UNITED
STATES


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
      1934For
      the quarterly period ended June 30,
      2009r
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor
      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.)3512 E. Silver Springs Blvd. -
      #243  Ocala, FL
            34470(Address
      of principal executive
      offices)
            (Zip
      Code)





(352)
502-4333


(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 r    
No x





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 YEARS:





Indicate
by check mark whether the registrant HAS FILED ALL DOCUMENTS AND REPORTS
REQUIRED 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 June 30, 2009:  12,062,524.













PART
I  FINANCIAL INFORMATION





Item
1. Financial Statements


ACACIA
AUTOMOTIVE, INC.


CONSOLIDATED
BALANCE SHEETS




June
      30,
              
              
              December
      31,2009
              
              
              2008(Unaudited)
              
              
              (Audited)ASSETSCURRENT
      ASSETSCash
              
              $
              27,919
              
              
              $
              5,586Certificate
      of Deposit (Restricted)
              
              
              150,724
              
              
              
              157,255Accounts
      receivable
              
              
              219,599
              
              
              
              236,524Employee
      receivables
              
              
              9,938Deposits
      and prepaid expenses
              
              
              1,800
              
              
              
              3,481Total
      Current Assets
              
              
              409,980
              
              
              
              402,846PROPERTY
      AND EQUIPMENT, net of accumulated depreciation of $69,637 and $52,103 in
      2009 and 2008, respectively
              
              
              208,484
              
              
              
              172,346OTHER
      ASSETSGoodwill
              
              
              427,929
              
              
              
              427,929Customer
      list and Non-Compete Agreement, net of amortization of $341,134 and
      $255,850 respectively
              
              
              300,000
              
              
              
              385,284Total
      Other Assets
              
              
              727,929
              
              
              
              813,213TOTAL
      ASSETS
              
              $
              1,346,393
              
              
              $
              1,388,405LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESCash
      overdraft
              
              $
              -
              
              
              $
              42,893Accounts
      payable
              
              
              215,299
              
              
              
              277,561Accrued
      liabilities
              
              
              419,422
              
              
              
              404,374Line
      of credit
              
              
              270,000
              
              
              
              275,000Capital
      lease obligations, current portion
              
              
              18,853
              
              
              
              14,619Total
      Current Liabilities
              
              
              923,574
              
              
              
              1,014,447NONCURRENT
      LIABILTIESCapital
      lease obligations, less current portion
              
              
              63,484
              
              
              
              16,900TOTAL
      LIABILITIES
              
              
              987,058
              
              
              
              1,031,347STOCKHOLDERS'
      EQUITYCommon
      stock, $0.001 par value, 150,000,000 shares authorized;12,062,524
      shares issued and outstanding.
              
              
              12,062
              
              
              
              12,062Additional
      paid-in capital
              
              
              11,127,535
              
              
              
              11,095,181Retained
      deficit
              
              
              (10,780,262
              )
              
              
              (10,750,185
              )TOTAL
      STOCKHOLDERS' EQUITY
              
              
              359,335
              
              
              
              357,058TOTAL
      STOCKHOLDERS' EQUITY AND LIABILITES
              
              $
              1,346,393
              
              
              $
              1,388,405


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





F-1




ACACIA
AUTOMOTIVE


STATEMENTS
OF OPERATIONS


(UNAUDITED)








Three
      Months Ended
              June
      30,
            
            
            Six
      Months Ended
              June
      30,2009
            
            
            2008
            
            
            2009
            
            
            2008REVENUES
            
            $
            476,366
            
            
            $
            307,137
            
            
            $
            798,016
            
            
            $
            522,057OPERATING
      EXPENSESCost of fees earned
            
            
            127,265
            
            
            
            113,047
            
            
            
            208,616
            
            
            
            148,551Employee Compensation
            
            
            90,035
            
            
            
            484,890
            
            
            
            193,276
            
            
            
            952,455General and administrative expenses
            
            
            188,337
            
            
            
            239,795
            
            
            
            302,361
            
            
            
            441,336Depreciation
            
            
            55,607
            
            
            
            56,706
            
            
            
            109,783
            
            
            
            112,470Beneficial
      Conversion of Preferred Stock
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Operating
      Income (Loss)
            
            
            15,122
            
            
            
            (587,301
            )
            
            
            (16,020
            )
            
            
            (1,132,755
            )Interest
      Income
            
            
            775
            
            
            
            827
            
            
            
            1,219
            
            
            
            2,848Interest
      Expense
            
            
            (5,781
            )
            
            
            (4,124
            )
            
            
            (11,766
            )
            
            
            (6,050
            )Loss
      on disposal of asset
            
            
            (2,749
            )
            
            
            (14,583
            )
            
            
            (3,510
            )
            
            
            (14,583
            )Net
      Income (Loss) Before Income Taxes
            
            
            7,367
            
            
            
            (605,181
            )
            
            
            (30,077
            )
            
            
            (1,150,540
            )Income
      Tax Expense
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -NET
      INCOME (LOSS)
            
            $
            7,367
            
            
            $
            (605,181
            )
            
            $
            (30,077
            )
            
            $
            (1,150,540
            )BASIC
      AND FULLY DILUTEDLOSS
      PER SHAREIncome
      (Loss) Per Share
            
            $
            0.00
            
            
            $
            (0.04
            )
            
            $
            0.00
            
            
            $
            (0.10
            )Weighted
      Average Number of Common
      Shares    Outstanding
            
            
            12,017,524
            
            
            
            11,997,524
            
            
            
            12,017,524
            
            
            
            11,997,524





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








F-2




ACACIA
AUTOMOTIVE, INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


SIX
MONTHS ENDED JUNE 30, 2009 AND 2008





2009
            
            
            2008(Unaudited)
            
            
            (Audited)Cash
      Flow From Operating ActivitiesNet
      Loss
            
            $
            (30,077
            )
            
            $
            (1,150,540
            )Adjustment
      to reconcile net loss to net cash used in operating
    activitiesDepreciation
            
            
            109,783
            
            
            
            112,470Loss
      on disposal of asset
            
            
            3,510
            
            
            
            14,583Write-down
      of software
            
            
            -
            
            
            
            (25,000
            )Common
      stock issued for services
            
            
            -
            
            
            
            -Stock
      options and warrants issued for services
            
            
            32,354
            
            
            
            642,876Beneficial
      Conversion
            
            
            -
            
            
            
            -Changes
      in Operating Assets and LiabilitiesInventory
            
            
            -
            
            
            
            (16,735
            )Accounts
      Receivable
            
            
            16,925
            
            
            
            (46,351
            )Accounts
      Payable
            
            
            (62,262
            )
            
            
            342,279Accrued
      Liabilities
            
            
            (27,845
            )
            
            
            129,514Due
      to (from) Stockholder
            
            
            (9,938
            )
            
            
            (15,316
            )Prepaid
      Expense
            
            
            1,681
            
            
            
            21,032Net Cash Flow Provided by Operating Activities
            
            
            34,131
            
            
            
            8,812Cash
      Flow Provided by (Used from) Investing ActivitiesRestricted
      CD interest earned (withdrawn)
            
            
            6,530Proceeds
      from sale of equipment
            
            
            9,640
            
            
            
            27,261Purchase
      of Equipment
            
            
            (73,787
            )
            
            
            -Net
      Cash Flow Provided by (Used in) Investing Activities
            
            
            (57,617
            )
            
            
            27,261Cash
      Flow Provided (Used) by Financing ActivitiesBorrowings
      and repayments on line of credit
            
            
            (5,000
            )
            
            
            (135,000
            )Capital
      lease borrowings (payments)
            
            
            50,819
            
            
            
            -Sale
      of Common Stock
            
            
            -
            
            
            
            130,000Net Cash Flow Provided (Used by) Financing Activities
            
            
            45,819
            
            
            
            (5,000
            )Change
      in Cash
            
            
            22,333
            
            
            
            31,073Cash
      at Beginning of Period
            
            
            5,586
            
            
            
            203,077Cash
      at End of Period
            
            $
            27,919
            
            
            $
            234,150





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





F-3














ACACIA
AUTOMOTIVE, INC.


NOTES
TO FINANCIAL STATEMENTS


JUNE
30, 2009 AND 2008





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 has also issued options to purchase Common
stock to directors, employees, and certain others providing services to the
Company. The Company records each of the securities issued on a fair value basis
up to the amount of the proceeds received.  The Company estimates the
fair value of the options and 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 options and
warrants.  The value ascribed to the options issued under the
Company’s Stock Option Program and warrants issued 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.  The consolidated financial statements include the accounts of
the Company and Acacia Augusta Vehicle Auction, Inc. dba / Augusta Auto Auction,
Inc.   All significant intercompany accounts and transactions are
eliminated in consolidation.





NOTE
2 – 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.








F-4




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


The
Company believes that vehicle auctions have historically shown that units they
sell do not generally decline substantially during a mild recession. We believe
this is attributable to, among other facts, that in a recession the overall
demand for used vehicles does not decline significantly, or at least declines
less than new car production would indicate, because some consumers that would
otherwise purchase new vehicles purchase used vehicles, acquiring vehicles
traditional purchasers of used vehicles may otherwise forgo or
delay.  For those reasons and more, we believe 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. However, the current recession has proven to be quite severe, and has
resulted in a greater loss of units for sale or sold at most auto auctions than
in recent recessionary periods, even though our auction operations have actually
seen an increase in volumes in most instances.
 
 Wholesale
automotive markets remain suppressed throughout the entire U.S. as compared to
previous year’s levels, although not so much as the retail markets. While lower
volumes of vehicles are generally available to the wholesale markets as compared
to the prior year, the constrictions are not sufficient to preclude
profitability, especially at auctions.  During previous periods of
economic downturns and recession, the automotive auction industry has
traditionally fared well compared to many other industries.
 
 As is
common with other auto auctions, the Company has experienced and expects to
continue to experience fluctuations in its quarterly results of operations due
to a number of factors, many of which are beyond the Company's control and which
are common to the auto auction industry. Generally, the volume of vehicles sold
at the Company's auctions is highest in the first and second calendar quarters
of each year and slightly lower in the third quarter. Fourth quarter volume of
vehicles sold is generally lower than all other quarters. This seasonality is
affected by several factors including weather, the timing of used vehicles
available for sale from selling customers, holidays, and the seasonality of the
retail market for used vehicles, which affect the demand side of the auction
industry. Used vehicle auction volumes tend to decline during prolonged periods
of winter weather conditions. Among the other factors that have in the past
and/or could in the future affect the Company's operating results are: general
business conditions; trends in new and used vehicle sales and incentives,
including wholesale used vehicle pricing; economic conditions including fuel
prices and interest rate fluctuations; trends in the vehicle remarketing
industry; the introduction of new competitors; competitive pricing pressures;
and costs associated with the acquisition of businesses or technologies. As a
result of the above factors, operations are subject to significant variability
and uncertainty from quarter to quarter, and revenues and operating expenses
related to volume will fluctuate accordingly on a quarterly basis.
 
 Discussion
Regarding the Company’s First Acquired Operating Entity
 
 With the
acquisition of the Augusta Auto Auction on July 10, 2007, the Company commenced
operations, ceased being a shell company, and conducted its first weekly auction
on July 11th under Acacia’s management.  The Company’s only operations
in 2007 were those operations, and those operations remain the Company’s only
operations through Q2 of 2009.
  1





Operating
Results of the Auction





Three
months ended June 30, 2009
 
 The
Auction earned an operating profit of $156,368 on revenues of $476,366 for the
three months ended June 30, 2009, compared to a loss of $78,364 in the same
period of 2008. Of that profit, $53,434 represented non-cash expenses for
amortization and depreciation, and interest expense of $4,639, resulting in a
positive cash flow for the period, and accounting for the largest net profit for
the auction operating unit since its acquisition by the Company in July of 2007
The second quarter of 2009 saw a substantial increase in the number of vehicles
entered at our Augusta Auto Auction operation versus the previous year, but more
notable was a similar increase in the number of units sold.  (See
table below)
 
 The chart
below indicates a comparison of units entered and sold, conversion rates, and
revenues generated in Q2 2009 versus the same period in 2008.  (Not
adjusted for charges associated with uncollected or recovered receivable in 2008
as noted above.)


2009Units
      Entered vs. Q2 2008
            
            
            +60.5
            %Units
      Sold vs. Q2 2008
            
            
            +34.0
            %Conversion
      Rate Q2 2008
            
            
            59.90
            %Conversion
      Rate Q2 2009
            
            
            50.10
            %Change
      in Buy/Sell Fee Revenues vs. Q2 2008
            
            
            +33.6
            %




The
period reflected a somewhat lower conversion rate than in the same period of
2008, but the Company anticipated this as the typical result of a higher number
of units entered for sale and a weaker general economy.  Considering
the generally-weakening economic conditions, reduced productivity at automotive
manufacturers, tightening credit and higher consumer interest rates, and other
negative pressures affecting trade in general, the Company considers any
increase for the period to be noteworthy, and such a substantial increase to be
exceptional.
 
 Six
months ended June 30, 2009
  Revenues
for the first six months of 2009 were $797,000, compared to $522,000 in the same
period of 2008, indicating an increase of 52.7% year-over-year.  This
comparison should be reviewed with the understanding that the 2008 result
included a charge of more than $78,000 for uncollected receivables associated
with problems in the Vemark operating system that was discontinued in early Q3
of that year. Most of the charges were recovered in Q3 under the ASI operating
system.  By reference, the auction generated $378,990 in revenues in
the first six months of 2007 prior to its acquisition by the Company in July of
that year.  This increase in revenue is mostly attributable to an
increase in the number of units sold as well as a higher average selling price
per unit and the attendant higher fees.
 2009Units
      Entered vs. Six Months 2008
              
              
              +42.9
              %Units
      Sold vs. Six Months 2008
              
              
              +26.7
              %Conversion
      Rate Six Months 2008
              
              
              57.52
              %Conversion
      Rate Six Months 2009
              
              
              51.00
              %Change
      in Buy/Sell Fee Revenues vs. Six Months 2008
              
              
              +52.7
              %
 
 The
conversion rate, while declining during the comparative periods, is also
consistent with a national trend believed by management to be related to a
slowing economy in the United States. We do believe that the current economic
environment could inhibit our present growth based upon (i) the negative
influences of higher consumer automotive interest rates, tighter credit, and
higher gasoline prices on the automotive industry, (ii) the unwillingness of
consumers to spend as freely on major purchases in an uncertain economy, and
(iii) the other wide-ranging negative impacts of a troubled general economy. In
addition, it is not uncommon for conversion rates to decline as volumes
increase.
 
 The
second quarter was bolstered by an infusion of additional sales and attendant
revenues from a special offering of units sold for a vehicle manufacturer and
another special offering of units in a liquidation sale for the United States
Bankruptcy Court in disposing of the automotive assets of a bankrupt local auto
dealer. Other sales and revenues in the period were up substantially as
well.
 
 With
respect to our Augusta operations in 2009, our total employee compensation is
averaging approximately $112,600 per quarter and other general and
administrative expenses are averaging approximately $132,000 per quarter. Cost
of sales, absent charges for uncollected receivables and wages included above,
are approximately $37,500 per quarter and depreciation and amortization is about
$35,000 per quarter leaving an average operating profit, assuming average
revenues, of about $110,000 per quarter and operating cash flow of about $39,000
per quarter. Interest expense at our Augusta operation averages about $5,000 per
quarter.
  2





Discussion
Regarding the Parent Company’s Operating Results





Three
months ended June 30, 2009


The
auction’s Q2 profit was the significant contributing component in the
consolidated Q2 net profit to the parent company of $8,872, compared to a loss
of $37,445 in Q1 of 2009 and a loss of $492,136 in Q2 of 2008, and also
reflecting the first time in the Company’s three year history that it generated
a consolidated quarterly operating profit. The Q2 consolidated financial results
also include $32,354 in non-cash charges for the issuance of Common stock as
grants or options for employee or outside director compensation, for warrants,
and $2,173 in additional depreciation and amortization by the parent
company.
 
 Six
months ended June 30, 2009
 
 The
auction’s six month profit was similarly the significant contributing component
in reducing the consolidated six month net loss to the parent company of
$30,077, compared to a loss of $1,150,540 in the first six months of 2008.
The  Company reported a cash flow from operating activities of $34,121
and a net cash flow of $22,333 for the six months ended June 30,
2009.
 
 We incur
expenses at the corporate level in addition to those incurred at our operations
at the Augusta auction. Our compensation for executives as shown under Employee
Compensation runs about $61,000 per quarter, and our option and warrant expense,
which is amortized, has averaged in the six month period ended June 30, 2009,
approximately $16,200 per quarter.  For the six months ended June 30,
2009 we incurred a loss of $29,362. Corporate G&A expenses accounted for
approximately $250,000 in the first six months, and included legal and
accounting fees of approximately $5,300, office rental costs of approximately
$2,500, non-cash amortized warrant and option expenses of approximately $32,350,
and other traditional expenses for travel, convention expenses, equipment
lease/rental, postage and shipping, printing and office supplies, insurance,
telephone, light heat power, etc.
  Liquidity
and Need for Additional Capital





We look
for our operations to provide the cash flow and cash return on our
investment.  Presently, the cash flow from our Augusta operation is
sufficient to support those operations in the current manner, although we
anticipate having to move to a different, larger location as described
below.  Nonetheless, our current operations do not provide sufficient
cash flow to cover fully our corporate activity, essentially our executive
officers, administrative overhead, and overhead that includes the cost of
lawyers and accountants required to be publicly held.
 
 The
Company will ultimately be forced to seek a larger operating facility for its
auction operations in the greater Augusta area, since the auction cannot
accommodate the anticipated growth at its present location.
 
 The
Company’s liquidity in 2007 and 2008 was provided through the closing of private
placements of common stock in the amounts of $1,112,500 and $130,000
respectively, and from the Company's auction operations since July 10, 2007.
Presently, the Company’s liquidity is supplemented by a $300,000 line of credit
with Wachovia Bank, N.A.  Although the Company presently has a
certificate of deposit with the same bank of just over $150,000, this line of
credit is used to cover some instances in which payments to dealers selling
vehicles through the auction exceeds collected payments for those
vehicles.  The Company anticipates increasing the size of the
available line as its sales volume grows.  The bank charges an
interest rate on the line of credit equal to prime plus 1.5% on the outstanding
daily balance, if any.  The line of credit is secured by all of the
Company’s deposits at the bank.
 
 Frequently,
when we hold an auction near the end of a quarter, our receivables and payables
will be large compared to prior quarters or as a ratio of receivables or
payables to revenues for that quarter and the other
quarters.  Receivables and payables for a given auction are
substantially liquidated within days of the auction process, but appear
distorted when occurring close to the end of an accounting period.
 
 The
Company is currently engaged in its plan of seeking to grow through acquisitions
as well as through organic means.  To succeed in doing so, the Company
will require additional capital, anticipated to be through sale of Common
Stock.
 Item
4T. Controls and Procedures





Management’s
Report on Internal Control over Financial Reporting





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.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f).  Under the supervision and with the participation of our
management, particularly our chief executive officer, we conducted an evaluation
of the effectiveness of our internal control over financial reporting based on
the framework set forth in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO).





3





Changes
in Internal Control over Financial Reporting





In the
course of conducting our audit for the fiscal year 2008, our auditor, Killman,
Murrell & Company, P.C. indicated that we have three material
weaknesses material weaknesses, although it did not identify to us any report
that necessitated restatement: (i) Our reconciliations and account analysis is
not performed in a timely manner because we do not have full time financial
accounting personnel; (ii) Our sales and accounts receivable software is not
integrated with our financial accounting software and our accounting personnel
do not perform routine reconciliations of data entered on the sales reporting
system to appropriate control accounts in the general ledger system with
reconciliations made in the aggregate without individual account scrutiny
regardless of materiality; and (iii) we made several adjusting entries relating
to the recording of options and the accrual of certain liabilities.





During
most of fiscal 2008, the Company had no full time financial accounting
personnel.  As such many reconciliations and account analysis were not
performed in a timely manner. However, contemporaneous to year-end, the Company
added a certified public accountant with financial reporting experience to its
staff.  The Company is also actively seeking a qualified CFO to join its
executive team, and feels that these additions will mitigate this
issue.





As with
many vehicle auction companies of its size, the Company’s sales and accounts
receivable software is not integrated with its financial accounting
software.  In 2008, the accounting personnel did not properly perform
routine reconciliations of the results of the data entered on the sales
reporting system to the appropriate control accounts in the general ledger
system.  As such, certain reconciliations to the control accounts were made
in the aggregate without individual account scrutiny, regardless of materiality.
With the addition of the accountant, the Company will require reconciliations of
the control accounts with each accounting period close.





The
auditors proposed significant adjusting entries to both the subsidiary and
parent companies that comprise the consolidated reporting entity. These entries
were principally the result of analyzing the Company’s recording of options and
the accrual of certain liabilities.  With the addition of the accountant,
the Company will perform this analysis on no less than a quarterly
basis.








4





PART
II OTHER INFORMATION





Item
5. Other Information.





None.









































5





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:
      November 16, 2009
            By:
            /s/ Steven L.
      SampleSteven
      L. SampleChief
      Executive Officer and Principal Financial Officer






6