UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C.
20549
FORM
10-K /A
Amendment
No. 2
[X]
ANNUAL REPORT PURSUANT
TO SECTION 13
OR 15(d)
OF THE
SECURITIES EXCHANGE
ACT OF
1934
For
the fiscal year
ended June
30, 2014
[
] TRANSITION REPORT
PURSUANT TO SECTION
13 OR
15(d) OF
THE SECURITIES EXCHANGE
ACT OF
1934
For
the transition period
from ________
to ________
Commission
file number 000-05391
METWOOD,
INC.
(Exact
name of registrant
as specified in
its charter)
NEVADA
83-0210365
(State
or other
jurisdiction
IRS Employer of incorporation or organization
Identification No.)
819
Naff Road, Boones
Mill, VA
24065
(Address
of principal executive
offices)
(540)
334-4294
(Registrant's
telephone number, including
area code)
Securities
registered pursuant to
Section 12(b) of
the Act:
None
Securities
registered pursuant
to Section
12(g) of
the Act:
$0.001
Par Value Common
Voting Stock
(Title
of Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
☐ No ☒
Indicate
by check mark
if the registrant
is not required
to file reports
pursuant to
Section 13
or Section
15(d) of
the Act. Yes ☐
No ☒
Indicate
by check mark
whether the registrant
(1) has filed
all reports
required to be
filed by
Section 13
or 15(d)
of the Securities Exchange Act
of 1934 during
the preceding 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 ☒ No
☐
Indicate
by check mark
whether the registrant
has submitted electronically
and posted on
its corporate
web site, if any, every Interactive
Data File required
to be submitted
and posted pursuant
to Rule 405
of Regulation
S-T (§232.405 of this chapter)
during the preceding
12 months (or
for such shorter
period that
the registrant was
required
to submit and post such
files). Yes ☒ No
☐
Indicate
by check mark
if disclosure of
delinquent filers pursuant
to Item 405
of Regulation S-K
(§229.405
of this chapter) is not contained herein,
and will not be
contained, to
the best of
registrant's knowledge, in
definitive proxy or information
statements incorporated by reference
in Part III
of this Form
10-K or any
amendment to this
Form 10-K. Yes ☒ No
☐
Indicate
by check mark
whether the registrant
is a large
accelerated filer,
an accelerated
filer, a non-accelerated
filer, or a smaller
reporting company. See
the definitions of
“large accelerated filer,”
“accelerated filer,” and
a "smaller reporting company”
in Rule 12b-2
of the Exchange
Act.
Large
accelerated filer Accelerated
filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☒
Indicate
by check mark
whether the registrant
is a shell
company (as defined
in Rule 12b-2
of the Act). Yes ☐
No ☒
As
of September 29, 2014, the
aggregate market value
of the 5,720,015
common shares outstanding
(based
upon the average
of the bid
price ($.5) reported
on the OTCQB
Market) held
by non-affiliates
was $2,860,000.
As
of September 29, 2014, the
number of shares
outstanding of
the registrant's common
stock, $0.001
par
value (the only class of voting
stock), was 15,221,647
shares.
ii
METWOOD,
INC. AND SUBSIDIARY
FORM
10-K
TABLE
OF CONTENTS
| ITEM | |
PART I | |
PAGE | |
| | |
| |
| |
| Item 1 | |
Description of Business | |
2 | |
| Item 1A | |
Risk Factors | |
4 | |
| Item 2 | |
Properties | |
5 | |
| Item 3 | |
Legal Proceedings | |
5 | |
| | |
| |
| |
| | |
PART II | |
| |
| Item 5 | |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issurer Purchases of Equity Securities | |
6 | |
| Item 7 | |
Management’s Discussion and Analysis or Plan of Operation | |
8 | |
| Item 8 | |
Financial Statements and Supplementary Data | |
14 | |
| Item 9 | |
Changes
in and Disagreements
with Accountants
on Accounting
and Financial Disclosure | |
14 | |
| Item 9A | |
Controls and Procedures | |
16 | |
| Item 9B | |
Other Information | |
16 | |
| | |
| |
| |
| | |
PART III | |
| |
| Item 10 | |
Directors, Executive Officers and Corporate Governance | |
17 | |
| Item 11 | |
Executive Compensation | |
18 | |
| Item 12 | |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | |
19 | |
| Item 13 | |
Certain Relationships and Related Transactions, and Director Independence | |
20 | |
| Item 14 | |
Principal Accounting Fees and Services | |
| |
| | |
| |
| |
| | |
PART IV | |
| |
| Item 15 | |
Exhibits and Financial Statement Schedules | |
21 | |
| | |
| |
| |
| | |
Signatures | |
22 | |
iii
SPECIAL
NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This
Annual Report
on Form 10-K
contains
certain forward-looking
statements
within the
meaning of the
Private Securities Litigation
Reform Act of
1995 with respect
to the financial
condition,
results of operations, business
strategies, operating efficiencies or synergies,
competitive positions,
growth opportunities for existing products,
and plans and
objectives of management.
Statements that are
not historical in nature and which include such
words as
"anticipate,"
"estimate,"
"should,"
"expect," believe," "intend," and similar expressions
are intended to identify
forward-looking
statements for the purpose of the
safe harbor
provided
by Section 21E
of the Exchange
Act and
Section
27A of
the Securities
Act.
PART
I
Item
1. Description
of Business
Business
Development
The
company was incorporated
under the laws
of the
State of
Wyoming
on June
19, 1969.
Following an involuntary
dissolution
for failure
to file
an annual
report,
the company
was reinstated
as a Wyoming corporation on October
14, 1999. On
January 28, 2000, the company, through a majority
shareholder vote, changed its domicile
to Nevada through a merger with EMC Energies, Inc.,
a Nevada corporation. The Plan of Merger provided for the
dissenting shareholders
to be paid the amount, if
any, to which
they would be
entitled under the
Wyoming Corporation Statutes
with respect to the rights of dissenting
shareholders. The company also changed
its par value to $.001 and the amount of
authorized common
stock to 100,000,000
shares.
Prior
to 1990, the
company was engaged
in the business
of exploring
for and
producing
oil and
gas in the Rocky Mountain and
mid-continental areas of the
United States. The
company liquidated substantially
all of its assets
in 1990 and was dormant
until
June 30,
2000,
when it acquired,
in a stock-for-stock, tax-free exchange, all of the outstanding common stock
of a privately held
Virginia corporation, Metwood,
Inc. ("Metwood"),
which was incorporated
in 1993.
See Form 8-K and
attached exhibits filed August
11, 2000.
Metwood has been in the
metal and metal/wood
construction
materials manufacturing business since 1992. Following the acquisition, the company
approved a name change
from EMC Energies,
Inc. to Metwood, Inc.
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,
for $350,000 and accounted for the transaction
under the purchase
method of accounting.
As of June 30, 2012, Providence was no
longer an operating
segment of the
Company.
A decision was made that the majority of the engineering portion of the business could
best be handled
through a strategic
partnership with an outside engineering firm. We believe that continuing research and
development
efforts will soon enable us to meet code requirements for our products
and will eliminate the
need for individual engineering seals.
Metwood
("the Company,"
"We," "Us,"
"Our")
provides construction-related
products and
engineering
services to residential
customers
and contractors,
commercial contractors,
developers
and retail enterprises, primarily
in southwestern Virginia.
Principal
Products or
Services and
Markets
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
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
are:
·
TUFF BEAM
- internally reinforced
cold-formed steel beam
·
TUFF JOIST
- cold-formed steel
joint system
·
TUFF JOIST+
- internally reinforced
cold-formed steel
joist
·
TUFF FLOOR
SYSTEM - combinations
of TUFFBEAM, NUJOIST
and TUFFJOIST
are
utilized to make up a
complete
floor system
·
TUFF DECK
- concrete deck
systems
·
RIM BEAM
- internally reinforced
CFS load distribution
member
·
TUFF FRAME
3.5 & 5.5
- a fully
proprietary panelized
load bearing
and non-load
bearing
CFS
wall framing
solution
·
TUFF TRUSS
2.0 - a
proprietary roof
and floor
truss system
·
Aegis -
Metwood is a
distributor of
Aegis Metal Framing's
cold-formed
steel trusses
SURE-SPAN™
·
Trimmable square columns
·
Joist reinforcers
·
Engineering, design and
custom building services
Metwood's
services include providing
its customers, through
a strategic
partnership
with an
outside
engineering firm, 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. Metwood also performs ongoing
product research
and development.
We
also perform 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.
The
Company has designed
numerous foundations
for a
variety of
structures.
Our 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.
We
have also designed
and drafted full
building plans
for several
applications.
When subcontracting
for local companies, we have
the ability, in
partnership with our
outside engineering firm,
to provide
basic architectural, mechanical, electrical,
and detailed civil and
structural design services
for these facilities.
We
have 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
Our
sales are primarily
wholesale, directly to
lumberyards, home
improvement stores, hardware
stores,
and
plumbing and electrical
suppliers in Virginia
and North
Carolina.
Metwood relies primarily on its own
sales force to
generate sales; additionally,
however, the
Company
has distributors
in Virginia,
New York, Oklahoma,
Arizona
and Colorado
and also
utilizes the
salespeople of wholesale yards stocking the Company's products as an additional
sales force.
We
are an authorized vendor for Lowe's,
Home Depot, 84
Lumber, Stock Building
Supply,
ProBuild,
and many more. We
have several stocking
dealers of our
square columns
and reinforcing
products.
We will sell directly to contractors in areas where we do not
have a dealer,
but with our
national dealer relationships, we typically have a dealer to use. Metwood intends to
continue expanding the wholesale marketing
of its unique products
to retailers, to increase dealer sales, 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
Metwood
has become a
fabricator of the
Aegis steel truss
system and is
a supplier
of their
products to both residential
and commercial customers.
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 typically 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
will 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 Telling Industries,
New Millenium,Allied Tube & Conduit,
and Vulcraft. Our main source of lumber
is BlueLinx. Adelphia Metals, Re- Steel,
Nucor and Gerdau Amersteel 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 fiscal years
ending June
30, 2014 and
2013,
no customer
accounted
for 10%
or more
of total sales.
Patents
The
Company has nine
U.S.
Patents:
U.S.
Patent 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,
a continuation
in part
of 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.
5,921,053, "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 Joist Reinforcing Bracket, which will be used
for repairs of
wood I-joists.
Each
of the above-mentioned
patents was originally
issued to the
inventors
and Company
founders, Robert Callahan
and Ronald
B. Shiflett,
who licensed these
patents to us.
Need
for Government
Approval
of Principal
Products
Our
products must either be sold with an engineer's seal or applicable building
code approval. Currently,
we are seeking International Code Council ("ICC") code approval
on our TUFFBEAMS.
Once
that approval is
obtained, our products
can be
used in
all fifty
states and will
eliminate the
need for an engineer's
seal on individual
products.
To date, the Company's
2x10 floor
joist reinforcer
has received both Bureau Officials Code Association approval
(2001) and
ICC approval (2004).
Time
Spent During
the Last Two
Fiscal Years on
Research and Development
Activities
Approximately
fifteen percent of our time and resources have been
spent during the last two fiscal years
researching and developing our metal/wood products, new product
lines, and
new patents.
Costs
and Effects of
Compliance with Environmental
Laws
We
do not incur any costs to comply with environmental
laws. We are an environmentally friendly business
in that our products are fabricated from recycled steel.
Number
of Total Employees
and Number of
Full-Time Employees
We
had fourteen employees
at June 30,
2014, thirteen of
whom
were full
time.
Item
1A. Risk
Factors
Our
business is subject
to various risks, including
those described below. You should
carefully consider the following risk factors and
all other information
contained in
this Form 10-K.
If any of the following events or
outcomes actually occurs, our business, operating results,
and financial conditions would likely
suffer.
Changing
economic conditions
could materially
adversely affect
us -
Our operations
and performance depend significantly
on regional and
national economic conditions
and their
impact on
levels of spending
by our customers and end
users. Currently, those economic conditions have deteriorated
and may remain depressed
for the foreseeable
future. These changing economic
conditions could have a material adverse effect on demand for
our products
and on our
financial condition and operating
results.
Current
volatility and disruption
in the capital
and credit
markets may
continue
to exert downward
pressure on our
stock price
- The capital
and credit markets
have been experiencing
extreme volatility and disruption over the past
year. Stock markets
in general, and our
stock price
in particular, have experienced significant volatility over the past year. Our stock
recently traded at historic lows.
In the future, there can be no assurance that price
volatility in the
stock markets in general will abate or
that our stock price in particular
will rise. Additionally, the volatility in the credit markets could
impact our ability
to access new
financing.
We
have a history
of operating
losses and
may
incur future
losses. We
incurred net
losses of $184,667 for
the fiscal year
ended June
30, 2014
and $61,291
for the
year ended June
30, 2013.
Our ability to generate significant revenues and maintain profitability is dependent
in large part on our
ability to expand our customer
base; increase sales
of our products to
existing customers; manage
our expense growth;
enter into additional supply, license
and collaborative arrangements; and
successfully manufacture and commercialize products incorporating our technologies
in new applications and in new markets.
Item
2. Properties
During
the year ended June 30, 2005, we sold our facilities to
a related party for $600,000
and subsequently leased the facilities back
under a long-term lease agreement. We now
lease our facilities in Boones Mill,
Virginia, which consist of corporate offices, warehouses, a garage/vehicle maintenance building,
and other multi-use buildings. The condition of
these buildings is very good.
We
do not
invest in
real estate
or interests
in real estate,
real estate
mortgages or
securities of
or interests in persons
primarily engaged in
real estate activities
and therefore have
no policies related to such investments.
Item
3. Legal
Proceedings
We
are not a
party to
any legal proceedings,
nor, to
the best
of our
knowledge,
are any such
proceedings threatened or
contemplated.
Item
4. Submission
of Matters
to a
Vote of
Security Holders
No
matter was submitted
to a vote
during
the year.
PART
II
Item
5. Market
for Common
Equity and
Related
Stockholder
Matters
Because
there is no
active trading market
for Metwood,
Inc. common
stock, it is
difficult to determine the market
value of the
stock. Based
on the recent
close of our
common stock at July
28,
2014
of $.50 per share (with a 52-week high
of $.85),
the market value
of shares held
by non-affiliates
would be
$7,610,824.
Our
common stock is
currently listed on
the OTCQB Market,
the middle tier
of the
OTC marketplace,
under the symbol "MTWD.OB."
The
following table sets
forth high and
low bid information
for each
full quarterly
period within
the two most recent
fiscal years. These
over-the-counter market quotations
reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not necessarily represent
actual transactions.
Year Ended June 30, 2014 | |
| High | | |
| Bid | |
| |
| | | |
| | |
First Quarter | |
$ | 0.85 | | |
$ | 0.25 | |
Second Quarter | |
$ | 0.50 | | |
$ | 0.36 | |
Third Quarter | |
$ | 0.50 | | |
$ | 0.50 | |
Fourth Quarter | |
$ | 0.50 | | |
$ | 0.50 | |
| |
| | | |
| | |
Year Ended June 30, 2013 | |
| | | |
| | |
| |
| | | |
| | |
First Quarter | |
$ | 0.51 | | |
$ | 0.04 | |
Second Quarter | |
$ | 1.35 | | |
$ | 0.03 | |
Third Quarter | |
$ | 1.00 | | |
$ | 0.08 | |
Fourth Quarter | |
$ | 0.45 | | |
$ | 0.37 | |
Holders
The
approximate number of
holders of
record
of our
common
stock as
of July
28, 2014
was 1,103.
This number does not
include an indeterminate
number of
stockholders
whose
shares are held
by brokers in street name. The number
of stockholders has
been substantially the
same during
the past
ten years.
Dividends
We
have not paid any dividends on our common
stock and do not
intend to pay dividends
in the foreseeable future.
Item
7. Management's
Discussion and Analysis
of Financial
Condition
and Results
of
Operation
Metwood
had previously entered
into a Member
Interests Purchase
Agreement (the "Agreement")
dated June 30, 2013
with Global
Energy Group.
The Company has
determined not to consummate the transaction.
We
anticipate that the
next twelve months
will be a
period of continued
growth as
we seek to
further expand our
presence in new
markets throughout the
United States through
increased numbers
of distributors, licensees and dealers.
ICC code approval is being sought
for our
TUFFBEAM and
is expected to be obtained
within the coming fiscal
year. If this approval
is obtained,
product marketability would be greatly
enhanced and would
likely lead to
higher demand.
Results
of Operations
Below
are selected financial
data for
the years
ended
June 30,
2014 and
2013:
| |
2014 | |
2013 |
Revenues | |
$ | 1,933,006 | | |
$ | 2,157,379 | |
Net loss | |
$ | (244,117 | ) | |
$ | (327,504 | ) |
Net loss per common share | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
Weighted
average common shares outstanding | |
| | | |
| | |
| |
| | | |
| | |
At June 30, 2014 and 2013: | |
| | | |
| | |
Total assets | |
$ | 1,671,282 | | |
$ | 1,944,206 | |
Working capital | |
$ | 808,626 | | |
$ | 1,112,947 | |
Stockholders' equity | |
$ | 1,339,039 | | |
$ | 1,583,156 | |
No
dividends have been
declared
or paid
during
the periods
presented.
Revenues
and Cost of Sales
- Gross sales
decreased $224,373, or
10%, for
the year
ended June 30,
2014 ("fiscal
2014")
compared to the year ended
June 30,
2013 ("fiscal
2013"). Gross
profit decreased
$249,842 (31%) from
fiscal 2013 to
fiscal 2014.
The
Company's sales decrease
for fiscal 2014
versus 2013
reflects a continuing
downtown in the overall economy and in the building industry in particular, although 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-gage steel
truss system, begun in March 2008.
Cost
of sales increased
$25,468, or 2%,
in fiscal
2014 compared
to fiscal 2013.
Material costs, primarily metal products, were significantly higher in fiscal 2014 compared to fiscal 2013 and accounted
for much of the increase.
Administrative
Expenses - These costs decreased $384,080 from fiscal 2013
to fiscal 2014. The decrease
resulted in large part from much lower payroll expenses and professional fees.
We are invested in decreasing expenditures where possible in order
to maximize our net earnings.
Other
Income (Expense) -
Other expenses in fiscal 2014 were $20,589 compared to other income of $9,967
in fiscal
2013.
The change resulted from lower finance
charge income in fiscal 2014 and also from a net loss on asset disposals compared to a gain on asset disposals in fiscal 2013.
Income
Taxes -
In fiscal 2014
we recorded an
income tax benefit
of $56,855
compared
to a tax
benefit of $77,150
in fiscal
2013.
An income tax
benefit was recognized in both
fiscal years
because, in addition to the book loss experienced, temporary ("timing")
differences between
book and tax income gave rise
to a higher tax loss,
which will be carried forward
and offset
future
taxable income. A deferred tax
asset has been recorded to reflect
the potential
future
benefit of such
a carryforward.
Since the realization of such an asset is uncertain, we have also recorded a valuation
allowance
to reduce this asset to
its net realizable
value.
Liquidity
and Capital
Reserves - Cash
flows used for
operating
activies in fiscal
2014 were
$61,039 versus net
cash used for
operating activities of
$158,282 in fiscal
2013. The decrease
in cash flows
used for operations for fiscal 2014 compared to fiscal 2013 was
primarily attributable
to decreases in accounts receivable and in inventory.
Weused $76,776 for capital improvements
and purchases of
fixed assets in fiscal 2014 compared
to $29,567 in fiscal 2013.
Financing activities in fiscal 2014 were $-0- compared
to $12,711 used
in fiscal 2013.
The use
of funds
in 2013
was from amounts repaid to a related
party.
We
have historically funded
our cash needs
through operating
income and
credit line
draws as
needed. We will continue to
rely on sales
revenue as our
main source of
liquidity and
will incur
debt primarily
to fund inventory purchases
as sales growth
produces increased
product demand.
Liquidity needs that cannot be
met by current sales revenue may also arise in certain unusual
circumstances such as has previously occurred
when rain and snow
significantly slowed construction
activity and resulted in a corresponding decline
in demand
for our
products. In those
circumstances, debt may be added
to meet our fixed costs and to maintain inventory in anticipation of a spurt in product
demand that generally occurs once a weather-related
slowdown has ended.
On
a long-term basis,
we also anticipate
that product demand
will increase
considerably
as we continue
to expand our marketing and
advertising campaign, which
may include the
use of
television,
radio, print and internet
advertising. Efforts are well underway to increase
the number of
out-of-state sales representatives/brokers
who will market our products
throughout
the country.
As sales increase, we can add a second shift
to meet the additional product
demand without
having to use funds
to expand our production
facilities. If additional cash becomes necessary to fund our
growth,
we may raise this capital through an
additional follow-on
stock offering
rather
than taking
on more
debt. However, there
can be no assurance that we will be able to obtain
additional equity
or debt financing
in the future. If we are
unable to raise
additional capital as needed, our
growth potential
will be adversely
affected, and we would have
to significantly modify our plans
Item
8. Financial
Statements and
Supplementary
Data
|
7951
SW 6th St.
Suite 216
Plantation, Fl 33324
Tel: 954-424-2345
Fax: 954-424-2230 |
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders
Metwood,
Inc.
We
have audited the accompanying consolidated balance sheets of Metwood, Inc and subsidiary (“the Company”) as of June
30, 2014 and 2013 and the related consolidated statements of operations, stockholders’ equity, and consolidated cash flows
for the years ended June 30, 2014 and 2013. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of their internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of the Company as of June 30, 2014 and 2013, and the results of its operations, changes in stockholders’
equity and cash flows for the years ended June 30, 2014 and 2013 in conformity with accounting principles generally accepted in
the United States of America.
/s/ Bongiovanni
& Associates, PA
Bongiovanni
& Associates, PA
Certified
Public Accountants
Plantation,
Florida
The
United States of America
September
29 , 2014
METWOOD,
INC. AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEETS
JUNE
30, 2014 AND 2013
| |
| June
30, |
| |
| 2014 | | |
| 2013 | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current Assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 36,836 | | |
$ | 174,650 | |
Accounts receivable, net | |
| 149,671 | | |
| 238,515 | |
Inventory | |
| 815,192 | | |
| 930,672 | |
Other current assets | |
| 44,356 | | |
| 30,160 | |
| |
| | | |
| | |
Total current assets | |
| 1,046,054 | | |
| 1,373,997 | |
| |
| | | |
| | |
Property and Equipment | |
| | | |
| | |
Leasehold improvements | |
| 274,869 | | |
| 266,689 | |
Furniture, fixtures and equipment | |
| 78,222 | | |
| 93,243 | |
Computer hardware, software and peripherals | |
| 175,207 | | |
| 178,605 | |
Machinery and shop equipment | |
| 467,166 | | |
| 465,085 | |
Vehicles | |
| 387,443 | | |
| 372,646 | |
Land improvements | |
| 67,959 | | |
| 67,959 | |
| |
| 1,450,866 | | |
| 1,444,227 | |
Less accumulated depreciation | |
| (1,071,802 | ) | |
| (1,063,326 | ) |
| |
| | | |
| | |
Net property and equipment | |
| 379,064 | | |
| 380,901 | |
| |
| | | |
| | |
Other Assets | |
| | | |
| | |
Deferred tax asset, less valuation reserve | |
| 246,163 | | |
| 189,308 | |
| |
| 246,163 | | |
| 189,308 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 1,671,282 | | |
$ | 1,944,206 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |
| | | |
| | |
| |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accounts payable | |
$ | 205,037 | | |
$ | 135,248 | |
Customer deposits | |
| 13,166 | | |
| 115,011 | |
Accrued expenses | |
| 19,225 | | |
| 10,791 | |
| |
| | | |
| | |
Total current liabilities | |
| 237,428 | | |
| 261,050 | |
| |
| | | |
| | |
Long-term Liabilities | |
| | | |
| | |
Due to related companies and parties | |
| 94,815 | | |
| 100,000 | |
| |
| | | |
| | |
Total long-term liabilities | |
| 94,815 | | |
| 100,000 | |
| |
| | | |
| | |
Total liabilities | |
| 332,243 | | |
| 361,050 | |
| |
| | | |
| | |
Stockholders' Equity | |
| | | |
| | |
Common stock ($.001 par, 100,000,000 shares authorized; | |
| | | |
| | |
15,221,647 shares issued and outstanding
at June 30, 2014 and 2013, respectively) | |
| 15,222 | | |
| 15,222 | |
Common stock not yet issued ($.001 par,
8,150 shares at | |
| | | |
| | |
June 30, 2014 and 2013, respectively) | |
| 8 | | |
| 8 | |
Additional paid-in capital | |
| 1,899,773 | | |
| 1,899,773 | |
Retained (deficit) | |
| (575,964 | ) | |
| (331,847 | ) |
Total stockholders' equity | |
| 1,339,039 | | |
| 1,583,156 | |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY | |
$ | 1,671,282 | | |
$ | 1,944,206 | |
The
Report of Independent Registered Public Accounting Firm and accompanying notes are an integral part of these consolidated financial
statements
METWOOD, INC. AND SUBSIDIARY |
CONSOLIDATED STATEMENTS
OF INCOME |
FOR THE YEARS ENDED JUNE
30, 2014 AND 2013 |
| |
| 2014 | | |
| 2013 | |
REVENUES | |
| | | |
| | |
Gross sales | |
$ | 1,933,006 | | |
$ | 2,157,379 | |
Cost of sales | |
| 1,384,630 | | |
| 1,359,162 | |
| |
| | | |
| | |
Gross profit | |
| 548,375 | | |
| 798,217 | |
| |
| | | |
| | |
ADMINISTRATIVE EXPENSES | |
| | | |
| | |
Advertising | |
| 17,731 | | |
| 29,607 | |
Bad debt provision | |
| 77,192 | | |
| 110 | |
Depreciation | |
| 22,679 | | |
| 22,289 | |
Insurance | |
| 18,936 | | |
| 22,584 | |
Payroll expenses | |
| 440,208 | | |
| 767,770 | |
Professional fees | |
| 42,207 | | |
| 60,022 | |
Rent | |
| 75,045 | | |
| 80,820 | |
Research and development | |
| 7,829 | | |
| 5,073 | |
Telephone | |
| 23,281 | | |
| 19,525 | |
Vehicle | |
| 26,596 | | |
| 30,683 | |
Other | |
| 77,054 | | |
| 174,355 | |
| |
| | | |
| | |
Total administrative expenses | |
| 828,758 | | |
| 1,212,838 | |
| |
| | | |
| | |
Operating loss | |
| (280,383 | ) | |
| (414,621 | ) |
| |
| | | |
| | |
Other Income (Expense) | |
| (20,589 | ) | |
| 9,967 | |
| |
| | | |
| | |
(Loss) before income taxes | |
| (300,972 | ) | |
| (404,654 | ) |
| |
| | | |
| | |
Income tax benefit | |
| (56,855 | ) | |
| (77,150 | ) |
| |
| | | |
| | |
Net (Loss) | |
$ | (244,117 | ) | |
$ | (327,504 | ) |
| |
| | | |
| | |
Basic and diluted loss per common share | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
| |
| | | |
| | |
Weighted average number of common shares | |
| 15,221,647 | | |
| 15,221,647 | |
The
Report of Independent Registered Public Accounting Firm and accompanying notes are an integral part of these consolidated financial
statements
METWOOD,
INC. AND SUBSIDIARY |
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY |
FOR
THE YEARS ENDED JUNE 30, 2014 AND 2013 |
|
Common
Shares
(000s) | |
| Common
Shares
($.001
Par) | |
| Common
Shares Not Yet Issued
(000s) | |
|
| Common
Shares Not Yet Issued
($.001
Par) | |
|
Additional
Paid-In
Capital | |
| Retained
Earnings
(deficit) |
|
| |
| | |
| | |
|
| | |
|
| |
| |
Balances July 1, 2012 |
12,232 | |
$ | 12,232 | |
| 8 | |
|
$ | 8 | |
|
1,544,268 | |
$ | (4,343) |
|
| |
| | |
| | |
|
| | |
|
| |
| |
Issuance of common stock |
| |
| | |
| | |
|
| | |
|
| |
| |
to employees |
560 | |
| 560 | |
| — | |
|
| — | |
|
285,040 | |
| — |
|
| |
| | |
| | |
|
| | |
|
| |
| |
Issuance of common stock |
| |
| | |
| | |
|
| | |
|
| |
| |
to related company |
2,430 | |
| 2,430 | |
| — | |
|
| — | |
|
70,465 | |
| — |
|
| |
| | |
| | |
|
| | |
|
| |
| |
Net loss for year |
— | |
| — | |
| — | |
|
| — | |
|
— | |
| (327,504) |
|
| |
| | |
| | |
|
| | |
|
| |
| |
Balances June 30, 2013 |
15,222 | |
$ | 15,222 | |
| 8 | |
|
$ | 8 | |
|
1,899,773 | |
$ | (331,847) |
|
| |
| | |
| | |
|
| | |
|
| |
| |
Net loss for year |
— | |
| — | |
| — | |
|
| — | |
|
— | |
| (244,117) |
|
| |
| | |
| | |
|
| | |
|
| |
| |
Balances June 30, 2014 |
15,222 | |
$ | 15,222 | |
| 8 | |
|
$ | 8 | |
|
1,899,773 | |
$ | (575,964) |
The
Report of Independent Registered Public Accounting Firm and accompanying notes are an integral part of these consolidated financial
statements
METWOOD, INC. AND SUBSIDIARY |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
FOR THE YEARS ENDED JUNE 30, 2014 AND 2013 |
| |
|
| |
| 2014 | | |
| 2013 | |
OPERATING ACTIVITIES | |
| | | |
| | |
Net loss | |
$ | (244,117 | ) | |
$ | (327,504 | ) |
Adjustments to reconcile net loss to net cash provided by | |
| | | |
| | |
(used for) operating activities: | |
| | | |
| | |
Depreciation, net of property disposals | |
| 72,518 | | |
| 62,258 | |
Issuance of common stock | |
| — | | |
| 358,495 | |
Loss on preperty disposals | |
| 3,191 | | |
| 6,170 | |
Provision for deferred income taxes | |
| (56,855 | ) | |
| (77,150 | ) |
(Increase) decrease in operating assets: | |
| | | |
| | |
Accounts receivable | |
| 88,844 | | |
| (7,134 | ) |
Impairment loss on intangible assets | |
| | | |
| — | |
Inventory | |
| 115,480 | | |
| 31,108 | |
Prepaid expenses | |
| | | |
| 1,411 | |
Other current assets | |
| (14,196 | ) | |
| | |
Refundable income taxes | |
| | | |
| — | |
Increase in operating liabilities: | |
| | | |
| | |
Accounts payable, customer deposits and accrued expenses | |
| (25,904 | ) | |
| 110,628 | |
Net cash provided by (used in) operating activities | |
| (61,039 | ) | |
| (158,282 | ) |
| |
| | | |
| | |
INVESTING ACTIVITIES | |
| | | |
| | |
Property, plant and equipment: | |
| | | |
| | |
Purchases | |
| (76,776 | ) | |
| (29,567 | ) |
Net cash provided by (used in) investing activities | |
| (76,776 | ) | |
| (29,567) | |
| |
| | | |
| | |
FINANCING ACTIVITIES | |
| | | |
| | |
Net repayment to related party | |
| — | | |
| (12,711 | ) |
Net borrowings from vehicle financing | |
| | | |
| — | |
Net cash (used in) financing activities | |
| — | | |
| (12,711 | ) |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| (137,814 | ) | |
| 116,004 | |
| |
| | | |
| | |
Cash, beginning of the year | |
| 174,650 | | |
| 58,646 | |
| |
| | | |
| | |
Cash, end of the year | |
$ | 36,836 | | |
$ | 174,650 | |
The
Report of Independent Registered Public Accounting Firm and accompanying notes are an
integral part of these consolidated financial statements. |
METWOOD,
INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
JUNE
30, 2014
AND
2013
NOTE
1 -
ORGANIZATION
AND
OPERATIONS
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, for $350,000 and accounted for
the transaction under
the purchase method
of accounting.
As of June
30, 2012, Providence is no longer an
operating
segment of
the Company. We have
concluded that the majority of the engineering portion of the
business can best
be handled
through a strategic
partnership with an outside engineering
firm. We believe that continuing research
and development efforts will soon enable us to meet code requirements for
our products and
will eliminate
the need for
individual engineering seals.
We
provide 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
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 our financial instruments, none of
which are held for
trading, including cash, accounts receivable, accounts payable and accrued expenses, and
the bank
lines of credit, the carrying amounts approximate fair value due to their
short maturities.
Cash
and Cash Equivalents -
For purposes of
the Consolidated
Statements of
Cash Flows,
we consider
liquid investments with an
original maturity of
three months or
less to be
cash equivalents.
We maintain our cash in bank deposit accounts,
which, at times, may exceed the federally
insured limit of $250,000. We have 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 - We
grant credit in
the form of
unsecured
accounts receivable
to our
customers based on an evaluation
of their financial condition.
We perform ongoing credit evaluations
of our 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, 2014
and 2013,
the allowance for
doubtful
accounts
was $7,800 and $5,000, 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, 2014 and 2013, the bad debt expense was
$77,192 and $110, respectively.
Inventory
- 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.
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 balance sheet, and the resulting gain or loss is reflected in other
income and expense.
Maintenance
and
repairs
are
charged
to operations
as incurred
Impairment
of Long-lived Assets -
We evaluate our
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 future net undiscounted cash flows
which the assets are expected
to generate. Should an impairment exist, the impairment would be measured
by the amount by which the
carrying
amount of
the assets exceeds
the projected discounted future
cash flows
arising from the
asset. There have been no such impairments of
long-lived assets through June 30,
2014 and
2013.
Patents
- We have
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 -
We perform 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,
2014, expenses
were $7,829 and for
the year ended June
30, 2013,
expenses were $5,073.
Advertising - We expense advertising 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 goods 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.
Recent
Accounting
Pronouncements –
In May 2014, the
FASB issued
ASU No.
2014-09, Revenue from Contracts with Customers
(Topic 606) (“ASU
2014-09").
With ASU
2014-09, the FASB supersedes the
revenue recognition requirements of Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 sets forth
an entirely new revenue recognition model, codified in FASB ASC 606-10, requiring that contracts be identified, performance obligations
be identified, the transaction price be determined and allocated to performance obligations, and revenue be recognized upon satisfaction
of performance obligations. ASU 2014-09 is effective for public companies for annual periods beginning after December 15, 2016
and interim periods within those annual periods. Early adoption is not permitted.
In
July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit When a Net Operating
Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires that
an unrecognized tax benefit, or a portion of an unrecognized benefit, should be presented in the financial statements as a reduction
to a deferred tax asset for a net operating loss carryforward except to the extent a net operating loss carryforward, a similar
tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction
to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable
jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose,
the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred
tax assets. In assessing whether a loss or tax credit carryforward is available to settle additional income taxes at the reporting
date, entities would not consider future developments such as the subsequent expiration of a deferred tax asset. The assessment
would only reflect conditions present at the reporting date. The ASU is effective for fiscal years, and interim periods within
those years, beginning after December 15, 2013.
Management does not believe that
any other recently issued, but not yet effective accounting pronouncements,
if adopted, would have a material effect on the accompanying consolidated financial
statements.
NOTE
3 - RELATED-PARTY
TRANSACTIONS
For
the years ended
June 30, 2014
and 2013,
we had
sales of
$18,721
and $21,455,
respectively,
to a related company 50% owned by our CEO. As
of June
30, 2014
and 2013,
the related receivable
was $-0-.
Also,
from time to
time we contract
with this related company
which provides capital
improvements and maintenance
work on our
buildings
and grounds. Billings
for such services during the
years ended June 30, 2014
and 2013
were $2,585
and 10,080,
respectively.
Additionally,
Metwood has a note payable to the related company incurred for services provided. The balances at June 30, 2014 and 2013 were
$94,815 and $100,000, respectively.
NOTE
4 -
COMMITMENT
In
prior years, we implemented a stock-based incentive compensation plan for our employees. Participating
employees have an after-tax deduction withheld by the Company throughout
the calendar year. As of December 31
of each year, the employee is considered vested in the plan, and we will
match the participating employee's withheld amounts. We may also make a discretionary
contribution based upon pay incentives or attendance. Periodically, we will
purchase restricted stock on behalf of the employee in the amount of his
withholdings, our match, and any discretionary
contributions.
NOTE
5 -
EQUITY
During
the year ended
June 30, 2013,
we issued
560,000
common
shares for
the benefit
of employees
included in our stock-based
incentive compensation program.
In addition, 2,429,850
shares were
issued to
a related
party as payment
for a finder's
fee during the year ended June 30, 2013. There
were no shares
issued in the program for the year ended
June 30,
2014
NOTE
6 - SALE
OF FIXED ASSETS
AND
RELATED OPERATING
LEASE
During
the year ended
June 30, 2005,
we entered into
a sale and
leaseback transaction
with a
related party. We
sold the various
buildings at our
corporate headquarters
which house
our manufacturing
plants, executive offices and
other buildings for
$600,000 in cash. We simultaneously entered
into a commercial lease agreement with the related party whereby we have been committed to lease back these same properties over
a ten-year term expiring December
31, 2014. Rent expense
charged to operations related to the commercial lease for the years ended June 30, 2014 and 2013 was $76,000 and $81,600,
respectively.
Future
minimum lease payments
under non-cancelable operating
leases as of
June
30,
2014
are as follows:
Year Ending June 30, |
| | |
2015 and beyond |
$ | 42,000 | |
NOTE 7- INCOME TAXES | |
|
| |
| |
|
The components of income
tax benefit consist of: | |
|
| |
2014 | |
2013 |
Current: | |
| | | |
| | |
Federal | |
$ | (41,910 | ) | |
$ | (20,681 | ) |
State | |
| (8,564 | ) | |
| (5,598 | ) |
| |
| (50,474 | ) | |
| (26,279 | ) |
Deferred: | |
| | | |
| | |
Federal | |
| (6,176 | ) | |
| (44,569 | ) |
State | |
| (205 | ) | |
| (6,302 | ) |
| |
| (6,381 | ) | |
| (50,871 | ) |
| |
| | | |
| | |
Total
income tax benefit | |
$ | (56,855 | ) | |
$ | (77,150 | ) |
| |
| | | |
| | |
The reconciliation of the provision for income taxes at the U. S. federal statutory income tax rate of 39% to the Company's income taxes is as follows: |
| |
| | | |
| | |
Loss
before income taxes | |
$ | (300,972 | ) | |
$ | (404,654 | ) |
Income tax
benefit computed at the statutory rate | |
| (117,379 | ) | |
| (157,815 | ) |
State income
tax benefit, net of federal tax effect | |
| (10,699 | ) | |
| (14,517 | ) |
Non-deductible
expenses | |
| 3,375 | | |
| 3,119 | |
Valuation
reserve adjustment | |
| 56,855 | | |
| 77,150 | |
Effect
of graduated income tax rates | |
| 10,993 | | |
| 14,913 | |
| |
| | | |
| | |
Total
income tax benefit | |
$ | (56,855 | ) | |
$ | (77,150 | ) |
| |
| | | |
| | |
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amount used
for federal and state income tax purposes. We have recorded deferred tax assets
at June 30, 2014 and 2013, net of a valuation reserve, of $246,163 and $189,308, respectively. The
components of these amounts are as follows:
|
| |
2014 | |
2013 |
| |
| | | |
| | |
Tax
loss carryforward | |
$ | 189,847 | | |
$ | 102,666 | |
Depreciation
and miscellaneous | |
| 56,316 | | |
| 86,642 | |
| |
| | | |
| | |
Net
deferred tax asset | |
$ | 246,163 | | |
$ | 189,308 | |
Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Controls and
Procedures
(a) Evaluation of disclosure controls and procedures
We maintain disclosure
controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and
forms and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding required disclosure. 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, and management is required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide
reasonable assurance that the controls and procedures would meet their objectives. As required by SEC Rule 13a-15, our Chief Executive
Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable
assurance level.
Management’s
Annual Report on Internal Control over Financial Reporting
Our Chief
Executive Officer and Chief Financial Officer are responsible for establishing and maintaining adequate internal control over
our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by
Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in
Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). Our system of internal control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Management has used the framework set forth in the report
entitled Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway
Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this
assessment, our Chief Executive Officer and Chief Financial Officer have concluded that our internal control over financial
reporting was not effective as of June 30, 2014. Management’s
assessment identified the following material
weaknesses in internal control over financial reporting:
The
small size of our Company limits our ability to achieve the desired level of separation in our internal controls and financial
reporting. We do have a separate CEO and CFO; however, we do not have an Audit Committee to review and oversee the financial policies
and procedures of the Company. Until such time we are able to install an audit committee, we do not meet the full requirement
for separation. In the interim, we will continue to strengthen the role of our CEO and CFO and their review of our internal control
procedures.
(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 not changes in our
internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
PART
III
Item
10. Directors,
Executive Officers
and Corporate
Governance
Identification
of Directors
and Executive
Officers
The
following
table sets
forth the
names and
the nature
of all
positions
and offices
held by
all directors and executive officers of the
Company for the
year ending
June 30,
2013 and
to the
date of the filing
of this report and the periods
during
which each such
director or executive
officer has
served in his
respective positions:
NAME |
POSITION AND BACKGROUND |
|
|
Robert
M. Callahan |
President
and CEO |
|
Mr.
Callahan has been
involved
in the building
industry
for over
thirty years.
He is well
recognized in southwestern Virginia
as an innovator
in the uses
of passive
solar design
and wood/metal products
in custom
home
building. Along
with Mr. Ronald Shiflett,
he formed Metwood, Inc.
in 1993 to bring light-gage construction, used
in commercial
building for years, into
common use in residential
construction.
|
|
|
Shawn
A. Callahan |
Secretary/Treasurer/CFO/VP/General
Manager |
|
Education:
MBA Accounting,
University of
Phoenix
B.S. Computer Science and Mathematics,
Virginia Military Institute
Since starting with
Metwood, Inc.
in May 1996,
Mr. Callahan has
played
a major
role in the restructuring
of the Company,
increasing
production,
improving efficiency,
and developing computer aids
for the
Company.
|
Term
of Office
The
term of office
of the current
directors shall continue
until new
directors
are elected or
appointed.
Family
Relationships
Robert
Callahan is the
father of
Shawn
Callahan.
Involvement
in Certain Legal
Proceedings
Except
as indicated below and to the knowledge of management, during
the past five years, no present
or former director, person nominated to become a director,
executive officer,
promoter or
control person of
the Company:
(1)
was a general partner or executive officer of any
business by or
against which
any bankruptc petition was filed, whether at the time of such filing or two years prior thereto;
(2)
was convicted in a criminal proceeding or named the subject of
a pending
criminal proceeding (excluding
traffic violations and other minor offenses);
(3)
was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated,
of any court of competent jurisdiction,
permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in
any type of business, securities or banking
activities;
(4)
was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated,
of any federal or state authority barring,
suspending or otherwise limiting for more than sixty
days the right of such person
to engage in any activity described above under
this Item, or to be
associated with persons engaged in any such activity; or
(5) was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity
Futures Trading Commission to have violated a federal or state securities or commodities
law, nor has a judgment been
reversed, suspended, or vacated.
Compliance
with Section 16(a)
of the
Exchange Act
Section
16(a) of the
Securities Exchange Act
of 1934, as
amended, requires
the Company's
directors,
officers and persons who own
more than 10%
of the Company's
common
stock or
other
registered class of equity securities
to file reports
of ownership
and changes in ownership with the
Securities and Exchange Commission. Officers, directors and greater than
10% shareholders
are required to furnish
us with copies
of all Section
16(a) forms
they file.
Based
solely on a
review of the
forms received covering
purchase and
sale transactions
in the Company's common
stock during the
fiscal year ended
June 30, 2014,
the Company
believes that each person who, at any
time during that period, was a director,
executive officer,
or beneficial owner
of more than 10%
of the Company's
common stock complied
with all Section 16(a)
filing requirements.
Item
11. Executive
Compensation
The
following table sets
forth in summary
form the compensation
received during
each of
the Company's
last three fiscal years
by our President
and Chief Executive
Officer,
Robert M. Callahan, and our Chief
Financial Officer, Shawn A. Callahan:
Summary
Compensation
Table
|
Fiscal Year |
Annual Salary |
Bonuses |
Other Compensation |
Restricted Stock Awards |
LTIP Options |
Restricted Stock Bonuses |
|
|
|
(1) |
(2) |
(3) |
(4) |
(4) |
Robert M. Callahan |
2014 |
$ 59,856 |
$ 7,900 |
-0- |
$-0- |
-0- |
-0- |
|
2013 |
$ 80,000 |
$ 7,100 |
-0- |
-0- |
-0- |
-0- |
|
2012 |
$ 71,667 |
$ 7,800 |
-0- |
-0- |
-0- |
-0- |
|
|
|
|
|
|
|
|
Shawn A. Callahan |
2014 |
$ 65,623 |
$ 8,000 |
-0- |
$-0- |
-0- |
-0- |
|
2013 |
$ 62,102 |
$ 7,580 |
-0- |
-0- |
-0- |
-0- |
|
2012 |
$ 63,006 |
$ 8,938 |
|
|
|
|
|
|
|
|
|
|
|
|
(1)
The dollar value
of bonuses
(cash
and non-cash)
received.
(2)
During the periods covered
by the
table, the
Company
did not
pay any
other
annual
compensation not properly
categorized as
salary or
bonus,
including
perquisites
and other
personal benefits,
securities or
property.
(3)
During the periods
covered by the
table, the Company
made no restricted
stock
awards.
(4)
The Company currently
has no
stock option or
restricted stock
bonus
plans.
No
member of our
management has been
granted any option
or stock appreciation
right; accordingly,
no tables relating to
such items have
been included within
this item.
Compensation
of Directors
There
are no standard
arrangements pursuant to
which
our
directors
are compensated
for
any services provided as
director.
No additional amounts
are payable to
our directors for
committee participation or special
assignments.
There
are no arrangements
pursuant to which
any of
our
directors
was compensated
during
our
last completed fiscal year or
the previous
two fiscal years
for any services
provided
as director.
Termination
of Employment
and Change of
Control Arrangement
There
are no compensatory plans or arrangements, including payments to be received
from the Company,
with respect to any person named in the Summary Compensation Table set out above
which would in any way result in payments to any such person because of his resignation, retirement
or other termination of such person's employment with the Company or
its subsidiaries, or
any change in control of the Company, or a change in the person's responsibilities following
a change in control of the Company.
Item
12.
Security Ownership of
Certain Beneficial
Owners and
Management
and Related
Stockholder Matters
Security
Ownership of
Certain Beneficial Owners
The
following table sets
forth the shares
held by
those persons
who owned
more than
five percent
of Metwood's common stock
as of July
31, 2014, based
upon 15,221,647
shares outstanding:
Greater
Than 5% Owners
| Title
of Class | | |
Name and Address of Beneficial Owner | |
| No.
of Shares | | |
| Percent
of Class | |
| | | |
| |
| | | |
| | |
| Common | | |
Robert
Callahan 819
Naff Road Boones
Mill, VA | |
| 9,501,632
(1) | | |
| 62.4 | % |
| | | |
| |
| | | |
| | |
| Common | | |
Ronald
Shiflett 638
Patti
Road Rocky
Mount, VA | |
| 1,000,000 | | |
| 6.6 | % |
(1)
Includes direct
and indirect
interests.
There are 9,128,600
common
shares
included
in this amount
that are
owned
in the
names of
family members
of Mr.
Callahan.
Security
Ownership of
Management
The
following table sets
forth the shares
held by Metwood
directors
and officers
as of
July 31,
2014:
Management
Ownership
Title of Class |
Name and Address of Beneficial Owner |
No. of Shares |
Percent of Class |
|
|
|
|
Common |
Robert
Callahan
819 Naff
Road
Boones
Mill, VA |
9,501,632 (1) |
62.4% |
(1)
Includes direct
and indirect
interests.
There are 9,128,600
common
shares
included
in this amount
that are
owned
in the
names of
family members
of Mr.
Callahan.
Ownership
of shares by
directors and
officers
of Metwood
as a group:
62.4%
Changes
in Control
We
know of no
contractual arrangements
which may
at a subsequent
date result
in a change
of control
in the Company.
Item
13. Certain
Relationships and Related
Transactions,
and
Director
Independence
Following
are the transactions
between Metwood and
members of management,
directors, officers,
5% shareholders, and
promoters
of Metwood:
We
contract with a
construction company 50%
owned by our
CEO which provides
capital improvements
and maintenance work
on ourbuildings
and grounds.
During
the year ended
June 30,
2005, we entered
into a sales
and leaseback
transaction
with a
related party. We
sold the various
buildings at our
corporate
headquarters
which house
our
manufacturing
plants, executive offices and other buildings
for $600,000
in cash. We simultaneously entered into a commercial lease agreement with the related
party whereby we are committed to lease back these same properties for a ten-year term
expiring
December 31,
2014.
Rent expense charged to operations for
the years ended
June 30, 2014
and 2013
was $76,000 and $81,600.
Item
14. Principal
Accounting
Fees and
Services
The
following table sets forth the aggregate fees billed or to be billed by
Bongiovanni
& Associates, CPAs
for audit services rendered in connection
with the consolidated financial statements and reports for
the years ended June 30, 2014 and
2013:
|
2014 |
2013 |
|
|
|
Audit Fee |
$ 20,494 |
$ 28,384 |
Audit-related fees |
- |
- |
Tax fees |
- |
- |
All other fees |
- |
- |
Total |
$ 20,494 |
$28,384 |
Audit
fees : Consist
of fees billed
for professional
services rendered
for the
audits of
our
consolidated
financial statements and reviews of the
interim consolidated financial statements
included in quarterly reports and services
that are normally provided by our auditors in connection
with statutory
and regulatory filings or engagements and
attest services, except
those not required
by statute or
regulation.
Audit-related
fees : Consist
of fees billed
for assurance and
related services that
are reasonably
related to the performance
of the audit
or review of
our consolidated
financial statements
and are not
reported
under "Audit fees." These services include accounting consultations
in connection with
the Sarbanes-
Oxley Act of
2002.
Tax
fees : Consist
of fees billed
for tax compliance,
tax advice and
tax planning
services.
All
other fees : Consist
of fees billed
for all other
services other
than those
reported
above.
PART
IV
ITEM
15. EXHIBITS
AND FINANCIAL
STATEMENT SCHEDULES
NUMBER |
DESCRIPTION |
|
|
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 (18 U.S.C. 1350) |
*Incorporated
by reference on
Form 8-K,
filed February
16, 2000
SIGNATURES
Pursuant
to the requirements
of Section 13
or 15(d) 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:
September 29, 2014
/s/ Robert M. Callahan
Robert M. Callahan
President,
CEO and Director
Date:
September 29, 2014
/s/
Shawn A. Callahan
Shawn
A. Callahan
Secretary/Treasurer/CFO
and Director
EXHIBIT 31.1
Certification
of Chief Executive Officer
Securities Exchange Act Rules 13a-14
and 15d-14
As Adopted Pursuant to Seciton 302 of
the Sarbanes-Oxley Act of 2002
I, Robert M. Callahan, certify that:
- I have reviewed this Amendment to
annual report on Form 10-K/A of Metwood, Inc.;
- Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
- Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
- The registrant's other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
a. Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b. Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness
of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any
change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial reporting; and
- The registrant's other certifying officer(s)
and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
DATE: May 4, 2015
By: /s/ ROBERT M. CALLAHAN
Robert M. Callahan
Chief Executive Officer,
EXHIBIT 31.2
Certification
of Chief Financial Officer
Securities Exchange Act Rules 13a-14
and 15d-14
As Adopted Pursuant to Seciton 302 of
the Sarbanes-Oxley Act of 2002
I, Shawn A. Callahan, certify that:
- I have reviewed this Amendment to
annual Report on Form 10-K/A of Metwood, Inc.;
- Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
- Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
- The registrant's other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
a. Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b. Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness
of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any
change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial reporting; and
- The registrant's other certifying officer(s)
and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
DATE: May 4, 2015
By: /s/ SHAWN A CALLAHAN
Shawn A. Callahan
Chief Financial Officer
Exhibit
32
Certification
of
Chief Executive Officer
and Chief Financial Officer
Securities
Exchange Act rules
13(a) and 15(d)
As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
In connection
with the Annual
Report on Form
10-KA of Metwood,
Inc. ("the Company")
for the year ended
June 30, 2014,
as filed with
the Securities and
Exchange Commission on
the date hereof
("the Report"), each of the undersigned
Chief Executive Officer
and Chief Financial
Officer of the Company
certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
1) The Report
fully complies
with the requirements
of Section 13(a) or
15(d) of
the Securities
Exchange
Act of 1934; and
2) The information contained
in the Report fairly presents,
in all material
respects,
the financial
condition and results of operations
of the Company.
Date:
May 4, 2015
/s/
Robert M. Callahan
Robert
M. Callahan
Chief
Executive Officer
Date:
May 4, 2015
/s/
Shawn A. Callahan
Shawn
A. Callahan
Chief
Financial Officer
Metwood (CE) (USOTC:MTWD)
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