METWOOD, INC.
(Formerly EMC Energies, Inc.)
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
July 21, 2000
Commission File No. 0-05391
METWOOD, INC.
(Name of Small Business Issuer in its Charter)
NEVADA 83-0210365
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
819 Naff Road
Boones Mill, VA 24065
(Address of Principal Executive Offices)
Issuer's Telephone Number: (540)334-4294
EMC Energies, Inc.
4685 South Highland Dr., Suite 202
Salt Lake City, UT 84117
(Former Name or Former Address if Changed Since Last Report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Sections 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.
(1) Yes X No (2) Yes X No
---- ---- ---- ----
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
None; not applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
None; not applicable
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
None; not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None; not applicable
ITEM 5. OTHER EVENTS
On July 21, 2000, through a majority shareholder vote, EMC Energies,
Inc. changed its name to Metwood, Inc. The Company also effected a reverse
split of its common stock on a 1 for 20 basis. No shareholder of record was
reversed below 100 shares; shareholders with less than 100 shares prior to
the reverse were not affected by the reverse split. The reverse split was
effective July 31, 2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
None; not applicable
ITEM 7. FINANCIAL STATEMENTS
Consolidated Financial Statements for Metwood, Inc. for the year ended
June 30, 2000 are included, following the signature page, with this 8-K as
required by Regulation S-X of the Securities Exchange Act of 1934 pursuant
to the Agreement and Plan of Reorganization between EMC Energies, Inc. and
Metwood, Inc. dated June 30, 2000.
ITEM 8. CHANGE IN FISCAL YEAR
None; not applicable
EXHIBITS AND REPORTS ON FORM 8-K
Exhibit Number Description
-------------- -----------
EX-3.(i) Articles of Amendment
EX-2 Agreement and Plan of Reorganization
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
Metwood, Inc.
Date: August 10, 2000 By /s/ Jennifer Ngo
President and Director
--------
CONSOLIDATED AUDITED
FINANCIAL STATEMENTS
Metwood, Inc.
June 30, 2000
--------
Michael J. Bongiovanni, P.A., C.P.A.
Certified Public Accountants
CONTENTS
======================================================================
INDEPENDENT AUDITOR'S REPORT...................................... 1
CONSOLIDATED BALANCE SHEET
ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY................... 2
CONSOLIDATED INCOME STATEMENTS ................................ 3-4
CONSOLIDATED STATEMENT OF STOCKHOLDERS'
EQUITY (DEFICIT) ............................................ 5
CONSOLIDATED STATEMENTS OF CASH FLOWS............................ 6-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.................... 8-14
======================================================================
Michael J. Bongiovanni, P.A., C.P.A.
19425-G Liverpool Parkway
Cornelius, North Carolina 28031
Business: (704) 892-8733
Facsimile: (704) 948-6677
Email: [email protected]
To the Board of Directors
Metwood, Inc.
819 Naff Road
Boones Mill, Virginia 24065
We have audited the accompanying consolidated balance sheet of Metwood, Inc.
as of June 30, 2000 and the related consolidated statements of income,
stockholders' equity (deficit), and cash flows for the years ended June 30,
2000 and June 30, 1999. 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by 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 Metwood, Inc. as of June 30, 2000, and the consolidated results of its
operations and its cash flows for the years ended June 30, 2000 and June 30,
1999 in conformity with generally accepted accounting principles.
/s/ Michael J Bongiovanni, PA
July 30, 2000
<TABLE>
<CAPTION>
METWOOD, INC.
Consolidated Balance Sheet
June 30, 2000
==========================================================================
<S> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents Note C $ 91,598
Accounts Receivable 104,171
Inventory 84,741
Accrued Interest Receivable Note E 4,500
-------
TOTAL CURRENT ASSETS 285,010
-------
FIXED ASSETS
Land Note G 88,000
Buildings and Improvements Note G 309,056
Machinery and Equipment 193,685
Accumulated Depreciation (83,032)
-------
Net Fixed Assets 507,709
-------
OTHER ASSETS
Notes Receivable from Stockholders Note E 300,000
Deposits 8,250
-------
TOTAL ASSETS $ 1,100,969
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 87,553
-------
TOTAL CURRENT LIABILITIES 87,553
-------
COMMITMENT NOTES F, H
STOCKHOLDERS' EQUITY NOTE G
Common Stock ($.001 par value, 100,000,000
common shares authorized; 8,153,499
issued and outstanding) 8,153
Common Stock Subscribed but not yet Delivered
($.001 par value, 3,200,000 shares) 3,200
Additional Paid in Capital 1,015,797
Retained Deficit (13,734)
---------
TOTAL STOCKHOLDERS' EQUITY 1,013,416
---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,100,969
=========
</TABLE>
See notes to consolidated audited financial statements and auditors' report
<TABLE>
<CAPTION>
METWOOD, INC.
Consolidated Income Statements
For the Years Ended June 30, 2000 and June 30, 1999
========================================================================
<S> <C> <C>
1999 2000
REVENUE AND COST OF SALES ---- ----
Sales $ 1,027,920 $ 1,626,637
Cost of Sales (613,278) (914,415)
--------- ---------
GROSS PROFIT 414,642 712,222
--------- ---------
OPERATING EXPENSES NOTE E
Professional Fees $ 16,872 $ 55,496
Salaries 113,796 231,526
Insurance 14,504 24,334
Rent 17,400 20,800
Telephone 8,755 12,424
Utilities 2,005 2,739
Repairs and Maintenance 2,024 37,723
Depreciation 10,880 29,510
Supplies 36,861 78,829
Advertising 22,074 41,416
Vehicle Expense 3,483 6,262
Taxes and Licenses 18,102 61,639
Commissions - 35,956
Uniforms 1,748 3,553
Other 56 1,439
------- -------
TOTAL EXPENSES 268,560 643,646
------- -------
NET INCOME FROM
CONTINUING OPERATIONS $ 146,082 $ 68,576
OTHER INCOME AND EXPENSE
Interest Expense Notes D, F (15,580) -
Interest Income - 8,132
------- -------
NET INCOME $ 130,502 $ 76,708
======= =======
1999 2000
---- ----
NET INCOME PER COMMON SHARE
BASIC & FULLY DILUTED $ .019 $ .010
======= =======
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 6,802,466 7,445,279
========= =========
</TABLE>
See notes to consolidated audited financial statements and auditors' report
<TABLE>
<CAPTION>
METWOOD, INC.
Consolidated Statement Of Stockholders' Equity (Deficit)
For the Years Ended June 30, 2000 and June 30, 1999
========================================================================
<S> <C> <C> <C> <C>
Common Common Additional Retained
Shares Stock Paid-in Earnings
(000's) $ Capital (Deficit)
------ ------ ---------- ---------
Balances, June 30, 1998 6,800 $ 6,800 $ -0- $ (89,844)
Issuance of common stock
- Note G 60 $ 60 $ 59,940 -
Net income for year - - - $ 130,502
----- ------ ------- --------
Balances, June 30, 1999 6,860 $ 6,860 $ 59,940 $ 40,658
Issuance of common stock
- Note G 940 $ 940 $939,060 -
Distributions to stockholders
Note E - - - $(131,100)
Retroactive restatement
(recapitalization) of equity
due to reverse acquisition
of public shell, and related
splits Note A 2,553 $ 2,553 $ (2,553) -
Issuance of common stock for
services rendered Note G 1,000 $ 1,000 $ 19,350 -
Net income for year - - - $ 76,708
----- ------ --------- --------
Balances, June 30, 2000 11,353 $11,353 $1,015,797 $ (13,734)
====== ====== ========= ========
</TABLE>
See notes to consolidated audited financial statements and auditor's report
<TABLE>
<CAPTION>
METWOOD, INC.
Consolidated Statements Of Cash Flows
For the Years Ended June 30, 2000 and June 30, 1999
=========================================================================
<S> <C> <C>
1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES: ---- ----
Net income $ 130,502 $ 76,708
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 10,880 29,510
Interest 8,834 -
Services exchanged for stock Note G - 35,000
(Increase) decrease in operating assets:
Accounts receivable (53,253) 12,528
Inventory (24,858) (5,943)
Accrued interest receivable Note E - (4,500)
Other current assets (1,273) 1,638
Increase in operating liabilities:
Accounts payable and accrued expenses 48,704 35,535
------- ------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 119,536 180,476
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for deposit - (8,250)
Expenditures for fixed assets (22,963) (397,634)
------- -------
NET CASH USED IN
INVESTING ACTIVITIES (22,963) (405,884)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock
Note G $ 60,000 $ 815,000
Incurrence of notes receivable from
stockholders Note E - (300,000)
Repayment of stockholders loans payable
Note D (13,412) (156,892)
Distributions to stockholders - (131,100)
Repayment of bank line of credit Note F (58,120) -
------- -------
NET CASH PROVIDED BY (USED
IN) FINANCING ACTIVITIES (11,532) 227,008
------- -------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 85,041 $ 1,600
------ ------
Cash and cash equivalents,
beginning of period $ 4,957 $ 89,998
------ ------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 89,998 $ 91,598
======= =======
SUPPLEMENTAL NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Issuance of common stock for purchase of
buildings and land Note G $ - $100,000
========= ========
Issuance of common stock for services
received Note G $ - $ 25,000
========= ========
Issuance of common stock for legal
services received $ - $ 10,000
========= ========
</TABLE>
See notes to consolidated audited financial statements and auditors' report
METWOOD, INC.
Consolidated Notes To Financial Statements
For the Years Ended June 30, 2000 and June 30, 1999
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity - Metwood, Inc. (the Company) was organized under the laws
of the State of Virginia on April 7, 1993.
Effective June 30, 2000, the Company entered an Agreement and Plan of
Reorganization to acquire the majority of the outstanding common stock of a
publicly held shell corporation. The acquisition resulted in a tax-free
exchange for federal and state income tax purposes. Upon acquisition, the
name of the shell corporation changed to Metwood, Inc. (a Nevada
corporation). Metwood, Inc. (a Virginia corporation) became a wholly owned
subsidiary of Metwood, Inc. (a Nevada corporation). The transaction is
accounted for as a reverse merger in accordance with Accounting Principles
Board Opinion No. 16 wherein the stockholders of Metwood, Inc. (a Virginia
corporation) retained the majority of the outstanding common stock of the
Company after the merger. The publicly traded shell corporation did not have
a material operating history over the past several years.
The Company provides construction related products and services primarily to
home building customers located principally in and around the Roanoke,
Virginia area.
Basis of Presentation The financial statements included herein include the
accounts of the Metwood, Inc. on a consolidated basis, prepared under the
accrual basis of accounting.
Accounts Receivable - Accounts receivable are charged to bad debt expense as
they are deemed uncollectible based upon a periodic review of the accounts.
No bad debt expense for the years ended June 30, 2000 and June 30, 1999 was
recorded. At June 30, 2000, no allowance for doubtful accounts was deemed
necessary.
Credit is extended to customers based on an evaluation of their financial
condition, and collateral is not required. The Company performs ongoing
credit evaluations of its customers.
Fixed Assets Fixed assets are recorded at cost and include expenditures
that substantially increase the productive lives of the existing assets.
Maintenance and repair costs are expensed as incurred. Depreciation is
provided using the straight-line method. Depreciation of fixed assets is
calculated over the management prescribed recovery periods that range from 5
to 31 years.
When a fixed asset is disposed of, its cost and related accumulated
depreciation are removed from the accounts. The difference between
undepreciated cost and proceeds from disposition is recorded as a gain or
loss.
Long-Lived Assets - In accordance with Financial Accounting Standards Board
Statement of Financial Accounting Standard No.121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
the carrying value of intangible assets and other long-lived assets is
reviewed by management on a regular basis for the existence of facts or
circumstances, both internally and externally, that may suggest impairment.
To date, no such impairment has been indicated. Should there be an impairment
in the future, the Company will recognize the amount of the impairment based
on discounted expected future cash flows from the impaired assets.
Cash and Cash Equivalents - For purposes of the Statements of Cash Flows,
the Company considers liquid investments with an original maturity of three
months or less to be cash equivalents.
Management's Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that effect the reported amounts of assets
and liabilities, disclosures of contingent assets and liabilities at the date
of financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
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 - The Company, with the consent of its stockholders, originally
elected to be taxed under the sections of the federal and state income tax
laws which provide that, in lieu of corporation income taxes, the
stockholders separately accounted for their pro rata share of the Company's
items of income, deductions, losses and credits. Therefore, these financial
statements do not include any provision for corporate federal or state income
taxes during such time.
Effective on June 30, 2000, the Company lost its small business "S"
corporation election due to the reverse merger with an unrelated publicly
traded company. See further explanation in this note above.
Since the loss of the Company's "S" corporation election, income taxes are
subsequently provided for in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income Taxes."
A deferred tax asset or liability will be prospectively recorded for all
temporary differences between financial and tax reporting and net operating
loss-carryforwards.
Deferred tax assets could be 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 will be adjusted for the effect of changes in tax laws and rates
on the date of enactment.
Net Income per Common Share Net income per common share has been calculated
by divided the net income for the year presented by the weighted average
number of common shares for the respective year.
Advertising Costs - Advertising costs are expensed as incurred. The Company
does not incur any direct-response advertising costs. Advertising expense
totaled $41,416 and $22,074 for the years ended June 30, 2000 and June 30,
1999, respectively.
Comprehensive Income (Loss) - The Company adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income", which establishes standards for the
reporting and display of comprehensive income and its components in the
financial statements. There were no items of comprehensive income (loss)
applicable to the Company during the years covered in the financial
statements.
Inventory - Inventory, consisting of building parts and materials located in
the vicinity of Roanoke, Virginia, is valued at the lower of cost or market
using the first-in, first-out (FIFO) method.
Concentration of Credit Risk At times during the year ended June 30, 2000,
the Company's cash on deposit with its bank exceeded federally insured
limits. This presents a significant concentration of credit risk.
NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS
In June of 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, which the Company has adopted. The Statement, as
deferred by FASB No. 137, is effective for fiscal years beginning after June
15, 2000. It establishes standards for accounting and reporting for
derivative instruments and hedging activities. Statement of Financial
Accounting Standards No.133 and No. 137 do not currently impact the Company's
financial statements as there are no derivative instrument holdings.
In March, 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) No. 98-1 "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use", which
establishes guidelines for the accounting for the costs of all computer
software developed or obtained for internal use. The Company adopted this SOP
but the adoption of the SOP did not have any impact on the Company's
financial statements.
In April, 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-
Up Activities". The SOP is effective for fiscal years beginning after
December 15, 1998. The SOP requires costs of start-up activities and
organization costs to be expensed as incurred. The Company has adopted SOP
98-5, however, the adoption of SOP 98-5 did not have a material impact on the
Company's financial statements.
The FASB has issued SFAS No. 134, "Accounting for Mortgage-Backed Securities
Retained after the Securitization of Mortgage Loans Held for Sale by a
Mortgage Banking Enterprise," an amendment of FASB Statement No. 65, which
the Company has not been required to adopt as of March 31, 2000. Statement
No. 65, as amended by FASB Statements No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", and No. 125, "Accounting for
Transfer and Servicing of Financial Assets and Extinguishments of
Liabilities", require that after the securitization of a mortgage loan held
for sale, an entity engaged in mortgage banking activities classify the
resulting mortgage-backed security as a trading security. This statement
further amends Statement No. 65 to require that after the securitization of
mortgage banking activities classify the resulting mortgage-backed securities
or other retained interests based on its ability and intent to sell or hold
those investments. This Statement is effective for fiscal years after
December 15, 1998 and does not have a material impact on the Company.
NOTE C SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosures of cash flow information for the years ended June
30, 2000 and June 30, 1999 are summarized as follows:
Cash paid during the years for interest and income taxes are as follows:
1999 2000
------ ------
Income Taxes $ - $ -
Interest $ 6,746 $ -
NOTE D STOCKHOLDERS LOANS PAYABLE
Stockholders loans payable at June 30, 1999 of $156,892 represented working
capital debt financing received prior to June 30, 1997 from two of the
Company's officers and stockholders. During the year ended June 30, 2000, the
entire principal balance was fully repaid with interest at a rate of 9% per
annum forgiven by the officers and stockholders.
NOTE E RELATED PARTY TRANSACTIONS
The Company has contracted with a construction company related through common
ownership whereby the Company utilizes the related party for construction
related services. Total payments to the related party for the years ended
June 30, 2000 and June 30, 1999 were $16,388 and $8,360, respectively. There
are no amounts payable to the related party at June 30, 2000.
During the year ended June 30, 1999, the Company signed a promissory note
with its majority stockholder and officer for unpaid S corporation
distributions through the end of 1999. During the year ended June 30, 2000,
the Company repaid $99,020 with interest at a rate of 9% per annum forgiven.
Under the exact same terms, the Company repaid $32,080 to the remaining
stockholders at such time during the year ended June 30, 2000.
Notes Receivable from Stockholders in the amount of $300,000 and related
Accrued Interest Receivable in the accompanying Balance Sheet at June 30,
2000 consists of promissory notes dated March 29, 2000 with two of the
Company's stockholders and officers. The notes bear interest at the rate of
6% per annum and mature with a balloon payment of principal due on March 29,
2005.
NOTE F BANK CREDIT LINE
During the year ended June 30, 1999, the Company repaid an outstanding bank
line of credit in the amount of $58,120 including interest thereon. The
credit line was closed at such time.
NOTE G EQUITY
On April 21, 1998, the Company approved an increase in the Company's
authorized common stock from 5,000 common shares to 10,000,000 common shares
and forward split the existing shares outstanding at a ratio of 2,000 to 1.
This caused the outstanding common shares to increase from 3,400 common
shares to 6,800,000 common shares during the year ended June 30, 1998.
Also on April 21, 1998, the Company authorized a Regulation D Private
Placement of 1,000,000 shares of its common stock at $1.00 per share. During
the year ended June 30, 1999, the Company collected $60,000. During the year
ended June 30, 2000, an additional amount of $815,000 was collected and
$125,000 of the Company's common stock was exchanged for services and
buildings and land as mentioned below.
During the year ended June 30, 2000, the Company purchased 8.124 acres of
land and several buildings that is used as corporate office and warehouse
space. The purchase price was $388,000 of which $288,000 was paid in cash and
$100,000 worth of the Company's common stock was exchanged at a value of
$1.00 per common share under the Company's private placement as mentioned
above.
In January of 2000, the Company, through a majority vote, changed its
authorized common stock to 100,000,000 shares. No preferred shares were
authorized.
In accordance with the June 30, 2000 plan of reorganization described in Note
A, the Company issued 1,000,000 shares of its common stock in exchange for
valuable management services received relating to the merger and
reorganization.
NOTE H OPERATING LEASE
The Company formerly leased its corporate office and warehouse facilities in
Botetourt County, Virginia under a cancelable month to month industrial
operating lease. The end of the lease term actually occurred in July, 2000
with final payment made at such time. The Company terminated the lease by
written notice. There are no future minimum annual commitments due to the
month to month provisions of the lease and the Company terminated the
operating lease upon relocating to another facility as explained in footnote
G above. Rental payments and related expense for the years ending June 30,
2000 and June 30, 1999 were $20,800 and $17,400, respectively.
NOTE I EARNINGS PER SHARE (EPS)
Statement of Financial Accounting Standard (SFAS) No.128 requires dual
presentation of basic and diluted EPS with a reconciliation of the numerator
and denominator of the EPS computations. 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. Accordingly, 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. The
basic and diluted weighted average shares outstanding for the period for the
years ended June 30, 2000 and June 30, 1999 are as follows:
1999 2000
---- ----
Weighted average outstanding common shares used
for basic and diluted EPS 6,802,466 7,445,279
========= ==========
