UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
      
      
 FORM 10-Q 
      
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended DecemberMarch 31, 20082009 
      
[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT 
For the transition period from ________ to ________ 
      
      
Commission File Number 000-05391 
      
METWOOD, INC. 
(Exact name of small business issuer as specified in its charter) 
      
NEVADA                                     83-0210365
 (State or other jurisdiction                          of incorporation)                                                                 (IRS Employer Identification No.) 
                of incorporation)                                          Identification No.) 
      
819 Naff Road, Boones Mill, VA 24065 
(Address of principal executive offices) (Zip code) 
      
(540) 334-4294 
(Registrant's telephone number, including area code) 
      
 N/A 
 (Former name, former address and former fiscal year, if changed since last report) 
      
 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
 Exchange Act during the past 12 months (or for such shorter period that the registrant was required
 to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 Yes [ X ] No [   ]    
      
 Indicate by check mark whether the regiatrant is a large accelerated filer, an accelerated filer, a 
 non-accelerated filer, or a smaller reporting company as defined by Rule 12b-2 of the Exchange Act: 
      
                                 Large accelerated filer [   ]           Non-accelerated filer [   ] 
                                 Accelerated filer [   ]                    Smaller reporting company [ X ] 
      
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):  Yes [   ] No [ X ] 
      
 As of February 24,May 12, 2009, the number of shares outstanding of the registrant's common stock,    
 $0.001 par value (the only class of voting stock), was 12,295,89912,231,797 shares.

 
1
 
METWOOD, INC. AND SUBSIDIARY
 TABLE OF CONTENTS - FORM 10-QSB
   
   
   
PART I - FINANCIAL INFORMATIONPage(s)
   
Item 1  Financial Statements 
   
  
Consolidated Balance Sheet As of DecemberMarch 31, 2009 (Unaudited) and June 30, 2008 (Unaudited)
3-41-2
  and June 30, 2008 
   
  
Consolidated Statements of Income (Unaudited) for the Three and SixNine Months Ended March 31, 2009 and 200853
             Ended December 31, 2008 and 2007 
   
  
Consolidated Statements of Cash Flows (Unaudited) for the ThreeNine Months Ended March 31, 2009 and Six Months200864
             Ended December 31, 2008 and 2007 
   
  
Notes to Consolidated Financial Statements75-10
   
Item 2  Management's Discussion and Analysis of Financial Condition8
and Results of Operations 10-15
   
Item 4  Controls and Procedures916
   
PART II - OTHER INFORMATION 
   
Item 6  Exhibits and Reports on Form 8-K1017
   
Signatures1117
   
Index to Exhibits1218

METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
       
  (UNAUDITED)  (AUDITED) 
  March 31,  June 30, 
  2009  2008 
ASSETS      
       
Current Assets      
Cash and cash equivalents $107,902  $67,880 
Accounts receivable  260,157   535,799 
Inventory  1,248,444   1,492,924 
Recoverable income taxes  97,718   45,955 
Prepaid expenses  52,550   53,184 
         
Total current assets  1,766,771   2,195,742 
         
Property and Equipment        
Leasehold and land improvements  208,233   174,385 
Furniture, fixtures and equipment  101,319   86,341 
Computer hardware, software and peripherals  198,238   197,817 
Machinery and shop equipment  409,732   407,103 
Vehicles  375,156   369,451 
   1,292,678   1,235,097 
Less accumulated depreciation  (801,402)  (703,815)
         
Net property and equipment  491,276   531,282 
         
Goodwill  253,088   253,088 
         
TOTAL ASSETS $2,511,135  $2,980,112 
         
See accompanying notes to consolidated financial statements.
 
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
       
  (UNAUDITED)  (AUDITED) 
  March 31,  June 30, 
  2009  2008 
LIABILITIES AND STOCKHOLDERS' EQUITY      
       
Current Liabilities      
Accounts payable and accrued expenses $61,276  $316,948 
Bank line of credit  50,000   150,000 
Customer deposits  -   36,000 
         
Total current liabilities  111,276   502,948 
         
Long-term Liabilities        
Deferred income taxes, net  111,361   121,588 
         
Total long-term liabilities  111,361   121,588 
         
Total liabilities  222,637   624,536 
         
Stockholders' Equity        
Common stock, $.001 par, 100,000,000 shares authorized;        
   12,231,797 shares issued and outstanding At March 31, 2009  12,232   12,091 
Common stock not yet issued ($.001 par, 8,150 shares)  8   200 
Additional paid-in capital  1,544,268   1,542,057 
Retained earnings  731,990   801,228 
         
Total stockholders' equity  2,288,498   2,355,576 
         
TOTAL LIABILITIES        
  AND STOCKHOLDERS' EQUITY $2,511,135  $2,980,112 
         
See accompanying notes to consolidated financial statements.
 
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
             
  Three Months Ended  Nine Months Ended 
  March 31,  March 31, 
  2009  2008  2009  2008 
REVENUES            
             
Construction sales $495,747  $966,826  $2,289,911  $3,230,114 
Engineering sales  44,842   55,847   179,710   193,298 
Gross sales  540,589   1,022,673   2,469,621   3,423,412 
                 
Cost of construction sales  454,777   556,340   1,466,197   2,007,589 
Cost of engineering sales  41,934   57,484   136,768   178,565 
Gross cost of sales  496,711   613,824   1,602,965   2,186,154 
                 
Gross profit  43,878   408,849   866,656   1,237,258 
                 
ADMINISTRATIVE EXPENSES                
Advertising  38,701   39,486   81,598   87,016 
Bad Debts  30,095   2,554   29,575   6,735 
Depreciation  15,818   15,915   46,147   48,189 
Insurance  19,755   17,421   57,861   55,680 
Payroll expenses  158,637   166,045   484,447   499,830 
Professional fees  8,538   8,148   42,570   41,660 
Rent  19,800   19,750   59,400   59,050 
Research and development  7,075   11,615   33,590   19,191 
Travel  2,548   3,356   13,508   20,220 
Vehicle  9,372   11,851   35,418   39,572 
Other  32,961   62,155   134,641   172,889 
Total administrative expenses  343,300   358,296   1,018,755   1,050,032 
                 
Operating income (loss)  (299,422)  50,553   (152,099)  187,226 
                 
Other income  5,881   11,075   20,871   17,800 
                 
Income (loss) before income taxes  (293,541)  61,628   (131,228)  205,026 
                 
Income taxes (benefit)  (117,591)  21,860   (61,990)  69,917 
                 
Net income (loss) from operations $(175,950) $39,768  $(69,238) $135,109 
                 
Basic and diluted earnings (deficit) per share $(0.01) $ ** $(0.01) $0.01 
                 
Weighted average number of shares  12,277,381   12,091,399   12,266,836   12,065,215 
                 
**Less than $0.01                
                 
See accompanying notes to consolidated financial statements.
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
       
       
       
  (UNAUDITED)  (AUDITED) 
  December 31,  June 30, 
  2008  2008 
ASSETS      
       
Current Assets      
Cash and cash equivalents $43,212  $67,880 
Accounts receivable  462,822   535,799 
Inventory  1,490,336   1,492,924 
Recoverable income taxes  3,868   45,955 
Prepaid expenses  77,089   53,184 
         
Total current assets  2,077,327   2,195,742 
         
Property and Equipment        
Leasehold and land improvements  208,233   174,385 
Furniture, fixtures and equipment  94,319   86,341 
Computer hardware, software and peripherals  198,238   197,817 
Machinery and shop equipment  407,555   407,103 
Vehicles  387,651   369,451 
   1,295,996   1,235,097 
Less accumulated depreciation  (772,631)  (703,815)
         
Net property and equipment  523,365   531,282 
         
Goodwill  253,088   253,088 
         
TOTAL ASSETS $2,853,780  $2,980,112 
 
See accompanying notes to consolidated financial statements.
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
       
  Nine Months Ended 
  March 31, 
  2009  2008 
OPERATIONS      
Net income (loss) $(69,238) $135,109 
Adjustments to reconcile net income        
to net cash from operating activities:        
Depreciation  97,587   88,590 
Provision for (reversal of) deferred income taxes  (10,227)  10,559 
(Increase) decrease in operating assets:        
Accounts receivable  284,616   10,299 
Inventory  244,480   (194,390)
Recoverable income taxes  (51,763)  57,077 
Other operating assets  (8,340)  67,200 
Increase (decrease) in operating liabilities:        
Accounts payable and accrued expenses  (291,673)  (8,090)
Current income taxes payable  -   42,959 
Net cash from operating activities  195,442   209,313 
         
INVESTING        
Capital expenditures  (70,076)  (133,249)
Proceeds from disposal of assets  12,495   21,850 
Net cash used for investing activities  (57,581)  (111,399)
         
FINANCING        
Decrease in credit line  (100,000)  (25,000)
Proceeds from issuance of common stock  2,161   26,614 
Purchase of treasury stock  -   (1,800)
Net cash used for financing activities  (97,839)  (186)
         
Net increase in cash  40,022   97,728 
         
Cash, beginning of the year  67,880   38,287 
         
Cash, end of the period $107,902  $136,015 
         
         
See accompanying notes to consolidated financial statements.
 
 
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
       
       
       
  (UNAUDITED)  (AUDITED) 
  December 31,  June 30, 
  2008  2008 
LIABILITIES AND STOCKHOLDERS' EQUITY      
       
Current Liabilities      
Accounts payable and accrued expenses $254,361  $316,948 
Bank line of credit  -   150,000 
Customer deposits  -   36,000 
         
Total current liabilities  254,361   502,948 
         
Long-term Liabilities        
Deferred income taxes, net  135,102   121,588 
         
Total long-term liabilities  135,102   121,588 
         
Total liabilities  389,463   624,536 
         
Stockholders' Equity        
Common stock, $.001 par, 100,000,000 shares authorized;        
   12,295,899 shares issued and outstanding  12,296   12,091 
   at December 31, 2008        
Common stock not yet issued ($.001 par, 2,150 shares)  2,162   200 
Additional paid-in capital  1,542,050   1,542,057 
Retained earnings  907,809   801,228 
         
Total stockholders' equity  2,464,317   2,355,576 
         
TOTAL LIABILITIES        
  AND STOCKHOLDERS' EQUITY $2,853,780  $2,980,112 
 
See accompanying notes to consolidated financial statements.
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
             
  Three Months Ended  Six Months Ended 
  December 31,     December 31,    
  2008  2007  2008  2007 
REVENUES            
             
Construction sales $788,428  $1,121,774  $1,794,539  $2,263,288 
Engineering sales  78,632   68,796   134,868   137,451 
Gross sales  867,060   1,190,570   1,929,407   2,400,739 
                 
Cost of construction sales  533,417   728,851   1,011,420   1,451,249 
Cost of engineering sales  44,637   57,733   94,834   121,081 
Gross cost of sales  578,054   786,584   1,106,254   1,572,330 
                 
Gross profit  289,006   403,986   823,153   828,409 
                 
ADMINISTRATIVE EXPENSES                
Advertising  24,407   26,699   42,897   47,530 
Depreciation  15,713   16,290   30,329   32,274 
Insurance  18,274   16,925   38,106   38,259 
Payroll expenses  157,664   168,190   322,810   333,784 
Professional fees  5,855   5,905   34,032   33,513 
Rent  19,800   19,650   39,600   39,300 
Research and development  22,115   -   26,515   7,576 
Travel  4,669   3,070   10,960   16,864 
Vehicle  12,762   14,249   26,045   27,721 
Other  60,050   70,142   104,667   114,915 
Total administrative expenses  341,309   341,120   675,961   691,736 
                 
Operating income (loss)  (52,303)  62,866   147,192   136,673 
                 
Other income  11,789   6,021   14,990   6,725 
                 
Income (loss) before income taxes  (40,514)  68,887   162,182   143,398 
                 
Income taxes (benefit)  (25,498)  28,105   55,601   48,057 
                 
Net income $(15,016) $40,782  $106,581  $95,341 
                 
Basic and diluted earnings per share  **   **  $0.01  $0.01 
                 
Weighted average number of shares  12,295,899   12,114,769   12,261,678   12,052,265 
                 
**Less than $0.01                
                 
See accompanying notes to consolidated financial statements.
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
       
  Six Months Ended 
  December 31, 
  2008  2007 
OPERATIONS      
Net income $106,581  $95,341 
Adjustments to reconcile net income        
to net cash from operating activities:        
Depreciation  68,817   67,441 
Provision for deferred income taxes  13,514   11,308 
Common stock subscribed not yet issued  1,960   0 
(Increase) decrease in operating assets:        
Accounts receivable  72,978   (60,673)
Inventory  2,588   (6,125)
Recoverable income taxes  42,087   57,077 
Other operating assets  (23,905)  56,650 
Increase (decrease) in operating liabilities:        
Accounts payable and accrued expenses  (98,590)  (4,038)
Current income taxes payable  -   20,350 
Net cash from operating activities  186,030   237,331 
         
INVESTING        
Net expenditures for fixed assets  (60,899)  (106,095)
Net cash used for investing activities  (60,899)  (106,095)
         
FINANCING        
Decrease in credit line  (150,000)  (25,000)
Proceeds from issuance of common stock  201   26,614 
Purchase of treasury stock  -   (1,800)
Net cash (used for) from financing activities  (149,799)  (186)
         
Net (decrease) increase in cash  (24,668)  131,050 
         
Cash, beginning of the year  67,880   38,287 
         
Cash, end of the period $43,212  $169,337 
 
See accompanying notes to consolidated financial statements.
METWOOD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBERMARCH 31, 20082009
(UNAUDITED)
        
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
        
Business Activity - Metwood, Inc. ("Metwood") was organized under the laws of the Commonwealth of Virginia on April 7, 1993.  On June 30, 2000, Metwood entered into an Agreement and Plan of Reorganization in which the majority of its outstanding common stock was acquired by a publicly held Nevada shell corporation.  The acquisition was a tax-free exchange for federal and state income tax purposes and was accounted for as a reverse merger in accordance with Accounting Principles Board ("APB") Opinion No. 16.  Upon acquisition, the name of the shell corporation was changed to Metwood, Inc., and Metwood, Inc., the Virginia corporation, became a wholly owned subsidiary of Metwood, Inc., the Nevada corporation.  The publicly traded shell corporation had not had a material operating history for several years prior to the merger.
        
Effective January 1, 2002, Metwood acquired certain assets of Providence Engineering, PC ("Providence"), a professional engineering firm with customers in the same proximity as Metwood.  The total purchase price of $350,000 was paid with $60,000 in cash and with 290,000 shares of the Company's common stock to the two Providence shareholders.  These shares were valued at the closing active quoted market price of the stock at the effective date of the purchase, which was $1.00 per share.  One of the shareholders of Providence was also an officer and existing shareholder of Metwood prior to the acquisition.  In 2002 Metwood purchased from that shareholder and retired 15,000 of the originally issued 290,000 shares for $15,000 and in 2004 purchased from that shareholder and retired the remaining 275,000 of the originally issued 290,000 shares for $50,000. The initial purchase transaction was accounted for under the purchase method of accounting.  The purchase price was allocated as follows:
        
  Accounts receivable$  75,000   
  Fixed assets    45,000   
  Goodwill  230,000   
     Total$350,000   
         
During the year ended June 30, 2003, liabilities assumed at the date of acquisition were identified and paid.  The amount of the liabilities paid was $23,088, and this amount was added to goodwill.
         
The consolidated company ("the Company") provides construction-related products and engineering services to residential customers and contractors, commercial contractors, developers and retail enterprises, primarily in southwestern Virginia.
         
Basis of Presentation - The financial statements include the accounts of Metwood, Inc. and its wholly owned subsidiary, Providence Engineering, PC, prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission.  All significant intercompany balances and transactions have been eliminated.
 
In the opinion of management, the unaudited condensed consolidated financial statements contain all the adjustments necessary in order to make the financial statements not misleading.  The results for the period ended DecemberMarch 31, 20082009 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2009.
 
Fair Value of Financial Instruments - For certain of the Company's financial instruments, none of which are held for trading, including cash, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities.
 
Management's Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
 
Accounts Receivable  - The Company grants credit in the form of unsecured accounts receivable to its customers based on an evaluation of their financial condition.  The Company performs ongoing credit evaluations of its customers.  The estimate of the allowance for doubtful accounts, which is charged off to bad debt expense, is based on management’s assessment of current economic conditions and historical collection experience with each customer.  At DecemberMarch 31, 2008,2009, the allowance for doubtful accounts was $5,000.  Specific customer receivables are considered past due when they are outstanding beyond their contractual terms and are charged off to bad debt expense when determined uncollectible.  For the three months ended DecemberMarch 31, 20082009 and 2007,2008, the amount of bad debts charged off was $-0-$30,095 and $4,181,$2,554, respectively.  For the sixnine months ended DecemberMarch 31, 2008, the amount of bad debts recovered was $520, and for the period ended December 31, 2007,2009, the amount of bad debts charged off was $4,181.$29,575, and for the nine months ended March 31, 2008, the amount of bad debts charged off was $6,735.
 
Inventory - Inventory, consisting of metal and wood raw materials, is located on the Company's premises and is stated at the lower of cost or market using the first-in, first-out method.
 
Property and Equipment - Property and equipment are recorded at cost and include expenditures for improvements when they substantially increase the productive lives of existing assets.  Maintenance and repair costs are expensed to operations as incurred.  Depreciation is computed using the straight-line method over the assets' estimated useful lives, which range from three to forty years.  When a fixed asset is disposed of, its cost and related accumulated depreciation are removed from the accounts.  The difference between undepreciated cost and the proceeds is recorded as a gain or loss.
 
Goodwill - The Company accounts for goodwill and intangibles under SFAS No. 142, “Goodwill and Other Intangible Assets.” As such, goodwill is not amortized, but is subject to annual impairment reviews, or more frequent reviews if events or circumstances indicate there may be an impairment. The Company performed its required annual goodwill impairment test as of June 30, 2008 using discounted cash flow estimates and found that there was no impairment of goodwill.
Patents - The Company has been assigned several key product patents developed by certain Company officers.  No value has been recorded in the Company's financial statements because the fair value of the patents was not determinable within reasonable limits at the date of assignment.
Revenue Recognition - Revenue is recognized when goods are shipped and earned or when services are performed, provided collection of the resulting receivable is probable.  If any material contingencies are present, revenue recognition is delayed until all material contingencies are eliminated.  Further, no revenue is recognized unless collection of the applicable consideration is probable.
          
Income Taxes - Income taxes are accounted for in accordance with SFAS No. 109, "Accounting for Income Taxes."  A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and for net operating loss carryforwards, where applicable.  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 the entire deferred tax asset will not be realized.  Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.
          
Research and Development - The Company performs research and development on its metal/wood products, new product lines, and new patents.  Costs, if any, are expensed as they are incurred.  Research and development costs for the three months ended DecemberMarch 31, 2009 and 2008 were $7,075 and 2007 were $22,115 and $-0-,$11,615, respectively.  For the sixnine months ended DecemberMarch 31, 20082009 and 2007,2008, the expenses relating to research and development were $26,515$33,590 and $7,576,$19,191, respectively.
          
Earnings Per Common Share - Basic earnings per share amounts are based on the weighted average shares of common stock outstanding.  If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share. This presentation has been adopted for the quarters presented.  There were no adjustments required to net income for the years presented in the computation of diluted earnings per share.
          
Recent Accounting Pronouncements - In March 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133," ("SFAS 161").  SFAS 161 requires enhanced disclosures about an entity's derivative and hedging activities, including (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under SFAS 133, and (iii) how derivative instruments and related hedged items affect an entity's financial position, financial performance and cash flows.  This standard becomes effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.  As SFAS 161 only requires enhanced disclosures, this standard will have no impact of the Company's financial statements.
          
In December 2007, the FASB issued Statement of Financial Accountaing Standards ("SFAS") No. 141 (revised 2007), "Business Combinations," which replaces SFAS No. 141.  The statement retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting.  It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred.  SFAS No. 141 (revised) is effective for fiscal years beginning after December 15, 2008 and will apply prospectively to business combinations completed on or after that date.  We are currently assessing the potential impact that adoption of SFAS No. 141 (revised) would have on our financial statements.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51," which changes the accounting and reporting for minority interests.  Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parent's equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions.  In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings.  SFAS No. 160 is effective for fiscal years beginning after December 15, 2008 and will apply prospectively, except for the presentation and disclosure requirements, which will apply retrospectively.  The application of SFAS No. 160 will have no effect on the Company's financial position, results of operations or cash flows.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles," ("SFAS No. 162"). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). SFAS No. 162 will be effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board's amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles." The FASB has stated that it does not expect SFAS No. 162 will result in a change in current practice. The application of SFAS No. 162 will have no effect on the Company's financial position, results of operations or cash flows.flows
In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts--an interpretation of FASB Statement No. 60" ("SFAS No. 163"). SFAS No. 163 interprets Statement 60 and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that Statement. SFAS No. 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years.  The Company is currently evaluating the impact of SFAS No. 163 on its financial statements but does not expect it to have an effect on the Company's financial position, results of operations or cash flows.
          
In May 2008, the FASB issued FSP APB 14-1, "Accounting for Convertible Debt Instruments that may be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 applies to convertible debt securities that, upon conversion, may be settled by the issuer fully or partially in cash. FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years after December 15, 2008, and must be applied on a retrospective basis. Early adoption is not permitted. The Company is assessing the potential impact of this FSP on the convertible debt issuances.
          
In June 2008, the FASB issued FASB Staff Position ("FSP") EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, Earnings per Share. Under the guidance of FSP EITF 03-6-1, unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings-per-share pursuant to the two-class method. FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and all prior-period earnings per share data presented shall be adjusted retrospectively. Early application is not permitted. The Company is assessing the potential impact of this FSP on the earnings per share calculation.
In June 2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock" ("EITF 07-5"). EITF 07-5 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. EITF 07-5 is effective for financial statements issued for fiscal years beginning after December 15, 2008. Early application is not permitted. The Company is assessing the potential impact of this EITF 07-5 on the financial condition and results of operations.
In April 2009, the FASB issued three FASB Staff Positions ("FSP") that are intended to provide additional application guidance and enhance disclosures about fair value measurements and impairments of securities. FSP 157-4 clarifies the objective and method of fair value measurement even when there has been a significant decrease in market activity for the asset being measured. FSP 115-2 and FSP 124-2 establish a new model for measuring other-than-temporary impairments for debt securities, including establishing criteria for when to recognize a write-down through earnings versus other comprehensive income.   FSP 107-1  and APB 28-1  expand the fair value disclosures required for all financial instruments within the scope of SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," to interim periods. All three FSPs are effective for the Company beginning July 1, 2009. The Company is currently assessing the potential impact that the adoption of FSP 157-4 and FSP 115-2 and FSP 124-2 may have on its consolidated financial statements. The Company does not currently believe that these standards will have a material impact on the Company’s consolidated financial statements.
 
            
NOTE 2 - EARNINGS PER SHARE       
            
Net income (loss) and earnings per share for the three and nine months ending March 31, 2009 and 2008 are as follows:
            
     For the Three Months Ended For the Nine Months Ended
     March 31, March 31,
     2009 2008 2009 2008
 Net income (loss)   $  (175,950)  $     39,768  $    (69,238)  $   128,374
 Income per share - basic and fully diluted                       $        (0.01)                          $           **                        $        (0.01)                          $        0.01
 Weighted average number of shares 12,277,381  12,091,399  12,266,836  12,065,215
            
 **Less than $0.01         
            
NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION    
            
Supplemental disclosures of cash flow information for the three and nine months ending March 31, 2009 and 2008 are summarized as follows:
            
     For the Three Months Ended For the Nine Months Ended
     March 31, March 31,
     2009 2008 2009 2008
 Cash paid for:         
 Income taxes   $     --  $     --  $     --  $     --
 Interest    $  779  $     --  $   1,251  $       2,073
            
NOTE 4 - RELATED-PARTY TRANSACTIONS      
            
From time to time, the Company contracts with a company related through common ownership for building and grounds-related maintenance services.  There were no fees paid to the related company for the three and nine months ended March 31, 2009 and 2008.  For the three months ended March 31, 2009 and 2008, the Company had sales of $6,252 and $5,915, respectively, to the company referred to above. For the nine months ended March 31, 2009 and 2008, sales were $22,130 and $89,948, respectively.  As of March 31, 2009, the related receivables outstanding were $6,310.  See also Note 7.
            
NOTE 5 - BANK CREDIT LINE       
            
The Company has available a $600,000 revolving line of credit with a local bank.  The balance outstanding at March 31, 2009 was $50,000.
In June 2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock" ("EITF 07-5"). EITF 07-5 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. EITF 07-5 is effective for financial statements issued for fiscal years beginning after December 15, 2008. Early application is not permitted. The Company is assessing the potential impact of this EITF 07-5 on the financial condition and results of operations.
             
NOTE 2 - EARNINGS PER SHARE            
             
Net income (loss) and earnings per share for the three and six months ending December 31, 2008 and 2007 are 
as follows:            
             
  For the Three Months Ended  For the Six Months Ended 
  December 31,    December 31,   
  2008  2007  2008  2007 
Net income (loss) $(15,016) $40,782  $106,581  $95,341 
Income per share - basic and fully diluted $**  $**  $0.01  $** 
Weighted average number of shares  12,295,899   12,114,769   12,261,678   12,052,265 
                 
**Less than $0.01                
                 
NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION         
                 
Supplemental disclosures of cash flow information for the three and six months ending December 31, 2008 and 2007 are summarized as follows:
                 
  For the Three Months Ended  For the Six Months Ended 
  December 31,     December 31,    
  2008  2007  2008  2007 
Cash paid for:                
Income taxes $--  $--  $--  $-- 
Interest $--  $--  $472  $356 
                 
 
NOTE 4 - RELATED-PARTY TRANSACTIONS             
               �� 
From time to time, the Company contracts with a company related through common ownership for building and grounds-related maintenance services. There were no fees paid to the related company for the three and six months ended December 31, 2008 and 2007. For the three months ended December 31, 2008 and 2007, the Company had sales of $1,832 and $52,179, respectively, to the company referred to above. For the six months ended December 31, 2008 and 2006, sales were $15,878 and $83,216, respectively. As of December 31, 2008, the related receivables outstanding were $2,439. See also Note 7.
                 
NOTE 5 - BANK CREDIT LINE                
                 
The Company has available a $600,000 revolving line of credit with a local bank. The balance outstanding at December 31, 2008 was $-0-. 
 
NOTE 6 - SEGMENT INFORMATION
 
          
The Company operates in two principal business segments: (1) construction-related products and (2) engineering services.  Performance of each segment is evaluated based on profit or loss from operations before income taxes.  These reportable segments are strategic business units that offer different products and services.  Summarized revenue and expense information by segment for the three and sixnine months ended DecemberMarch 31, 20082009 and 2007,2008, as excerpted from internal management reports, is as follows:
          
 
  For the Three Months Ended For the SixNine Months Ended
December 31,December 31,
Construction:
2008200720082007
Sales$788,428$1,121,774$1,794,539$2,263,288
Intersegment expenses(12,351)(22,102)(27,760)(36,614)
Cost of sales(533,417)(728,851)(1,011,420)(1,451,249)
Corporate and other expenses(279,455)(341,088)(678,819)(694,953)
     Segment income$(36,795)$29,733$76,540$80,472
   March 31, March 31,
 
EngineeringConstruction:
2009 2008 2009 2008
 
Sales $78,632    495,747  $68,796    966,826  $134,868 2,289,911  $137,451 3,230,114
Intersegment revenuesexpenses         (9,000)        12,351(17,484)        22,102(36,760)        (54,098)
 27,76036,614
Cost of sales(454,777) (44,637)(556,340) (57,733)(1,466,197) (2,007,589)(94,834)
 (121,081)
Corporate and other expenses(205,163) (24,567)(360,520) (22,116)(883,607) (37,753)(38,115)
     Segment income (loss)$21,779$11,049$30,041$14,869(1,055,474)
      Segment income $  (173,193)  $      32,482  $    (96,653)  $    112,953
          
 
NOTE 7 - OPERATING LEASE COMMITMENTS
Engineering:
    
Sales $      44,842 $      55,847 $    179,710 $    193,298
Intersegment revenues           9,000         17,484         36,760         54,098
Cost of sales(41,934)(57,484)(136,768)(178,565)
Corporate and other expenses(14,665)(8,561)(52,287)(46,675)
     Segment income (loss) $      (2,757) $        7,286 $      27,415 $      22,156
       
NOTE 7 - OPERATING LEASE COMMITMENTS
          
On January 3, 2005, the Company entered into a ten-year commercial operating lease with a company related through common ownership.  The lease covers various buildings and property which house our manufacturing plant, executive offices and other buildings with a current monthly rental of $6,600.  The lease expires on December 31, 2014. For the three and sixnine months ended DecemberMarch 31, 20082009 and 2007,2008, we recognized rental expense for these spaces of $19,800, $39,600, $19,650,$59,400, $19,750, and $39,300,$59,050, respectively.
          
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
 
With the exception of historical facts stated herein, the matters discussed in this report are "forward-looking" statements that involve risks and uncertainties that could cause actual  results to differ materially from projected results.  Such "forward-looking" statements include, but are not necessarily limited to, statements regarding anticipated levels of future revenues and earnings from operations of the Company.  Readers of this report are cautioned not to put undue reliance on "forward-looking" statements, which are by their nature, uncertain as reliable indicators of future performance.
Description of Business
Background
As discussed in detail in Note 1, the Company was incorporated under the laws of the Commonwealth of Virginia on April 7, 1993 and, on June 30, 2000, entered into a reverse merger in which it became the wholly owned subsidiary of a public Nevada shell corporation, renamed Metwood, Inc.  Effective January 1, 2002, Metwood acquired certain assets of Providence Engineering, PC in a transaction accounted for under the purchase method of accounting.
Principal Products/Services and Markets
Metwood
Residential builders are aware of the superiority of steel framing vs. wood framing, insofar as steel framing is lighter; stronger; termite, pest, rot and fire resistant; and dimensionally more stable in withstanding induced loads.  Although use of steel framing in residential construction has generally increased each year since 1980, many residential builders have been hesitant to utilize steel due to the need to retrain framers and subcontractors who are accustomed to a "stick-built" construction method where components are laid out and assembled with nails and screws.  The Company's founders, Robert ("Mike") Callahan and Ronald Shiflett, saw the need to combine the strength and durability of steel with the convenience and familiarity of wood and wood fasteners.
Metwood manufactures light-gage steel construction materials, usually combined with wood or wood fasteners, for use in residential and commercial applications in place of more conventional wood products, which are inferior in terms of strength and durability.  The steel and steel/wood products allow structures to be built with increased load strength and structural integrity and fewer support beams or support configurations, thereby allowing for structural designs that are not possible with wood-only products.
Metwood's primary products and services are:
    ·  Girders and headers          ·  Garage, deck and porch concrete pour-over systems
    ·  Floor joists                          ·  Garage and post-and-beam buildings
    ·  Floor joist reinforcers        ·  Engineering, design and custom building services
    ·  Roof and floor trusses
Providence
Providence is extensively involved in ongoing product research and development for Metwood.  Additionally, Providence offers its customers civil engineering capabilities which include rezoning and special use submissions; erosion and sediment control and storm-water management design; residential, commercial, and religious facility site development design; and utility design, including water, sewer and onsite treatment systems.  Providence's staff is familiar with construction practices and has been actively involved in construction administration and inspection on multiple projects.
 
Providence also performs a variety of structural design and analysis work, successfully providing solutions for many projects, including retaining walls, residential framing, commercial building framing, light-gage steel fabrication drawings, metal building retrofits and additions, mezzanines, and seismic anchors and restraints.
          
Providence has designed numerous foundations for a variety of structures.  Its foundation design expertise includes metal building foundations, traditional building construction foundations, atypical foundations for residential structures, tower foundations, and sign foundations for a variety of uses and applications.
          
Providence has also designed and drafted full building plans for several applications.  When subcontracting with local professional firms, Providence has the ability to provide basic architectural, mechanical, electrical, and detailed civil and structural design services for these facilities.
          
Providence has reviewed designs by manufacturers for a variety of structures and structural components, including retaining walls, radio towers, tower foundations, sign foundations, timber trusses, light-gage steel trusses, and light-gage steel beams.  This service enables clients to take generic designs and have them certified and approved for construction in the desired locality.
          
Distribution Methods of Products and Services     
          
The Company's sales are primarily retail, directly to contractors and do-it-yourself homeowners in Virginia and North Carolina.  Approximately 90% of the Company's sales are wholesale to lumberyards, home improvement stores, hardware stores, and plumbing and electrical suppliers in Virginia and North Carolina, including Lowe's and 84 Lumber.  Metwood relies primarily on its own sales force to generate sales; additionally, however, the Company has distributors in Virginia, New York, Oklahoma, Arizona, Colorado and Pennsylvania and also utilizes the salespeople of wholesale yards stocking the Company's products as an additional sales force.  Metwood intends to continue expanding the wholesale marketing of its unique products to retailers and to license the Company's technology and products to increase its distribution outside of Virginia, North Carolina and the South.
          
Status of Publicly Announced New Products or Services    
          
The Company has acquired four new patents through assignment from Robert M. Callahan and Ronald B. Shiflett, the patent holders.  All four patents reflect various modifications to the Company's Joist Reinforcing Bracket which will make it even easier for tradesmen to insert utility conduits through wood joists.
          
Seasonality of Market       
          
The Company's sales can be subject to seasonal impacts, as its products are used in residential and commercial construction projects which tend to be at peak levels in Virginia and North Carolina between the months of March and October.  Accordingly, the Company's sales tend to be greater in its fourth and first fiscal quarters.  However, the Company is expanding into less weather-sensitive markets, such as Florida, Georgia, Arizona, South Carolina and Alabama in order to ameliorate seasonality factors.  The Company builds an inventory of its products throughout the winter and spring to support its sales season.
 
Competition
 
Nationally, there are over one hundred manufacturers of the types of products produced by the Company.  However, the majority of these manufacturers are using wood-only products or products without metal reinforcement.  Metwood has identified only one other manufacturer in the United States that manufactures a wood-metal floor truss similar to that of the Company.  However, Metwood has often found that its products are the only ones that will work within many customers' design specs.
 
Sources and Availability of Raw Materials and the Names of Principal Suppliers
 
All of the raw materials used by the Company are readily available on the market from numerous suppliers.  The light-gage metal used by the Company is supplied primarily by Marino-Ware, Telling Industries and Wheeling Corrugating Company.  The Company's main sources of lumber are BlueLinx and The Contractor Yard.  Gerdau Amersteel, Descosteel and Adelphia Metals provide the majority of the Company's rebar.  Because of the number of suppliers available to the Company, its decisions in purchasing materials are dictated primarily by price and secondarily by availability.  The Company does not anticipate a lack of supply to affect its production; however, a shortage might cause the Company to pass on higher materials prices to its buyers.
 
Dependence on One or a Few Major Customers
 
Presently the Company does not have any one customer whose loss would have a substantial impact on the Company's operations.
 
Patents
 
The Company has eightnine U.S. Patents:
 
     U.S. Patent No.Nos. 5,519,977 and 7,347,031, "Joist Reinforcing Bracket," a bracket that reinforces wooden joists with a hole for the passage of a utility conduit.  The Company refers to this as its floor joist patch kit.
 
     U.S. Patent No. 5,625,997, "Composite Beam," a composite beam that includes an elongated metal shell and a pierceable insert for receiving nails, screws or other penetrating fasteners.
 
     U.S. Patent No. 5,832,691, "Composite Beam," a composite beam that includes an elongated metal shell and a pierceable insert for receiving nails, screws or other penetrating fasteners.  This is a continuation-in-part of U.S. Patent No. 5,625,997.
 
     U.S. Patent No. 5,921,053, "Internally Reinforced Girder with Pierceable Nonmetal Components," a girder that includes a pair of c-shaped members secured together so as to form a hollow box, which permits the girder to be secured within a building structure with conventional fasteners such as nails, screws and staples.
 
     U.S. Patent Nos. D472,791S, D472,792S, D472,793S, and D477,210S, all modifications of Metwood's Reinforcing Bracket, which will be used for repairs of wood I-joists.
 
Each of these patents was originally issued to the inventors and Company founders, Robert Callahan and Ronald B. Shiflett, who licensed these patents to the Company.
Need for Government Approval of Principal Products
 
The Company's products must either be sold with an engineer's seal or applicable building code approval.  Once that approval is obtained, the products can be used in all fifty states.  The Company's Floor Joist Reinforcer received Bureau Officials Code Association ("BOCA") approval in April 2001.  Currently, the Company's chief engineer has obtained professional licensure in several states which permit products not building code approved to be sold and used with his seal.   The Company expects his licensure in a growing number of states to greatly assist in the uniform acceptability of its products as it expands to new markets.  The Company works with other engineers to seal products in all fifty states.
 
Time Spent During the Last Two Fiscal Years on Research and Development Activities
 
Approximately fifteen percent of the Company's time and resources have been spent during the last two fiscal years researching and developing its metal/wood products, new product lines, and new patents.
 
Costs and Effects of Compliance with Environmental Laws
 
The Company does not incur any costs to comply with environmental laws.  It is an environmentally friendly business in that its products are fabricated from recycled steel.
 
Number of Total Employees and Number of Full-Time Employees
 
The Company had thirty employees at DecemberMarch 31, 2008,2009, twenty-nine of whom were full time.
 
Results of Operations
 
Net Income
Loss
The Company had a net loss of $15,016$175,950 for the three months ended DecemberMarch 31, 2008,2009, versus net income of $40,782$39,768 for the three months ended DecemberMarch 31, 2007,2008, a decrease of $55,798.$215,718.  The decrease in net income for the three months ended DecemberMarch 31, 20082009 compared to 20072008 was attributable to a general downturn in the economy, in particular, as it affects the Company, the building industry.  Construction area sales decreased 30%49% comparing 20082009 to 2007,2008, and as a percentage of sales, costs of goods sold increased 3%35% comparing 2009 to 2008.  Engineering sales decreased 20% comparing 2009 to 2008, further contributing to 2007.   Payrollthe net loss for the quarter. Administrative expenses decreased for4% comparing the three months ended DecemberMarch 31, 2008 compared to 2007 due to the decreased demand for the Company's products.  Less job installs cut down on the amount of overtime required, and some exployees volunteered to take time off.  Research and development costs for the three months ended December 31, 2008  compared2009 to the same period in 2007  went from  $-0-2008.  However, this slight decrease did not offset the Company's 89% decline in gross profit in the quarter ended March 31, 2009 compared to $22,115,  further  diminishingthe quarter ended March 31, 2008.
Management is currently discussing the possibility of taking the Company private as a means of rasing capital, improving the bottom line.    line, and removing the high compliance costs incurred as a public company.  The present economic environment may make privatization the best option as the Company goes forward.
 
For the six months ended December 31, 2008 and 2007, net income decreased $468,749, or 21%. On the other hand, engineering gross profit increased both for the three and six months ended December 31, 2008 compared to 2007 (200% and 145%, respectively), while administrative expenses remained relatively constant for the three and six months period.  Nevertheless, engineering net income contributions were not enough to overcome the loss in the construction segment of the Company.
Sales
 
Revenues were $867,060$540,589 for the three months ended DecemberMarch 31, 20082009 compared to $1,190,570$1,022,673 for the same period in 2007,2008, a decrease of $323,510,$482,084, or 27%47%.  For the six-monthnine-month periods ended DecemberMarch 31, 20082009 and 2007,2008, sales were $1,929,407$2,469,621 and $2,400,739,$3,423,412, respectively, a decrease of $471,332 (20%$953,791 (28%).  The sales decline for the three and six-monthnine-month periods in 20082009 versus 20072008 reflects a general downtown in the building industry.  Although the Company has sold product in over twenty-five states since July 2007, our local market is down 20%more than 50%. Nonetheless, truss sales have increased over 2007,2008, and the commercial market has overcome some of the residential downturn.  The potential for increased sales volume as the Company goes forward is enhanced by the fact that we are now an authorized fabricator for the Dynatruss light-gauge steel truss system, begun in March 2008.
 
Expenses
 
Total administrative expenses were $341,309$343,300 for the three months ended DecemberMarch 31, 2008,2009, versus $341,120$358,296 for the three months ended DecemberMarch 31, 2007,2008, a slight increasedecrease of $189.$14,996.  For the sixnine months ended DecemberMarch 31, 2008,2009, administrative expenses were $675,961$1,018,755 compared to $691,736$1,056,767 for the sixnine months ended DecemberMarch 31, 2007.2008.  The biggest decline in both the three and six-monthnine-month periods occurred in payroll expenses travel and other costs.  In the six-monthnine-month period ended DecemberMarch 31, 20082009 compared to 2007,2008, those decreased expenses were offset somewhat by a jump in research and development costs.
 
Liquidity and Capital Reserves
 
On DecemberMarch 31, 2008,2009, the Company had cash of $43,212$107,902 and working capital of $1,822,966.$1,655,495.  Net cash provided by operating activities was $186,030$197,402 for the sixnine months ended DecemberMarch 31, 20082009 compared to $237,331$209,313 for the sixnine months ended DecemberMarch 31, 2007.2008.  The lower provision of cash from operating activities in the current year resulted primarily from the decrease in accounts payable and accrued expenses partially offset by a decrease in accounts receivable.
 
Cash used in investing activities was $60,899$57,581 for the sixnine months ended DecemberMarch 31, 2008,2009, compared to cash used of $106,095$111,399 during the same period in the prior year.  Cash flows used in investing activities for the current period were for shop equipment $452)$2,629); computers and peripherals and furniture and fixtures ($8,400)15,400); and leasehold and land improvements ($33,847), and vehicles ($18,200)18,200 less disposals of $12,495)).
 
Cash used in financing activities was $149,799$99,799 for the sixnine months ended DecemberMarch 31, 20082009 compared to cash used of $186 for the period ended DecemberMarch 31, 2007.2008.  The cash used in 20082009 was to pay off the Company's credit line balance ($150,000)100,000) offset by proceeds from the issuance of common stock ($201).
 
ITEM 4 - CONTROLS AND PROCEDURES
 
(a) Evaluation of disclosure controls and procedures.
 
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
 
Based on our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
 
(b) Changes in internal control over financial reporting.
 
We regularly review our system of internal control over financial reporting to ensure we maintain an effective internal control environment. As we grow geographically and with new product offerings, we continue to create new processes and controls as well as improve our existing environment to increase efficiencies. Improvements may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.
 
There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
PART II - OTHER INFORMATION
 
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
 
      (a)  Exhibits
 
             See index to exhibits.
 
      (b)  Reports on Form 8-K
 
             There were no reports on Form 8-K filed during the quarter ended DecemberMarch 31, 2008.
 
 
SIGNATURES
 
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Date:  February 24,May 12, 2009                                       /s/  Robert M. Callahan
                                                                         Robert M. Callahan
                                                                         Chief Executive Officer
 
Date:  May 12, 2009                                      /s/ /s/  Shawn A. Callahan
                                                                         Shawn A. Callahan
                                                                         Chief Financial Officer
 
 
INDEX TO EXHIBITS
         
NUMBERDESCRIPTION OF EXHIBIT    
         
3(i)*Articles of Incorporation     
         
3(ii)**By-Laws       
         
31.1
Certification of Chief Executive Officer Pursuant to  Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
         
31.2
Certification of Chief Financial Officer Pursuant to  Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
         
32
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18U.S.C. 1350)
         
*Incorporated by reference on Form 8-K, filed February 16, 2000   
         
**Incorporated by reference on Form 8-K, filed February 16, 2000