The accompanying notes are an integral part of these consolidated financial statements
The accompanying notes are an integral part of these consolidated financial statements
The accompanying notes are an integral part of these consolidated financial statements
The accompanying notes are an integral part of these consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2018 AND 2017
NOTE 1 - ORGANIZATION AND OPERATIONS
Metwood, Inc. (“The Company”, “we”, “us”) 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. 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.
The Company provides construction-related products and engineering services to residential customers and contractors, commercial contractors, developers and retail enterprises, primarily in southwestern Virginia
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
A. Going Concern
The consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have sustained significant operating losses which raises substantial doubt about the Company’s ability to continue as a going concern. During the year ended June 30, 2018, The Company incurred a loss from operations of $482,132 and has an accumulated deficit of $2,153,321. Management will continue its ongoing efforts to increase the customer base and seek lower cost suppliers to generate future profits.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty. The basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.
Basis of Presentation - The financial statements include the accounts of Metwood, Inc. (a Nevada corporation) and its wholly owned subsidiary, Metwood Inc. (a Virginia corporation) 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.
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 and 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.
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.
Cash and Cash Equivalents – For purposes of the Consolidated Statements of Cash Flows, The Company considers liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash in bank deposit accounts, which, at times, may exceed the federally insured limit of $250,000. The Company has not experienced any losses in such accounts and believe we are not exposed to any significant credit risk on cash and cash equivalents.
Accounts Receivable – The Company grants credit in the form of unsecured accounts receivable to its customers based on an evaluation of their financial condition. We perform ongoing credit evaluations of 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 June 30, 2018 and 2017, the allowance for doubtful accounts was $8,362 and $8,362 respectively, specific customer receivables are considered past due when they are outstanding beyond their contractual terms and are charged off to the allowance for doubtful accounts when determined uncollectible. For the years ended June 30, 2018 and 2017, the bad debt expense was $0 and $(47), respectively.
Inventory – Raw material inventory, consisting primarily of metal and wood raw materials, is located on our premises and is stated at the lower of cost or market using the first-in, first-out method, comparative inventory values are shown below:
|
|
2018
|
|
|
2017
|
|
Raw materials
|
|
$
|
354,912
|
|
|
$
|
433,637
|
|
Work in process
|
|
|
84,737
|
|
|
|
84,364
|
|
Total inventory
|
|
$
|
439,649
|
|
|
$
|
518,001
|
|
The company recorded a reduction of inventory reserve of $ 13,540 and an increase of $25,788 during the years ended June 30, 2018 and 2017, respectively.
Property and Equipment - Property and equipment are stated at cost less accumulated depreciation and are depreciated over their estimated useful lives using the straight-line method. Recovery periods range from three to thirty-nine years. Upon retirement or sale, the cost and related accumulated depreciation are removed from the consolidatedbalance sheet, and the resulting gain or loss is reflected in other income and expense. Maintenance and repairs are charged to operations as incurred.
|
|
|
Useful Life
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold improvements
|
|
|
39
|
|
|
$
|
274,869
|
|
|
$
|
274,869
|
|
Leasehold improvements
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture, fixtures and equipment
|
|
|
5
|
|
|
|
78,222
|
|
|
|
78,222
|
|
Computers and software
|
|
|
3
|
|
|
|
193,204
|
|
|
|
186,517
|
|
Machinery and equipment
|
|
|
10
|
|
|
|
744,672
|
|
|
|
741884
|
|
Vehicles
|
|
|
5
|
|
|
|
415,528
|
|
|
|
393,887
|
|
Land improvements
|
|
|
39
|
|
|
|
67,959
|
|
|
|
67,959
|
|
Total property and equipment
|
|
|
|
|
|
|
1,774,454
|
|
|
|
1,743,338
|
|
Less accumulated depreciation
|
|
|
|
|
|
|
(1,353,003
|
|
|
|
(1,273,705
|
|
Total property and equipment
|
|
|
|
|
|
$
|
421,451
|
|
|
$
|
469,633
|
|
Impairment of Long-lived Assets – The Company evaluates its long-lived assets for indications of possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amounts to the fair value of the asset. Should an impairment exist, the impairment would be measured by the amount by which the carrying amount of the asset exceeds the projected discounted future cash flows arising from the asset. There have been no such impairments of long-lived assets through June 30, 2018 and 2017.
Patents – The Company has been assigned several key product patents developed by certain Company officers. No value has been recorded in our 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 FASB ASC 740, 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 our metal/wood products, new product lines, and new patents. Costs, if any, are expensed as they are incurred. For the year ended June 30, 2018, expenses were $6,375 and for the year ended June 30, 2017, expenses were $52,130.
Advertising – The Company expenses costs as incurred. However, certain expenditures are treated as prepaid (such as trade show fees) if they are for goods or services which will not be received until after the end of the accounting period. These costs are subsequently recognized as expenses in those periods in which the good or services are received.
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 years presented. There were no adjustments required to net income for the years presented in the computation of diluted earnings per share.
During the future fiscal years the company may be required to issued up to fifty million shares of common stock to satisfy a convertible note entered into in August 2017. This note expires on June 30, 2019 and 10,000,000 shares of common stock can be issued in any year. When the contract noted in the subsequent events Note 10 is consummated the company will be required to issue an additional 30,000,000 shares of common stock.
Recent Accounting Pronouncements – In February, 2017 the FASB issued ASU 20 16-0 2, “Leases (Topic 842)” requiring lessees to recognize lease assets and lease liabilities for most leases classified as operating leases under previous U.S. GAAP. The guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company will be required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The adoption of this standard is not expected have a material impact on the Company’s consolidated financial statements.
Accounting Standard Update No. 2014-09, (“ASU 2014-09’) Revenue from Customers (Topic 606), became effective for us in the period ending June 30, 2019. No significant adjustment was required as a result of adopting the new revenue standard. The comparative information has not been restated and continues to be reported under the historic accounting standards in effect for those periods. The impact of the adoption of the new revenue standard will be immaterial to the Company’s net income on an ongoing basis.
NOTE 3 - RELATED-PARTY TRANSACTIONS
The Company has executed a demand note with its controlling shareholder, Cahas Mountain, LLC, that Cahas Mountain will make available cash advances from time to time to bridge cash flow shortfalls. These advances are repaid to Cahas Mountain as cash flow allows. The unpaid balance due to Cahas Mountain at the end of each month is subject to an interest rate of 6% per year. At June 30, 2018 and 2017, advances payable to Cahas Mountain Properties of approximately $77,000 and $77,000, respectively. Accrued interest payable to Cahas Mountain Properties total approximately $ 36,000 and $28,000 for the years ended June 30, 2018 and 2017, respectively. The Company recognized interest expense of approximately $26,000 and $23,000 for the years ended June 30, 2018 and 2017, respectively. Sales to Cahas Mountain, LLC was approximately $ 8,800 and $12,000 . As of June 30, 2018 and 2017, the related accounts receivable totaled approximately $ 8,800 and $ -0- , respectively.
On August 18, 2016 the Company entered into a convertible note with Cahas Mountain in the amount of $50,000 with an interest rate of 8% per year, this note expires on June 30, 2019. The note is convertible into common shares of Metwood, Inc. at par value of $.001 and if converted in its entirety will dilute the current shareholders by a maximum of 50,000,000 shares of common stock. The maximum conversion in any year is 10,000,000 shares of common stock. A debt discount of $50,000 was recorded at issuance and $17,647 was amortized and included in interest expense during the year ended June 30, 2018. During the year ended June 30, 2017 $14,706 was included in the interest expense.
NOTE 4 – COMMITMENT AND CONTINGENCIES
During the year ended June 30, 2005, The Company entered into a sales and leaseback transaction with a related party. The Company sold various buildings at the corporate headquarters which house its manufacturing plants, executive offices and other buildings for $600,000 in cash. The Company simultaneously entered into a commercial lease agreement with the related party whereby the Company is committed to lease back these same properties for $6,800 per month over a ten-year term expiring December 31, 2014. On July 1, 2015 a new lease was entered into with the related party. This lease terms have a term of five years and the monthly rental is $5,500 in cash, in addition the company issued common stock as part of the transaction, this portion of the lease is covered in NOTE 9.
|
|
|
|
|
Amortization of
|
|
|
|
Payments
in cash
|
|
|
Contra equity account
|
|
Fiscal year end June 30, 2019
|
|
|
66,000
|
|
|
|
312,000
|
|
Fiscal year end June 30,2020
|
|
|
66,000
|
|
|
|
312,000
|
|
Total commitments
|
|
$
|
132,000
|
|
|
$
|
624,000
|
|
At June 30, 2018 and 2017, the Company had the following customer concentrations:
|
|
|
|
|
Sales
|
|
|
Accounts Receivable
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Customer A
|
|
|
*
|
|
|
|
14
|
%
|
|
|
*
|
|
|
|
14
|
%
|
Customer B
|
|
|
17
|
%
|
|
|
12
|
%
|
|
|
15
|
%
|
|
|
15
|
%
|
Customer C
|
|
|
*
|
|
|
|
*
|
|
|
|
13
|
%
|
|
|
16
|
%
|
Customer D
|
|
|
*
|
|
|
|
*
|
|
|
|
*
|
|
|
|
13
|
%
|
*Amounts to less than 10%
NOTE 5 - EQUITY
During the year ended June 30, 2018 The Company did not issue any preferred or common shares. There are 100,000,000 shares of common stock authorized and at the year end there are 17,766,647 shares issued and outstanding. The authorized preferred stock is 40,000,000 shares and there are -0- shares of preferred stock issued and outstanding.
If the convertible note that is covered in the related party transactions (Note 3) is converted into common stock of The Company, an additional 50,000,000 shares of common stock could be issued, resulting in dilution of the current shareholders. When the contract of October 11, 2018 is completed (see Note 9) there will be an additional 30,000,000 shares issued to the principals of Emerge Nutraceuticals, Inc.
NOTE 6 - INCOME TAXES
The Company determined that the future use of a Deferred Tax Asset was no longer appropriate and therefore the Deferred Tax Asset previously shown on the Balance Sheet has been expensed during this year as a line item on the Statement of Operations. The decision was made that the earnings in the near term would not be sufficient to allow the utilization of the deferred tax asset.
The difference between the expected income tax expense (benefit) and the actual tax expense (benefit) computed by using the Federal statutory rate of 39% is as follows:
|
|
|
|
|
Tax
|
|
|
|
|
|
Tax
|
|
|
|
2018
|
|
|
Rate
|
|
|
2017
|
|
|
Rate
|
|
Expected income tax benefit at statutory rate of 39%
|
|
$
|
188,000
|
|
|
|
39
|
%
|
|
$
|
169,000
|
|
|
|
39
|
%
|
Permanent differences
|
|
|
(124,000
|
)
|
|
|
(26
|
%)
|
|
|
(124,000
|
)
|
|
|
(30
|
%)
|
Change in estimate
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
(17,000
|
)
|
|
|
(4
|
%)
|
Change in valuation allowance
|
|
|
(64,000
|
)
|
|
|
(6
|
%)
|
|
|
(28,000
|
)
|
|
|
(6
|
%)
|
Income tax expense (benefit)
|
|
|
|
|
|
$
|
-0-
|
|
|
|
|
|
|
$
|
-0-
|
|
Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset, are as follows:
Deferred tax assets:
|
|
2018
|
|
|
2017
|
|
Tax benefit of net operating loss carry-forward
|
|
$
|
497,000
|
|
|
$
|
465,000
|
|
Book and tax difference
|
|
|
102,000
|
|
|
|
89,000
|
|
Less: valuation allowance
|
|
|
(599,000
|
)
|
|
|
(554,000
|
)
|
Net deferred tax asset
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
The Company had a federal net operating tax loss carry-forward of approximately $1,260,000 as of June 30, 2018. The loss carry-forwards are available to offset future taxable income with the federal carry-forwards beginning to expire in 2020.
At June 30, 2018 the deferred tax valuation allowance increased by $64,000. The realization of the tax benefits is subject to the sufficiency of taxable income in future years. The deferred tax assets represent the amounts expected to be realized before expiration. The Company periodically assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible profits. As of June 30, 2018 and 2017, the Company established valuation allowances equal to the full amount of the net deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.
For the years ended June 30, 2018 and 2017, no amounts have been recognized for uncertain tax positions and no amounts have been recognized related to interest or penalties related to uncertain tax positions. The Company has determined that it is not reasonably likely for the amounts of unrecognized tax benefits to significantly increase or decrease within the next twelve months. The Company is currently subject to a three-year statute of limitations by major tax jurisdictions.
NOTE 7 – LEGAL PROCEEDINGS
There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
NOTE 8 – STOCKHOLDER’S EQUITY
On July 1, 2015, the Company entered into a ten-year commercial operation lease with a company related through common ownership. The related party is Cahas Mountain Properties in which Robert Callahan, our Chief Executive Officer, is a Managing Member. The lease covers various buildings and property which house our manufacturing plant, executive offices and other buildings with a current monthly rental of $5,500.00. As part of the lease agreement The Company issued 2,400,000 of its shares with a fair value of $1,560,000 at the date of the agreement. This amount is recorded on our books as a contra equity account, and is amortized over the five year term of the lease. See Note 4 for commitments and contingencies.
NOTE 9 - SUBSEQUENT EVENTS
On June 20, 2019, an extension of the due date of the $50,000 convertible note due to Cahas Mountain Properties, Inc. was signed. This note extension, approved by the board of directors, extends the maturity of the convertible note to June 30, 2020.
Acquisition of Emerge Nutraceuticals, Inc.
On June 28, 2019, Metwood, Inc. entered into an Acquisition Agreement with Emerge Nutraceuticals, Inc.( ENI), a Florida Corporation. Pursuant to the agreement, 100% of ENI’s common stock (500 shares) and $300,000 was transferred to Metwood, Inc. In consideration, fifteen million (15,000,000) shares of Metwood common stock was issued which were valued at one million two hundred fifty thousand $1,250,000) dollars. This purchase excluded the formulas for the products produced by ENI, which were spun out of ENI prior to the acquisition. Upon closing, two the Company’s manager’s, officers and board of directors members, Robert M. Callahan and Shawn A. Callahan, resigned after appointing Mr. Keith Thomas, Shawn Phillips and Raffaela Thomas to the Board of Directors. ENI is the acquirer for financial statement purposes and the transaction will be handled as a reverse merger and recapitalization. Financial statements are not available.
Sale of Wholly Owned Subsidiary
On June 29, 2019, the Company, entered into a stock purchase agreement with Cahas Mountain Properties, LLC, a Virginia limited liability company, (“Cahas”) a majority shareholder of the Company. Pursuant to the agreement, Cahas agreed to purchase from the Company the wholly owned subsidiary, Metwood of Virginia, Inc., a Virginia corporation, for nine million four hundred thousand (9,400,000) common shares of the Company’s common stock which it held at a value of seven hundred fifty-two thousand ($752,000) dollars. As part of this agreement, all assets and liabilities of Metwood of Virginia except, the convertible note payable to Cahas of $50,000 which remained an obligation of the Company. After the sale of the subsidiary the proforma Balance Sheet at June 30, 2018 and Statement of Operations for the year ended June 30, 2018 are shown below:
Pro Forma adjustments on the balance sheet:
|
a)
|
Represents Metwood of Virginia, Inc.’s historical balance sheet as of June 30, 2018 to carve out Metwood of Virginia’s assets and liabilities as of June 30, 2018 prior to its sale.
|
|
|
|
|
b)
|
Represents the retirement of 9,400,000 share of the Company’s common stock which the Company received in exchange from Cahas Mountain Properties, LLC.
|
Pro Forma adjustments on the balance sheet:
|
c)
|
Represents Metwood of Virginia, Inc.’s historical balance sheet as of June 30, 2018 to carve out Metwood of Virginia’s assets and liabilities as of June 30, 2018 prior to its sale.
|
|
|
|
|
d)
|
Represents the retirement of 9,400,000 share of the Company’s common stock which the Company received in exchange from Cahas Mountain Properties, LLC.
|
Metwood, Inc.
Proforma Unaudited Balance Sheet
June 30, 2018
|
|
|
|
|
Less
|
|
|
Proforma
|
|
|
|
2018
|
|
|
Metwood VA
|
|
|
2018
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
61,872
|
|
|
$
|
(61,872
|
)
|
|
$
|
-
|
|
Accounts receivable, net of reserve
|
|
|
225,414
|
|
|
|
(225,414
|
)
|
|
|
-
|
|
Inventory
|
|
|
439,649
|
|
|
|
(439,649
|
)
|
|
|
-
|
|
Other current assets
|
|
|
18,436
|
|
|
|
(18,436
|
)
|
|
|
-
|
|
Total current assets
|
|
|
745,371
|
|
|
|
(745,371
|
)
|
|
|
-
|
|
Property and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold Improvements
|
|
|
274,869
|
|
|
|
(274,869
|
)
|
|
|
-
|
|
Furniture, fixtures and equipment
|
|
|
78,222
|
|
|
|
(78,222
|
)
|
|
|
-
|
|
Computer and software
|
|
|
193,204
|
|
|
|
(193,204
|
)
|
|
|
-
|
|
Machinery & Equipment
|
|
|
744,672
|
|
|
|
(744,672
|
)
|
|
|
-
|
|
Vehicles
|
|
|
415,528
|
|
|
|
(415,528
|
)
|
|
|
-
|
|
Land improvements
|
|
|
67,959
|
|
|
|
(67,959
|
)
|
|
|
-
|
|
Total property and equipment
|
|
|
1,774,454
|
|
|
|
(1,774,454
|
)
|
|
|
-
|
|
Less accumulated depreciation
|
|
|
(1,353,003
|
)
|
|
|
1,353,003
|
|
|
|
-
|
|
Net property and equipment
|
|
|
421,451
|
|
|
|
(421,451
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,166,822
|
|
|
$
|
(1,166,822
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
247,150
|
|
|
$
|
(247,150
|
)
|
|
$
|
-
|
|
Accrued payroll expense
|
|
|
19,177
|
|
|
|
(19,177
|
)
|
|
|
-
|
|
Demand note payable-related party
|
|
|
77,460
|
|
|
|
(77,460
|
)
|
|
|
-
|
|
Convertible note payable-related party
|
|
|
|
|
|
|
|
|
|
|
|
|
note discount of $17,647 and $38,294, respectively
|
|
|
32,353
|
|
|
|
|
|
|
|
32,353
|
|
Total current liabilities
|
|
|
376,140
|
|
|
|
(343,787
|
)
|
|
|
32,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock (par $.001) 40,000,000
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Common stock (par $.001)
|
|
|
17,767
|
|
|
|
(9,400
|
)
|
|
|
8,367
|
|
Paid in capital
|
|
|
3,550,236
|
|
|
|
|
|
|
|
3,550,236
|
|
Accumulated deficit
|
|
|
(2,153,321
|
)
|
|
|
(1,437,635
|
)
|
|
|
(3,590,956
|
)
|
Contra equity-prepaid rent
|
|
|
(624,000
|
)
|
|
|
624,000
|
|
|
|
-
|
|
Treasury stock
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Total stockholders' equity
|
|
|
790,682
|
|
|
|
(823,035
|
)
|
|
|
(32,353
|
)
|
Total liabilities and stockholders' equity
|
|
$
|
1,166,822
|
|
|
$
|
(1,166,822
|
)
|
|
$
|
-
|
|
Metwood Inc.
|
Proforma Unaudited Statement of Operations
|
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
|
|
|
Proforma
|
|
|
|
2018
|
|
|
Metwood VA
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Gross sales
|
|
$
|
1,938,222
|
|
|
$
|
(1,938,222
|
)
|
|
$
|
-
|
|
Cost of sales
|
|
|
1,304,551
|
|
|
|
(1,304,551
|
)
|
|
|
-
|
|
Gross profit
|
|
|
633,671
|
|
|
|
(633,671
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
|
35,025
|
|
|
|
(35,025
|
)
|
|
|
-
|
|
Bad debt recovery
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation
|
|
|
26,054
|
|
|
|
(26,054
|
)
|
|
|
-
|
|
Insurance
|
|
|
31,397
|
|
|
|
(31,397
|
)
|
|
|
-
|
|
Payroll expense
|
|
|
457,529
|
|
|
|
(457,529
|
)
|
|
|
-
|
|
Professional fees
|
|
|
15,251
|
|
|
|
(15,251
|
)
|
|
|
-
|
|
Rent related party
|
|
|
385,586
|
|
|
|
(385,586
|
)
|
|
|
-
|
|
Repairs and maintenance
|
|
|
11,005
|
|
|
|
(11,005
|
)
|
|
|
-
|
|
Research and development
|
|
|
6,375
|
|
|
|
(6,375
|
)
|
|
|
-
|
|
Telephone
|
|
|
13,052
|
|
|
|
(13,052
|
)
|
|
|
-
|
|
Vehicle
|
|
|
27,051
|
|
|
|
(27,051
|
)
|
|
|
-
|
|
Other
|
|
|
86,013
|
|
|
|
(86,013
|
)
|
|
|
-
|
|
Total operating expenses
|
|
|
1,094,338
|
|
|
|
(1,094,338
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(460,667
|
)
|
|
|
460,667
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
(25,635
|
)
|
|
|
3,988
|
|
|
|
(21,647
|
)
|
Gain on sale of asset
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other Income (expense)
|
|
|
4,170
|
|
|
|
(4,170
|
)
|
|
|
-
|
|
Total Other Income (expense)
|
|
|
(21,465
|
)
|
|
|
(182
|
)
|
|
|
(21,647
|
)
|
Net income (loss)
|
|
|
(482,132
|
)
|
|
|
460,485
|
|
|
|
(21,647
|
)
|
Income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net (loss)
|
|
$
|
(482,132
|
)
|
|
$
|
460,485
|
|
|
$
|
(21,647
|
)
|
Metwood, Inc.
|
Unaudited Proforma Balance Sheet
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
Proforma
|
|
|
|
Historical
|
|
|
Adjustment
|
|
|
Combined
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
67,854
|
|
|
$
|
(67,854
|
)a)
|
|
$
|
-
|
|
Accounts receivable, net of reserve
|
|
|
184,290
|
|
|
|
(184,290
|
)a)
|
|
|
-
|
|
Inventory
|
|
|
518,001
|
|
|
|
(518,001
|
)a)
|
|
|
-
|
|
Other current assets
|
|
|
14,755
|
|
|
|
(14,755
|
)a)
|
|
|
-
|
|
Total current assets
|
|
|
784,900
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment
|
|
|
469,633
|
|
|
|
(469,633
|
)a)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,254,533
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
178,928
|
|
|
$
|
(174,928
|
)a)
|
|
$
|
4,000
|
|
Accrued payroll expense
|
|
|
22,625
|
|
|
|
(22,625
|
)a)
|
|
|
-
|
|
Demand note payable-related party
|
|
|
77,460
|
|
|
|
(77,460
|
)a)
|
|
|
-
|
|
Convertible note payable-related party
|
|
|
|
|
|
|
|
|
|
|
|
|
note discount of $38,294
|
|
|
14,706
|
|
|
|
|
|
|
|
14,706
|
|
Total current liabilities
|
|
|
293,719
|
|
|
|
|
|
|
|
18,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock (par $.001) 40,000,000
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Common stock (par $.001)
|
|
|
17,767
|
|
|
|
(9,400
|
)b)
|
|
|
8,367
|
|
Paid in capital
|
|
|
3,550,236
|
|
|
|
|
|
|
|
3,550,236
|
|
Accumulated deficit
|
|
|
(1,671,189
|
)
|
|
|
(1,915,520
|
)a)
|
|
|
(3,577,309
|
)
|
|
|
|
|
|
|
|
9,400
|
b)
|
|
|
|
|
Contra equity-prepaid rent
|
|
|
(936,000
|
)
|
|
|
936,000
|
a)
|
|
|
-
|
|
Treasury stock
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Total stockholders' equity
|
|
|
960,814
|
|
|
|
|
|
|
|
(18,706
|
)
|
Total liabilities and stockholders' equity
|
|
$
|
1,254,533
|
|
|
|
|
|
|
$
|
-
|
|
Pro Forma adjustments on the balance sheet:
a)
|
Represents Metwood of Virginia, Inc.'s historical balance sheet as of June 30, 2018 to carve out Metwood of Virginia, Inc.'s assets and liabiities as of June 30, 2018 prior to its sale.
|
b)
|
Represents the retirement 9,400,000 shares the Company's common stock which the Company received in exchange from Cahas Mountain Properties, LLC.
|
Metwood Inc.
|
Unaudited Proforma Condensed Statement of Operations
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
Proforma
|
|
|
|
Historical
|
|
|
Adjustment
|
|
|
Combined
|
|
|
|
|
|
|
|
|
|
|
|
Gross sales
|
|
$
|
1,864,222
|
|
|
$
|
(1,864,222
|
)a)
|
|
$
|
-
|
|
Cost of sales
|
|
|
1,169,569
|
|
|
|
(1,169,569
|
)a)
|
|
|
-
|
|
Gross profit
|
|
|
694,653
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenes
|
|
|
1,137,962
|
|
|
|
(1,137,962
|
)a)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(443,309
|
)
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (expense)
|
|
|
8,697
|
|
|
|
(27,403
|
)a)
|
|
|
(18,706
|
)
|
Net income (loss) before income taxes
|
|
|
(434,612
|
)
|
|
|
|
|
|
|
(18,706
|
)
|
Income taxes
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Net loss
|
|
$
|
(434,612
|
)
|
|
|
|
|
|
$
|
(18,706
|
)
|
Pro Forma adjustments on the balance sheet:
a)
|
Represents Metwood of Virginia, Inc.'s historical statement of operations for the year ended as of June 30, 2017 to carve out Metwood of Virigina, Inc's income and expenses prior to its sale with the exception of the interest expense and discount amortization for the convertible note payable.
|
METWOOD, INC.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2018 AND JUNE 30, 2017
Notes to Unaudited Pro Forma Financial statements:
1. Overview
On June 28, 2019, Metwood, Inc. entered into an Acquisition Agreement with Emerge Nutraceuticals, Inc.( ENI), a Florida Corporation. Pursuant to the agreement, 100% of ENI’s common stock (500 shares) and $300,000 was transferred to Metwood, Inc. In consideration, fifteen million (15,000,000) shares of Metwood common stock was issued which were valued at one million two hundred fifty thousand $1,250,000) dollars. This purchase excluded the formulas for the products produced by ENI, which were spun out of ENI prior to the acquisition. Upon closing, two the Company’s manager’s, officers and board of directors members, Robert M. Callahan and Shawn A. Callahan, resigned after appointing Mr. Keith Thomas, Shawn Phillips and Raffaela Thomas to the Board of Directors. ENI is the acquirer for financial statement purposes and the transaction will be handled as a reverse merger and recapitalization. Financial statements are not available.
On June 28, 2019, Metwood, Inc. entered into an Acquisition Agreement with Emerge Nutraceuticals, Inc.( ENI), a Florida Corporation. Pursuant to the agreement, 100% of ENI’s common stock (500 shares) and $300,000 was transferred to Metwood, Inc. In consideration, fifteen million (15,000,000) shares of Metwood common stock was issued which were valued at one million two hundred fifty thousand $1,250,000) dollars. This purchase excluded the formulas for the products produced by ENI, which were spun out of ENI prior to the acquisition. Upon closing, two the Company’s manager’s, officers and board of directors members, Robert M. Callahan and Shawn A. Callahan, resigned after appointing Mr. Keith Thomas, Shawn Phillips and Raffaela Thomas to the Board of Directors. ENI is the acquirer for financial statement purposes and the transaction will be handled as a reverse merger and recapitalization. Financial statements are not available.
2. Pro Forma Information
The unaudited pro forma consolidate financial statements of the Company is prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) . The unaudited pro forma financial information is an abbreviated form and therefore does not comply with all presentation and disclosure requirements of GAAP.
Pro Forma Adjustments and Assumptions
The unaudited pro forma balance sheets ad of June 30, 2018, and June 30, 2017 are prepared as if the reverse merger and recapitalization had occurred on June 30, 2018 and June 30, 2017, respectively. The unaudited pro forma statement of operations , wee prepared as if the reverse merger and recapitalization had occurred on June 30, 2018 and 2017, respectively.
The unaudited pro forma financial statements have been developed from and should be read in conjunction with:
|
1.
|
Separate audited financial statements of Metwood, Inc. as of and for the year ended June 30, 2017 and the related notes;
|
|
|
|
|
2.
|
Separate audited financial statements of Metwood, Inc. as of and for the year ended June 30, 2018 and the related notes.
|
|
|
|
|
3.
|
The accompanying notes to the unaudited pro forma financial statements
|
Unaudited Pro Forma Financial adjustments
The unaudited pro forma consolidated financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the reverse merger and recapitalization and other related transaction occurred on the dates indicated. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma financial statements and are subject to change as additional information becomes available and analyses are performed.
Pro Forma Adjustments to the Balance Sheet;
|
1
|
Represents the Company’s historical Balance sheet at June 30, 2018 and June 30, 2017 to carve out Metwood of Virginia’s assets and liabilities prior to the reverse merger.
|
|
|
|
|
2
|
Represents the recapitalization as a result of the share exchange.
|
Pro Forma Adjustments to the Statements of Operations
|
1.
|
Represents the Company’s historical statement of operations for the years ended June 30, 20148 and June 30, 2017 to carve out Metwood’s income and expenses prior to the reverse merger.
|