Annual Report (Form 10-K), fiscal year 1994








ITEM 6. SELECTED FINANCIAL DATA
The following summary sets forth certain selected financial information for the years ended December 31, 1990 to 1994 derived from the audited financial statements of the Company. Such information should be read in conjunction with the financial statements and the report of R. Andrew Gately & Co. contained in Item 8 of this report.
The information set forth in the table may not be indicative of future financial condition or results of operations. The information for the years 1990 to 1993 have been restated for the discontinued operations (see Note 2 to the financial statements (Item 8 of this Report).
The Company distributed a $0.005 cash dividend on March 15, 1991.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and Results of Operation is that of the new management of the Company (see Items 1 and 8 of this Report) based on their knowledge of the operations during the periods discussed.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
The Company's consolidated revenues of $478,474 during 1994 were $259,881, 35% less than in 1993. The decline was almost entirely related to the Company's discontinuance of support of Scotcoast in the second quarter of 1994. Scotcoast's sales were $346,474 in 1994 (first quarter) vs. $714,122 (approximately three quarters in 1993). As more fully discussed in Item 1 of this Report, SRCF discontinued its support of Scotcoast due to the continuing losses of Scotcoast. Scotcoast is presently in liquidation. The Company's interest and other income decreased from $16,567 to $12,846 (22%) mainly due to the reduced level of investable funds.
Total expenses for 1994 were $930,327 compared to $1,341,546 in 1993. The decrease of $411,219 (31%) is due primarily to a $401,580 decrease in Scotcoast's cost of sales, $182,452 in Scotcoast's general and administrative expenses and $279,873 relating to Seahawk Foods discontinuing their efforts to expand its food distribution activities. This was offset by the $302,856 increase in loss on investments which was due to the write off of the Company s interests in Scotcoast and PEICO and the write-down of its investment in Extruco as discussed in Items 1 and 8 of this Report and a $111,558 increase in SRCF's general and administrative expenses due to the inclusion of a full year in 1994 vs. one month in 1993.
YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1992
As more fully discussed in Note 2 to the financial statements (Item 8


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT AUDITORS
Board of Directors Seahawk Capital Corporation Cherry Hill, New Jersey
We have audited the accompanying consolidated balance sheet of Seahawk Capital Corporation as of December 31, 1994 and 1993, and the related consolidated statement of operations, shareholders equity and cash flow for the years then ended. The financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statement based on our audit.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Seahawk Capital Corporation at December 31, 1994 and 1993 and the consolidated results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles.
/s/ R. ANDREW GATELY & CO.
R. ANDREW GATELY & CO.
Orange County, California December 28, 1995 SEAHAWK CAPITAL CORPORATION Consolidated Balance Sheets As of December 31, 1994 and 1993
See notes to accompanying financial statements.
SEAHAWK CAPITAL CORPORATION Consolidated Statements of Operations For The Three Years Ended December 31, 1994, 1993 and 1992
See accompanying notes to financial statements. SEAHAWK CAPITAL CORPORATION Consolidated Statements of Stockholders' Equity For the Years Ended December 31, 1994, 1993 and 1992
See accompanying notes to financial statements. SEAHAWK CAPITAL CORPORATION Consolidated Statements of Cash Flows For the Years Ended December 31, 1994, 1993 and 1992
See accompanying notes to financial statements. SEAHAWK CAPITAL CORPORATION Notes to Consolidated Financial Statements For The Years Ended December 31, 1994, 1993 and 1992
1. BASIS OF FINANCIAL PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS - Since February 1992, Seahawk Capital Corporation (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.
During 1993, the Company elected to concentrate its resources on the activities of SRC Food Group Limited ("SRCF"), a company based in the United Kingdom. The Company owns a 70% interest in SRCF through its wholly-owned subsidiary Seahawk Foods International, Inc. ("Seahawk Foods"). SRCF controlled 80.26% of Scotcoast Limited ("Scotcoast"), an operating business primarily engaged in production and marketing of frozen potato products through a proprietary processing facility in Glasgow, Scotland. As more fully discussed in Note 5, due to continued losses from Scotcoast operations, the Company and 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. SRCF also had an equity investment in PEICO Limited which was formed to utilize certain rights and processes of SRCF. As discussed in Note 5, because this company has not to date been able to obtain financing needed to begin operations, this investment has also been written off. SRCF's similar 33.3% investment in Extruco Limited was disposed of in August 1995.
As discussed in Note 2, effective December 31, 1994, the Company disposed of its 73.4% interest in Seahawk Overseas Exploration Corporation ("Overseas"). The Board of Directors of the Company determined that the Company's retention of Overseas shares was inconsistent with future planned operations of the Company. The Company's interest in Overseas has been treated as a discontinued operation in the accompanying consolidated statements of operations.
Other than the Company's ongoing interest in Seahawk Foods and its subsidiaries, written off in 1994, and its interest in Overseas disposed of in 1994, the Company s other investments were written off in 1993. Based on the above
events, the Company had no significant assets or active business operations as of December 31, 1994. In the last half of 1994, former management sought an acquisition of assets or a merger with another operating entity in exchange for Company securities in an effort to sustain the Company as a viable entity. However, the Company's former management was unable to locate a suitable transaction for this purpose. As discussed below, in May 1995 the Company issued and sold common stock and common stock purchase warrants representing a controlling interest in the Company for $150,000 in cash; all members of its former management other than Robert S. Friedenberg, simultaneously resigned as officers and directors of the Company. The Company's current business strategy is to negotiate the acquisition of one or more new business operations through an acquisition of stock or assets of another entity. In view of the Company s limited financial resources, this strategy anticipates the Company will issue additional securities and/or promissory notes as the consideration for an acquisition, which may be further dilutive to the interests of existing stockholders.
At December 31, 1994, the Company has stockholders' equity of only $55,055. Also, the Company has incurred net losses in most of the past 10 years. Presently, the Company's only operations are related to SRCF, which are 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, as discussed above. As more fully discussed in Note 8, in May 1995, the Company sold 15,000,000 previously unissued shares of its common stock for $150,000 in cash.
Because of 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 through the proceeds from the sale of common stock in May 1995.
It is not expected that the Company will achieve profitability in the year ended December 31, 1995. 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.
BASIS OF PRESENTATION - The consolidated financial statements include the accounts of Seahawk Capital Corporation and its subsidiaries. All intercompany accounts and transactions have been eliminated.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt instruments with original maturities of less than 90 days to be cash equivalents.
PROPERTY AND EQUIPMENT - Depreciation is provided on the straight-line method over the estimated useful lives of the assets.
FOREIGN CURRENCY TRANSLATION - The functional currency of the Company's non-U.S. subsidiaries is the local currency of the subsidiary. Adjustments resulting from the translation of financial statements are reflected as a separate component of stockholders' equity. Transaction gains and losses are reported in current operations.
LOSS PER SHARE - Loss per common share is computed by dividing the income or loss by the weighted average number of common shares outstanding. No common equivalent shares were used in the calculations since their effect would be antidilutive.
2. DISCONTINUED OPERATIONS
Effective December 31, 1994, the Company transferred its approximately 73% interest in Seahawk Overseas Exploration Corporation ("Overseas") to John C. Fitton (a Director of the Company who resigned in May 1995) 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 $.03 per share, the mean between the bid and ask prices of $.02 and $.04). Accordingly, common stock was reduced by this amount for the shares reacquired.
The results of Overseas have been reported separately as a component of discontinued operation in the accompanying consolidated statements of operations. Prior years consolidated financial statements have been restated to present Overseas as a discontinued operation.
Summarized results of Overseas are as follows:
The net assets relating to the discontinued operations included in the accompanying balance sheet at December 31, 1993:
3. COMMON STOCK, STOCK OPTIONS AND WARRANTS
At the Company's 1994 annual meeting, the Company's shareholders 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.
See Note 2 as to the reacquisition of 855,780 shares of the Company's stock in 1994. These shares are held as treasury shares. Also, see Note 8 as to the sale, after December 31, 1994, of 15,000,000 previously unissued shares of the Company's common stock and transferable warrants to purchase up to 70,000,000 shares of the Company's common stock.
Under the Company's Incentive Stock Option Plan (the "Plan") approved by the Company s shareholders in June 1992, 2,000,000 shares of the Company's common stock are reserved for granting options to certain key officers and employees who own less than 10% of the outstanding common stock of the
Company. Outstanding options for 425,000 shares exercisableat $0.10 a share were forfeited in May 1995. There are no remaining options outstanding.
4. BUSINESS SEGMENT INFORMATION
During 1993 and 1994, the Company's principal business was food processing and distribution. The Company's principal businesses in 1992 were (i) oil and gas exploration and development, (ii) food distribution, and (iii) medical equipment distribution.
The following table presents certain information regarding these industry segments for the year ended December 31, 1992.
5. FOREIGN OPERATIONS
In March 1993, Seahawk Foods Seahawk Foods, Inc. ("Seahawk Foods") negotiated an agreement under which it assumed operational control of Scotcoast Limited, a frozen potato product processing facility in Glasgow, Scotland. Seahawk Foods and its British and Scottish partners have obtained the rights to a proprietary processing method to make "twice Baked" potatoes and potato skins for the consumer, catering and restaurant markets throughout the United Kingdom and the European Community. The facility, which was acquired from receivership, had been placed in receivership due to lack of funds necessary to meet operating requirements.
In December 1993, Seahawk Foods negotiated an agreement with Systems Research Consultants ("SR Consultants"), under which the interest of both companies in Scotcoast Limited and in a joint venture were contributed into a newly formed subsidiary, SRC Food Group Limited ("SRCF"). Seahawk Foods paid an additional sum of $303,000 and acquired a 70% interest in SRCF. SR Consultants contributed its 11.8% interest in Scotcoast to SRCF in addition to SF Consultants
interests in other food processing technology rights to acquire the balance of 30%.
Seahawk and SRCF and its partners planned to use Scotcoast's facility and production equipment as a base to expand operations from Scotland to other European countries. Under the agreement, Scotcoast Limited has the right to occupy its present premises in Glasgow, Scotland, and to lease the facility's equipment from its former parent company for a term of five years. Due to continued losses from Scotcoast operations, the Company and 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:
SRCF also had 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' 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.
In 1993, the Company discontinued the activities of MedConsult (USA), Inc. and disposed of its 51% interest. MedConsult was incorporated to market medical supplies in Eastern Europe with MedConsult, GmbH of Vienna, Austria.
Foreign operations included in the accompanying consolidated financial statements are as follows:
There were no foreign operations in 1992.
6. CONTINGENCIES
The Company is obligated to pay severance compensation to a former officer and current director of $1,500 a month until February 1996.
7. INCOME TAXES
The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes" effective January 1, 1993. There was no cumulative effect of adopting SFAS No. 109 on the Company's financial statements for 1993. Restatement of prior years for the effect of SFAS No. 109 would not have materially changed previously reported losses.
There was no provision for current income taxes (domestic or foreign) in 1994, 1993 and 1992. Due to the uncertainty of the Company's ability to utilize loss carry forwards in future years, there was no provision for deferred income taxes in 1994, 1993 and 1992.
The only significant item comprising the Company s net deferred taxes as of December 31, 1994 and 1993 was the Company's operating loss carry forwards in excess of $12.5 million. Since there is no assurance such losses will be utilized, a valuation reserve for the full amounts has been provided. Further, the sale of the Company's common stock discussed in the following Note 8 to the financial statements will, under current income tax regulations, eliminate substantially all the net operating carry forwards.
8. SUBSEQUENT EVENTS
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 have resigned as directors and officers.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's directors and executive officers as of the date of this report are as follows:
- ----------------------------------- (*) - Elected as Directors and Officers as of May 8, 1995.
Jonathan B. Lassers, a private investor acquired a controlling interest in Seahawk Capital Corporation in May 1995 and was elected President and Chief Executive Officer at that time. Mr. Lassers is occupied primarily with the interests of Seahawk Capital Corporation. Since 1987 he has worked on start ups and restructuring with companies in the health care, real estate and food service industries.
Edward Daly, has been a director of SRC Food Group Limited since December 1993 as well as serving as managing director of Scotcoast Limited. He has been a director of SRC Limited, a Scarborough, UK based food and food processing consultancy business advising vegetable processing companies throughout the worked since 1990. Prior to his jointing SRC Limited, he worked with McCain Foods (GB) Limited as a management accountant.
Annamarie L. Arias is a qualified paralegal and has worked within the legal profession on an international basis for more than five years. Currently, she devotes part of her time as Secretary and Treasurer of Seahawk Capital Corporation.
Robert S. Friedenberg founded the Company in 1979 and was principally occupied as its Chief Executive Officer from 1979 until his resignation as an executive officer in February 1993. He has served as a director of the Company since 1979. He has a Bachelor of Science degree in geology from Franklin & Marshal College in Lancaster, Pennsylvania. He has served as a director of the Company since 1979.
All directors serve for a term of one year and until their successors are duly elected. Officers serve at the discretion of the Board of Directors.
The Board of Directors held two meetings during the year ended December 31, 1994. No director attended fewer than 75% of the aggregate of all meetings of the Board of Directors. Actions by the Board of Directors other than at such meetings were held by unanimous written consent. There are currently no committees of the Board of Directors. There are no family relationships between any of the Company's current directors and executive officers, except that Annamarie L. Arias is Jonathan Lassers aunt.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") requires the Company's executive officers, directors and persons who beneficially own more than 10% of the Company's equity securities file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission and are required by law to provide copies of such filings to the Company. The Company has an internal reporting program, through monthly questionnaires, of monitoring changes in beneficial ownership of its securities held by officers, directors and known 10% beneficial owners which was in effect from 1992 until October 1994 and has subsequently been reactivated in July 1995. Based solely upon a review of the copies of reports furnished to the Company as a result of its internal program, copies of filings with the Securities and
Exchange Commission provided to the Company by its officers, directors and 10% beneficial owners, and information involving securities transactions to which the Company was a party, the Company believes that Section 16(a) filing requirements applicable to its executive officers, directors and greater than 10% beneficial shareholders were complied with as of December 31, 1994.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
SUMMARY EXECUTIVE COMPENSATION
There were no executive officers of the Company or any of its subsidiaries whose salary and bonus exceeded $100,000 for the fiscal years ended December 31, 1994, 1993 or 1992.
STOCK OPTIONS
There were no executive officers of the Company or any of its subsidiaries who received or exercised stock options, stock appreciation rights or other stock awards from the Company during the last fiscal year ended December 31, 1994.
All options granted by the Company held by executive officers and directors of the Company at December 31, 1994 were returned to the Company and canceled as of May 8, 1995. No options were granted or were exercised during the year ended December 31, 1994 or subsequently. Other than the Company's Incentive Stock Option Plan, the Company does not have any other compensation plans involving stock appreciation rights or long-term incentive plans or deferred pension or profit-sharing plans.
COMPENSATION OF DIRECTORS AND EMPLOYMENT AGREEMENTS
Each Director is paid $500 per meeting attended for his services as a director. As indicated above, stock options received by certain directors granted in 1992 were returned to the Company and canceled as of May 8, 1995. The Company's Bylaws permit compensation of directors, and the Board reserves the right to change its policy as to compensation of directors from time to time.
The Company has no employment agreements with any of its executive officers.
STOCK OPTION PLAN
The Company had provided a long-term incentive tied to performance of its common stock through its 1992 Stock Option Plan (the "Plan"). All options granted by the Company under this Plan held by executive officers and directors of the Company at
December 31, 1994 were returned to the Company and canceled as of May 8, 1995. At December 31, 1994, there were options outstanding to purchase 425,000 shares of the Company's common stock at an average price of $0.10 a share of which 375,000 options were held by four executive officers or directors of the Company. None of the options granted under the Plan were exercised and all outstanding options were canceled in May 1995.
EXERCISE OF OPTION GRANTED BY SUBSIDIARY
On January 4, 1994, John C. Fitton, a director of the Company, exercised an option to purchase 1,000,000 shares of Seahawk Overseas Development Corporation ("Overseas"), an oil and gas subsidiary in which Mr. Fitton serves as President, at an option price of $0.005 a share ($5,000 total). Before exercise of the option, Mr. Fitton owned 53,835 shares of Overseas common stock; after giving effect to the option exercised, the percentage of ownership represented by 6,440,000 shares owned by the Company in Overseas was reduced from 83% to 73.4% and Mr. Fitton s ownership increased to 12%. As more fully discussed in Items 1 and 8 of this Report, Mr. Fitton purchased the Company's Overseas common shares in exchange for the Company's common stock held by Mr. Fitton as of December 31, 1994.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to shares of the Company's common stock owned by (I) each person known by management to beneficially own more than 5% of the Company s outstanding common stock, (ii) each of the Company s directors, and (iii) all executive officers and directors of the Company as a group as of December 31, 1995:
- ------------------------------- (1) To the best knowledge of the Company's management the persons named in the table have sole voting and investment power with respect to all shares shown to be beneficially owned by them, subject to the information contained in the footnotes to this table. (2) Common stock includes, where applicable, shares beneficially owned and shares issuable upon exercise of Class A common stock purchase warrants ("Class A Warrants") that were fully exercisable or exercisable within a period of 60 days from the date of this Report. Percentages in the table are based upon 27,280,646 shares of common stock outstanding (after giving effect to the issuance of 15,000,000 shares directly owned by Mr. Lassers) plus 70,000,000 shares issuable upon exercise of Class A Warrants. (3) Common stock includes 15,000,000 shares directly owned by Mr. Lassers plus 70,000,000 shares issuable upon exercise of Class A Warrants that were fully exercisable as of the date of this Report. (4) Common stock includes 1,273,491 shares directly owned by Mr. Friedenberg plus 75,000 shares owned by a family corporation in which Mr. Friedenberg has a 20% equity interest. (5) Includes shares described in Notes 3 and 4 above.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As more fully discussed in Item 1 of this Report and Note 2 to the financial statements (Item 8 of this Report), the Company disposed of its 73.4% interest in Seahawk Overseas Development Corporation to John C. Fitton, a former director of the Company, in exchange for shares of the Company's common stock held by him.
Reference is made to Item 1 of this Report for a discussion of the purchase of a controlling interest in the Company by Jonathan B. Lassers in May 1995. Following that transaction, Mr. Lassers was elected an executive officer and director of the Company.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report.
1. Financial Statements - see Index to Financial Statements included in Item 8 of this Report.
2. Financial Statement Schedules - All schedules are omitted since the required information is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements and notes thereto.
(b) Exhibits.
* Indicates exhibits filed herewith. All other exhibits are incorporated by reference to prior filings.
## Denotes management contract or compensation plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Acto of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: February 15, 1996
SEAHAWK CAPITAL CORPORATION (Registrant)
By: /s/ Jonathan B. Lassers ------------------------- Jonathan B. Lassers, President, Principal Executive Officer and Principal Financial Officer
By: /s/ Annemarie L. Arias -------------------------- Annemarie L. Arias, Secretary-Treasurer Principal Accounting Officer
Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.