##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from  to
 Commission File Number 000-30951
 SILVERGRAPH
INTERNATIONAL, INC.
  Nevada
(State or other jurisdiction
of incorporation or organization)
    
    67-0695367
(IRS Employer Identification No.)
 11919 Burke Street  Santa Fe Springs, CA 90670-2507
 (562) 693-3737
 N/A
 þ o
 o þ




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SILVERGRAPH INTERNATIONAL, INC.
 INDEX
 Page No.PART I FINANCIAL INFORMATION
    
    
    3Item 1 Financial Statements
    
    
    3Condensed, Consolidated Balance Sheets June 30, 2006 (Unaudited) and December 31, 2005
    
    
    3Condensed, Consolidated Statements of Operations
Three Months Ended June 30, 2006 and 2005 (Unaudited), and
Six Months Ended June 30, 2006 and 2005 (Unaudited)
    
    
    4Condensed, Consolidated Statement of Stockholders Equity
June 30, 2006 (Unaudited) and December 31, 2005
    
    
    5Condensed, Consolidated Statements of Cash Flows
Six Months Ended June 30, 2006 and 2005 (Unaudited)
    
    
    6Notes to Condensed, Consolidated Financial Statements
Six Months Ended June 30, 2006 and 2005 (Unaudited)
    
    
    7Item 2 Managements Discussion and Analysis or Plan of Operation
    
    
    13Item 3 Controls and Procedures
    
    
    17PART II OTHER INFORMATION
    
    
    18Item 1 Legal Proceedings
    
    
    18Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3 Defaults Upon Senior Securities
    
    
    18Item 4 Submission of Matters to a Vote of Security Holders
    
    
    18Item 5 Other Information
    
    
    18Item 6 Exhibits
    
    
    19EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30, 2006
    
    
    December 31,(unaudited)
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    227,986
    
    
    $
    171,034Accounts receivable, net of allowance for doubtful accounts,
adjustments and sales returns of $5,000
    
    
    160,070
    
    
    
    42,945Inventories
    
    
    87,627
    
    
    
    83,042Prepaid expenses and other current assets
    
    
    
    
    
    
    7,838Total current assets
    
    
    475,683
    
    
    
    304,859Property and equipment, net
    
    
    274,729
    
    
    
    329,841Other assets
    
    
    21,667
    
    
    
    Total assets
    
    $
    772,079
    
    
    $
    634,700LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    203,031
    
    
    $
    147,205Accrued expenses
    
    
    55,640
    
    
    
    47,086Line of credit
    
    
    45,803
    
    
    
    46,159Capital lease obligation, current
    
    
    77,479
    
    
    
    74,712Note payable  stockholder
    
    
    280,000
    
    
    
    Due to related party
    
    
    
    
    
    
    103,045Total current liabilities
    
    
    661,953
    
    
    
    418,207Capital
lease obligation - long-term
    
    
    62,713
    
    
    
    95,820Total liabilities
    
    
    724,666
    
    
    
    514,027Commitments and contingenciesStockholders equity:Common Stock, $0.001 par value, 100,000,000 shares
authorized: 36,000,015 and 23,100,000 shares issued and
outstanding
    
    
    36,000
    
    
    
    23,100Additional paid-in capital
    
    
    1,746,202
    
    
    
    1,222,347Accumulated deficit
    
    
    (1,734,789
    )
    
    
    (1,124,774
    )Total members and stockholders equity
    
    
    47,413
    
    
    
    120,673Total liabilities and stockholders equity
    
    $
    772,079
    
    
    $
    634,700
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SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 Three months
    
    
    Three months
    
    
    Six months
    
    
    Six monthsended June 30,
    
    
    ended June 30,
    
    
    ended June 30,
    
    
    ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    278,944
    
    
    
    192,993
    
    
    
    412,549
    
    
    
    373,584Cost of Sales
    
    
    143,509
    
    
    
    95,311
    
    
    
    240,415
    
    
    
    205,660Gross Profit
    
    
    135,435
    
    
    
    97,682
    
    
    
    172,134
    
    
    
    167,924Operating expenses
    
    
    215,813
    
    
    
    163,546
    
    
    
    429,461
    
    
    
    320,433Reorganization
expenses
    
    
    360,000
    
    
    
    
    
    
    
    360,000
    
    
    
    Operating loss
    
    
    (440,378
    )
    
    
    (65,864
    )
    
    
    (617,327
    )
    
    
    (152,509
    )Other income
    
    
    (259
    )
    
    
    (6,395
    )
    
    
    7,312
    
    
    
    3,324Net Loss
    
    $
    (440,637
    )
    
    $
    (72,259
    )
    
    $
    (610,015
    )
    
    $
    (149,185
    )Weighted average
shares outstanding
    
    
    33,013,187
    
    
    
    23,100,000
    
    
    
    28,083,978
    
    
    
    23,100,000Net Loss per share
    
    $
    (0.01
    )
    
    $
    (0.00
    )
    
    $
    (0.02
    )
    
    $
    (0.01
    )
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SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (UNAUDITED)
 AdditionalCommon
    
    
    Stock
    
    
    Paid-in
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    TotalBalance, December 31, 2005
    
    
    23,100,000
    
    
    $
    23,100
    
    
    $
    1,222,347
    
    
    $
    (1,124,774
    )
    
    $
    120,673Cash distributions
    
    
    
    
    
    
    
    
    
    
    (36,369
    )
    
    
    
    
    
    
    (36,369
    )Repurchase and
cancellation of
Silvergraph LLC
membership units, prior
to share exchange
    
    
    
    
    
    
    
    
    
    
    (45,000
    )
    
    
    
    
    
    
    (45,000
    )Distribution of liability
resulting from transfer
of LGT business into
Silvergraph LLC
    
    
    
    
    
    
    
    
    
    
    103,045
    
    
    
    
    
    
    
    103,045Issuance of warrants
    
    
    
    
    
    
    
    
    
    
    14,961
    
    
    
    
    
    
    
    14,961Sale of equity securities
    
    
    9,300,000
    
    
    
    9,300
    
    
    
    490,818
    
    
    
    
    
    
    
    500,118Shares transferred upon
share exchange
transaction
    
    
    3,600,015
    
    
    
    3,600
    
    
    
    (3,600
    )
    
    
    
    
    
    
    Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (610,015
    )
    
    
    (610,015
    )Balance, June 30, 2006
(unaudited)
    
    
    36,000,015
    
    
    $
    36,000
    
    
    $
    1,746,202
    
    
    $
    (1,734,789
    )
    
    $
    47,413
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SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 Six months ended June 30,2006
    
    
    2005Operating activities:Net loss
    
    $
    (610,015
    )
    
    $
    (149,185
    )Adjustment to reconcile net loss to net cash used
in operating activities:Depreciation
    
    
    57,162
    
    
    
    54,678Equity based compensation expense
    
    
    14,961
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (117,125
    )
    
    
    (16,865
    )Inventory
    
    
    (4,585
    )
    
    
    Other assets
    
    
    (13,829
    )
    
    
    (19,901
    )Accounts payable and accrued expenses
    
    
    64,380
    
    
    
    (9,807
    )Net cash used in operating activities
    
    
    (609,051
    )
    
    
    (141,080
    )Investing activities:Purchases of furniture and equipment
    
    
    (2,050
    )
    
    
    Net cash used in investing activities
    
    
    (2,050
    )
    
    
    Financing activities:Debt principal payments
    
    
    (356
    )
    
    
    (14,395
    )Principal payments on capital leases
    
    
    (30,340
    )
    
    
    (33,487
    )Proceeds from issuance of notes payable
    
    
    280,000
    
    
    
    Proceeds from sale of Silvergraph LLC member interests
    
    
    500,118
    
    
    
    324,998Repurchase
of Silvergraph LLC member interests
    
    
    (45,000
    )
    
    
    Distributions
    
    
    (36,369
    )
    
    
    (21,755
    )Net cash provided by financing activities
    
    
    668,053
    
    
    
    255,361Change in cash and cash equivalents
    
    
    56,952
    
    
    
    114,280Cash and cash equivalents, beginning of period
    
    
    171,034
    
    
    
    133,741Cash and cash equivalents, end of period
    
    $
    227,986
    
    
    $
    248,021Supplemental cash flow information:Cash paid for interest
    
    $
    3,533
    
    
    $
    5,413Cash paid for income taxes
    
    
    
    
    
    
    Supplemental Non cash investing and
financing activities:Transfer of related party liability to
additional paid in capital as a result
of the transfer of LGT Business
into Silvergraph LLC
    
    $
    103,045
    
    
    $
    
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SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)
 NOTE 1THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
 The Company
   
    
    The companies have been operated as one business over the past three (3)
years,
    
    The managing member and owners of 28% of Silvergraph LLCs membership interests
own 100% of LGT, and
    
    The business assets, liabilities, business contacts and intellectual property of
LGT were transferred at no cost to Silvergraph LLC on April 1, 2006, which was
merged into New Era Studios, Inc. (New Era) on June 9, 2006, which then
consummated a share exchange with Pinecrest Services, Inc. (Pinecrest) effective
June 23, 2006.
  
    
    On April 1, 2006, LGT transferred all of their business assets and liabilities to Silvergraph LLC
    
    Silvergraph LLC merged into New Era, a shell Nevada corporation, effective June 9, 2006, and
    
    On June 23, 2006, New Era was acquired by Pinecrest. The Company, exchanged 100% of its
outstanding common stock for 32,400,015 shares of Pinecrest common stock. The transaction
was accounted for as a recapitalization with the Company deemed the accounting acquirer,
and Pinecrest the legal acquirer. Additionally, the Company paid $280,000 to certain
shareholders of Pinecrest for 15,000,000 shares of their outstanding common stock, which
were immediately retired. This payment, along with other expenses associated with the
share exchange, has been reflected as reorganization expenses in the Companys accompanying
income statements. Simultaneous with the closing of the share exchange, Pinecrest
Services, Inc. changed its name to Silvergraph International, Inc.
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SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)
 NOTE 1THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
 Going Concern
  Revenue Recognition
  Equity-based compensation
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SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)
 NOTE 1THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
 Equity-based compensation (cont.)
  Use of Estimates
  Significant customers
  Recent Accounting Pronouncements
  NOTE 2BALANCE SHEET COMPONENTS
 Inventories:
  December 31,
    
    
    June 30,2005
    
    
    2006Raw materials
    
    $
    42,695
    
    
    $
    24,644Work in process
    
    
    
    
    
    
    29,291Finished goods
    
    
    40,347
    
    
    
    33,692$
    83,042
    
    
    $
    87,627
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SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)
 NOTE 2BALANCE SHEET COMPONENTS (CONTINUED)
 Property and equipment, net
  June 30,
    
    
    December 31,2006
    
    
    2005Machinery and equipment
    
    $
    685,060
    
    
    $
    685,060Furniture and fixtures
    
    
    3,051
    
    
    
    1,000Computer hardware and software
    
    
    8,628
    
    
    
    8,628Vehicles
    
    
    
    
    
    
    51,965696,039
    
    
    
    746,653Accumulated depreciation and amortization
    
    
    (422,010
    )
    
    
    (416,802
    )$
    274,729
    
    
    $
    329,841
 NOTE 3DEBT
 Line of credit
  Note payable  stockholder
  10




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SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)
 NOTE 4COMMITMENTS AND CONTINGENCIES
 Leases
  Operating
    
    
    CapitalFiscal Year
    
    Leases
    
    
    Leases2006 (remainder)
    
    $
    75,574
    
    
    $
    50,5752007
    
    
    129,266
    
    
    
    86,7002008
    
    
    75,501
    
    
    
    14,450Total minimum lease payments
    
    $
    280,341
    
    
    
    151,725Interest
    
    
    
    
    
    
    11,533Total
    
    
    
    
    
    
    140,192Less current portion
    
    
    
    
    
    
    (77,479
    )Long term
    
    
    
    
    
    $
    62,713
  Litigation
  11




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SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY
(FORMERLY KNOWN AS PINECREST SERVICES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)
 NOTE 5EQUITY
 Membership interest repurchase
  NOTE 6COMMON STOCK WARRANT
   Dividend yield
    
    
    Risk-free interest rate
    
    
    4.50
    %Expected volatility
    
    
    50.00
    %Expected life of options
    
    
    4 years
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Item 2. Managements Discussion and Analysis or Plan of Operation.
 Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
   Overview
   13




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Results of Operations
 Quarters ended June 30, 2006 and 2005 (all amounts for these periods are unaudited)
 Revenues.
 Gross profit.
  Operating expenses.
  14




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Reorganization expenses.
 Other income (expense).
 Six months ended June 30, 2006 and 2005 (all amounts for these periods are unaudited)
 Revenues.
 Gross profit.
 Operating expenses.
 Reorganization expenses.
 Other income (expense).
 Liquidity and Capital Resources
    15




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Inflation and Seasonality
  Critical Accounting Policies
   
    
    we have to make assumptions about matters that are highly uncertain at the time of
the estimate; and
    
    different estimates we could reasonably have used, or changes in the estimate that
are reasonably likely to occur, would have a material effect on the our financial
condition or results of operations.
  16




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Revenue Recognition
  
    
    title and risk of loss have passed to the customer;
    
    there is persuasive evidence of an arrangement;
    
    delivery has occurred or services have been rendered;
    
    the sales price is fixed and determinable;
    
    collectibility is reasonably assured; and
    
    customer acceptance criteria, if any, have been successfully demonstrated.
 Accounts Receivable
  Inventories
  Recent Accounting Pronouncements
  
 Item 3. Controls and Procedures.
  17




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  18




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Item 6. Exhibits.
 ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Share Exchange dated June 23, 2006, between
Pinecrest Services, Inc. and New Era Studios, Inc. (incorporated
by reference from our Current Report on Form 8-K filed on June 27,
2006).3.1
    
    Articles of Incorporation (incorporated by reference from our
Current Report on Form 8-K filed on June 27, 2006).3.2
    
    Articles of Merger for Pinecrest Services, Inc. (incorporated by
reference from our Registration Statement on Form 10-SB filed on
July 6, 2000).3.3
    
    Articles of Exchange by and between Pinecrest Services, Inc. and
New Era Studios, Inc. filed with the Nevada Secretary of State on
June 23, 2006 (incorporated by reference from our Current Report
on Form 8-K filed on June 27, 2006).3.4
    
    Certificate of Amendment to Articles of Incorporation of Pinecrest
Services, Inc. filed with the Nevada Secretary of State on June
23, 2006 (incorporated by reference from our Current Report on
Form 8-K filed on June 27, 2006).3.5
    
    Amended and Restated Bylaws of Silvergraph International, Inc.
(incorporated by reference from our Current Report on Form 8-K
filed on June 27, 2006).10.1
    
    Standard Sublease dated as of June 26, 2006 by and between William
W. Lee, New Era Studios, Inc. and Silvergraph International, Inc.
(incorporated by reference from our Current Report on Form 8-K
filed on June 27, 2006).10.2
    
    Employment Agreement, dated June 9, 2006, between New Era Studios,
Inc. and James R. Martin (incorporated by reference from our
Current Report on Form 8-K filed on June 27, 2006).10.3
    
    Employment Agreement, dated June 9, 2006, between New Era Studios,
Inc. and James R. Simpson (incorporated by reference from our
Current Report on Form 8-K filed on June 27, 2006).10.4
    
    Employment Agreement, dated June 9, 2006, between New Era Studios,
Inc. and William W. Lee (incorporated by reference from our
Current Report on Form 8-K filed on June 27, 2006).10.5
    
    Promissory Note, dated June 23, 2006 from New Era Studios, Inc. to
and in favor of Edward Brian ODwyer Separate Property Trust
(incorporated by reference from our Current Report on Form 8-K
filed on June 27, 2006).10.6
    
    2006 Stock Option Plan of Silvergraph International, Inc., dated
June 26, 2006 (incorporated by reference from our Current Report
on Form 8-K filed on June 27, 2006).31.1
    
    Certification of the Registrants Principal Executive Officer
under Exchange Act Rule 15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Registrants Principal Financial Officer
under Exchange Act Rule 15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Registrants Principal Executive Officer
under 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Registrants Principal Financial Officer
under 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
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SIGNATURES
  SILVERGRAPH INTERNATIONAL, INC.Date: August 18, 2006
    
    By:
    
    /s/ James R. SimpsonJames R. Simpson, Chief Executive Officer(Principal Executive Officer)Date: August 18, 2006
    
    By:
    
    /s/ Gary FreemanGary Freeman, Chief Financial Officer(Principal Financial Officer)
 20