U.S.
Securities and Exchange Commission


Washington,
D.C. 20549





Form
10-Q







(Mark
      One)x
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the quarterly period ended September 30,
2008




r
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
  ACT




For
the transition period from __________________ to ______________




Commission
file number: 1-14088




Acacia
Automotive, Inc.


(Exact
name of small business issuer as specified in its charter)






Texas
            75-2095676(State or
      other jurisdiction of incorporation or organization)
            (IRS Employer
      Identification No.)1200
      East Buena Vista Avenue, North Augusta, SC
            29841(Address of
      principal executive offices)
            (Zip
      Code)





(352)
427-6848


(Registrant's
telephone number)




_________________________________________________________________________


(Former
name, former address and former fiscal year, if changed since last
report)




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes x  No
r




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (Check one):




Large
accelerated filer    r                                                                             Accelerated
filer                
      r


Non-accelerated
filer      r                                                                             Smaller
Reporting Company  x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  r       No  x




APPLICABLE
ONLY TO ISSUERS INOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEAARS:




Indicate
by check mark whether the registrant HAS FILED ALL DOCUMENTS AND REPORTS
REUQIRED TO BE FILED BY Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes x   No 
r




APPLICABLE
ONLY TO CORPORATE ISSUERS




State the number of shares outstanding
of each of the issuer's classes of common equity, as of February 13,
2009:  12,062,524.










PART I - FINANCIAL INFORMATION




Item
1. Financial Statements




ACACIA
AUTOMOTIVE, INC.


BALANCE
SHEETS




September
      30,
                    
                    
                    December
      31,2008
                    
                    
                    2007(Unaudited)
                    
                    
                    (Audited)ASSETSCurrent
      AssetsCash
                    
                    $
                    233,071
                    
                    
                    $
                    203,077Accounts
      receivable
                    
                    
                    156,444
                    
                    
                    
                    210,130Employee
      receivables
                    
                    
                    -
                    
                    
                    
                    294Inventory
      repurchases
                    
                    
                    10,160
                    
                    
                    
                    -Deposits
      and prepaid expense
                    
                    
                    4,700
                    
                    
                    
                    33,562Total
      Current Assets
                    
                    
                    404,375
                    
                    
                    
                    447,063PROPERTY
      AND EQUIPMENT, net of accumulated depreciation of $39,927and
      $13,707, for 2008 and 2007 respectively
                    
                    
                    171,020
                    
                    
                    
                    203,142OTHER
      ASSETSGoodwill
                    
                    
                    427,929
                    
                    
                    
                    427,929Customer
      list and Non-Compete Agreement, net of amortization of$213,209
      and $85,283, for 2008 and 2007 respectively
                    
                    
                    427,925
                    
                    
                    
                    555,850Total
      Other Assets
                    
                    
                    855,854
                    
                    
                    
                    983,779Total
      Assets
                    
                    $
                    1,431,249
                    
                    
                    $
                    1,633,984LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
                    
                    $
                    242,127
                    
                    
                    $
                    224,927Accrued
      liabilities
                    
                    
                    307,188
                    
                    
                    
                    87,238Line
      of credit
                    
                    
                    210,000
                    
                    
                    
                    139,900Capital
      lease obligations, current portion
                    
                    
                    11,913
                    
                    
                    
                    11,706Due
      to Stockholder
                    
                    
                    18,317
                    
                    
                    
                    47,104Total
      Current Liabilities
                    
                    
                    789,545
                    
                    
                    
                    510,875NONCURRENT
      LIABILITIESCapital
      lease obligations, less current portion
                    
                    
                    31,871
                    
                    
                    
                    32,078Total
      Liabilities
                    
                    
                    821,416
                    
                    
                    
                    542,953Stockholders'
      EquityPreferred
      Stock, $0.001 par value 1,475,000shares
      authorized; none issued and outstanding
                    
                    
                    -
                    
                    
                    
                    -Common
      Stock, $0.001 par value, 150,000,000shares
      authorized; 11,997,524shares
      issued and outstanding, respectively
                    
                    
                    11,997
                    
                    
                    
                    11,997Paid-In-Capital
                    
                    
                    11,883,036
                    
                    
                    
                    10,918,722Redeemable
      common stock
                    
                    
                    130,000
                    
                    
                    
                    -Retained
      Deficit
                    
                    
                    (11,415,200
                    )
                    
                    
                    (9,839,688
                    )Total
      Stockholders' Equity
                    
                    
                    609,833
                    
                    
                    
                    1,091,031Total
      Liabilities and Stockholders' Equity
                    
                    $
                    1,431,249
                    
                    
                    $
                    1,633,984
  The
accompanying notes are an integral part of these financial
statements.
  2


ACACIA
AUTOMOTIVE, INC.


STATEMENTS
OF OPERATIONS


(UNAUDITED)




Three
      Months Ended
                              
                              
                              Nine
      Months EndedSeptember
      30,
                              
                              
                              September
      30,2008
                              
                              
                              2007
                              
                              
                              2008
                              
                              
                              2007REVENUES
                              
                              $
                              387,343
                              
                              
                              $
                              188,753
                              
                              
                              $
                              909,400
                              
                              
                              
                              188,753OPERATING
      EXPENSESCost
      of fees earned
                              
                              
                              44,629
                              
                              
                              
                              -
                              
                              
                              
                              193,220
                              
                              
                              
                              -Employee
      Compensation
                              
                              
                              502,191
                              
                              
                              
                              192,542
                              
                              
                              
                              1,454,606
                              
                              
                              
                              1,418,307General
      AndAdministrative
      Expenses
                              
                              
                              210,739
                              
                              
                              
                              160,430
                              
                              
                              
                              652,075
                              
                              
                              
                              247,491Depreciation
      and amortization
                              
                              
                              53,051
                              
                              
                              
                              25,366
                              
                              
                              
                              165,521
                              
                              
                              
                              29,010Beneficial
      Conversionof
      Preferred Stock
                              
                              
                              -
                              
                              
                              
                              500,000
                              
                              
                              
                              -
                              
                              
                              
                              500,000Operating
      Loss
                              
                              
                              (423,267
                              )
                              
                              
                              (189,585
                              )
                              
                              
                              (1,556,022
                              )
                              
                              
                              (2,006,055
                              )Interest
      Income
                              
                              
                              667
                              
                              
                              
                              3,228
                              
                              
                              
                              3,515
                              
                              
                              
                              6,172Interest
      Expense
                              
                              
                              (3,330
                              )
                              
                              
                              -
                              
                              
                              
                              (9,380
                              )
                              
                              
                              -Gain
      (loss) on disposal of asset
                              
                              
                              958
                              
                              
                              
                              -
                              
                              
                              
                              (13,625
                              )
                              
                              
                              -Net
      Loss Before Income Taxes
                              
                              
                              (424,972
                              )
                              
                              
                              (186,357
                              )
                              
                              
                              (1,575,512
                              )
                              
                              
                              (1,999,883
                              )Income
      Tax Expense
                              
                              
                              –
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -NET
      LOSS
                              
                              $
                              (424,972
                              )
                              
                              $
                              (186,357
                              )
                              
                              $
                              (1,575,512
                              )
                              
                              $
                              (1,999,883
                              )BASIC
      AND FULLY DILUTEDLOSS
      PER SHARELoss
      Per Share
                              
                              $
                              (0.04
                              )
                              
                              $
                              (0.02
                              )
                              
                              $
                              (0.13
                              )
                              
                              $
                              (0.18
                              )Weighted
      Average NumberOf
      Common ShareOutstanding
                              
                              
                              11,997,524
                              
                              
                              
                              11,873,000
                              
                              
                              
                              11,997,524
                              
                              
                              
                              10,860,000


The
accompanying notes are an integral part of these financial
statements.
   3


ACACIA
AUTOMOTIVE, INC.


STATEMENT
OF CASH FLOWS


(UNAUDITED)






Nine
      Months Ended September 30,2008
                              
                              
                              2007Cash
      Flow From Operating ActivitiesNet
      Loss
                              
                              $
                              (1,575,512
                              )
                              
                              $
                              (1,999,883
                              )Adjustment
      to reconcile net loss to net cashused
      in operating activitiesDepreciation
                              
                              
                              165,521
                              
                              
                              
                              24,245Loss
      on disposal of asset
                              
                              
                              13,625
                              
                              
                              
                              -Write-down
      of software
                              
                              
                              (25,000
                              )
                              
                              
                              -Common
      stock issued for services
                              
                              
                              -
                              
                              
                              
                              1,000,000Stock
      options and warrants issued for services
                              
                              
                              964,314
                              
                              
                              
                              48,725Beneficial
      Conversion
                              
                              
                              -
                              
                              
                              
                              500,000Changes
      in Operating Assets and LiabilitiesInventory
                              
                              
                              (10,160
                              )
                              
                              
                              -Accounts
      Receivable
                              
                              
                              53,686
                              
                              
                              
                              (18,328
                              )Employee
      Receivables
                              
                              
                              294
                              
                              
                              
                              (294
                              )Deposits
      and Prepaid Expense
                              
                              
                              28,862
                              
                              
                              
                              (10,093
                              )Accounts
      Payable
                              
                              
                              17,200
                              
                              
                              
                              (41,133
                              )Accrued
      Liabilities
                              
                              
                              219,950
                              
                              
                              
                              (182,379
                              )Due
      to Stockholder
                              
                              
                              (28,787
                              )
                              
                              
                              8,045Net
      Cash Flow Provided by (Used) in Operating Activities
                              
                              
                              (176,007
                              )
                              
                              
                              (671,095
                              )Cash
      Flow Provided (Used) by Investing ActivitiesProceeds
      from sale of equipment
                              
                              
                              27,261
                              
                              
                              
                              -Purchase
      of equipment
                              
                              
                              (21,360
                              )
                              
                              
                              (58,355
                              )Net
      Cash Flow Provided (Used) by Investing Activities
                              
                              
                              5,901
                              
                              
                              
                              (58,355
                              )Cash
      Flow Provided by (Used) from Financing ActivitiesBorrowings
      on line of credit
                              
                              
                              2,457,000
                              
                              
                              
                              -Repayments
      on line of credit
                              
                              
                              (2,386,900
                              )
                              
                              
                              -Sale
      of Common Stock
                              
                              
                              130,000
                              
                              
                              
                              1,025,000Cash
      Flow Provided by (Used) from Financing Activities
                              
                              
                              200,100
                              
                              
                              
                              1,025,000Change
      in Cash
                              
                              
                              29,994
                              
                              
                              
                              295,550Cash
      at Beginning of Period
                              
                              
                              203,077
                              
                              
                              
                              1,432Cash
      at End of Period
                              
                              $
                              233,071
                              
                              
                              $
                              296,982Supplemental
      Cash Flow DisclosuresCash
      paid during year for:Interest
                              
                              $
                              9,380
                              
                              
                              $
                              -Non-Cash
      Investing and Financing ActivitiesPreferred
      stock
                              
                              $
                              -
                              
                              
                              $
                              525Equipment
                              
                              
                              -
                              
                              
                              
                              (1,025
                              )Common
      Stock
                              
                              
                              -
                              
                              
                              
                              (831,062
                              )Additional
      paid-in capital
                              
                              
                              964,314
                              
                              
                              
                              (6,173
                              )Intangibles
                              
                              
                              -
                              
                              
                              
                              34,806Accounts
      payable
                              
                              
                              802,929
                              
                              
                              
                              -Officer
      salaries payable
                              
                              
                              (926,409
                              )
                              
                              
                              -Directors
      fees payable
                              
                              
                              (37,905
                              )
                              
                              
                              -




The
accompanying notes are an integral part of these financial
statements.






4




ACACIA
AUTOMOTIVE, INC.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
30, 2008 AND 2007




NOTE
1 – THE COMPANY AND BASIS OF PRESENTATION




Acacia
Automotive, Inc. (“Acacia” or the “Company”) is engaged in acquiring and
operating automotive auctions, including automobile, truck, equipment, boat,
motor home, RV, motorsports, and other related vehicles.




BASIS OF
PRESENTATION – The Company has elected to prepare its financial statements in
accordance with generally accepted accounting principles (United States) with
December 31, as its year end.  The financial statements and notes are
representations of the Company’s management who are responsible for their
integrity and objectivity.




The
accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America for
annual financial information and with the instructions to Form 10-Q and Article
10 of Regulation SX.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete consolidated financial statements.  In the opinion of
management, all adjustments considered necessary for a full presentation have
been included.  All such adjustments are of a normal and recurring
nature.




Historically,
the Company had issued warrants in exchange for the conversion of certain
preferred stock, for certain non-compete agreements, and with the purchase of
Common shares of stock in conjunction with certain of its debt and equity
financings.  The Company records each of the securities issued on a
relative fair value basis up to the amount of the proceeds
received.  The Company estimates the fair value of the warrants using
the Black-Scholes option pricing model.  The Black-Scholes model is
dependent on a number of variables and estimates including: interest rates,
dividend yield, volatility and the expected term of the warrants.  The
estimates are based on market interest rates at the date of issuance, our past
history for declaring dividends as well as the expectation of future dividends,
the Company’s estimated stock price volatility, and the contractual term of the
warrants.  The value ascribed to the warrants in connection with debt
offerings is considered a cost of capital and amortized to interest expense over
the term of the debt.




CONSOLIDATION
– The Company owns 100% of the voting stock of Acacia Augusta Vehicle Auction,
Inc. dba / Augusta Auto Auction, Inc.  The consolidated financial
statements include the accounts of the Company and Acacia Augusta Vehicle
Auction, Inc.   All significant intercompany accounts and transactions
are eliminated in consolidation.




NOTE
2– OPERATING SOFTWARE SYSTEM




On June
30, 2008, the Company took a charge of $78,157 against 2008 operating results,
representing the devaluation of certain accounts receivable determined to be
uncollectible. This resulted, in substantial part, from the issues the Company
encountered in utilizing a new operating software system during the first half
of 2008. During that period, the Company experienced problems in deriving
accurate operating information from that system and also suffered from
inconsistencies in the system to automatically deduct charges from client
transactions in real time. The operating software system was replaced in the
third quarter of 2008. The Company will seek to effect recovery of a portion of
these charges in coming periods.




NOTE
3 – GOING CONCERN CONSIDERATIONS




The
Company neither has sufficient cash on hand nor is it generating sufficient
revenues to cover its operating overhead.  These facts raise doubt as
to the Company’s ability to continue as a going concern.  The Company
has been operating over the past year based on the proceeds from the sale of
Common stock in private offerings, loans from its officers/directors, and
revenues from its auction operating unit.  There is no guarantee that
such officers/directors will continue to provide operating funds for the
Company.  In order to pursue its goals and commitments, the Company
will be required to obtain significant funding to meet its projected minimum
expenditure requirements.  Management’s plans include raising funds
from the public through a private placement stock offering or securing debt
financing, acquiring additional auto auction operations that will provide
profitability and liquidity, and attempting to increase the revenues from its
current auction operations.  Management intends to make every effort
to identify and develop sources of funds, but there is no assurance that
Management’s plans will be successful.






5




Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.




Forward-Looking
Information




The
Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of the Form 10-Q contain forward-looking
information. The forward-looking information involves risks and uncertainties
that are based on current expectations, estimates, and projections about the
Company's business, management's beliefs and assumptions made by management.
Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks",
"estimates", and variations of such words and similar expressions are intended
to identify such forward-looking information. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
forward-looking information due to numerous factors, including, but not limited
to, availability of financing for operations, successful performance of internal
operations, impact of competition and other risks detailed below as well as
those discussed elsewhere in this Form 10-Q and from time to time in the
Company's Securities and Exchange Commission filings and reports. In addition,
general economic and market conditions and growth rates could affect such
statements.




General




With the
acquisition of the Augusta Auto Auction on July 10, 2007, we commenced
operations, ceased being a shell company, and conducted our first weekly auction
on July 11, 2007. Our only operations in 2007 were those operations, and those
operations remain our only operations.




During
the third and fourth quarter of 2007, we made substantial improvements to the
physical plant at our auction and attempted to upgrade our technology by
licensing new software, the SNaps operating system, and purchased related
computer hardware.




We
believe that the automobile auction business is seasonal with the first and
second quarters of the calendar year being the strongest but declining somewhat
in the third and fourth calendar quarters. However, at our auction, we did not
see that pattern in 2007 and 2008. The number of units we sold in the last two
quarters of 2007 was 7.3% more than the number of units we sold in the first two
quarters of 2008; however, the number of units sold in Q2 of 2008 was 1.1%
greater than the number sold in Q4 2007 and 14.9% greater than the number sold
in Q1 2008.  Likewise, the number of units sold in Q3 of 2008 was up
an additional 13.9% versus the previous quarter. Q3 2008 versus Q3 2007 showed a
gain of 11.8% in units sold.  We anticipate that the strengthening of
unit sales throughout 2008 will continue as compared to previous periods, the
decline in the early part of 2008 being attributable in large part to resolving
software problems discussed elsewhere and the effect of those problems on our
operations.




We
believe the initial increase in the last two quarters of 2007 showed a favorable
response to our ownership of the auction. But the Vemark SNaps® software we
installed proved unsatisfactory for many reasons. A major concern was the
control issues, discussed herein under Item 4T - Controls and Procedures. But
the software also caused major operational dislocations such as not providing
customers timely accounting of transactions and not being able to process
automatically title information on vehicles sold. We believe that such failures
caused much of the decreased sales that occurred from the last six months of
2007 to the first six months of 2008. In July 2008, we terminated our
relationship with the SNaps vendor and implemented other software solutions that
we believe are now providing sufficient operational support and better control
of our financial reporting. We now anticipate the number of units sold by the
Augusta Auto Auction in the latter half of 2008 to exceed those sold in the
latter half of 2007 by approximately 5%.  In addition we engaged our
director, David Bynum, to assist in the management of the Augusta auction
beginning in late April of 2008, and attribute his efforts to the auction’s
improved operational efficiency and mitigation of many of the concerns expressed
by clients that were initially dissatisfied with our operation as a result of
the software difficulties we encountered.




Finally,
we believe that vehicle auctions have historically shown that units sold do not
generally decline substantially during a recession. We believe this is
attributable to, among other facts, that the auto auction industry is more
dependent upon the number of actual used vehicles in operation (VIO) in the
U.S., rather than upon retail vehicle sales and manufacturing
output.  The table below depicts fluctuations through Q3 2008,
indicating that auction volumes remain nearly unchanged while used and new light
vehicle retail volumes are down approximately 10% and 13% respectively in the
same period.




*  Text
and Chart reprinted with permission of the National Auto Auction
Association


Provided
by Ira A. Silver, Ph.D., NAAA EconomistPublication
11/6/08





6




Nine
months ended September 30




Our
revenues for the nine month period ended September 30 are not comparable to the
same period in 2007 because we did not have operations until we acquired the
Augusta Auto Auction in July 2007. Nonetheless our revenues for the first six
months of 2008 were approximately 23.3% more than those in the last six months
of 2007 even though the number of units sold in the 2008 period declined
approximately 7.3%. This increase in revenue is mostly attributable to an
increase in the average unit selling price and their attendant higher fees, as
well as an increase in the actual fee structure, the level of our new fees being
more consistent with auction fees in the surrounding area.  The
revenues generated in Q3 2008 were 26.1% greater than in Q2 2008, and Q2
revenues were 43.4% higher than Q1.




With
respect to our Augusta operations, our employee compensation is averaging
approximately $107,000 per quarter and other general and administrative
expenses, excluding depreciation and amortization expenses, are averaging
approximately $85,000 per quarter. Cost of Fees Earned in 2008, absent charges
for uncollected receivables, is approximately $64,400 per quarter and
depreciation and amortization is about $55,500 per quarter leaving an operating
loss at the auction, assuming average revenues of about $300,000 per quarter, of
about $13,300 per quarter but operating cash flow (EDITDA) of about $45,000 per
quarter average. We achieved those operating results in our Augusta operation
after taking a charge in Q2 of approximately $78,000 mostly for uncollected
receivables related to our discontinued software.




While our
interest expenses at our Augusta operation is about $2,800 per quarter, we
incurred $14,583 in additional charges for loss on the sale of asset relating to
the removal of the Vemark SNaps® software in July 2008, all of which is
reflected in the results stated in the preceding paragraph.




We incur
expenses at the corporate level in addition to those incurred at our operations
at the Augusta auction. Our employee compensation has averaged about $378,000
per quarter, and is comprised of approximately: $41,000 in actual employee
compensation and payroll taxes, $5,000 in insurance expenses, and option and
warrant expense, which is amortized and has averaged approximately $469,000 per
quarter. For the nine months ended September 30, 2008 we incurred a loss of
$1,575,512. Corporate G&A expenses, excluding depreciation, amortization,
and employee compensation accounted for approximately $136,000 per quarter in
the first nine months, including legal and accounting fees of approximately
$52,000 and other traditional expenses.




Three
months ended September 30, 2008




Revenues
for the three month period ended September 30 compared to the same period in
2007 were up 105%, more than doubling the comparative period. Our revenues for
the third quarter were $387,343, again representing the largest revenues for any
quarter since our acquisition of the auction, while the number of units sold
exceeded the third quarter of 2007 by12%, and at the same time exceeding the
second quarter of 2008 by 14%, the increase in revenues also being attributable
to increases in fees as discussed above.




Our cost
of fees earned for the period was $44,629.  Our employee
compensation-exclusive of amortized options and warrant expenses and inclusive
of insurance and payroll taxes was typical, being approximately $112,000 for
parent company compensation and approximately $110,000 for employee compensation
in our operating (auction) company. Amortizing of options and warrants accounted
for expense of approximately $358,000 during the period.




Liquidity
and Capital Resources




Our liquidity has been provided through
private placements, one for $1,025,000 which closed in the second quarter of
2007 and another for $130,000 which closed in the Spring of 2008. These
placements have been supplemented by a line of credit for $300,000 with Wachovia
Bank, this line of credit supporting short term cash requirements at our
Augusta operations.




Our
Augusta auction operation has achieved a positive cash flow status for the nine
months ended September 30, 2008, with EBITDA earnings of $134,987, earning an
EBITDA of $140,527 in Q3 and overcoming a six months’ negative EBITDA of
<$5,540> at the end of Q2.  These improvements, although
substantial, are not sufficient to support our existing corporate overhead cost
structure.




The
company’s Augusta auction operation will add a public auto auction to its lineup
beginning in Q4, initially scheduling one event per quarter as it prepares for
weekly public offerings beginning in January of 2009.  The Company
believes that this addition will provide opportunities for additional sales and
revenues, but will continue to rely upon the weekly dealer auction offerings as
its staple revenue events.




We desire
to expand through acquisition of other automobile auctions and are seeking
funding for that purpose. We believe that any modest addition of other auctions
will enable us to operate the corporation with its consolidated subsidiaries on
a positive cash flow basis.




We are,
accordingly, seeking additional funding to expand our auctions.




7




Item 4T. Controls and Procedures




The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company's Securities Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms,
and that such information is accumulated and communicated to the Company's
management, including its Chief Executive Officer who acts as our Chief
Financial Officer to allow timely decisions regarding required
disclosure.  During the 90-day period prior to the date of this
report, an evaluation was performed under the supervision and with the
participation of the Company's management, including the Chief Executive
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures.  Based upon that evaluation, the
Chief Executive Officer concluded that the Company's disclosure controls and
procedures were effective.  Nonetheless, we have identified areas that
we are addressing which we believe need to be rectified.




Changes
in Internal Control over Financial Reporting




In the
course of conducting our audit for the fiscal year 2007, our auditor, Killman,
Murrell & Company, P.C. identified to us material weaknesses involving
internal control, although it did not identify to us any report that
necessitated restatement. These material weaknesses related to our accounting
personnel, accounting for cash, documentation with respect to options and
warrants as well as the issuance of common stock.




We
believe that two factors most affected those reported material weaknesses,
namely, the lack of accounting personnel and the lack of integration of software
that manages our operations and our accounting software. Our lack of senior
accounting personnel affected the adequacy our general systems and practices.
While the failure of the processes and systems affected our documentation of
options and warrants as well as one issuance of common stock, all matters of
which have been rectified, its most critical manifestation was in the software
integration referred to above. We have identified and largely rectified matters
regarding the issuance and reporting of checks, and we are yet making certain
that our actions will be adequate in that area.




All of
these issues, we believe, relate most to the lack of experienced accounting
personnel, particularly senior accounting personnel. In that regard, we have
identified a certified public accountant who is helping us with these and other
issues on a part time basis and who has extensive experience in accounting and
auditing.




None






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SIGNATURES





Pursuant
to the requirements of the Securities exchange Act of 1934, registrant has duly
caused this report to be signed on its behalf by the undersigned.





Acacia Automotive, Inc.








Dated:
February 13,
2009                                                                                              /s/ Steven L.
Sample


Steven L.
Sample,


Chief
Executive Officer and Principal Financial Officer






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