UNITED
                STATES
              SECURITIES
                AND EXCHANGE COMMISSION
              Washington,
                D.C. 20549
              
              
              FORM
                10-QSB




**[X]**
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**





****
            **For
                the quarterly period ended September 30,
                2006**




**[   ]**
            **TRANSITION
                REPORT UNDER SECTION 12 OR 15(d) OF THE EXCHANGE
                ACT**





****
            **For
                the transition period from ________ to
                ________**




Commission
      File Number 000-05391







METWOOD,
                INC.
              (Exact
                name of registrant as specified in its charter)




**NEVADA**
              (State
                or other jurisdiction
              of
                incorporation)
            
            **83-0210365**
              (IRS
                Employer
              Identification
                No.)




**819
                Naff Road, Boones Mill, VA 24065**
              (Address
                of principal executive offices)
              
              **(540)
                334-4294**
              (Issuer’s
                telephone number)
              
              
              
              Check
                  whether the issuer (1) filed all reports required to be filed by
                  Section
                  13 or 15(d) of theExchange
                  Act during the past 12 months (or for such shorter period that
                  the
                  registrant was requiredto
                  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 shell company (as defined
                  in
                  Rule 12b-2 of the Exchange Act). Yes [  ] No [X]
                
                Number
                  of shares of common stock outstanding as of November 11, 2006:
                  11,923,999
                
                Transitional
                  Small Business Disclosure Format (Check one) Yes [  ] No
                  [X]













**METWOOD,
                INC. AND SUBSIDIARY**
              
              **TABLE
                OF CONTENTS - FORM 10****-QSB**





**PART
                I - FINANCIAL INFORMATION**
            
            *Page(s)*Item
                1  Financial StatementsConsolidated
                Balance Sheet As of September 30,
                2006
            
            3Consolidated
                Statements of Income for the Three
                Months Ended September 30, 2006 and 2005
            
            5Consolidated
                Statements of Cash Flows for the Three Months
                Ended September 30, 2006 and 2005
            
            6Notes
                to Consolidated Financial Statements
            
            7-11Item
                2  Management’s Discussion and
                Analysis
            
            11-16Item
                3  Controls and Procedures
            
            16**PART
                II - OTHER INFORMATION**Item
                6  Exhibits and Reports on Form
                8-K
            
            17Signatures
            
            18Index
                to Exhibits
            
            19






2
 *Table
          of Contents*


METWOOD,
                INC. AND SUBSIDIARYCONSOLIDATED
                BALANCE SHEETAS
                OF SEPTEMBER 30, 2006(UNAUDITED)ASSETSCurrent
                AssetsCash
                and cash equivalents
            
            $
            97,526Accounts
                receivable
            
            
            494,965Deposits
            
            
            6,200Inventory
            
            
            1,064,421Prepaid
                expenses
            
            
            67,314Total
                current assets
            
            
            1,730,426Property
                and EquipmentLeasehold
                improvements
            
            
            119,233Furniture,
                fixtures and equipment
            
            
            75,851Computer
                hardware, software and peripherals
            
            
            166,173Machinery
                and shop equipment
            
            
            268,019Vehicles
            
            
            321,165950,441Less
                accumulated depreciation
            
            
            (483,521
            )Net
                property and equipment
            
            
            466,920Goodwill
            
            
            253,088TOTAL
                ASSETS
            
            $
            2,450,434See
                accompanying notes to consolidated financial
                statements.




3
 *Table
          of Contents*


METWOOD,
                  INC. AND SUBSIDIARYCONSOLIDATED
                  BALANCE SHEETAS
                  OF SEPTEMBER 30, 2006(UNAUDITED)LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  LiabilitiesAccounts
                  payable and accrued expenses
              
              $
              239,455Income
                  taxes
              
              
              54,159Total
                  current liabilities
              
              
              293,614Long-term
                  LiabilitiesDeferred
                  income taxes, net
              
              
              111,932Total
                  liabilities
              
              
              405,546Stockholders'
                  EquityCommon
                  stock, $.001 par, 100,000,000 shares authorized;11,923,999
                  shares issued and outstanding
              
              
              11,924Common
                  stock not yet issued ($.001 par, 2,150 shares)
              
              
              2Additional
                  paid-in capital
              
              
              1,319,317Retained
                  earnings
              
              
              713,645Total
                  stockholders' equity
              
              
              2,044,888TOTAL
                  LIABILITIESAND
                  STOCKHOLDERS' EQUITY
              
              $
              2,450,434See
                  accompanying notes to consolidated financial
                  statements.




4
 *Table
          of Contents*


METWOOD,
                  INC. AND SUBSIDIARYCONSOLIDATED
                  STATEMENTS OF INCOMEFOR
                  THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005(UNAUDITED)2006
              
              2005REVENUESConstruction
                  sales
              
              $
              1,105,956
              
              $
              1,201,594Engineering
                  sales
              
              
              44,568
              
              
              54,204Gross
                  sales
              
              
              1,150,524
              
              
              1,255,798Cost
                  of construction sales
              
              
              570,608
              
              
              687,345Cost
                  of engineering sales
              
              
              45,919
              
              
              37,656Gross
                  cost of sales
              
              
              616,527
              
              
              725,001Gross
                  profit
              
              
              533,997
              
              
              530,797ADMINISTRATIVE
                  EXPENSESAdvertising
              
              
              30,514
              
              
              69,073Bad
                  debts
              
              
              23,061
              
              
              -Depreciation
              
              
              13,031
              
              
              12,671Insurance
              
              
              19,354
              
              
              15,986Payroll
                  expenses
              
              
              189,557
              
              
              164,366Professional
                  fees
              
              
              22,300
              
              
              20,970Rent
              
              
              18,600
              
              
              18,600Research
                  and development
              
              
              8,000
              
              
              -Telephone
              
              
              9,071
              
              
              6,089Travel
              
              
              9,809
              
              
              5,738Vehicle
              
              
              9,073
              
              
              3,083Other
              
              
              34,681
              
              
              36,971Total
                  administrative expenses
              
              
              387,051
              
              
              353,547Operating
                  income
              
              
              146,946
              
              
              177,250Other
                  income (expense)
              
              
              3,077
              
              
              (1,309
              )Income
                  before income taxes
              
              
              150,023
              
              
              175,941Income
                  taxes
              
              
              56,349
              
              
              54,446Net
                  income
              
              $
              93,674
              
              $
              121,495Basic
                  and diluted earnings per share
              
              $
              0.01
              
              $
              0.01Weighted
                  average number of shares
              
              
              11,908,958
              
              
              11,882,166See
                  accompanying notes to consolidated financial
                  statements.




5
 *Table
          of Contents*


METWOOD,
                  INC. AND SUBSIDIARYCONSOLIDATED
                  STATEMENTS OF CASH FLOWSFOR
                  THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005(UNAUDITED)2006
              
              2005CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  income
              
              $
              93,674
              
              $
              121,495Adjustments
                  to reconcile net income to net cash from operatingactivitiesDepreciation
              
              
              29,086
              
              
              27,145Provision
                  for deferred income taxes
              
              
              4,778
              
              
              9,513(Increase)
                  decrease in operating assets:Accounts
                  receivable
              
              
              11,861
              
              
              (45,323
              )Inventory
              
              
              (81,450
              )
              
              91,028Recoverable
                  income taxes
              
              
              -
              
              
              29,854Other
                  operating assets
              
              
              (2,639
              )
              
              (53,446
              )Increase
                  (decrease) in operating liabilities:Accounts
                  payable and accrued expenses
              
              
              (16,520
              )
              
              (95,333
              )Current
                  income taxes payable
              
              
              (7,429
              )
              
              15,079Net
                  cash from operating activities
              
              
              31,361
              
              
              100,012CASH
                  FLOWS USED FOR INVESTING ACTIVITIESExpenditures
                  for fixed assets
              
              
              (33,715
              )
              
              (44,732
              )Net
                  cash used for investing activities
              
              
              (33,715
              )
              
              (44,732
              )Net
                  (decrease) increase in cash
              
              
              (2,354
              )
              
              55,280Cash,
                  beginning of the year
              
              
              99,880
              
              
              234,607Cash,
                  end of the period
              
              $
              97,526
              
              $
              289,887See
                  accompanying notes to consolidated financial
                  statements.




6
 *Table
          of Contents*


METWOOD,
      INC. AND SUBSIDIARY


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
      30, 2006


(UNAUDITED)





NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Business
      Activity - 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. The total purchase price of $350,000 was paid with $60,000
      in cash and with 290,000 shares of the Company's common stock to the two
      Providence shareholders. These shares were valued at the closing active quoted
      market price of the stock at the effective date of the purchase, which was
      $1.00
      per share. One of the shareholders of Providence was also an officer and
      existing shareholder of Metwood prior to the acquisition. In 2002 Metwood
      purchased from that shareholder and retired 15,000 of the originally issued
      290,000 shares for $15,000 and in 2004 purchased from that shareholder and
      retired the remaining 275,000 of the originally issued 290,000 shares for
      $50,000. The initial purchase transaction was accounted for under the purchase
      method of accounting. The purchase price was allocated as follows:


Accounts
                    receivable
                
                $
                75,000Fixed
                    assets
                
                
                45,000Goodwill
                
                
                230,000Total
                
                $
                350,000





During
      the year ended June 30, 2003, liabilities assumed at the date of acquisition
      were identified and paid. The amount of the liabilities paid was $23,088, and
      this amount was added to goodwill.


The
        consolidated company ("the Company") provides construction-related products
        and
        engineering services to residential customers and contractors, commercial
        contractors, developers and retail enterprises, primarily in southwestern
        Virginia.





Basis
      of
      Presentation - The financial statements include the accounts of Metwood, Inc.
      and its wholly owned subsidiary, Providence Engineering, PC, 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.




7
 *Table
          of Contents*




METWOOD,
      INC. AND SUBSIDIARY


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
      30, 2006


(UNAUDITED)







In
        the
        opinion of management, the unaudited condensed consolidated financial statements
        contain all the adjustments necessary in order to make the financial statements
        not misleading. The results for the period ended September 30, 2006 are not
        necessarily indicative of the results to be expected for the entire fiscal
        year
        ending June 30, 2007.
 
 Fair
        Value of Financial Instruments - For certain of the Company's financial
        instruments, none of which are held for trading, including cash, accounts
        receivable, accounts payable and accrued expenses, the carrying amounts
        approximate fair value due to their short maturities.
 
 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, 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.
 
 Accounts
        Receivable - The Company grants credit in the form of unsecured accounts
        receivable to its customers based on an evaluation of their financial condition.
        The Company performs ongoing credit evaluations of its 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 September 30, 2006,
        the
        allowance for doubtful accounts was $-0-. 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 three months ended September 30, 2006 and 2005, the
        amount of bad debts charged off was $23,061 and $-0-, respectively, including
        chargeoffs for the three months ended September 30, 2006 relating to receivables
        which have been awarded to the Company as a result of lawsuits whose
        collectibility is doubtful.
 
 Inventory
        - Inventory, consisting of metal and wood raw materials, is located on the
        Company's 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 recorded at cost and include
        expenditures for improvements when they substantially increase the productive
        lives of existing assets. Maintenance and repair costs are expensed to
        operations as incurred. Depreciation is computed using the straight-line
        method
        over the assets' estimated useful lives, which range from three to forty
        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 the
        proceeds is recorded as a gain or loss.
 
 "Goodwill
        - The Company accounts for goodwill and intangibles under SFAS No. 142,
“Goodwill and Other Intangible Assets.” As such, goodwill is not amortized, but
        is subject to annual impairment reviews, or more frequent reviews if events
        or
        circumstances indicate there may be an impairment. The Company performed
        its
        required annual goodwill impairment test as of June 30, 2006 using discounted
        cash flow estimates and found that there was no impairment of
        goodwill. "
  8
 *Table
            of Contents*




METWOOD,
      INC. AND SUBSIDIARY


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
      30, 2006


(UNAUDITED)







Patents
        -
        The Company has been assigned several key product patents developed by certain
        Company officers. No value has been recorded in the Company's 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 SFAS No. 109,
        "Accounting for Income Taxes." A deferred tax asset or liability is recorded
        for
        all temporary differences between financial and tax reporting and for net
        operating loss carryforwards, where applicable. Deferred tax assets are reduced
        by a valuation allowance when, in the opinion of management, it is more likely
        than not that some portion or the entire deferred tax asset will not be
        realized. Deferred tax assets and liabilities are adjusted for the effect
        of
        changes in tax laws and rates on the date of enactment.
  Research
        and Development - The Company performs research and development on its
        metal/wood products, new product lines, and new patents. Costs, if any, are
        expensed as they are incurred. For the three months ended September 30, 2006
        and
        2005, the expenses relating to research and development were $8,000 and $-0-,
        respectively.
  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 quarters 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 July 2006, the Financial Accounting Standards
        Board ("FASB") issued Interpretation ("FIN") No. 48, "Uncertainty in Income
        Taxes." FIN 48 applies to all tax positions within the scope of Statement
        109
        and clarifies when and how to recognize tax benefits in the financial statements
        with a two-step approach to recognition and measurement. FIN 48 will become
        effective for fiscal years beginning after December 15, 2006. Management
        continues to evaluate the effect that adoption of FIN 48 will have on the
        Company's consolidated results of operations and financial position.
  In
        May
        2005, the FASB issued Statement of Financial Accounting Standards ("SFAS")
        No.
        154, "Accounting changes and Error Corrections" (replacing Accounting Principles
        Board Opinion ("APB") No. 20, "Accounting Changes," and SFAS No. 3, "Reporting
        Accounting Changes in Interim Financial Statements - an Amendment of APB
        Opinion
        No. 28") which changes the requirements for the accounting for and reporting
        of
        a change in accounting principle. SFAS 154 requires retrospective application
        to
        prior period financial statements (to the extent practicable) of changes
        in
        accounting principle instead of recognition of the cumulative effect of the
        change in net income in the period of the change as required by APB No. 10.
        SFAS
        154 also requires that a change in depreciation or amortization be accounted
        for
        as a change in accounting estimate effected by a change
 
 9
 *Table
            of Contents*




METWOOD,
      INC. AND SUBSIDIARY


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
      30, 2006


(UNAUDITED)







in
        accounting principle. The Company adopted SFAS 154 during the quarter ended
        September 30, 2006, and such adoption did not impact the Company's consolidated
        results of operations or financial position.
 
 "In
        September 2006, the FASB issued Statement No. 157, ""Fair Value Measurements.""
        SFAS 157 defines fair value, establishes a framework and gives guidance
        regarding the methods used for measuring fair value, and expands disclosures
        about fair value measurements. SFAS 157 is effective for financial statements
        issued for fiscal years beginning after November 15, 2007, and interim periods
        within those fiscal years. The Company is currently assessing the impact
        that
        SFAS 157 will have on our consolidated results of operations or financial
        position. "
  "In
        September 2006, the SEC released Staff Accounting Bulletin (""SAB"") No.
        108,
        ""Considering the Effects of Prior Year Misstatements when Quantifying
        Misstatements in Current Year Financial Statements."" SAB 108 provides
        interpretive guidance on the SEC's views regarding the process of quantifying
        materiality of financial statement misstatements. SAB 108 is effective for
        fiscal years ending after November 15, 2006, with early application for the
        first interim period ending after November 15, 2006. The Company does not
        believe that the application of SAB 108 will have a material effect on our
        consolidated results of operations or financial position. "
 
 NOTE
        2 -
        EARNINGS PER SHARE
 
 Net
        income and earnings per share for the three months ending September 30, 2006
        and
        2005 are as follows:
 2006
                
                2005Net
                    income
                
                $
                93,674
                
                $
                121,495Income
                    per share - basic and fully diluted
                
                $
                0.01
                
                $
                0.01Weighted
                    average number of shares
                
                
                11,908,958
                
                
                11,882,166
  NOTE
        3 -
        SUPPLEMENTAL CASH FLOW INFORMATION
 
 Supplemental
        disclosures of cash flow information for the three months ended September
        30,
        2006 and 2005 are summarized as follows:
  2006
              
              2005Cash
                  paid for:Income
                  taxes
              
              $
              59,000
              
              $
              --Interest
              
              $
              --
              
              $
              --
 
 NOTE
        4 -
        RELATED-PARTY TRANSACTIONS
 
 From
        time
        to time, the Company contracts with a company related through common ownership
        for building and grounds-related maintenance services. There were no fees
        paid
        to the related company for the three months ended September 30, 2006 and
        2005.
        For the three months ended September 30, 2006 and 2005, the Company had sales
        of
        $25,248 and $0, respectively, to the company referred to above. As of September
        30, 2006, the related receivables were still outstanding. See also Note
        7.
 
 10
 *Table
            of Contents*




METWOOD,
      INC. AND SUBSIDIARY


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
      30, 2006


(UNAUDITED)





NOTE
      5 -
      BANK CREDIT LINE





The
      Company has available a $600,000 revolving line of credit with a local bank.
      The
      balance outstanding at September 30, 2006 was $-0-.





NOTE
      6 -
      SEGMENT INFORMATION




The
      Company operates in two principal business segments: (1) construction-related
      products and (2) engineering services. Performance of each segment is evaluated
      based on profit or loss from operations before income taxes. These reportable
      segments are strategic business units that offer different products and
      services. Summarized revenue and expense information by segment for the three
      months ended September 30, 2006 and 2005, as excerpted from internal management
      reports, is as follows:


**Construction**:
              
              2006
              
              2005Sales
              
              $
              1,105,956
              
              $
              1,201,594Intersegment
                  expenses
              
              
              (4,837
              )
              
              -Cost
                  of sales
              
              
              (570,608
              )
              
              (687,345
              )Corporate
                  and other expenses
              
              
              (436,151
              )
              
              (398,307
              )Segment
                  income
              
              $
              94,360
              
              $
              115,942**Engineering:**Sales
              
              $
              44,568
              
              $
              54,204Intersegment
                  revenues
              
              
              4,837
              
              
              -Cost
                  of sales
              
              
              (45,919
              )
              
              (37,656
              )Corporate
                  and other expenses
              
              
              (4,172
              )
              
              (10,995
              )Segment
                  income (loss)
              
              $
              (686
              )
              $
              5,553





NOTE
      7 -
      OPERATING LEASE COMMITMENTS




On
      January 3, 2005, the Company entered into a ten-year commercial operating lease
      with a company related through common ownership. The lease covers various
      buildings and property which house our manufacturing plant, executive offices
      and other buildings with a monthly rental of $6,200. The lease expires on
      December 31, 2014. For both the three months ended September 30, 2006 and 2005,
      we recognized rental expense for these spaces of $18,600.




ITEM
      2 -
      MANAGEMENT'S DISCUSSION AND ANALYSIS





*With
      the exception of historical facts stated herein, the matters discussed in this
      report are "forward-looking" statements that involve risks and uncertainties
      that could cause actual results to differ materially from projected results.
      Such "forward-looking" statements include, but are not necessarily limited
      to,
      statements regarding anticipated levels of future revenues and earnings from
      operations of the Company. Readers of this report are cautioned not to put
      undue
      reliance on "forward-looking" statements, which are by their nature, uncertain
      as reliable indicators of future performance.*





11
 *Table
          of Contents*


**Description
      of Business**




Background




As
      discussed in detail in Note 1, the Company was incorporated under the laws
      of
      the Commonwealth of Virginia on April 7, 1993 and, on June 30, 2000, entered
      into a reverse merger in which it became the wholly owned subsidiary of a public
      Nevada shell corporation, renamed Metwood, Inc. Effective January 1, 2002,
      Metwood acquired certain assets of Providence Engineering, PC in a transaction
      accounted for under the purchase method of accounting.




Principal
      Products/Services and Markets




*Metwood*


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, Robert ("Mike") Callahan and
      Ronald Shiflett, 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 and services are:





·
Girders
      and
      headers ·
Garage,
      deck and porch concrete pour-over systems


·
Floor
      joists ·
Garage
      and post-and-beam buildings


·
Floor
      joist
      reinforcers ·
      Engineering, design and custom building services


·
Roof
      and floor trusses




*Providence*




Providence
      is extensively involved in ongoing product research and development for Metwood.
      Additionally, Providence offers its customers 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. Providence's staff is familiar with construction
      practices and has been actively involved in construction administration and
      inspection on multiple projects.





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Providence
      also performs 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.





Providence
      has designed numerous foundations for a variety of structures. Its 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.





Providence
      has also designed and drafted full building plans for several applications.
      When
      subcontracting with local professional firms, Providence has the ability to
      provide basic architectural, mechanical, electrical, and detailed civil and
      structural design services for these facilities.





Providence
      has 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





The
      Company's sales are primarily retail, directly to contractors and do-it-yourself
      homeowners in Virginia and North Carolina. Approximately 90% of the Company's
      sales are wholesale to lumberyards, home improvement stores, hardware stores,
      and plumbing and electrical suppliers in Virginia and North Carolina, including
      Lowe's and 84 Lumber. Metwood relies primarily on its own sales force to
      generate sales; additionally, however, the Company has distributors in Virginia,
      New York, Oklahoma, Arizona, Colorado and Pennsylvania and also utilizes the
      salespeople of wholesale yards stocking the Company's products as an additional
      sales force. Metwood intends to continue expanding the wholesale marketing
      of
      its unique products to retailers 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





The
      Company has acquired four new patents through assignment from Robert M. Callahan
      and Ronald B. Shiflett, the patent holders. All four patents reflect various
      modifications to the Company's Joist Reinforcing Bracket which will make it
      even
      easier for tradesmen to insert utility conduits through wood joists.





Seasonality
      of Market





The
      Company's sales can be subject to seasonal impacts, as its 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, the Company's sales tend to be greater in its fourth and first
      fiscal quarters. However, the Company is expanding into less weather-sensitive
      markets, such as Florida, Georgia, Arizona, South Carolina and Alabama in order
      to ameliorate seasonality factors. The Company builds an inventory of its
      products throughout the winter and spring to support its sales
      season.





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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 that of the Company. However, Metwood has often found that
      its
      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 used by the Company are readily available on the market from
      numerous suppliers. The light-gage metal used by the Company is supplied
      primarily by Marino-Ware, Telling Industries and Wheeling Corrugating Company.
      The Company's main sources of lumber are BlueLinx and The Contractor Yard.
      Gerdau Amersteel, Descosteel and Adelphia Metals provide the majority of the
      Company's rebar. Because of the number of suppliers available to the Company,
      its decisions in purchasing materials are dictated primarily by price and
      secondarily by availability. The Company does not anticipate a lack of supply
      to
      affect its production; however, a shortage might cause the Company to pass
      on
      higher materials prices to its buyers.





Dependence
      on One or a Few Major Customers





Presently
      the Company does not have any one customer whose loss would have a substantial
      impact on the Company's operations.





Patents





The
      Company has eight U.S. Patents:





U.S.
      Patent No. 5,519,977, "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, "Composite Beam," a composite beam that includes an
      elongated metal shell and a pierceable insert for receiving nails, screws or
      other penetrating fasteners. This is a continuation-in-part of U.S. Patent
      No.
      5,625,997.





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 Reinforcing Bracket, which will be used for repairs of wood
      I-joists.




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Each
      of
      these patents was originally issued to the inventors and Company founders,
      Robert Callahan and Ronald B. Shiflett, who licensed these patents to the
      Company.





Need
      for Government Approval of Principal Products





The
      Company's products must either be sold with an engineer's seal or applicable
      building code approval. Once that approval is obtained, the products can be
      used
      in all fifty states. The Company's Floor Joist Reinforcer received Bureau
      Officials Code Association ("BOCA") approval in April 2001. Currently, the
      Company's chief engineer has obtained professional licensure in several states
      which permit products not building code approved to be sold and used with his
      seal. The Company expects his licensure in a growing number of states to greatly
      assist in the uniform acceptability of its products as it expands to new
      markets.





Time
      Spent During the Last Two Fiscal Years on Research and Development
      Activities





Approximately
      fifteen percent of the Company's time and resources have been spent during
      the
      last two fiscal years researching and developing its metal/wood products, new
      product lines, and new patents.





Costs
      and Effects of Compliance with Environmental Laws





The
      Company does not incur any costs to comply with environmental laws. It is an
      environmentally friendly business in that its products are fabricated from
      recycled steel.





Number
      of Total Employees and Number of Full-Time Employees





The
      Company had thirty-three employees at September 30, 2006, all of whom were
      full
      time.





**Results
      of Operations**





Net
      Income





The
      Company had net income of $93,674 for the three months ended September 30,
      2006,
      versus $121,495 for the three months ended September 30, 2005, a decrease of
      $27,821. The decrease in net income was attributable primarily to higher
      administrative costs, since gross profit comparing 2006 to 2005 increased
      slightly.





Sales





Revenues
      were $1,150,524 for the three months ended September 30, 2006 compared to
      $1,255,798 for the same period in 2005, a decrease of $105,274, or 8%. The
      decrease in sales resulted primarily from a slight decrease in volume comparing
      the two periods. Average selling prices and gross margins remained fairly
      constant.




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Expenses





Total
      administrative expenses were $387,051 for the three months ended September
      30,
      2006, versus $353,547 for the three months ended September 30, 2005, an increase
      of $33,504 (9%). A decrease of approximately $40,000 in advertising in 2006
      over
      2005 was offset by increases in payroll, bad debt, and research and development
      expenses.





Liquidity
      and Capital Reserves





On
      September 30, 2006, the Company had cash of $97,526 and working capital of
      $1,436,812. Net cash provided by operating activities was $31,361 for the three
      months ended September 30, 2006 compared to $100,012 for the three months ended
      September 30, 2005. The lower provision of cash in the current year resulted
      primarily from purchases of inventory and a paydown in payables, partially
      offset by a net collection of accounts receivable for the period.





Cash
      used
      in investing activities was $33,715 for the three months ended September 30,
      2006 compared to cash used of $44,732 during the same period in the prior year.
      Cash flows used in investing activities for the current period were for vehicles
      ($18,664), shop equipment $11,497), and computers and peripherals
      ($3,554).





No
      cash
      was provided from financing activities for the periods ended September 30,
      2006
      and 2005.





ITEM
      3 -
      CONTROLS AND PROCEDURES





The
      management of Metwood, Inc. has reviewed the systems of internal controls and
      disclosures within the specified time frame of ninety days. Management believes
      that the systems in place allow for proper controls and disclosures of financial
      reporting information. There have been no changes in these controls since our
      last evaluation date.




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PART
      II -
      OTHER INFORMATION





ITEM
      6 -
      EXHIBITS AND REPORTS ON FORM 8-K





(a)
      Exhibits





See
      index
      to exhibits.





(b)
      Reports on Form 8-K





There
      were no reports on Form 8-K filed during the quarter ended September 30,
      2006.





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**SIGNATURES**





In
      accordance with the requirements 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:
              November 11, 2006
            By:
            /s/ Robert
              M. CallahanRobert M. Callahan
              Chief Executive Officer




By:
            /s/ Shawn
              A. CallahanShawn A. Callahan
              Chief Financial Officer










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**INDEX
                TO EXHIBITS****NUMBER**
            
            **DESCRIPTION
                OF EXHIBIT**3(i)*
            
            Articles
                of Incorporation3(ii)**
            
            By-Laws31.1
            
            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 200231.2
            
            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 200232
            
            Certifications
                Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002 (18U.S.C. 1350)*Incorporated
                by reference on Form 8-K, filed February 16, 2000**Incorporated
                by reference on Form 8-K, filed February 16, 2000






19