seawright_10qsb-063007.htm
 
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
June 30, 2007
OR
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________

COMMISSION FILE NUMBER: 333-56848

SEAWRIGHT HOLDINGS, INC
 (Exact name of Company as specified in its charter)
 
Delaware
54-1965220
(State or jurisdiction of incorporation)
(I.R.S. Employer or
organization
Identification No.)
 
600 Cameron Street, Alexandria, VA            22314
(Address of principal executive offices)       (Zip Code)

Company's telephone number: (703) 340-1629

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $0.001 Par Value

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) been subject to such filing requirements for the past 90 days. Yes X  No___

Indicate the number of shares outstanding of each of the issuer's class of common stock.  The Registrant had 13,792,896 shares of its common stock outstanding as of August 20, 2007.

1

 
TABLE OF CONTENTS
 
Part I - Financial Information
   Page
   
Item 1.  Financial Statements (Unaudited)
4
   
Item 2.  Management's Discussion And
20
              Analysis Of Financial Condition Or Plan Of Operations
 
   
Item 3. Controls and Procedures
25
   
Part II - Other Information
   26
   
Item 1.  Legal Proceedings
26
   
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
26
   
Item 3.  Defaults Upon Senior Securities
26
   
Item 4.  Submission Of Matters To A Vote Of Security Holders
26
   
Item 5.  Other Information
26
   
Item 6.  Exhibits
26
 

2

 
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

Index to Financial Statements

Condensed Consolidated Balance Sheet at June 30, 2007 (unaudited)

Condensed Consolidated Statement of Operations
For The Three and Six Months Ended June 30, 2007 and 2006
And For The Period From October 14, 1999 (Date Of Inception) Through June 30, 2007 (unaudited)

Condensed Consolidated Statements Of (Deficiency In) Stockholders’ Equity
For The Period From October 14, 1999 (Date Of Inception) Through June 30, 2007 (unaudited)

Condensed Consolidated Statements of Cash Flows
For Six Months Ended June 30, 2007 and 2006
And For The Period From October 14, 1999 (Date Of Inception) Through June 30, 2007 (unaudited)

Notes to Unaudited Condensed Consolidated Financial Information
June 30, 2007



3

 
SEAWRIGHT HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

   
June 30, 2007
 
ASSETS
 
(Unaudited)
 
Current assets:
     
Cash and cash equivalent
  $
475
 
Marketable securities (Note B)
   
22,505
 
Financing costs, net – current portion
   
19,116
 
Deposits
   
65,300
 
Total current assets
   
107,396
 
         
Property and equipment:
       
Land
   
1,965,000
 
Equipment
   
32,167
 
Building
   
100,800
 
Building improvement
   
102,906
 
     
2,200,873
 
Less: accumulated depreciation
    (7,131 )
Total property and equipment
   
2,193,742
 
         
Other assets:
       
Financing costs, net – less current portion
   
4,977
 
Intangible asset, net
   
23,437
 
Total other assets
   
28,414
 
         
Total assets
  $
2,329,552
 
         
LIABILITIES AND STOCKHOLDERS' EQUITY
       
Current liabilities:
       
Cash disbursed in excess of available funds
  $
1,680
 
Accounts payable and accrued liabilities
   
170,909
 
Due to related party (Note G)
   
156,158
 
Notes payable – current portion (Note C)
   
1,010,450
 
Total current liabilities
   
1,339,197
 
         
Convertible notes payable, net of debt discount (Note D)
   
32,436
 
Notes payable – less current portion (Note C)
   
518,786
 
Other long-term liabilities
   
36,107
 
         
Total liabilities
   
1,926,526
 
         
STOCKHOLDERS' EQUITY
       
STOCKHOLDERS' EQUITY
       
Preferred stock, par value $.001 per share; 100,000 shares authorized: (Note E)
       
Series A Convertible Preferred stock, par value $.001 per share; 60,000 shares authorized; none issued and outstanding at June 30, 2007
   
-
 
Common stock, par value $.001 per share; 19,900,000 shares authorized; 13,279,610 shares issued and outstanding at June 30, 2007 (Note E)
   
13,280
 
Additional paid-in-capital
   
6,314,749
 
Preferred stock dividend
    (25,000 )
Accumulated deficit
    (5,900,003 )
Stockholders' equity
   
403,026
 
         
Total liabilities and stockholders' equity
  $
2,329,552
 

See accompanying notes to unaudited condensed consolidated financial information
4

SEAWRIGHT HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

   
For the three months ended June 30,
   
For the six months ended June 30,
       
   
2007
   
2006
   
2007
   
2006
   
For the period from October 14, 1999 (Date of Inception) Through June 30, 2007
 
Revenue, net
  $
1,775
    $
1,010
    $
2,084
    $
1,600
    $
7,912
 
Gross profit
   
1,775
     
1,010
     
2,084
     
1,600
     
7,912
 
                                         
Costs and expenses:
                                       
Selling, general and administrative
   
365,188
     
332,295
     
546,419
     
559,847
     
4,420,211
 
(Gain) loss on trading securities (Note B)
    (456 )    
731
     
248
     
531
      (37,108 )
Amortization and financing fees
   
456,223
     
-
     
544,051
     
-
     
544,051
 
Marketing expenses
   
153,392
     
-
     
295,812
     
-
     
295,812
 
Depreciation expenses
   
703
     
658
     
1,406
     
1,316
     
18,851
 
Total operating expense
   
975,050
     
333,684
     
1,387,936
     
561,694
     
5,241,817
 
                                         
Loss from operations
    (973,275 )     (332,674 )     (1,385,852 )     (560,094 )     (5,233,905 )
                                         
Other income (expenses):
                                       
Other income
   
-
     
-
     
-
     
-
     
61,969
 
Gain/(Loss) on early extinguishment of debt
    (79,970 )    
-
      (79,970 )    
-
     
727,133
 
Interest expense, net
    (386,595 )     (90,755 )     (634,610 )     (170,130 )     (1,472,101 )
      (466,565 )     (90,755 )     (714,580 )     (170,130 )     (682,999 )
                                         
Loss from continuing operations before income taxes and discontinued operations
    (1,439,840 )     (423,429 )     (2,100,432 )     (730,224 )     (5,916,904 )
                                         
Provision for income tax
   
-
     
-
     
-
     
-
     
-
 
                                         
Loss from continuing operations before discontinued operations
    (1,439,840 )     (423,429 )     (2,100,432 )     (730,224 )     (5,916,904 )
Income from discontinued operations
   
-
     
-
     
-
     
-
     
16,901
 
                                         
Net loss
  $ (1,439,840 )   $ (423,429 )   $ (2,100,432 )   $ (730,224 )   $ (5,900,003 )
Preferred stock dividend
   
-
     
-
     
-
     
-
      (25,000 )
                                         
Net loss attributable to common shareholders
  $ (1,439,840 )   $ (423,429 )   $ (2,100,432 )   $ (730,224 )   $ (5,925,003 )
                                         
Losses per common share (basic and assuming dilution)
  $ (0.12 )   $ (0.05 )   $ (0.20 )   $ (0.08 )        
                                         
Weighted average common shares outstanding
   
11,664,075
     
9,008,809
     
10,427,284
     
8,942,143
         
 
See accompanying notes to unaudited condensed consolidated financial information
5

SEAWRIGHT HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF (DEFICIENCY IN) STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 14, 1999 (DATE OF INCEPTION) TO JUNE 30, 2007
(Unaudited)

     
Preferred Shares
   
Preferred Stock Amount
   
Common Shares
   
Common Stock Amount
   
Additional Paid-in Capital
   
Common Stock Subscription
   
Preferred Stock Dividend
   
Deficit Accumulated During Development Stage
   
Total
 
                                                         
Net loss
   
-
    $
-
     
-
    $
-
    $
-
    $
-
    $
-
    $ (1,291 )   $ (1,291 )
                                                                           
Balance at December 31, 1999
   
-
     
-
     
-
     
-
     
-
     
-
     
-
      (1,291 )     (1,291 )
Common stock issued on September
                                                                       
30, 2000 in exchange for convertible
                                                                       
debt at $.50 per share
   
-
     
-
     
78,000
     
78
     
38,922
     
-
     
-
     
-
     
39,000
 
Common stock issued on November
                                                                       
27, 2000 in exchange for convertible
                                                                       
debt at $.50 per share
   
-
     
-
     
26,000
     
26
     
12,974
     
-
     
-
     
-
     
13,000
 
                                                                           
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
      (157,734 )     (157,734 )
                                                                           
Balance at December 31, 2000
   
-
     
-
     
104,000
     
104
     
51,896
     
-
     
-
      (159,025 )     (107,025 )
Common stock issued on January 1,
                                                                       
2001 in exchange for convertible debt
                                                                       
at $.50 per share
   
-
     
-
     
174,000
     
174
     
86,826
     
-
     
-
     
-
     
87,000
 
Common stock issued on January 2,
                                                                       
2001 to founders in exchange for
                                                                       
services rendered at $.001 per share
   
-
     
-
     
5,000,000
     
5,000
     
20
     
-
     
-
     
-
     
5,020
 
Common stock issued on January 2,
                                                                       
2001 in exchange for services
                                                                       
rendered at $.50 per share
   
-
     
-
     
90,000
     
90
     
44,910
     
-
     
-
     
-
     
45,000
 
                                                                           
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
      (556,921 )     (556,921 )
                                                                           
Balance at December 31, 2001
   
-
     
-
     
5,368,000
     
5,368
     
183,652
     
-
     
-
      (715,946 )     (526,926 )
                                                                           
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
      (357,588 )     (357,588 )
                                                                           
Balance at December 31, 2002
   
-
    $
-
     
5,368,000
    $
5,368
    $
183,652
    $
-
    $
-
    $ (1,073,534 )   $ (884,514 )
 
See accompanying notes to unaudited condensed consolidated financial information
6

 
SEAWRIGHT HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF (DEFICIENCY IN) STOCKHOLDERS' EQUITY (CONTINUED)
FOR THE PERIOD OCTOBER 14, 1999 (DATE OF INCEPTION) TO JUNE 30, 2007
(Unaudited)

   
Preferred Shares
   
Preferred Stock Amount
   
Common Shares
   
Common Stock Amount
   
Additional Paid-in Capital
   
Common Stock Subscription
   
Preferred Stock Dividend
   
Deficit Accumulated During Development Stage
   
Total
 
                                                       
Balance at December 31, 2002
   
-
    $
-
     
5,368,000
    $
5,368
    $
183,652
    $
-
    $
-
    $ (1,073,534 )   $ (884,514 )
Preferred stock issued in exchange
                                                                       
for cash at $5 per share
   
55,000
     
55
     
-
     
-
     
274,945
     
-
     
-
     
-
     
275,000
 
Stock options issued in exchange for
                                                                       
services rendered
   
-
     
-
     
-
     
-
     
5,276
     
-
     
-
     
-
     
5,276
 
                                                                         
Net income
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
506,846
     
506,846
 
                                                                         
Balance at December 31, 2003
   
55,000
    $
55
     
5,368,000
    $
5,368
    $
463,873
    $
-
    $
-
    $ (566,688 )   $ (97,392 )
Preferred stock cancelled in exchange
                                                                       
for stock options exercised at
                                                                       
$.5625 per share
    (5,000 )     (5 )    
160,000
     
160
     
64,845
     
-
     
-
     
-
     
65,000
 
Common stock issued on April 8, 2004
                                                                       
in exchange for cash at $.30 per share
   
-
     
-
     
300,000
     
300
     
89,700
     
-
     
-
     
-
     
90,000
 
Common stock issued and subscribed
                                                                       
in connection with private placement
   
-
     
-
     
2,404,978
     
2,405
     
1,359,491
     
25,581
     
-
     
-
     
1,387,477
 
Conversion of preferred stock to
                                                                       
common stock
   
(50,000
    (50 )    
500,000
     
500
      (450 )    
-
     
-
     
-
     
-
 
                                                                         
Preferred stock dividend
   
-
     
-
     
50,000
     
50
     
24,950
     
-
     
(25,000
   
-
     
-
 
Warrants issued to consultants in
                                                                       
exchange for services rendered
   
-
     
-
     
-
     
-
     
545,460
     
-
     
-
     
-
     
545,460
 
Beneficial conversion feature of
                                                                       
convertible debentures
   
-
     
-
     
-
     
-
     
274,499
     
-
     
-
     
-
     
274,499
 
Value of warrants attached to
                                                                       
convertible debentures
   
-
     
-
     
-
     
-
     
187,123
     
-
     
-
     
-
     
187,123
 
Return of contributed capital to
                                                                       
shareholder
   
-
     
-
     
-
     
-
      (144,006 )    
-
     
-
     
-
      (144,006 )
Reclassification of equity to liability
                                                                       
upon issuance of put agreement
   
-
     
-
     
-
     
-
      (90,000 )                             (90,000 )
                                                                         
Net loss, as restated
   
-
     
-
     
-
     
-
     
-
     
-
     
-
      (331,449 )     (331,449 )
                                                                         
Balance at December 31, 2004
   
-
    $
-
     
8,782,978
    $
8,783
    $
2,775,485
    $
25,581
    $
(25,000
  $ (898,137 )   $
1,886,712
 
 
See accompanying notes to unaudited condensed consolidated financial information
7

 
SEAWRIGHT HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF (DEFICIENCY IN) STOCKHOLDERS' EQUITY (CONTINUED)
FOR THE PERIOD OCTOBER 14, 1999 (DATE OF INCEPTION) TO JUNE 30, 2007
(Unaudited)

   
Preferred Shares
   
Preferred Stock Amount
   
Common Shares
   
Common Stock Amount
   
Additional Paid-in Capital
   
Common Stock Subscription
   
Preferred Stock Dividend
   
Deficit Accumulated During Development Stage
   
Total
 
                                                       
Balance at December 31, 2004
   
-
    $
-
     
8,782,978
    $
8,783
    $
2,775,485
    $
25,581
    $ (25,000 )   $ (898,137 )   $
1,886,712
 
Common stock issued in connection
                                                                       
with common stock subscribed in
                                                                       
connection with private placement
   
-
     
-
     
54,998
     
55
     
25,526
      (25,581 )    
-
     
-
     
-
 
Common stock issued in connection
                                                                       
with private placement
   
-
     
-
     
37,500
     
38
     
25,150
     
-
     
-
     
-
     
25,188
 
                                                                         
Fractional share - return of proceeds
   
-
     
-
     
-
     
-
      (13 )    
-
     
-
     
-
      (13 )
Beneficial conversion feature of
                                                                       
convertible debentures
   
-
     
-
     
-
     
-
     
5,708
     
-
     
-
     
-
     
5,708
 
Value of warrants attached to
                                                                       
convertible debentures
   
-
     
-
     
-
     
-
     
3,020
     
-
     
-
     
-
     
3,020
 
                                                                         
Expiration of put agreement
   
-
     
-
     
-
     
-
     
90,000
     
-
     
-
     
-
     
90,000
 
                                                                         
Contributed capital
   
-
     
-
     
-
     
-
     
89,500
     
-
     
-
     
-
     
89,500
 
                                                                         
Net loss, as restated
   
-
     
-
     
-
     
-
     
-
     
-
     
-
      (1,116,048 )     (1,116,048 )
                                                                         
Balance at December 31, 2005
   
-
     
-
     
8,875,476
     
8,876
     
3,014,376
     
-
      (25,000 )     (2,014,185 )    
984,067
 
                                                                         
Common stock
                                                                       
issued on May 1, 2006 in
                                                                       
exchange for cash at $0.45
                                                                       
per share
   
-
     
-
     
199,998
     
200
     
89,800
     
-
     
-
     
-
     
90,000
 
                                                                         
Contributed capital
   
-
     
-
     
-
     
-
     
54,505
     
-
     
-
     
-
     
54,505
 
                                                                         
Stock options
                                                                       
issued to consultants in
                                                                       
exchange for services rendered
   
-
     
-
     
-
     
-
     
38,490
     
-
     
-
     
-
     
38,490
 
                                                                         
Common stock
                                                                       
issued on September 1, 2006
                                                                       
in exchange for cash at $0.45
                                                                       
per share
   
-
     
-
     
20,000
     
20
     
8,980
     
-
     
-
     
-
     
9,000
 
                                                                         
Return of
                                                                       
contributed capital to
                                                                       
shareholder
   
-
     
-
     
-
     
-
      (42,951 )    
-
     
-
     
-
      (42,951 )
                                                                         
Reacquisition and cancellation
                                                                       
of shares
   
-
     
-
      (160,000 )     (160 )     (81,440 )    
-
     
-
     
-
      (81,600 )
                                                                         
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
      (1,785,386 )     (1,785,386 )
                                                                         
Balance at December 31, 2006
   
-
    $
-
     
8,935,474
    $
8,936
    $
3,081,760
    $
-
    $ (25,000 )   $ (3,799,571 )   $ (733,875 )
 
See accompanying notes to unaudited condensed consolidated financial information
8

 
SEAWRIGHT HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF (DEFICIENCY IN) STOCKHOLDERS' EQUITY (CONTINUED)
FOR THE PERIOD OCTOBER 14, 1999 (DATE OF INCEPTION) TO JUNE 30, 2007
(Unaudited)

   
Preferred Shares
   
Preferred Stock Amount
   
Common Shares
   
Common Stock Amount
   
Additional Paid-in Capital
   
Common Stock Subscription
   
Preferred Stock Dividend
   
Deficit Accumulated During Development Stage
   
Total
 
                                                       
Balance at
                                                     
December 31, 2006
   
-
    $
-
     
8,935,474
    $
8,936
    $
3,081,760
    $
-
    $ (25,000 )   $ (3,799,571 )   $ (733,875 )
                                                                         
Common stock
                                                                       
issued in connection with
                                                                       
Dutchess put agreements for
   
-
     
-
     
218,542
     
218
     
330,687
     
-
     
-
     
-