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 June 30, 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
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
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, FL 34470
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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 ____
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of June 30, 2007: 11,422,523.
PART I - FINANCIAL INFORMATION
ACACIA AUTOMOTIVE, INC.
(FORMERLY GIBBS CONSTRUCTION, INC.)
BALANCE SHEETS
June 30, December 31,
2007 2006
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(Unaudited) (Audited)
ASSETS
Current Assets
Cash $ 875,521 $ 1,432
Prepaid Expense - 469
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Total Current Assets 875,521 1,901
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Equipment and Vehicle 31,496 31,074
Less Accumulated Depreciation (6,513) (2,869)
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Equipment and Vehicle, net 24,983 28,205
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Total Assets $ 900,504 $ 30,106
================ ===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable $ 95,828 $ 54,363
Accrued Liabilities 414,894 239,395
Due to Stockholder - 10,765
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Total Liabilities 510,722 304,523
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Stockholders' Deficit
Series A Preferred Stock, $0.001 par value; 525,000
shares authorized, issued and outstanding - 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; 11,422,523 and 9,935,023
shares issued and outstanding, respectively 11,423 9,935
Paid-In-Capital 8,176,692 5,703,930
Retained Deficit (7,798,333) (5,988,807)
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Total Stockholders' Deficit (389,782) (274,417)
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Total Liabilities and Stockholders' Deficit $ 900,504 $ 30,106
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The accompanying notes are an integral part of
these financial statements.
F-1
ACACIA AUTOMOTIVE, INC.
(FORMERLY GIBBS CONSTRUCTION, INC.)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------- ------------------------------------
2007 2006 2007 2006
-------------- --------------- ---------------- ---------------
OPERATING EXPENSES
Employee Compensation $ 106,250 - $ 1,221,765 $ -
General And
Administrative Expenses 35,337 - 87,061 -
Depreciation 1,822 - 3,644 -
Beneficial Conversion
of Preferred Stock 500,000 - 500,000 -
-------------- --------------- ---------------- ---------------
Operating Loss (643,409) - (1,812,470) -
Interest Income 2,944 - 2,944 -
-------------- --------------- ---------------- ---------------
Net Loss Before Income Taxes (640,465) - (1,809,526) -
Income Tax Expense - - - -
-------------- --------------- ---------------- ---------------
NET LOSS (640,465) $ - $ (1,809,526) $ -
============== =============== ================= ===============
BASIC AND FULLY DILUTED
LOSS PER SHARE
Loss Per Share $ (0.06) $ - $ (0.17) $ -
============== =============== =============== ===============
Weighted Average Number
Of Common Share
Outstanding 10,681,898 10,361,808
============== ================
The accompanying notes are an integral part of
these financial statements.
F-2
ACACIA AUTOMOTIVE, INC.
(FORMERLY GIBBS CONSTRUCTION, INC.)
STATEMENT OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
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2007 2006
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Cash Flow From Operating Activities
Net Loss $ (1,809,526) $ -
Adjustment to reconcile net loss to net cash
used in operating activities
Depreciation 3,644 -
Common stock issued for services 1,000,000 -
Stock options issued for services 48,725 -
Beneficial Conversion 500,000 -
Changes in Operating Assets and Liabilities
Accounts Payable 41,465 -
Accrued Liabilities 175,499 -
Due to Stockholder (10,765)
Prepaid Expense 469 -
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Net Cash Flow Provided by Operating Activities (50,489) -
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Cash Flow Provided by Investing Activities
Purchase of Equipment (422) -
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Net Cash Flow Provided by Investing Activities (422) -
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Cash Flow Provided by Financing Activities
Sale of Common Stock 925,000 -
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925,000 -
Change in Cash 874,089 -
- -
Cash at Beginning of Period 1,432 -
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Cash at End of Period $ 875,521 $ -
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Supplemental Cash Flow Disclosures
Cash paid during year for:
Interest $ - $ -
=============== =============
Income Taxes $ - $ -
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Non-Cash Investing and Financing Activities
Officer Salaries $ 1,115,515 $ -
Director Fees 20,960 -
Common Stock (500) -
Paid-In-Capital (1,048,225) -
Accrued Liabilities (87,750) -
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$ - $ -
=============== ============
The accompanying notes are an integral part of
these financial statements.
F-3
ACACIA AUTOMOTIVE, INC.
(FORMERLY GIBBS CONSTRUCTION, INC.)
NOTES TO FINANCIAL STATEMENTS
June 30, 2007 AND 2006
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 an 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 Changed the Company's name to Acacia Automotive, Inc.
o Authorized 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 Increased 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 Authorized a one-for-eight reverse stock split of the Company's common
stock.
o Designated 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 Authorized 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,
require 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 have
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)
Payment (31,573)
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Due to Stockholder, June 30, 2007 $ -0-
============
The Company granted 10,000 shares of common stock options to each of three
outside directors on February 1, 2007, and to one outside director on May 16,
2007, upon their appointment in accordance to the Stock Incentive Plan for 2007.
Additionally, upon 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/COO in accordance with the
Stock Incentive Plan.
NOTE 4: EQUITY TRANSACTIONS - QUARTER ENDED JUNE 30, 2007
The Company sold 462,500 shares of common stock at $2.00 per share.
In exchange for conversion of all issued and outstanding Preferred shares of the
Company, the Company issued 500,000 warrants, of which 95% were issued to Steven
L. Sample, its CEO, and 5% were issued to Harry K. Myers, Jr., an affiliate of
the Company prior to the acquisition of the majority of the Company's Stock by
Steven L. Sample, This warrant is exercisable immediately with an exercise price
of $1.00. The difference between the exercise price and the $2.00 current
selling price of the common stock was recognized as a beneficial conversion
expense of $500,000 at June 30, 2007.
These same individuals were also issued the following warrants in the same
proportion:
Vesting Year Price Number
2008 $2.00 333,000
2009 $3.00 333,000
2010 $4.00 334,000
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1,000,000
The vesting of these warrants is subject to the Company attaining certain
performance levels.
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 June 30, 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 first two quarters of 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 and the Company closed a
private of common stock in June and July 2007, raising $1,025,000. In addition,
the Company purchased its first automobile auction in July 2007 for stock.
The Company plans to seek additional sales of Common Stock through private
placements commencing in the third quarter of 2007.
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 Harry K. Myers,
an affiliate of the Company prior to Mr. Sample acquiring control of the
Company, 8,567,500 shares of Common Stock and 525,000 shares of preferred stock.
See Note 1 to the Notes to Financial Statements herein.
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.
In the second quarter of 2007, the 525,000 shares of preferred stock was
converted to Common Stock.
Loss for six months ended June 30, 2007
The Company incurred a loss of $1,169,061 for the quarter ended March 31,
2007 and $640,645 for the quarter ended June 30, 2007. Of the $640,645 second
quarter loss, $500,000 related to an expense incurred in connection with the
conversion of Preferred Stock. (See Note 4 to the notes to financial statements
herein.) Of the amount incurred in the first quarter, $51,724 was for legal and
accounting fees compared to $35,337 incurred in the second quarter. The
Corporation also incurred $1,115,515 of expense for employee compensation during
the first quarter of which $1,000,000 was incurred as expense for the grant of
restricted stock granted to Tony Moorby, President of the Corporation. Employee
compensation was $106,250 in the second quarter of 2007.
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
F-7
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 6.
Exhibits and Reports on Form 8-K
None
F-8
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: August 1, 2007 /s/ Steven L. Sample
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Steven L. Sample, Chief Executive Officer and
Principal Financial Officer