|UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549


FORM 10-KSB
|-----------------------------------------------------------------------------------

|[X] |  | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- |  | ------------------------------------------------------------------------------

|For the period ended
June 30, 2003
|----------------------------------

|[   ] |  | 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 
                
                
                
                
                83-0210365
                      
   (State or other jurisdiction
                      
                   
                        (IRS Employer
               
                  of incorporation)          
             
                          
                      Identification No.)


819 Naff Road, Boones Mill, VA 24065(Address of principal executive offices)



(540) 334-4294
(Issuers telephone number)


Securities
registered under Section 12(b) of the Exchange Act:None


Securities registered
under Section 12(g) of the Exchange Act:$0.001 Par Value Common Voting Stock(Title of Class)



Check whether the issuer (1) 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______


Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrants knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-KSB
or an amendment to this Form 10-KSB. [X]


State issuers net revenues for
its most recent fiscal year: $1,995,395


As of September 22, 2003 there were
12,057,549 common shares outstanding, and the aggregate market value of the common shares
(based upon the average of the bid price ($.35) reported by brokers) held by
non-affiliates was approximately $4,220,142.

Transitional Small Business disclosure Format (check one): Yes [ ] No [X]
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|METWOOD, INC. AND
SUBSIDIARYTABLE OF CONTENTS
 FORM 10-KSB
|-----------------------------------------------------------

|         |                                                                                                    |        
|-------- | -------------------------------------------------------------------------------------------------- | -------
|PART I   |                                                                                                    | Page(s)
|         |                                                                                                    |        
|Item 1   | Description of Business                                                                            | 1-4    
|         |                                                                                                    |        
|Item 2   | Properties                                                                                         | 5      
|         |                                                                                                    |        
|Item 3   | Legal Proceedings                                                                                  | 5-6    
|         |                                                                                                    |        
|Item 4   | Submission of Matters to a Vote of Security Holders                                                | 6      
|         |                                                                                                    |        
|PART II  |                                                                                                    |        
|         |                                                                                                    |        
|Item 5   | Market for Common Stock and Related Security Holder Matters                                        | 7      
|         |                                                                                                    |        
|Item 6   | Management's Discussion and Analysis                                                               | 8-10   
|         |                                                                                                    |        
|Item 7   | Financial Statements                                                                               |        
|         |                                                                                                    |        
|         | Independent Auditors' Reports                                                                      | 11-12  
|         |                                                                                                    |        
|         | Consolidated Balance Sheet - June 30, 2003                                                         | 13-14  
|         |                                                                                                    |        
|         | Consolidated Statements of Income for the Years Ended         June 30, 2003 and 2002               | 15     
|         |                                                                                                    |        
|         | Consolidated Statements of Stockholders' Equity for the Years Ended         June 30, 2003 and 2002 | 16     
|         |                                                                                                    |        
|         | Consolidated Statements of Cash Flows for the Years Ended         June 30, 2003 and 2002           | 17     
|         |                                                                                                    |        
|         | Notes to Consolidated Financial Statements                                                         | 18-25  
|         |                                                                                                    |        
|PART III |                                                                                                    |        
|         |                                                                                                    |        
|Item 9   | Directors and Executive Officers of the Registrant                                                 | 26-27  
|         |                                                                                                    |        
|Item 10  | Executive Compensation                                                                             | 28-29  

|ii
|--

|                                         |                                                                |      
|---------------------------------------- | -------------------------------------------------------------- | -----
|Item 11                                  | Security Ownership of Certain Beneficial Owners and Management | 29-30
|                                         |                                                                |      
|Item 12                                  | Certain Relationships and Related Transactions                 | 30   
|                                         |                                                                |      
|Item 13                                  | Exhibits and Reports on Form 8-K                               | 31   
|                                         |                                                                |      
|Signatures                               |                                                                | 32   
|                                         |                                                                |      
|Certification of Chief Executive Officer | 33-34                                                         
|                                         |                                                                |      
|Certification of Chief Financial Officer | 35-36                                                         

|iii
|---

|PART I


SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS


This periodic report contains certain
forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995 with respect to the financial condition, results of operations, business
strategies, operating efficiencies or synergies, competitive positions, growth
opportunities for existing products, and plans and objectives of management. Statements in
this periodic report that are not historical facts are hereby identified as
forward-looking statements for the purpose of the safe harbor provided by
Section 21E of the Exchange Act and Section 27A of the Securities Act.


Item 1. Description of
Business


Business Development


The company was incorporated under
the laws of the State of Wyoming on June 19, 1969. Following an involuntary dissolution
for failure to file an annual report, the company was reinstated as a Wyoming corporation
on October 14, 1999. Thereafter, on January 28, 2000, the company, through a majority
shareholder vote, changed its domicile to Nevada through a merger with EMC Energies, Inc.,
a Nevada corporation. The Plan of Merger provided for the dissenting shareholders to be
paid the amount, if any, to which they would be entitled under the Wyoming Corporation
Statutes with respect to the rights of dissenting shareholders. The company also changed
its par value to $.001 and the amount of authorized common stock to 100,000,000 shares.


Prior to 1990, the company was
engaged in the business of exploring for and producing oil and gas in the Rocky Mountain
and mid-continental areas of the United States. The company liquidated substantially all
of its assets in 1990 and was dormant until June 30, 2000, when it acquired, in a
stock-for-stock, tax-free exchange, all of the outstanding common stock of a privately
held Virginia corporation, Metwood, Inc. (Metwood), which was incorporated in
1993. See Form 8-K and attached exhibits filed August 11, 2000. Metwood has been in the
metal and metal/wood construction materials manufacturing business since 1992. Following
the acquisition, the company approved a name change from EMC Energies, Inc. to Metwood,
Inc.


Effective January 1, 2002, Metwood
acquired certain assets of Providence Engineering, P.C. (Providence), a
professional engineering firm with customers in the same proximity as Metwood, paying
$60,000 in cash and issuing 290,000 Metwood common shares to the two Providence
shareholders. These shares were valued at the closing quoted stock price of $1.00 per
share at the effective date of the purchase. On October 15, 2002, $15,000 additional cash
was paid to one shareholder in exchange for the shareholders surrender of 15,000
shares of Metwood stock. One of the shareholders of Providence was also an officer and
existing shareholder of Metwood prior to the acquisition. The transaction was accounted
for under the purchase method of accounting.
1
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.


Principal Products or
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.

The Companys primary products and services are:
          · Girders and headers
          · Floor joists
          · Floor joist reinforcers
          · Roof and floor trusses
          · Garage, deck and porch concrete pour-over systems
          · Garage and post-and-beam buildings
          · Engineering, design and custom building services

ProvidenceProvidence 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.


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.
2
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 20% of the Companys sales are wholesale to
lumberyards, home improvement stores, hardwole stores, and plumbing and electrical
suppliers in Virginia and North Carolina. Metwood relies primarily on its own sales force
to generate sales; additionally, however, the Company has distributors in Virginia, New
York, Oklahoma, Arizona and Colorado and also utilizes the salespeople of wholesale yards
stocking the Companys products as an additional sales force. The Company is in
discussions with national engineered I-joist manufacturers who are interested in marketing
the Companys products and expects to announce affiliations with these companies in
the near future. 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 are 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 are greater in its fourth and
first fiscal quarters. The Company builds an inventory of its products throughout the
winter and spring to support its sales season.
3
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 Dietrich Industries, Marino-Ware, and
Consolidated Systems, Inc. The Companys main sources of lumber are Lowes, 84
Lumber Company and Smith Mountain Building Supply. 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 four 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, a continuation in part of U.S. Patent No. 5,625,997,
          Composite Beam, a composite beam that includes an elongated metal
          shell and a pierceable insert for receiving nails, screws or other penetrating
          fasteners.


     U.S.
          Patent No. 5,921,053, Internally Reinforced Girder with Pierceable
          Nonmetal Components, a girder that includes a pair of c-shaped
          members secured together so as to form a hollow box which permits the girder to
          be secured within a building structure with conventional fasteners such as
          nails, screws and staples.
4
The Company also has a patent pending
on a modification of the floor joist patch kit. The Company expects that this patent will
be granted from the U. S. Patent office within the next twelve months.


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 twenty-six employees
at June 30, 2003, all of whom were full time.


Item 2. Properties


The Company owns its facilities in
Boones Mill, Virginia, which consist of corporate offices, warehouses, a garage/vehicle
maintenance building, and other multi-use buildings. It also owns five acres of land
adjacent to the facilities. There is no mortgage or lien on the properties.


Item 3. Legal Proceedings


The Company is not a party to any
legal proceedings, nor, to the best of its knowledge, are any such proceedings threatened
or contemplated.
5
Furthermore, to the knowledge of management, no director or executive officer is a party to any action adverse to the Company
or has a material interest adverse to the Company.
Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote
during the year.
6
PART II
Item 5.  Market for Common Stock and Related Security Holder Matters



For five years prior to September 2000,
there was no public market for shares of common stock of the Company. As a result of the
acquisition between EMC Energies, Inc. and Metwood, Inc., a trading market has developed,
but it is not an active trading market. It is therefore difficult to determine the market
value of the stock. Based on the average bid price for the Companys common stock at
September 22, 2003 of $.35 per share (average asking price of $.75), the market value of
shares held by non-affiliates would be $4,220,142. There are no preferred shares
authorized.


The Company is listed on the OTC
Bulletin Board of the National Association of Securities Dealers (NASD) under
the symbol MTWD.


Set forth below are the high and low
bid prices for the Companys common stock for the last two years:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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|               |            |           
|-------------- | ---------- | ----------
|Quarter Ended  | High Bid   | Low Bid   
|September 2001 | $     2.00 | $     1.75
|December 2001  | $     2.00 | $     1.01
|March 2002     | $     1.90 | $     1.01
|June 2002      | $     1.75 | $     0.65
|September 2002 | $     1.01 | $     0.60
|December 2002  | $     0.80 | $     0.60
|March 2003     | $     0.90 | $     0.57
|June 2003      | $     1.09 | $     1.09
|              

|Holders


The number of holders of record of
the Companys common stock as of September 22, 2003 was 1,105. This number does not
include an indeterminate number of stockholders whose shares are held by brokers in street
name. The number of stockholders has been substantially the same during the past ten
years.


Dividends



Per the negative covenants in the
line-of-credit agreements, the Company is restricted from paying dividends until the debt
is repaid. The Company has not paid any dividends on its common stock and does not intend
to pay dividends in the foreseeable future.
7
Item 6. Managements
Discussion and Analysis


The following discussion and analysis
should be read in conjunction with our financial statements and the notes thereto
appearing elsewhere in this Annual Report as Item 7. This Annual Report on Form 10-KSB
contains statements that constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. We caution you that forward-looking
statements are not guarantees of future performance and involve risks and uncertainties
and that actual results may differ materially from those in the forward-looking statements
as a result of various factors, including those set forth under the caption Risk
Factors.


Selected Financial Data


For the years ended June 30, 2003 and
2002:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            |  |                
|--------------------------- |  | ---------------
|                            |  | 2003           
|                            |  |                
|Revenues                    |  | $  1,995,395   
|                            |  |                
|Net income                  |  | $         1,486
|Net income per common share |  | **             
|Weighted average common     | 
|shares outstanding          |  | 12,047,722     
|                            |  |                
|**Less than $.01            | 
|                            |  |                
|At June 30, 2003 and 2002:  | 
|                            |  |                
|                            |  | 2003           
|                            |  |                
|Total assets                |  | $  2,157,138   
|Working capital             |  | $       78,377 
|Shareholders' equity        |  | $  1,460,737   

|No dividends have been declared or
paid during the periods presented.


Results of Operations
Fiscal 2003 Compared with Fiscal 2002


Revenues


Consolidated revenues increased
approximately $151,041, or 8%, for the year ended June 30, 2003 (fiscal 2003)
compared to the year ended June 30, 2002 (fiscal 2002). Construction sales
consisted of product sales and installation fees. Engineering sales consisted of fees for
engineering services. The increase in revenues was primarily attributable to increased
residential sales of garage floor systems and decks. A larger sales force was also a
factor in the increased sales.
8
Income from Operations


Operating income for the year ended
June 30, 2003 was $8,145 compared to $107,875 for the year ended June 30, 2002 as more
fully described below.


Gross profit decreased $38,107 (5%)
from fiscal 2002 to fiscal 2003. Even though revenues increased as previously described,
the increase was not as great as the Company had anticipated. Virginia experienced the
wettest winter weather in twenty years, which severely limited construction starts and
framing. As a result, builders demand for the Companys products was unusually
low during the Companys second and third quarters. Additionally, the cost of raw
materials (particularly metal) increased approximately $174,000, or 16%, for fiscal 2003
compared to fiscal 2002. The combined factors of lower-than-normal sales and increased
cost of sales contributed to the overall decline in gross profit in fiscal 2003.


Administrative expenses increased
$61,623, or 9%, to $768,535 in fiscal 2003 from $706,912 in fiscal 2002. The increase was
due primarily to higher payroll costs, both wages and benefits, and higher professional
fees incurred as a result of the acquisition of Providence. Additionally, travel costs
increased almost 300% from $3,724 in fiscal 2002 to $14,290 in fiscal 2003 due to
out-of-state trips to trade shows and meetings with national retailers interested in
marketing the Companys products.


Other Income (Expense)


Income from renting a portion of the
Companys facilities and equipment was $72,499 in fiscal 2002 and zero in fiscal
2003, while interest expense increased approximately $5,000 from fiscal 2002 to fiscal
2003. These two elements, decreased rental income and increased interest expense, were
primarily responsible for the decrease of $79,419 in other income from fiscal 2002 to
2003.


Income Taxes


In fiscal 2003 the Companys
income tax benefit was $778 compared to tax expense of $57,300 in fiscal 2002. An income
tax benefit was recognized for fiscal 2003 because temporary (timing)
differences between book and tax income gave rise to a tax loss, which can fully be
carried back to prior years. The Company increased its deferred tax liability by $37,715
in 2003. The primary component of the deferred tax liability relates to timing differences
between book and tax depreciation.
9
Liquidity and Capital
Reserves


Cash flows used in operations in
fiscal 2003 were $159,428 versus cash flows provided in fiscal 2002 of $69,023, a decrease
of $228,451. The decline in cash flows from operations was primarily attributable to lower
net income, an increase in accounts receivable, and payment of fiscal 2002s income
tax liability. The Company also used approximately $250,000 for capital improvements,
comprised in part of major renovations to the Companys warehouses. The funds
expended for these renovations included $49,510 for employee labor. The Company elected to
put shop employees to work improving its facilities during the weather-related slowdown
discussed earlier rather than laying them off. Financing activities in fiscal 2003
generated $340,243 compared to $100,400 in fiscal 2002. The main source of funds provided
through financing activities was a net increase in borrowings under the Companys
line-of-credit agreement of $377,000.


The Company has historically funded
its cash needs through operating income and credit line draws as needed. It will continue
to rely on sales revenue as its main source of liquidity and will incur debt primarily to
fund inventory purchases as sales growth produces increased product demand. Liquidity
needs that cannot be met by current sales revenue may also arise in certain unusual
circumstances such as occurred this past winter when rain and snow significantly slowed
construction activity and resulted in a corresponding decline in demand for the
Companys products. In those circumstances, debt may be added to meet the
Companys fixed costs and to maintain inventory in anticipation of a spurt in product
demand that generally occurs once a weather-related slowdown has ended.


On a long-term basis, the Company
also anticipates that product demand will increase considerably as it continues to expand
its marketing and advertising campaign, which may include the use of television, radio,
print and internet advertising. Efforts are well underway to increase the number of
out-of-state sales representatives/brokers who will market the Companys products
throughout the country. As sales increase, the Company can add a second shift to meet the
additional product demand without having to use funds to expand its production facilities.
If additional cash becomes necessary to fund its growth, the Company may raise this
capital through an additional follow-on stock offering rather than take on more debt.
However, there can be no assurance that the Company will be able to obtain additional
equity or debt financing in the future. If the Company is unable to raise additional
capital as needed, the Companys growth potential will be adversely affected, and the
Company would have to significantly modify its plans.
10
Item 7. Financial
Statements


INDEPENDENT
AUDITORS REPORT


To the Board of Directors
ofMetwood, Inc.


We have audited the accompanying
consolidated balance sheet of Metwood, Inc. (a Nevada corporation) and subsidiary as of
June 30, 2003, and the related consolidated statements of income, stockholders
equity, and cash flows for the year then ended. These consolidated financial statements
are the responsibility of the Companys management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.


We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.


In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
financial position of Metwood, Inc. and subsidiary as of June 30, 2003, and the results of
their operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.


McLeod & CompanyRoanoke, VirginiaJuly 25, 2003
11
INDEPENDENT
AUDITORS REPORT


To the Board of Directors
ofMetwood, Inc.


We have audited the accompanying
consolidated statements of income, stockholders equity, and cash flows of Metwood,
Inc. and its wholly owned subsidiary for the year ended June 30, 2002. These consolidated
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial statements based
on our audit.


We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.


In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
consolidated results of operations and cash flows of Metwood, Inc. and its wholly owned
subsidiary for the year ended June 30, 2002 in conformity with accounting principles
generally accepted in the United States of America.


Bongiovanni &
Associates, P.A.Charlotte, North CarolinaSeptember 27, 2002
12
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JUNE 30, 2003
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|                                            | 
|------------------------------------------- | 
|ASSETS                                      | 
|Current Assets                              | 
|Cash                                        | 
|Accounts receivable                         | 
|Inventory                                   | 
|Prepaid expenses                            | 
|Refundable income taxes                     | 
|                                            | 
|                                            | 
|Total current assets                        | 
|                                            | 
|Property and Equipment                      | 
|Furniture, fixtures and equipment           | 
|Computer hardware, software and peripherals | 
|Machinery and shop equipment                | 
|Vehicles                                    | 
|Buildings and improvements                  | 
|Land and land improvements                  | 
|                                            | 
|                                            | 
|Less accumulated depreciation               | 
|                                            | 
|                                            | 
|Net property and equipment                  | 
|                                            | 
|Goodwill                                    | 
|                                            | 
|                                            | 
|TOTAL ASSETS                                | 
|                                            | 

|See accompanying notes to consolidated financial statements.
13
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JUNE 30, 2003
|-------------------------------------------------------------------------------------------------------------------------------------

|                                                        | 
|------------------------------------------------------- | 
|LIABILITIES AND STOCKHOLDERS' EQUITY                    | 
|
|Current Liabilities                                     | 
|Accounts payable                                        | 
|Accrued expenses                                        | 
|Customer deposits                                       | 
|Bank lines of credit                                    | 
|                                                        | 
|
|Total current liabilities                               | 
|
|Long-term Liabilities                                   | 
|Deferred income taxes                                   | 
|                                                        | 
|
|Total liabilities                                       | 
|
|COMMITMENTS (Note 4)                                    | 
|
|Stockholders' Equity                                    | 
|Common stock, $.001 par, 100,000,000 shares authorized; | 
|12,046,549 shares issued and outstanding                | 
|Common stock not yet issued ($.001 par, 10,950 shares)  | 
|Additional paid-in capital                              | 
|Retained earnings                                       | 
|                                                        | 
|
|Total stockholders' equity                              | 
|                                                        | 
|
|TOTAL LIABILITIES                                       | 
|AND STOCKHOLDERS' EQUITY                                | 
|                                                        | 

|See accompanying notes to consolidated financial statements.
14
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
               FOR THE YEARS ENDED JUNE 30, 2003 AND 2002
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     |  |                 
|------------------------------------ |  | ----------------
|                                     |  | 2003            
|                                     |  |                 
|REVENUES                             | 
|Construction sales                   |  | $   1,781,462   
|Engineering sales                    |  | 213,933         
|                                     |  |                 
|Gross sales                          |  | 1,995,395       
|Cost of construction sales           |  | 1,021,259       
|Cost of engineering sales            |  | 197,456         
|                                     |  |                 
|Gross cost of sales                  |  | 1,218,715       
|                                     |  |                 
|Gross profit                         |  | 776,680         
|                                     |  |                 
|ADMINISTRATIVE EXPENSES              | 
|Advertising                          |  | 36,651          
|Depreciation                         |  | 46,000          
|Insurance                            |  | 33,311          
|Office expense                       |  | 31,044          
|Payroll expenses                     |  | 411,846         
|Professional fees                    |  | 77,718          
|Telephone                            |  | 19,030          
|Travel                               |  | 14,290          
|Vehicle                              |  | 15,217          
|Other                                |  | 83,428          
|                                     |  |                 
|Total administrative expenses        |  | 768,535         
|                                     |  |                 
|Operating income                     |  | 8,145           
|                                     |  |                 
|Other income (expense)               |  | (7,437          
|                                     |  |                 
|Income before income taxes           |  | 708             
|                                     |  |                 
|Income tax (expense) benefit         |  | 778             
|                                     |  |                 
|                                     |  |                 
|Net income                           |  | $          1,486
|                                     |  |                 
|                                     |  |                 
|Basic and diluted earnings per share |  | **              
|                                     |  |                 
|Weighted average number of shares    |  | 12,047,722      

|**Less than $.01See accompanying notes to consolidated financial statements.
15
METWOOD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED JUNE 30, 2003 AND 2002
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               |  |                        |   |                                 |   |                                         
|---------------------------------------------- |  | ---------------------- | - | ------------------------------- | - | ----------------------------------------
|                                               |  | Common  Shares  (000s) |   | Common   Shares     ($.001 Par) |   | Common   Shares Not  Yet Issued   (000s)
|                                               |  |                        |   |                                 |   |                                         
|Balances July 1, 2001                          |  | 11,757                 |   | $ 11,757                        |   | --                                      
|                                               |  |                        |   |                                 |   |                                         
|Net income for year                            |  | --                     |   | --                              |   | --                                      
|                                               |  |                        |   |                                 |   |                                         
|Distributions to stockholdersof Providence     |  | --                     |   | --                              |   | --                                      
|                                               |  |                        |   |                                 |   |                                         
|Issuance of common stock for asset acquisition |  | 290                    |   | 290                             |   | --                                      
|                                               |  |                        |   |                                 |   |                                         
|Issuances of common stock for services         |  | 6                      |   | 6                               |   | --                                      
|                                               |  |                        |   |                                 |   |                                         
|Common stock not yetissued for services        |  | --                     |   | --                              |   | 4                                       
|                                               |  |                        |   |                                 |   |                                         
|Balances June 30, 2002                         |  | 12,053                 |   | $ 12,053                        |   | 4                                       
|                                               |  |                        |   |                                 |   |                                         
|Net income for year                            |  | --                     |   | --                              |   | --                                      
|                                               |  |                        |   |                                 |   |                                         
|Common stock retired                           |  | (15                    | ) | (15                             | ) | --                                      
|                                               |  |                        |   |                                 |   |                                         
|Issuance of common stock for services          |  | 5                      |   | 5                               |   | --                                      
|                                               |  |                        |   |                                 |   |                                         
|Issuance of common stock for equipment         |  | 3                      |   | 3                               |   | --                                      
|                                               |  |                        |   |                                 |   |                                         
|Common stock not yetissued for services        |  | --                     |   | --                              |   | 7                                       
|                                               |  |                        |   |                                 |   |                                         
|Balances June 30, 2003                         |  | 12,046                 |   | $ 12,046                        |   | 11                                      
|                                               |  |                        |   |                                 |   |                                         

|See accompanying notes to consolidated financial statements.
16
METWOOD, INC. AND SUBSIDIARY
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                       FOR THE YEARS ENDED JUNE 30, 2003 AND 2002
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                           |  |            
|---------------------------------------------------------- |  | -----------
|                                                           |  | 2003       
|                                                           |  |            
|CASH FLOWS USED FOR OPERATING ACTIVITIES                   | 
|Net income                                                 |  | $     1,486
|Adjustments to reconcile net income to net cash (used for) | 
|provided by operating activities:                          | 
|Depreciation                                               |  | 81,193     
|Bad debt expense                                           |  | 2,061      
|Provision for deferred income taxes                        |  | 35,715     
|Common stock issued for services                           |  | 8,550      
|(Increase) decrease in operating assets:                   | 
|Accounts receivable                                        |  | (134,550   
|Inventory                                                  |  | (83,313    
|Prepaid expenses                                           |  | (19,481    
|Refundable income taxes                                    |  | (25,187    
|Increase (decrease) in operating liabilities:              | 
|Accounts payable, accrued expenses and customer deposits   |  | 23,598     
|Current income taxes payable                               |  | (49,500    
|                                                           |  |            
|Net cash (used for) provided by operating activities       |  | (159,428   
|                                                           |  |            
|CASH FLOWS USED FOR INVESTING ACTIVITIES                   | 
|Expenditures for fixed assets                              |  | (249,421   
|                                                           |  |            
|Net cash used for investing activities                     |  | (249,421   
|                                                           |  |            
|CASH FLOWS FROM FINANCING ACTIVITIES                       | 
|Common stock retired                                       |  | (15,000    
|Distributions to stockholders                              |  | --         
|Borrowings on note payable                                 |  | --         
|Repayment of note payable                                  |  | (21,757    
|Net borrowings under line-of-credit agreement              |  | 377,000    
|                                                           |  |            
|Net cash from financing activities                         |  | 340,243    
|                                                           |  |            
|Net increase (decrease) in cash                            |  | (68,606    
|                                                           |  |            
|Cash, beginning of the year                                |  | 78,088     
|                                                           |  |            
|                                                           |  |            
|Cash, end of the year                                      |  | $     9,482
|                                                           |  |            

|See accompanying notes to consolidated financial statements.
17
METWOOD, INC. AND SUBSIDIARY
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003 AND 2002
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, P.C. (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. The transaction was
accounted for under the purchase method of accounting. The purchase price was allocated as
follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    | 
|------------------- | 
|Accounts receivable | 
|Fixed assets        | 
|Goodwill            | 
|                    | 
|Total               | 
|                    | 

|For the year ended June 30, 2002,
Providence Engineerings results of operations included in the accompanying
consolidated statement of income is for the six months ending June 30, 2002. This
represents the date of acquisition of January 1, 2002 through the fiscal year end. 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 has been 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. (a Nevada corporation) and its
wholly owned subsidiary, Metwood Inc. (a Virginia corporation) prepared in accordance with
accounting principles generally accepted in the United States of America and pursuant to
the rules and regulations of the Securities and Exchange Commission. All significant
intercompany balances and transactions have been eliminated.
18
Managements Use of Estimates
 The preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.
At June 30, 2003, the significant estimates used by management include the valuation of
its goodwill. Actual results could differ from those estimates.


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, and
the bank lines of credit, the carrying amounts approximate fair value due to their short
maturities.


Cash and Cash Equivalents  For
purposes of the Consolidated Statements of Cash Flows, the Company considers liquid
investments with an original maturity of three months or less to be cash equivalents. The
Company maintains its cash in bank deposit accounts, which, at times, may exceed the
federally insured limit of $100,000. The Company has not experienced any losses in such
accounts. The Company believes it is not exposed to any significant credit risk on cash
and cash equivalents.


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 June 30,
2003, the allowance for doubtful accounts was zero. Specific customer receivables are
considered past due when they are outstanding beyond their contractual terms and are
charged off to the allowance for doubtful accounts when determined uncollectible. For the
years ended June 30, 2003 and 2002, the bad debt expense was $2,061 and $8,869,
respectively.


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 from disposition is recorded as a
gain or loss.
19
Goodwill  In June 2001 the
Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets. This statement requires that goodwill and intangible assets deemed to have
an indefinite life not be amortized. Instead, such assets are to be tested for impairment
annually or immediately if conditions indicate that such an impairment could exist.
Transition to the new rules of SFAS 142 requires the completion of a transitional
impairment test of goodwill within the first year of adoption. The Company adopted the
provisions of SFAS 142 beginning July 1, 2002 and completed the transitional impairment
test of goodwill as of July 1, 2002 and again as of June 30, 2003 using discounted cash
flow estimates and found no goodwill impairment.


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.


Impairment of Long-Lived Assets
 In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 generally establishes a standard
framework within which to measure impairment of long-lived assets and expands APB Opinion
No. 30, Reporting the Results of Operations  Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events
and Transactions, to include a component of the entity rather than a segment of the
business. SFAS No. 144 is effective for financial statements issued for fiscal years
beginning after December 15, 2001. The adoption of SFAS No. 144 has had no material effect
on the Companys consolidated financial condition and consolidated cash flows.


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 years ended
June 30, 2003 and 2002, the expenses relating to research and development were
approximately $28,000 and $11,000, 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 years presented. There were no
adjustments required to net income for the years presented in the computation of diluted
earnings per share.
20
Reclassifications  Certain
items in the financial statements for the year ended June 30, 2002 have been reclassified
to conform to the June 30, 2003 financial statement presentation.


Recent Accounting Pronouncements
 In October 2001, the FASB issued SFAS No. 143, Accounting for Asset
RetiremenurObligations, which requires companies to record a liability for asset
retirement obligations in the period in which they are incurred if a reasonable estimate
of their fair value can be made. The statement applies to a companys legal
obligations associated with the retirement of a tangible long-lived asset that results
from the acquisition, construction, or development and (or) the normal operation of a
long-lived asset. When a liability for an asset retirement obligation is initially
recognized, a company capitalizes the asset retirement cost by increasing the carrying
amount of the related long-lived asset by the same amount as the liability. The
capitalized asset retirement cost is depreciated over the life of the respective asset,
while the liability is accreted to its present value. Upon settlement of the liability,
the obligation is settled at its recorded amount, or the company inc of this statement has
had no material impact on the Companys consolidated financial condition or results
of operations.


In April 2002, the FASB issued
Statement No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections.  This statement rescinds FASB
Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt; an
amendment of that statement, FASB Statement No. 64, Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements; and FASB Statement No. 44, Accounting for
Intangible Assets of Motor Carriers. This statement also amends FASB Statement No.
13, Accounting for Leases, to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback transactions.
 The adoption of this statement has had no material impact on the Companys
consolidated financial condition or results of operations.


In June 2002, the FASB issued SFAS
No. 146, Accounting for Costs Associated with Exit or Disposal Activities.
 This statement nullifies Emerging Issues Task Force Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring).  This statement requires
that a liability for costs associated with an exit or disposal activity be recognized when
the liability is incurred instead of at the date an entity commits to an exit plan. The
statement is effective for exit and disposal activities entered into after December 31,
2002. The adoption of this statement has had no material impact on the Companys
consolidated financial condition or results of operations.


In December 2002, the FASB issued
SFAS No. 148, Accounting for Stock-Based Compensation Transition and
Disclosurean amendment of FASB Statement No. 123. This
statement amends SFAS 123, Accounting for Stock-Based Compensation, to allow
for alternative methods of transition for a voluntary change to the fair-value-based
method of accounting for stock-based employee compensation. This statement also amends
FASB No. 123 to require disclosure of the accounting method used for valuation in both
annual and interim financial statements.  It permits an entity to recognize
compensation expense under the prospective method, modified prospective method, or the
retroactive restatement method. If an entity elects to adopt this statement, financial
statements for fiscal years beginning after December 15, 2003 must include this change in
accounting for stock-based employee compensation.
21
In April 2003, the FASB issued SFAS
No. 149 Amendment of Statement 133 on Derivative Instruments and Hedging
Activities. This statement amends and clarifies financial accounting and reporting
for derivative instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives) and for hedging activities under FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities. The effective date for implementation of this statement is for contracts
entered into or modified after June 30, 2003. The Company is currently evaluating the
effect of implementation of this statement; however it does not expect the statement to
apply, since it does not own nor plan to own derivative instruments or engage in hedging
activities.


In May 2003, the FASB issued SFAS No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. This statement establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). The remaining
provisions of this statement are consistent with the Boards proposal to revise the
definition of liabilities to encompass certain obligations that a reporting entity can or
must settle by issuing its own equity shares, depending on the nature of the relationship
established between the holder and the issuer. This statement is effective for financial
instruments entered into or modified after May 31, 2003, and is effective at the beginning
of the first interim period beginning after June 15, 2003. The Company is currently
evaluating the effect of this statement and does not expect implementation to have
a material impact on the Company's consolidated financial condition or results of operations.


NOTE 2 
SUPPLEMENTAL CASH FLOW INFORMATION


Supplemental disclosures of cash flow
information for the years ended June 30, 2003 and 2002 are summarized as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                         |  |           
|------------------------------------------------------------------------ |  | ----------
|                                                                         |  | 2003      
|                                                                         |  |           
|Cash paid for:                                                           | 
|Income taxes                                                             |  | $   38,194
|Interest                                                                 |  | $   13,791
|Supplemental disclosures of non-cash investing and financing activities: | 
|                                                                         |  | 2003      
|                                                                         |  |           
|Issuance of common stock for consulting services                         |  | $  8,550  
|Issuance of common stock for acquisition of other assets                 |  | $       --
|Issuance of common stock for fixed asset additions                       |  | $  1,801  
|Vehicles acquired with notes payable                                     |  | $       --

|22
NOTE 3 
RELATED-PARTY TRANSACTIONS


For the year ended June 30, 2003, the
Company had sales of $48,830 to its shareholder and CEO, Robert M. Callahan. As of June
30, 2003, the related receivable was still outstanding. Also, from time to time, the
Company contracts with a construction company related through common ownership and from
whom the Company earns equipment rental fees. During the years ended June 30, 2003 and
2002, the Company earned and collected $0 and $79,977, respectively, in equipment rental
and other revenue from this company.


During the year ended June 30, 2002,
the Company purchased five acres of land adjacent to its corporate offices and warehouses.
The purchase price of $89,000 was paid to an entity controlled by the Companys
shareholder and CEO.


See Note 6 below for related-party
common stock transactions.


NOTE 4  STOCK-BASED
INCENTIVE COMPENSATION


During the year ended June 30, 2003,
the Company implemented a stock-based incentive compensation plan for its employees.
Participating employees have an after-tax deduction withheld by the Company throughout the
calendar year. As of December 31 of each year, the employee is considered vested in the
plan, and the Company will match the participating employees withheld amounts. The
Company may also make a discretionary contribution based upon pay incentives or
attendance. As of January 1, the Company will purchase restricted stock on behalf of the
employee in the amount of his withholdings, the Companys match, and any
discretionary contributions.


As of June 30, 2003, the Company had
only three participating employees who withheld an amount immaterial to the consolidated
financial statements. No accrual for the Companys match has been made in the current
year.


NOTE 5  BANK CREDIT
LINE


The Company has available a $600,000
revolving line of credit with a local bank. Interest is payable monthly on the outstanding
balance at the prime lending rate, which was 4.0% as of June 30, 2003. The note is secured
by accounts receivable, equipment, general intangibles, inventory, and fixtures and
furniture. The note is personally guaranteed by the Companys CEO. The balance
outstanding as of June 30, 2003 was $367,000.


The Company has available a $250,000
line of credit with a local bank, which matures June 30, 2003. Interest is payable monthly
on the outstanding balance at the prime lending rate, which was 4.0% as of June 30, 2003.
The note is secured by accounts receivable, equipment, general intangibles, inventory, and
fixtures and furniture. The note is personally guaranteed by the Companys CEO. The
balance outstanding as of June 30, 2003 was $160,000. As of July 2003, this line was
converted to a term note payable due July 2007.
23
These line-of-credit agreements
contain certain covenants regarding non-payment of dividends and dealings with insiders.
The Company requested and was granted a waiver of the dealings-with-insiders covenant for
the year ended June 30, 2003 with regard to the sales and activities with the
Companys CEO, as stated in Note 3. With this waiver, the Company was in full
compliance with all requirements as of June 30, 2003.


NOTE 6  EQUITY


During the year ended June 30, 2003,
the Company issued 3,000 common shares in partial payment for equipment with a fair market
value of $1,801 and 5,000 common shares in payment for services valued at $3,000. The
company promised, but did not issue, common shares in lieu of payment for services valued
at $5,550. The Company also retired 15,000 common shares previously issued to a
shareholder and Metwood officer in exchange for $15,000 cash.


During the year ended June 30, 2002,
the Company issued 5,666 common shares of Company stock in exchange for fixed asset
additions having a fair market value of $10,199. The Company paid $10,840 in former
S corporation distributions to former Providence shareholders during fiscal
2002.


NOTE 7  INCOME TAXES


The provision for income tax expense
(benefit) consists of:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                       |  |           
|------------------------------------------------------------------------------------------------------ |  | ----------
|                                                                                                       |  | 2003      
|                                                                                                       |  |           
|Current:                                                                                               | 
|Federal                                                                                                |  | $(30,498  
|State                                                                                                  |  | (5,995    
|                                                                                                       |  |           
|                                                                                                       |  | (36,493   
|                                                                                                       |  |           
|Deferred:                                                                                              | 
|Federal                                                                                                |  | $ 28,415  
|State                                                                                                  |  | 7,300     
|                                                                                                       |  |           
|                                                                                                       |  | 35,715    
|                                                                                                       |  |           
|Total income tax expense (benefit)                                                                     |  | $    (778 
|                                                                                                       |  |           
|The effective income tax rate differed from the statutory income tax rates due to the following items:
|                                                                                                       |  |           
|Income tax expense (benefit) computed at the statutory rates                                           |  | $      142
|Accelerated depreciation                                                                               |  | --        
|Other                                                                                                  |  | (920      
|                                                                                                       |  |           
|Total income tax expense (benefit)                                                                     |  | $    (778 

|Deferred income taxes reflect the net
tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amount used for federal and state
income tax purposes. At June 30, 2003, the total deferred tax asset and liabilities
amounted to $0 and $47,325, respectively. Accordingly, there is no deferred tax valuation
allowance at June 30, 2003. The significant component of these temporary differences
results from the use of accelerated depreciation methods for tax purposes.

24
NOTE 8  OTHER
INCOME (EXPENSE)


For the year ended June 30, 2003,
interest income, the primary component of other income, was offset by approximately
$15,000 of interest expense and resulted in net other expense of $7,437. For the year
ended June 30, 2002, interest income and interest expense netted to approximately zero.
During fiscal 2002, the Company also received $6,225 from the rental of a portion of its
warehouses to an unrelated third party.


NOTE 9  CONCENTRATIONS


Approximately 25% of the
Companys accounts receivable as of June 30, 2003 is derived from two customers. The
largest, which was 15% of accounts receivable, was from the Companys CEO and is
disclosed in Note 3.


NOTE 10  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 years
ended June 30, 2003 and 2002, as excerpted from internal management reports, is as
follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             |  |                
|---------------------------- |  | ---------------
|                             |  | 2003           
|Construction:                |  |                
|Sales                        |  | $ 1,781,462    
|Cost of sales                |  | (1,021,259     
|Corporate and other expenses |  | (729,401       
|                             |  |                
|Segment income               |  | $      30,802  
|                             |  |                
|Total assets                 |  | $ 1,814,815    
|Capital expenditures         |  | $    246,174   
|Depreciation                 |  | $      71,713  
|Interest expense             |  | $      13,382  
|                             |  |                
|Engineering:                 | 
|Sales                        |  | $    213,933   
|Cost of sales                |  | (197,456       
|Corporate and other expenses |  | (40,816        
|                             |  |                
|Segment (loss) income        |  | $     (24,339  
|                             |  |                
|Total assets                 |  | $    342,323   
|Capital expenditures         |  | $        5,048 
|Depreciation                 |  | $        9,480 
|Interest expense             |  | $           318

|25
PART III

Item 9.  Directors and Executive Officers of the Registrant

Identification of
Directors and Executive Officers


The following table sets forth the
names and the nature of all positions and offices held by all directors and executive
officers of the Company for the year ending June 30, 2003 and to the date of the filing of
this report and the periods during which each such director or executive officer has
served in his or her respective positions:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | -----------------------
| | Name                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                    | Position and Background
| | Robert M. Callahan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                    | President              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |                        
| | Mr. Callahan has been involved in the building industry for over thirty years. He is
          well recognized in southwestern Virginia as an innovator in the uses of passive
          solar design and wood/metal products in custom home building. Along with Mr.
          Ronald Shiflett, he formed Metwood, Inc. in 1993 to bring light-gage
          construction, used in commercial building for years, into common use in
          residential construction.                                                                                                                           |                                    |                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                   
| | Shawn A. Callahan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Secretary/Treasurer, Plant Manager
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |                        
| | Education:   B.S. Computer
Science and Mathematics, Virginia Military InstituteSince
starting with Metwood, Inc. in May 1996, Mr. Callahan has played a major role in the
restructuring of the Company, increasing production, improving efficiency, and developing
computer aids for the Company.                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                   
| | Ronald B. Shiflett                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                    | Vice President         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                   
| | Education:   B.S.
Civil Engineering, Virginia Polytechnic Institute & State University               
     M.S. Civil Engineering, Virginia Polytechnic Institute &State University
Mr. Shiflett has been engaged in the structural design of industrial, commercial,
          residential, and institutional buildings for twenty-six years. He is recognized
          by the design community in southwestern Virginia as an innovator in the use and
          design of light-gage steel framing in building construction. Along with Mr.
          Callahan, he formed Metwood, Inc. in 1993.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                   
| | Annette G. Mariano                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                    | Chief Financial Officer
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                   
| | Education:   B.A. English,
Colorado Women's College                
    M.B.A. Concentration in Accounting, San Diego State University
Ms.
          Mariano has twenty-five years experience as a CPA in both private and public
          accounting. She has been with the Company since October 2001.                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                   

|Term of Office


The term of office of the current
directors shall continue until new directors are elected or appointed.

26
Family Relationships


Robert Callahan is the father of
Shawn Callahan.


Involvement in Certain
Legal Proceedings


Except as indicated below and to the
knowledge of management, during the past five years, no present or former director, person
nominated to become a director, executive officer, promoter or control person of the
Company:
(1) was a general partner or executive officer of any business by or against which
any bankruptcy petition was filed, whether at the time of such filing or two
years prior thereto;


(2) was convicted in a criminal proceeding or named the subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);



(3) was the subject of any order, judgment or decree, not subsequently reversed,
               suspended or vacated, of any court of competent jurisdiction, permanently or
               temporarily enjoining, barring, suspending or otherwise limiting his involvement
               in any type of business, securities or banking activities;


(4) was the subject of any order, judgment or decree, not subsequently reversed,
               suspended or vacated, of any federal or state authority barring, suspending or
               otherwise limiting for more than sixty days the right of such person to engage
               in any activity described above under this Item, or to be associated with
               persons engaged in any such activity; or


(5) was found by a court of competent jurisdiction (in a civil action), the
               Commission or the Commodity Futures Trading Commission to have violated a
               federal or state securities or commodities law, nor has a judgment been
               reversed, suspended, or vacated.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Compliance with Section
16(a) of the Exchange Act


No director, executive officer or 10%
shareholder of the Company has effected any transactions in the Companys securities
for the dates covered by this report since the date of filing their respective Form 3
reports.

27
Item 10. Executive
Compensation


The following table sets forth in
summary form the compensation received during each of the Companys last three fiscal
years by the Companys President and Chief Executive Officer, Robert M. Callahan:

Summary Compensation Table
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|FiscalYear | AnnualSalary | Bonuses | OtherCompen-sation | RestrictedStockAwards | LTIPOptions | RestrictedStockOptions
|---------- | ------------ | ------- | ------------------ | --------------------- | ----------- | ----------------------
|           | (1)          | (2)     | (3)                | (4)                   | (5)         | (5)                   
|2003       | $97,500      | -0-     | -0-                | -0-                   | -0-         | -0-                   
|2002       | $100,000     | -0-     | -0-                | -0-                   | -0-         | -0-                   
|2001       | $100,000     | -0-     | -0-                | -0-                   | -0-         | -0-                   

| | (1) | The dollar value of base salary (cash and non-cash) received.
| | --- | -------------------------------------------------------------

| | (2) | The dollar value of bonuses (cash and non-cash) received.
| | --- | ---------------------------------------------------------

| | (3) | During the periods covered by the table, the Company did not pay any other
               annual compensation not properly categorized as salary or bonus, including
               perquisites and other personal benefits, securities or property.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | During the periods covered by the table, the Company did not make any award of
               restricted stock.
| | --- | ---------------------------------------------------------------------------------------------------------------

| | (5) | The Company currently has no stock option or restricted stock bonus plans.
| | --- | --------------------------------------------------------------------------

|No member of the Companys
management has been granted any option or stock appreciation right; accordingly, no tables
relating to such items have been included within this item.


Compensation of Directors


There are no standard arrangements
pursuant to which the Companys directors are compensated for any services provided
as director. No additional amounts are payable to the Companys directors for
committee participation or special assignments.

There are no arrangements pursuant to
which any of the Companys directors was compensated during the Companys last
completed fiscal year or the previous two fiscal years for any services provided as
director.
28
Termination of Employment
and Change of Control Arrangement


There are no compensatory plans or
arrangements, including payments to be received from the Company, with respect to any
person named in the Summary Compensation Table set out above which would in any way result
in payments to any such person because of his resignation, retirement or other termination
of such persons employment with the Company or its subsidiaries, or any change in
control of the Company, or a change in the persons responsibilities following a
change in control of the Company.

Item 11.  Security Ownership of Certain Beneficial Owners and Management


Security Ownership of
Certain Beneficial Owners


The following table sets forth the
shares held by those persons who owned more than five percent of Metwoods common
stock as of September 22, 2003, based upon 12,057,549 shares outstanding:
Greater Than 5% Owners
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Title ofClass | Name and Addressof Beneficial Owner               | No. ofShares  | Percentof Class
|------------- | ------------------------------------------------- | ------------- | ---------------
|Common        | Robert Callahan819 Naff RoadBoones Mill, VA 24065 | 5,564,665 (1) | 46.2%          
|Common        | Ronald Shiflett819 Naff RoadBoones Mill, VA 24065 | 2,151,282     | 17.8%          
|Common        | Shawn Callahan819 Naff RoadBoones Mill, VA 24065  | 1,004,550     | 8.3%           

| | (1) | Includes direct and indirect interests. There are 2,000,000 common shares
               included in this amount that are owned in the names of family members of Mr.
               Callahan.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Security Ownership of
Management


The following table sets forth the
shares held by Metwood directors and officers as of September 22, 2003:
29
Management Ownership
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Title ofClass | Name and Addressof Beneficial Owner               | No. ofShares  | Percentof Class
|------------- | ------------------------------------------------- | ------------- | ---------------
|Common        | Robert Callahan819 Naff RoadBoones Mill, VA 24065 | 5,564,665 (1) | 46.2%          
|Common        | Ronald Shiflett819 Naff RoadBoones Mill, VA 24065 | 2,151,282     | 17.8%          
|Common        | Shawn Callahan819 Naff RoadBoones Mill, VA 24065  | 1,004,550     | 8.3%           
|Common        | Annette Mariano819 Naff RoadBoones Mill, VA 24065 | 6,000         | *              

| | (1)
               Includes direct and indirect interests. There are 2,000,000 common shares
               included in this amount that are owned in the names of family members of Mr.
               Callahan.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | * Less than 1% Ownership of shares by directors and officers of
               Metwood as a group: 72.3%
| | --------------------------------------------------------------------------------------------------------

|Changes in Control


We know of no contractual
arrangements which may at a subsequent date result in a change of control in the Company.

Item 12.  Certain Relationships and Related Transactions


Following are the transactions
between Metwood and members of management, directors, officers, 5% shareholders, and
promoters of Metwood:


The Company contracts with a
construction company related through common ownership whereby the Company earns fees from
construction-related services. During the years ended June 30, 2003 and 2002, the Company
earned and collected $-0- and $79,977, respectively, in equipment rental and other revenue
from this company. There were no amounts receivable from the related party at June 30,
2003 or June 30, 2002.


During the year ended June 30, 2002,
the Company purchased five acres of land adjacent to its corporate offices and warehouses.
The purchase price of $89,000 was paid to an entity controlled by the Companys chief
executive officer and shareholder.
30
Item 13.  Exhibits and Reports on Form 8-K



INDEX TO EXHIBITS
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NUMBER  |  | DESCRIPTION OF EXHIBIT    | 
|------- |  | ------------------------- | 
|        |  |                           | 
|3(i)*   |  | Articles of Incorporation | 
|        |  |                           | 
|3(ii)** |  | By-Laws                   | 

|*Incorporated by reference on Form
8-K, filed February 16, 2000.


**Incorporated by reference on Form
8-K, filed February 16, 2000.
31
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:  September 22, 2003 |  | /s/  Robert M. CallahanRobert M. CallahanPresident, CEO and Director    
|------------------------- |  | ------------------------------------------------------------------------
|                         
|Date:  September 22, 2003 |  | /s/  Ronald B. ShiflettRonald B. ShiflettVice-President and Director    
|                         
|Date:  September 22, 2003 |  | /s/  Shawn A. CallahanShawn A. CallahanSecretary, Treasurer and Director
|                         
|Date:  September 22, 2003 |  | /s/  Annette G. MarianoAnnette G. MarianoChief Financial Officer        

|32
Certification of Chief
Executive OfficerSecurities Exchange Act Rules 13a-14 and 15d-14 As
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Robert M. Callahan, Chief Executive
Officer of Metwood, Inc., certifies that:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 1. | I have reviewed this annual report on Form 10-KSB of Metwood, Inc.;
| | -- | -------------------------------------------------------------------

| | 2. | Based on my knowledge, this annual report does not contain any untrue statement
               of a material fact or omit to state a material fact necessary to make the
               statements made, in light of the circumstances under which such statements were
               made, not misleading with respect to the period covered by this annual report;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements and other financial information
               included in this annual report fairly present in all material respects the
               financial condition, results of operations and cash flows of the Company as of
               and for the periods presented in this annual report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The Companys other certifying officer and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-14 and 15d-14) for the Company and have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed such disclosure controls and procedures to ensure that material
               information relating to the Company, including its consolidated subsidiary, is
               made known to us by others within those entities, particularly during the period
               in which this annual report is being prepared;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated the effectiveness of the Companys disclosure controls and
               procedures as of a date within ninety days prior to the filing date of this
               annual report (the Evaluation Date); and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented in this annual report our conclusions about the effectiveness of the
               disclosure controls and procedures based on our evaluation as of the Evaluation
               Date;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The Companys other certifying officer and I have disclosed, based on our
               most recent evaluation, to the Companys auditors and the audit committee
               or Companys board of directors (or persons performing the equivalent
               functions):
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|33
|--

| | a) | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the Companys ability to record, process,
               summarize and report financial data and have identified for the Companys
               auditors any material weaknesses in internal controls; and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the Companys internal controls; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | The Companys other certifying officer and I have indicated in this annual
               report whether there were significant changes in internal controls or in other
               factors that could significantly affect internal controls subsequent to the date
               of our most recent evaluation, including any corrective actions with regard to
               significant deficiencies and material weaknesses.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date:  September 22, 2003 |  | /s/  Robert M. CallahanRobert M. CallahanChief Executive Officer
|------------------------- |  | ----------------------------------------------------------------

|34
Certification of Chief
Financial OfficerSecurities Exchange Act Rules 13a-14 and 15d-14 As
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Annette G. Mariano, Chief Financial
Officer of Metwood, Inc., certifies that:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 1. | I have reviewed this annual report on Form 10-KSB of Metwood, Inc.;
| | -- | -------------------------------------------------------------------

| | 2. | Based on my knowledge, this annual report does not contain any untrue statement
               of a material fact or omit to state a material fact necessary to make the
               statements made, in light of the circumstances under which such statements were
               made, not misleading with respect to the period covered by this annual report;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements and other financial information
               included in this annual report fairly present in all material respects the
               financial condition, results of operations and cash flows of the Company as of
               and for the periods presented in this annual report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The Companys other certifying officer and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-14 and 15d-14) for the Company and have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed such disclosure controls and procedures to ensure that material
               information relating to the Company, including its consolidated subsidiary, is
               made known to us by others within those entities, particularly during the period
               in which this annual report is being prepared;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated the effectiveness of the Companys disclosure controls and
               procedures as of a date within ninety days prior to the filing date of this
               annual report (the Evaluation Date); and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented in this annual report our conclusions about the effectiveness of the
               disclosure controls and procedures based on our evaluation as of the Evaluation
               Date;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The Companys other certifying officer and I have disclosed, based on our
               most recent evaluation, to the Companys auditors and the audit committee
               or Companys board of directors (or persons performing the equivalent
               functions):
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|35
|--

| | a) | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the Companys ability to record, process,
               summarize and report financial data and have identified for the Companys
               auditors any material weaknesses in internal controls; and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the Companys internal controls; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | The Companys other certifying officer and I have indicated in this annual
               report whether there were significant changes in internal controls or in other
               factors that could significantly affect internal controls subsequent to the date
               of our most recent evaluation, including any corrective actions with regard to
               significant deficiencies and material weaknesses.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date:  September 22, 2003 |  | /s/  Annette G. MarianoAnnette G. Mariano
|------------------------- |  | -----------------------------------------

|36
|--