SECURITIES AND EXCHANGE COMMISSION | ||||||||||
Washington, D.C. 20549 | ||||||||||
FORM 10-Q | ||||||||||
Amendment No. 1 | ||||||||||
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||
For the quarterly period ended | ||||||||||
[ ] 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 | ||||||||||
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 | ||||||||||
$0.001 par value (the only class of voting stock), was 12,231,797 shares. | ||||||||||
TABLE OF CONTENTS | |||||||||
- FORM 10-QSB | |||||||||
METWOOD, INC. AND SUBSIDIARY | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(UNAUDITED) | (AUDITED) | |||||||
December 31, | June 30, | |||||||
2009 | 2009 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 274,458 | $ | 199,868 | ||||
Accounts receivable, net | 290,006 | 383,673 | ||||||
Inventory | 844,829 | 912,169 | ||||||
Recoverable income taxes | 106,943 | 90,533 | ||||||
Prepaid expenses | 29,363 | 49,239 | ||||||
Total current assets | 1,545,599 | 1,635,482 | ||||||
Property and Equipment | ||||||||
Leasehold and land improvements | 210,652 | 208,233 | ||||||
Furniture, fixtures and equipment | 103,698 | 101,319 | ||||||
Computer hardware, software and peripherals | 216,765 | 211,861 | ||||||
Machinery and shop equipment | 400,140 | 403,731 | ||||||
Vehicles | 378,141 | 378,141 | ||||||
1,309,396 | 1,303,285 | |||||||
Less accumulated depreciation | (890,884 | ) | (834,811 | ) | ||||
Net property and equipment | 418,512 | 468,474 | ||||||
Goodwill | 253,088 | 253,088 | ||||||
TOTAL ASSETS | $ | 2,217,199 | $ | 2,357,044 | ||||
See accompanying notes to consolidated financial statements. |
METWOOD, INC. AND SUBSIDIARY | ||||||||
CONSOLIDATED BALANCE SHEET | ||||||||
(UNAUDITED) | (AUDITED) | |||||||
December 31, | June 30, | |||||||
2009 | 2009 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 88,079 | $ | 85,269 | ||||
Total current liabilities | 88,079 | 85,269 | ||||||
Long-term Liabilities | ||||||||
Deferred income taxes, net | 62,966 | 82,344 | ||||||
Total long-term liabilities | 62,966 | 82,344 | ||||||
Total liabilities | 151,045 | 167,613 | ||||||
Stockholders' Equity | ||||||||
Common stock, $.001 par, 100,000,000 shares authorized; | ||||||||
12,231,797 shares issued and outstanding at December 31, 2009 | 12,232 | 12,232 | ||||||
Common stock not yet issued ($.001 par, 8,150 shares) | 8 | 8 | ||||||
Additional paid-in capital | 1,544,268 | 1,544,268 | ||||||
Retained earnings | 509,646 | 632,923 | ||||||
Total stockholders' equity | 2,066,154 | 2,189,431 | ||||||
TOTAL LIABILITIES | ||||||||
AND STOCKHOLDERS' EQUITY | $ | 2,217,199 | $ | 2,357,044 | ||||
See accompanying notes to consolidated financial statements. |
METWOOD, INC. AND SUBSIDIARY | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
REVENUES | ||||||||||||||||
Construction sales | $ | 504,661 | $ | 788,428 | $ | 1,062,376 | $ | 1,794,539 | ||||||||
Engineering sales | 48,181 | 78,632 | 92,592 | 134,868 | ||||||||||||
Gross sales | 552,842 | 867,060 | 1,154,968 | 1,929,407 | ||||||||||||
Cost of construction sales | 327,022 | 533,417 | 677,930 | 1,011,420 | ||||||||||||
Cost of engineering sales | 42,300 | 44,637 | 83,919 | 94,834 | ||||||||||||
Gross cost of sales | 369,322 | 578,054 | 761,849 | 1,106,254 | ||||||||||||
Gross profit | 183,520 | 289,006 | 393,119 | 823,153 | ||||||||||||
ADMINISTRATIVE EXPENSES | ||||||||||||||||
Advertising | 22,576 | 24,407 | 41,894 | 42,897 | ||||||||||||
Depreciation | 13,121 | 15,713 | 26,654 | 30,329 | ||||||||||||
Insurance | 9,159 | 18,274 | 21,030 | 38,106 | ||||||||||||
Payroll expenses | 151,165 | 157,664 | 305,107 | 322,810 | ||||||||||||
Professional fees | 13,712 | 5,855 | 33,175 | 34,032 | ||||||||||||
Rent | 19,800 | 19,800 | 39,600 | 39,600 | ||||||||||||
Research and development | 960 | 22,115 | 960 | 26,515 | ||||||||||||
Travel | 5,702 | 4,669 | 10,478 | 10,960 | ||||||||||||
Vehicle | 14,203 | 12,762 | 23,017 | 26,045 | ||||||||||||
Other | 38,051 | 60,050 | 70,647 | 104,667 | ||||||||||||
Total administrative expenses | 288,449 | 341,309 | 572,562 | 675,961 | ||||||||||||
Operating income (loss) | (104,929 | ) | (52,303 | ) | (179,443 | ) | 147,192 | |||||||||
Other income | 7,497 | 11,789 | 15,521 | 14,990 | ||||||||||||
Income (loss) before income taxes | (97,432 | ) | (40,514 | ) | (163,922 | ) | 162,182 | |||||||||
Income taxes (benefit) | (11,693 | ) | (25,498 | ) | (40,654 | ) | 55,601 | |||||||||
Net income (loss) from operations | $ | (85,739 | ) | $ | (15,016 | ) | $ | (123,268 | ) | $ | 106,581 | |||||
Basic and diluted earnings per share | ** | ** | $ | (0.01 | ) | $ | 0.01 | |||||||||
Weighted average number of shares | 12,231,797 | 12,295,899 | 12,231,797 | 12,261,678 | ||||||||||||
**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, | ||||||||
2009 | 2008 | |||||||
OPERATIONS | ||||||||
Net income (loss) | $ | (123,277 | ) | $ | 106,581 | |||
Adjustments to reconcile net income | ||||||||
to net cash from operating activities: | ||||||||
Depreciation | 56,073 | 68,817 | ||||||
Common stock subscribed not yet issued | - | 1,960 | ||||||
Provision for (reversal of) deferred income taxes | (19,378 | ) | 13,514 | |||||
(Increase) decrease in operating assets: | ||||||||
Accounts receivable | 93,667 | 72,978 | ||||||
Inventory | 67,340 | 2,588 | ||||||
Recoverable income taxes | (16,410 | ) | 42,087 | |||||
Other operating assets | 19,876 | (23,905 | ) | |||||
Increase (decrease) in operating liabilities: | ||||||||
Accounts payable and accrued expenses | 2,810 | (98,590 | ) | |||||
Net cash from operating activities | 80,701 | 186,030 | ||||||
INVESTING | ||||||||
Capital expenditures | (6,111 | ) | (60,899 | ) | ||||
Net cash used for investing activities | (6,111 | ) | (60,899 | ) | ||||
FINANCING | ||||||||
Decrease in credit line | - | (150,000 | ) | |||||
Proceeds from issuance of common stock | - | 201 | ||||||
Net cash used for financing activities | - | (149,799 | ) | |||||
Net increase (decrease) in cash | 74,590 | (24,668 | ) | |||||
Cash, beginning of the year | 199,868 | 67,880 | ||||||
Cash, end of the period | $ | 274,458 | $ | 43,212 | ||||
See accompanying notes to consolidated financial statements. |
NOTE 3 - EARNINGS PER SHARE | ||||||||||||||||
Net income (loss) and earnings per share for the three and six months ended December 31, 2009 and 2008 are as follows: | ||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net income (loss) | $ | (85,739 | ) | $ | (15,016 | ) | $ | (123,268 | ) | $ | 106,581 | |||||
Earnings per share - basic and fully diluted | $ | ** | $ | ** | $ | (0.01 | ) | $ | 0.01 | |||||||
Weighted average number of shares | 12,231,797 | 12,295,899 | 12,231,797 | 12,261,678 | ||||||||||||
**Less than $0.01 | ||||||||||||||||
NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||||||||||
Supplemental disclosures of cash flow information for the three and six months ended December 31, 2009 and 2008 are summarized as follows: | ||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Cash paid for: | ||||||||||||||||
Income taxes | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||
Interest | $ | -- | $ | -- | $ | -- | $ | 472 | ||||||||
NOTE 5 - RELATED-PARTY TRANSACTIONS | ||||||||||||||||
From time to time, we contract 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, 2009 and 2008. For the three months ended December 31, 2009 and 2008, we had sales of $2,696 and $1,832, respectively, to the company referred to above. For the six months ended December 31, 2009 and 2008, we had sales of $5,412 and $15,878 to the company. As of December 31, 2009 and 2008, the related receivable was $1,961 and $2,439, respectively. See also Note 8. | ||||||||||||||||
NOTE 6 - BANK CREDIT LINE | ||||||||||||||||
The Company has available a $600,000 revolving line of credit with a local bank. The balance outstanding at December 31, 2009 and 2008 was $-0-. | ||||||||||||||||
NOTE 7 - SEGMENT INFORMATION | ||||||||||||||||
We operate 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 six months ended December 31, 2009 and 2008, as excerpted from internal management reports, is as follows: | ||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
Construction: | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Sales | $ | 504,661 | $ | 788,428 | $ | 1,062,376 | $ | 1,794,539 | ||||||||
Intersegment expenses | (6,570 | ) | (12,351 | ) | (19,110 | ) | (27,760 | ) | ||||||||
Cost of sales | (327,022 | ) | (533,417 | ) | (677,930 | ) | (1,011,420 | ) | ||||||||
Corporate and other expenses | (253,397 | ) | (279,455 | ) | (487,811 | ) | (678,819 | ) | ||||||||
Segment income (loss) | $ | (82,328 | ) | $ | (36,795 | ) | $ | (122,475 | ) | $ | 76,540 | |||||
Engineering: | ||||||||||||||||
Sales | $ | 48,181 | $ | 78,632 | $ | 92,592 | $ | 134,868 | ||||||||
Intersegment revenues | 6,570 | 12,351 | 19,110 | 27,760 | ||||||||||||
Cost of sales | (42,300 | ) | (44,637 | ) | (83,919 | ) | (94,834 | ) | ||||||||
Corporate and other expenses | (15,862 | ) | (24,567 | ) | (28,576 | ) | (37,753 | ) | ||||||||
Segment income (loss) | $ | (3,411 | ) | $ | 21,779 | $ | (793 | ) | $ | 30,041 | ||||||
NOTE 8 - 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 six months ended December 31, 2009 and 2008, we recognized rental expense for these spaces of $19,800 and $39,600, respectively. | ||||||||||||||||
Status of Publicly Announced New Products or Services | ||||||||||||||||
Currently, there are no publicly announced new products or services. | ||||||||||||||||
Seasonality of Market | ||||||||||||||||
Our sales are subject to seasonal impacts, as our 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, our sales are greater in our fourth and first fiscal quarters. We build an inventory of our products throughout the winter and spring to support our sales season. Due to the seasonality of our local market, we are continuing our efforts to expand into markets that are not so seasonally impacted. We have shipped projects to Florida, Georgia, South Carolina, Arizona, Washington, and more. These markets have some seasonality, but increased exposure in these markets wil help maintain stronger sales year round. | ||||||||||||||||
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 ours. However, we have often found that our 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 we use are readily available on the market from numerous suppliers. The light-gage metal used by the Company is supplied primarily by Dietrich Industries, Marino-Ware, Telling Industries, Wheeling Corrugating, and Consolidated Systems, Inc. Our main sources of lumber are BlueLinx, Lowe's, 84 Lumber Company and Smith Mountain Building Supply. Gerdau Amersteel, Descosteel and Adelphia Metals provide the majority of our rebar. Because of the number of suppliers available to us, our decisions in purchasing materials are dictated primarily by price and secondarily by availability. We do not anticipate a lack of supply to affect our production; however, a shortage might cause us to pass on higher materials prices to our buyers. | ||||||||||||||||
Dependence on One or a Few Major Customers | ||||||||||||||||
For the three and six months ended December 31, 2009 and 2008, sales to certain customers amounted to more than 5% of total sales. Those customers and the related percent of sales greater than 5% were as follows: | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
84 Lumber | 6 | % | 7 | % | - | 6 | % | |||||||||
Architecture-Planning & Development | - | 10 | % | - | 13 | % | ||||||||||
Lionberger Construction | - | 6 | % | - | - | |||||||||||
Pacific Polysteel | 6 | % | - | 7 | % | - | ||||||||||
Price Buildings | 20 | % | - | 14 | % | - | ||||||||||
Probuild East | 7 | % | 9 | % | 8 | % | 10 | % | ||||||||
Straco, Inc. | 6 | % | - | - | - | |||||||||||
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 |
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: |
Robert M. Callahan |
Chief Executive Officer |
Date: |
Shawn A. Callahan |
Chief Financial Officer |
INDEX TO EXHIBITS | |||||||||
NUMBER | DESCRIPTION OF EXHIBIT | ||||||||
3(i)* | Articles of Incorporation | ||||||||
3(ii)** | By-Laws | ||||||||
31.1 | |||||||||
31.2 | |||||||||
*Incorporated by reference on Form 8-K, filed February 16, 2000 | |||||||||
**Incorporated by reference on Form 8-K, filed February 16, 2000 |