
Number of
shares held
by affiliates
-3
Directors,
Officers
and
Employees
3,000
Others
85,037,000