U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________________ to ______________
Commission file number: 1-14088
Acacia Automotive, Inc.
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(Exact name of small business issuer as specified in its charter)
Texas 75-2095676 (State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
3512 East Silver Springs Blvd. - #243, Ocala, FL 34470
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(Address of principal executive offices) (Zip Code)
(352) 502-4333
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(Registrant's telephone number)
1515 East Silver Springs Blvd. - Suite 118.4, Ocala, FL34470
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes __X__No __
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer (Check one):
Large accelerated filer Accelerated filer Non-accelerated filer X
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes _X No ____
--
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of March 31, 2007: 10,435,023.
F-3
PART I - FINANCIAL INFORMATION
ACACIA AUTOMOTIVE, INC.
(FORMERLY GIBBS CONSTRUCTION, INC.)
BALANCE SHEETS
March 31, December 31,
2007 2006
---------------- ---------------
(Unaudited) (Audited)
ASSETS
Current Assets
Cash $ 1,533 $ 1,432
Escrow Cash 100,000 -
Prepaid Expense 469 469
--------------- ---------------
Total Current Assets 102,002 1,901
--------------- ---------------
Equipment and Vehicle 31,496 31,074
Less Accumulated Depreciation (4,691) (2,869)
---------------- ----------------
Equipment and Vehicle, net 26,805 28,205
---------------- ---------------
Total Assets $ 128,807 $ 30,106
================ ===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable $ 83,205 $ 54,363
Accrued Liabilities 327,145 239,395
Due to Stockholder 31,573 10,765
Stock Subscriptions payable 100,000 -
---------------- ---------------
Total Liabilities 541,923 304,523
---------------- ---------------
Stockholders' Deficit
Series A Preferred Stock, $0.001 par value; 525,000
shares authorized, issued and outstanding 525 525
Preferred Stock, $0.001 par value 1,475,000
shares authorized; none issued and outstanding - -
Common Stock, $0.001 par value, 150,000,000
shares authorized; 10,435,023 and 9,935,023
shares issued and outstanding, respectively 10,435 9,935
Paid-In-Capital 6,733,655 5,703,930
Retained Deficit (7,157,731) (5,988,807)
---------------- ----------------
Total Stockholders' Deficit (413,116) (274,417)
--------------- ----------------
Total Liabilities and Stockholders' Deficit $ 128,807 $ 30,106
============== ===============
The accompanying notes are an integral part of these fiancial statements.
F-1
ACACIA AUTOMOTIVE, INC.
(FORMERLY GIBBS CONSTRUCTION, INC.)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
------------------------------------
2007 2006
---------------- ---------------
OPERATING EXPENSES
Employee Compensation $ 1,115,515 $ -
General And
Administrative Expenses 51,724 -
Depreciation 1,822 -
---------------- --------------
Operating Loss (1,169,061) -
Interest Income 137 -
---------------- ---------------
Net Loss Before Income Taxes (1,168,924) -
Income Tax Expense - -
---------------- ---------------
NET LOSS $ (1,168,924) $ -
================ ===============
BASIC AND FULLY DILUTED
LOSS PER SHARE
Loss Per Share $ (0.11)
================
Weighted Average Number
Of Common Share
Outstanding 10,262,801
================
The accompanying notes are an integral part of these fiancial statements.
F-2
ACACIA AUTOMOTIVE, INC.
(FORMERLY GIBBS CONSTRUCTION, INC.)
STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
---------------------------------------
2007 2006
---------------- -------------
Cash Flow From Operating Activities
Net Loss $ (1,169,061) $ -
Adjustment to reconcile net loss to net cash
used in operating activities
Depreciation 1,822 -
Common stock issued for services 1,000,000 -
Stock options issued for services 30,225 -
Changes in Operating Assets and Liabilities
Accounts Payable 28,842 -
Accrued Liabilities 87,750 -
Due to Stockholder 20,808 -
--------------- -------------
Net Cash Flow Provided by Operating Activities 386 -
--------------- -------------
Cash Flow Provided by Investing Activities
Interest Income 137 -
Purchase of Equipment (422) -
---------------- -------------
Net Cash Flow Provided by Investing Activities (285) -
--------------- -------------
Cash Flow Provided by Financing Activities
Escrow Account (100,000) -
Common Stock Subscription Payable 100,000 -
--------------- -------------
- -
--------------- -------------
Change in Cash 101 -
- -
Cash at Beginning of Period 1,432 -
--------------- -------------
Cash at End of Period $ 1,533 $ -
=============== =============
Supplemental Cash Flow Disclosures
Cash paid during year for:
Interest $ - $ -
=============== =============
Income Taxes $ - $ -
=============== =============
Non-Cash Investing and Financing Activities
Officer Salaries $ 1,115,515 $ -
Director Fees 2,460 -
Common Stock (500) -
Paid-In-Capital (1,029,725) -
Accrued Liabilities (87,750) -
--------------- -------------
$ - $ -
=============== ============
The accompanying notes are an integral part of these fiancial statements.
F-3
ACACIA AUTOMOTIVE, INC.
(FORMERLY GIBBS CONSTRUCTION, INC.)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006
F-6
NOTE 1: THE COMPANY
Gibbs Construction, Inc. ("Gibbs" or the "Company") was a full service, national
commercial construction company located in Garland, Texas. During 1999, Gibbs
experienced significant losses associated with certain construction projects,
which were bonded by Gibbs' primary bonding surety. In the fourth quarter of
1999, Gibbs' bonding surety notified Gibbs that it would no longer provide
completion and payment bonds for Gibbs' construction projects. Given these
events, Gibbs began a series of negotiations with its bonding surety in December
of 1999, which resulted in a written agreement in January of 2000, whereby the
bonding surety would provide funds to finish certain projects and required Gibbs
to terminate construction on other projects. These events led to Gibbs inability
to satisfy its debts in the ordinary course of business and on April 20, 2000,
Gibbs filed a Petition pursuant to Chapter 11 of the United States Bankruptcy
Code.
On July 28, 2000, Gibbs received permission from its Court of Jurisdiction to
solicit approval of its Plan of Reorganization. Gibbs continued to operate on a
limited basis pending approval of its Plan of Reorganization. On November 10,
2000, Gibbs completed its Plan of Reorganization pursuant to an order of the
court as follows:
a) Gibbs transferred all of its assets and liabilities to the Gibbs
Construction, Inc. Creditor Trust ("Trust").
b) Gibbs issued 501,000 shares of its authorized but previously unissued
common stock to the Trust in settlement of unsecured creditor claims.
c) Gibbs approved issuance of 1,000,000 shares of a newly created
preferred stock, with an aggregate liquidation preference value of
$200,000 and a six percent (6%) non-cumulative dividend, to the
bonding surety.
d) Gibbs issued 4,000,000 shares of its authorized but previously unissued
common stock to Thacker Asset Management, LLC (TAM), a Texas limited
liability company, in exchange for certain operating assets and the
obligation to complete certain construction projects of TAM.
Gibbs did not obtain a court ordered final decree from the bankruptcy court due
to the difficulties encountered with the implementation of the re-organization
plan. All operating activities ceased in 2002. On June 26, 2006, the bankruptcy
trustee requested and received a Order for Final Decree. The 501,000 shares of
common stock issued to the Trust were abandoned and returned to the Company on
October 5, 2006. These shares have been cancelled.
On July 25, 2006, the Board of Directors of the Company met and approved the
following actions: o Changing the Company's name to Acacia Automotive, Inc.
o Authorizing 2,000,000 shares of $0.001 par value preferred stock and
authorized the Board of Directors to:
a.) set the number of shares constituting each series of preferred
stock
b.) establish voting rights, powers, preferences and conversion
rights
o Increasing the authorized number of common shares to 150,000,000 and
decreased the par value to $0.001.
F-4
NOTE 1: THE COMPANY (Continued)
o Authorizing a one-for-eight reverse stock split of the Company's common stock.
o Designating 525,000 shares of preferred stock as Series A Preferred Stock,
with the following rights:
a.) Dividends can be paid when declared by the Board of Directors
but must be also simultaneously declared on the common stock.
b.) Series A Preferred Stock may not be redeemed.
c.) Each share of Series A Preferred Stock is convertible into one
share of common stock at the option of the holders.
d.) The holders of Series A Preferred Shares are certified to 50
votes on all matters to be voted on by the shareholders of the
Company for each share of Series A Preferred Stock held.
o Authorizing the issuance of common stock and Series A Preferred Stock
for services rendered and payments of organization expenses on behalf
of the Company:
a.) 8,567,500 shares of common stock.
b.) 525,000 shares of Series A Preferred Stock.
c.) Aggregated issuance fair value was $150,262.
Certain of the actions approved by the Board of Directors on July 25, 2006,
required the approval of the shareholders of the Company, which was gained in a
Special Meeting of Shareholders on February 1, 2007, and are reflected in the
accompanying financial statements.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company has elected to prepare its financial statements in accordance with
generally accepted accounting principles (United States) with December 31, as
its year end. The financial statements and notes are representations of the
Company's management who are responsible for their integrity and objectively.
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America for
annual financial information and with the instructions to Form 10-Q and Article
10 of Regulation SX. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. All such
adjustments are of a normal and recurring nature.
F-5
NOTE 3: RELATED PARTY TRANSACTIONS
The Company's Chief Executive Officer ("CEO") and majority stockholder has
provided all monies to pay substantially all operating expenses since business
activities resumed in July 2006. The following summarizes the activity and
balance due the stockholder:
Description Amount
Payments made by stockholder
Opening Expenses $ 165,218
Equipment 7,248
Prepaid 469
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172,935
Less:
Purchase of Common Stock (138,862)
Stock Purchase Warrant Exercise (2,500)
------------
Due to Stockholder, March 31, 2007 $ 31,573
===========
The Company granted 10,000 shares of common stock options to each of its three
outside directors on February 1, 2007 upon their appointment in accordance to
the Stock Incentive Plan for 2007. Additionally, upon election at each annual
stockholders meeting 15,000 shares of common stock options will be granted to
each eligible director. The Company also granted 10,000 shares of Common stock
options to its newly-appointed Secretary and 5,000 options to its Assistant
Secretary. In addition, the Company granted 500,000 shares of its Common stock
to its President and COO in accordance with the Stock Incentive Plan.
NOTE 4: GOING CONCERN
On June 26, 2006, the Bankruptcy Court for the Northern District of Texas,
issued its Order for Final Decree related to the Company's bankruptcy petition
filed April 20, 2000. The Board of Directors convened its first post bankruptcy
meeting on July 25, 2006, and assumed operating control. On August 15, 2006, the
Company entered into a "Stock Purchase and Subscription Agreement" whereby the
effective control of the Company was transferred to Steven L. Sample, an
individual residing in the State of Florida. Mr. Sample and his assignees
purchased 5,500,000 pre-split shares for an aggregate purchase price of $65,000
plus at least $20,000 to discharge any obligations of the Company and agreed to
provide the capital such that the Company can arrange to have its filings with
the United States Securities and Exchange Commission brought current.
The Company issued to two individuals 8,567,500 shares of its post reverse split
$0.001 par value common stock and 525,000 shares of its Series A Preferred Stock
for services rendered and expenses paid (aggregate total value $150,262).
None of the above described transactions provided the Company with operating
funds.
On September 11, 2006, the Company issued a private placement memorandum for the
sale of 8,000,000 shares of the Company's common stock at $2.00 per share.
Without a successful raising of at least $1,000,000, the Company will not be
able to commence operations.
F-6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Forward-Looking Information
The Management's Discussion and Analysis of Financial Condition and
Results of Operations and other sections of the Form 10-Q contain
forward-looking information. The forward-looking information involves risks and
uncertainties that are based on current expectations, estimates, and projections
about the Company's business, management's beliefs and assumptions made by
management. Words such as "expects", "anticipates", "intends", "plans",
"believes", "seeks", "estimates", and variations of such words and similar
expressions are intended to identify such forward-looking information.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking information due to numerous
factors, including, but not limited to, availability of financing for
operations, successful performance of internal operations, impact of competition
and other risks detailed below as well as those discussed elsewhere in this Form
10-QSB and from time to time in the Company's Securities and Exchange Commission
filings and reports. In addition, general economic and market conditions and
growth rates could affect such statements.
General
For each of the fiscal years ended December 31, 2003, 2004, and 2005, and
for the quarter ended March 31, 2006, the Company had no operations, income,
expenses, assets or liabilities or other activity. With the funding by Mr.
Sample of the costs of completing the Company's bankruptcy proceeding, which was
completed in June 2006, Mr. Sample commenced a plan to revive the Company by
acquiring automobile auctions. This plan required the funding by Mr. Sample of
certain Company debts which, although discharged in the bankruptcy proceeding,
required payment to commence operating as a public entity. Further, the revival
of the Company as a public entity required substantial expenditures for legal
and accounting fees, among other costs, in the final three quarters of 2006 and
the quarter ended March 31, 2007.
The implementation of Mr. Sample's plan required the reorganizing of the
Company's capital structure, a plan completed in February 2007. Simultaneously,
the plan required the raising of additional capital, a process which is
anticipated to be completed in the second quarter of 2007. With the additional
capital, the Company will attempt to acquire automobile auctions.
The plan for an acquired auction or auctions will depend upon the auction
or auctions acquired.
Without a successful raising of additional capital of at least $1,000,000,
the Company will not be able to commence operations.
Restructuring.
The Company's plan of restructuring, which was effected in February
2007, amended the corporate charter to effect a one for eight reverse stock
split, to increase the number of authorized shares of Common Stock to
150,000,000 and agreed to create and establish a series of preferred stock.
Following, the adoption of the amendments, the company issued to Mr. Sample and
one other individual 8,567,500 shares of Common Stock and 525,000 shares of
preferred stock. See Note 1 to the Notes to Financial Statements herein. The
distinguishing feature of the preferred stock is that each share has 50 votes,
but if Mr. Sample or the other recipient transfers the shares to any other
entity other than for estate planning purposes, the shares automatically convert
on a share for share basis to Common Stock and, in any event, automatically
convert to Common Stock upon the death of either recipient. Mr. Sample will hold
the right to vote all such shares to be issued for a period of nine years.
On February 1, 2007, the Company's shareholders approved these actions,
including changing the Company's name to Acacia Automotive, Inc. and the
amendment to the Company's charter was effective February 20, 2007.
Loss for quarter ended March 31, 2007
The Company incurred a loss of 1,169,061 for the quarter ended March
31, 2007. Of this amount $51,724 was for legal and accounting fees incurred
during the quarter. The Corporation also incurred $1,115,515 of expense for
employee compensation during the quarter. Of this amount $1,000,000 was incurred
as expense for the grant of restricted stock granted to an officer of the
Corporation. In addition $87,750 was accrued in the quarter for executive
officers' salaries. The remainder was a result of stock options granted to other
officers.
Item 3. Controls and Procedures
The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's Securities
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 the
Company's management, including its President who acts as our Chief Financial
Officer to allow timely decisions regarding required disclosure. During the
90-day period prior to the date of this report, an evaluation was performed
under the supervision and with the participation of the Company's management,
including the Chief Executive Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. Based upon that
evaluation, the Chief Executive Officer concluded that the Company's disclosure
controls and procedures were effective. There have been no significant changes
in the Company's internal controls or in other factors that could significantly
affect these controls, and no corrective actions taken with regard to
significant deficiencies or material weaknesses in such controls, subsequent to
the date of our most recent evaluation of internal controls.
PART - II
Item 1. Legal Proceedings.
On June 26, 2006, after being on the docket for six years, the United
States Bankruptcy Court for the Northern District of Texas, Dallas Division
closed the registrant's case following an application for Final Decree. Item 2.
Unregistered Sales of Equity Securities and use of Proceeds.
On February 1, 2007, the Corporation's shareholders approved amendments to
the Articles of incorporation pursuant to a restructuring plan proposed to the
shareholders. This plan included increasing the number of authorized shares of
Common Stock and authorized the board of directors to establish the relative
rights, powers, and privileges of a series of preferred stock. Upon the
effecting of these amendments, the Corporation issued to two individuals a total
of 8,657,500 shares of Common Stock and 525,000 shares of Preferred Stock for
services rendered to the Corporation and expenses, totaling $138,862. The
issuance of these shares was exempt from registration under the Securities Act
pursuant to Section 4(2) thereunder as transactions not involving a public
offering.
The board of directors also granted a warrant to purchase 125,000 shares
of Common Stock for $0.01 per share to each of two individuals for use of an
automobile provided to an officer of the Corporation and other services provided
to the Corporation. These warrants were exercised. The issuance of these shares
was exempt from registration under the Securities Act pursuant to Section 4(2)
thereunder as transactions not involving a public offering.
The board of directors also adopted a stock option plan under which it
granted an officer of the Corporation 500,000 restricted shares of Common Stock.
The issuance of these shares was exempt from registration under the Securities
Act pursuant to Section 4(2) thereunder as transactions not involving a public
offering.
The board of directors also granted under the stock option plan options to
acquire 30,000 shares and 15,000 shares of Common Stock for $0.01 per share to
three directors and two officers, respectively. Also, the board of directors
granted pursuant to the plan 10,000 restricted shares of Common Stock to one
consultant to the Corporation. The issuance of these options was exempt from
registration under the Securities Act pursuant to Section 4(2) thereunder as
transactions not involving a public offering.
Item 6. Exhibits and Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities exchange Act of 1934, registrant
has duly caused this report to be signed on its behalf by the undersigned.
Acacia Automotive, Inc.
Dated: May 15, 2007 /s/ Steven L. Sample
--------------------
Steven L. Sample, Chief Executive Officer and
Principal Financial Officer