- ----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
[ ] Transition Report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended: June 30, 1994
Commission File No. 0-10039
SEAHAWK CAPITAL CORPORATION
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2267656
- -----------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1010 Kings Highway South, Suite 1-D
Cherry Hill, New Jersey 08034-5074
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609)428-3845
Former address: 18552 MacArthur Boulevard, Suite 395
Irvine, California 92715
- -----------------------------------------------------------------
Former name, former address and former fiscal year, if changed
since last report
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 [ ] NO [X]
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date: Common Stock, no par value, outstanding as of June 30,
1995: 28,137,082 shares.
- -----------------------------------------------------------------
SEAHAWK CAPITAL CORPORATION
FORM 10-Q
INDEX
Page
Number
Part I. FINANCIAL INFORMATION........................... 3
Item 1. Financial Statements:
Consolidated Balance Sheets at
June 30, 1994 and December 31, 1993........... 3
Consolidated Statements of Operations for the
Three Months and Six Months Periods ended
June 30, 1994 and June 30, 1993............... 5
Consolidated Statement of Changes in
Stockholders' Equity for the
Six Months ended June 30, 1994................ 6
Consolidated Statements of Cash Flows
for the Six Months Periods ended
June 30, 1994 and 1993........................ 7
Notes to Consolidated Financial Statements
at June 30, 1994.............................. 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations... 11
Part II. Other Information............................... 13
Signatures ................................................ 13
PART I. FINANCIAL INFORMATION
SEAHAWK CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1994 1993
(unaudited)
------------ ------------
ASSETS:
Current Assets:
Cash and cash equivalents.......... $ 286,781 $ 466,607
Note and accounts receivable,
net of allowances for
doubtful accounts of $-0-........ 211,163 392,662
Inventory, at cost................. -- 110,313
---------- ----------
Total current assets............. 497,944 969,582
---------- ----------
Property and equipment, at cost:
Plant and equipment................ -- 287,243
Oil and gas properties,
accounted for under the
"successful efforts" method...... 9,421 9,421
Office furniture and equipment..... -- 6,486
---------- ----------
9,421 303,150
Less accumulated depreciation...... -- 16,272
---------- ----------
Net property and equipment....... 9,421 286,878
---------- ----------
Other assets......................... 54,385 91,709
---------- ----------
Total Assets......................... $ 561,750 $1,348,169
========== ==========
See accompanying notes to financial statements.
SEAHAWK CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS -- continued
June 30, December 31,
1994 1993
(unaudited)
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities...................... $ 24,121 $ 551,199
Joint venture advances............. 153,793 155,272
Reserve for loss................... 173,327 --
---------- ----------
Total current liabilities........ 351,241 706,471
---------- ----------
Commitments and contingencies
Minority interest.................... -- 28,157
---------- ----------
Stockholders' equity:
Common stock, no par value,
50,000,000 shares authorized;
13,137,082 shares issued and
outstanding...................... 12,726,450 12,726,450
Translation adjustment............. (2,671) --
Deficit............................ (12,513,270) (12,112,909)
---------- ----------
Total stockholders' equity..... 210,509 613,541
---------- ----------
Total Liabilities and
Stockholders' Equity $ 561,750 $1,348,169
========== ==========
See accompanying notes to financial statements.
SEAHAWK CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ending Six Months Ending
June 30, June 30,
-------------------- --------------------
1994 1993 1994 1993
--------- --------- --------- ---------
Revenues:
Sales to customers. -- $ 278,073 $ 351,644 $ 278,073
Commission and fees $ 21,398 20,669 86,000 25,269
Interest and other. 1,752 8,198 4,299 14,774
--------- ------- --------- ---------
23,150 306,940 441,943 318,116
--------- ------- --------- ---------
Costs and expenses:
Cost of sales...... -- 147,821 260,242 147,821
General and
administrative... 31,426 283,341 267,064 417,073
Loss on investments 309,808 -- 309,808 --
Depreciation....... -- 954 2,728 1,908
Other.............. -- -- 2,462 --
--------- ------- --------- ---------
341,234 432,116 842,304 566,802
--------- ------- --------- ---------
Net loss............. $(318,084) $(125,176) $(400,361) $(248,686)
========= ========= ========= =========
Net loss per
common and common
equivalent share... $ (0.02) $(0.01) $(0.03) $(0.02)
========= ========= ========= =========
See accompanying notes to financial statements
SEAHAWK CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 1994
(Unaudited)
Common Stock Cumulative
---------------------- Translation
Shares Amount (Deficit) Adjustment Total
---------- ----------- ------------ --------- --------
Balance,
December 31, 1993 13,137,082 $12,726,450 $(12,112,909) $613,541
Cumulative
translation
adjustment....... $(2,671) (2,671)
Net loss for the
six months ended
June 30, 1994.... (400,361) (400,361)
---------- ----------- ------------ --------- --------
Balance,
June 30, 1994 13,137,082 $12,726,450 $(12,513,270) $(2,671) $210,509
========== =========== ============ ========= =========
See accompanying notes to financial statements
SEAHAWK CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended June 30, 1994 and 1993
(Unaudited)
Six Months Ended June 30,
---------------------------
1994 1993
------------ ------------
OPERATING ACTIVITIES
Net loss........................... $(400,361) $(248,686)
Adjustments to reconcile
net loss to net cash
used in operating activities:
Loss on investments............ 308,966 --
Depreciation................... 2,690 1,908
Changes in assets
and liabilities.............. (97,986) 100,555
--------- ---------
Net cash used by
operating activities............. (186,691) (146,223)
--------- ---------
INVESTING ACTIVITIES
Capital expenditures............... -- (49,155)
Other.............................. (1,479) (22,972)
--------- ---------
Net cash used in
investing activities............. (1,479) (72,127)
--------- ---------
FINANCING ACTIVITIES
Minority investment in subsidiary.. 5,000 --
--------- ---------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH.................. 3,344 --
--------- ---------
NET DECREASE IN CASH
AND CASH EQUIVALENTS............. (179,826) (218,350)
CASH AND CASH EQUIVALENTS:
At beginning of period............. 466,607 1,041,016
--------- ---------
At end of period................... $286,781 $ 822,666
========= =========
See accompanying notes to financial statements
SEAHAWK CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The consolidated financial statements include the accounts
of Seahawk Capital Corporation (the "Company") and its
subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
The accompanying consolidated financial statements of the
Company at June 30, 1994 and 1993 and for the three and six month
periods then ended are unaudited, but include all adjustments,
consisting only of normal recurring accruals, which management
considers necessary for a fair presentation of the Company's
financial condition and results of operations for the interim
periods covered by such statements in accordance with generally
accepted accounting principles. These financial statements do
not include all the disclosures associated with the Company s
annual financial statements and accordingly should be read in
conjunction with such statements. Certain information and
footnote disclosures normally included in consolidated financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
rules of the Securities and Exchange Commission. Reference is
made to Note 1 of the notes to consolidated financial statements
contained in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 for a summary of significant
accounting policies utilized by the Company. It is suggested
that the consolidated financial statements at June 30, 1994 and
1993 be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's
latest Annual Report on Form 10-K. The information for
the six months periods ended June 30, 1994 and 1993 are not
necessarily indicative of the operating results for the entire
year.
Loss per share calculations are based upon 13,137,082 shares
in all periods presented, based upon the weighted average number
of common and common equivalent shares outstanding during the
periods.
2. INVESTMENTS IN SUBSIDIARY COMPANIES
Due to continued losses from Scotcoast, Limited
("Scotcoast") operations, the Company and SRC Food Group, Limited
("SRCF") elected not to provide further support to Scotcoast.
Scotcoast is in the process of being liquidated. The investment
in Scotcoast was written off in the second quarter of 1994. The
loss on investments for 1994 in the accompanying statement of
consolidated operations includes the following:
Loss on
Investments
---------
Net assets of Scotcoast................... $ 113,973
Loan made in 1994 to Scotcoast............ 8,927
SRCF guarantee of Scotcoast loans......... 149,040
---------
$ 271,940
=========
SRCF also has an equity investment in Extruco, Limited and
PEICO Limited, which companies were to utilize certain rights and
processes of SRCF. Due to a disagreement with Extruco, Limited's
shareholders, SRCF's 33.3% interest was disposed of in August
1995 at a loss of approximately $5,000. Because PEICO Limited
has not to date been able to obtain the financing needed to begin
operations, this investment was written off. The loss on
investments for 1994 in the accompanying statement of
consolidated operations includes $37,868 applicable to the loss
on Extruco and the write-off of PEICO.
Foreign operations included in the accompanying consolidated
financial statements are as follows:
Six Months Ended June 30,
-------- --------
1994 1993
-------- --------
Revenues................... $408,251 $238,688
Expenses................... 711,902 296,038
Loss from continuing
operations............... (303,651) ( 57,350)
Total assets............... 259,448 286,038
3. SUBSEQUENT EVENTS
Effective December 31, 1994, the Company transferred its
approximately 73% interest in Seahawk Overseas Exploration
Corporation ("Overseas") to John C. Fitton (then a Director of
the Company) in exchange for 855,780 shares of the Company's
common stock.
At December 31, 1994, the Company s equity in the net assets
of Overseas was approximately $25,000. This amount approximated
the market value of the shares at that date (based on $0.03 per
share, the mean between the bid and ask prices of $0.02 and
$0.04).
Summarized results of Overseas included in the accompanying
statement of operations for the six months ended June 30, 1994
are as follows:
Six Months Ended June 30,
----------------------
1994 1993
-------- --------
Revenues, principally
commissions and fees........ $ 33,560 $ 28,358
Expenses, principally
general and administrative.. 53,781 58,919
-------- --------
Loss.......................... $(20,221) $(39,561)
======== ========
The net assets relating to the discontinued operations
included in the accompanying balance sheet at June 30, 1994:
Discontinued
Operations
------------
Cash....................... $ 56,245
Accounts receivable........ 181,245
Property-net............... 9,421
Accounts payable........... (3,001)
Advance payable
to joint venture......... (153,793)
---------
Net assets................ $ 90,119
=========
At the Company's 1994 annual meeting, the Company's
stockholders authorized an amendment to the Company's certificate
of incorporation increasing the number of its authorized shares
of common stock from 50 million to 100 million shares.
On May 8, 1995, the Company sold 15,000,000 previously
unissued shares of its common stock to Jonathan B. Lassers for
$150,000 in cash. As part of the transaction, Mr. Lassers also
acquired transferable warrants to purchase up to an additional
70,000,000 shares of the Company's common stock exercisable until
December 31, 1997 at $0.01 a share. As a result of the purchase,
Mr. Lassers owns approximately 55% of the total outstanding
common stock. If all the warrants are exercised, his beneficial
ownership would increase to approximately 87.4%. Because of this
purchase, a change in control of the Company was effected.
Substantially all members of the Company's prior management
resigned as directors and officers.
Since February 1992, the Company operated as a Business
Development Company ("BDC") under the Investment Company Act of
1940 (the "Act"). In July 1994, the Company notified the
Securities and Exchange Commission that it withdrew its election
to be subject to the Act. The Company has changed the nature of
its business to cease to be a BDC. Such change was authorized by
the vote of a majority of its outstanding voting securities at
the Company's annual meeting of stockholders held on July 15,
1994.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
As indicated in Note 3 to the consolidated financial
statements in Item 1 of this Report, the Company has new
management. The following management's discussion is based on
new management's understanding of the financial condition and the
results of operations for the periods presented.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1994, the Company has a stockholders' equity of
$210,509. The Company has incurred net losses in most of the
past 10 years. After the transfer of Overseas and write-off of
its investment in Scotcoast in this second quarter, the Company's
only operations are related to SRCF, which is not significant in
amount, and its 50% interest in PEICO Limited which was written
off and 33.3% interest in Extruco, Limited which was disposed of
in August 1995. (See Notes 2 and 3 to the consolidated financial
statements under Item 1 of this Report for a fuller discussion.)
As discussed in Note 3 to the consolidated financial
statements under Item 1 of this Report, in May 1995 the Company
sold 15,000,000 previously unissued shares of its common stock
for $150,000 in cash.
Because of the above mentioned net losses, the Company's
cash flows from operating activities have been negative. Until
such time as additional operating businesses are acquired and
operate profitably, the Company's operations are being financed
with the remaining cash and the proceeds from the sale of common
stock in May 1995. The Company is exploring various financing
options in connection with the acquisition of companies in the
food processing industry.
It is not expected that the Company will achieve
profitability in the near future. Further, there is no assurance
that the Company will achieve profitability thereafter. Although
it is expected that the Company will have adequate resources
available to continue through December 31, 1995, unless the
Company can obtain the financing necessary to acquire a
profitable operating business, the Company will be unable to
continue as a going concern.
RESULTS OF OPERATIONS: SIX MONTHS ENDED JUNE 30, 1994 COMPARED
TO SIX MONTHS ENDED JUNE 30, 1993
The Company generated consolidated revenues of $441,943 in
the six months ended June 30, 1994 (the "1994 Period") compared
to revenues of $318,116 during the six months ended June 30, 1993
(the "1993 Period"). This increase of $123,827 was due primarily
to the revenues generated by Scotcoast in the first quarter of
1994 compared to their revenue in the second quarter of 1993.
Scotcoast was not an operating subsidiary for the first quarter
of 1993. Commission and fees increased mainly due to the
services provided by SRCF during the 1994 Period. SRCF was not
acquired until December 1993. Interest and other income
decreased primarily as a result of lower interest paid by
financial institutions and the reduced level of investable funds.
Total expenses for the 1994 Period of $842,304 were $275,502
greater than the 1993 Period. This is substantially due
to the $309,808 charge in the second quarter of 1994 relating to
the loss on Scotcoast and PEICO Limited and the write-down of
Extruco, Limited to amounts realized in 1995 from its disposal.
Cost of sales increased $112,421 in the 1994 Period due to the
increase in sales revenues of Scotcoast. General and
administrative expenses decreased $150,009 mainly as a result of
lower domestic costs due to the wrap-up of certain operations in
1993 (Seahawk Foods and MedConsult, primarily).
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit
No. Description
- -------- ---------------------
27 Article 5 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the quarter ended June 30, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: December 15, 1995
SEAHAWK CAPITAL CORPORATION
(Registrant)
By: /S/ Jonathan B. Lassers
------------------------
Jonathan B. Lassers,
President, Principal Executive Officer
and Principal Financial Officer
By: /S/ Annamarie L. Arias
------------------------
Annamarie L. Arias,
Secretary-Treasurer and
Principal Accounting Officer