SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
Commission file number 000-24623
SW Ventures, Inc.
________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 87-0559453
____________________________ ________________________________
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization
455 East 400 South, Suite 100
Salt Lake City, Utah 84111
________________________________________
(Address of principal executive offices)
(801) 355-6524
________________________________________________
(Issuer's telephone number, including area code)
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) Yes [ x ] No [ ], and (2) has been subject to such filing
requirements for the past 90 days. Yes [X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of March 31, 1999 the issuer had outstanding 3,416,066 shares of its
Common Stock, $0.001 par value.
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited financial statements of SW Ventures, Inc., a Nevada
corporation (the "Company"), as of March 31, 1999 were prepared by Management
and commence on the following page. In the opinion of Management the
financial statements fairly present the financial condition of the Company.
SW Ventures Inc.
Unaudited Balance Sheets
For the Three Months Ended March 31, 1999
Balance Sheet at March 31, 1999 and December 31, 1998
Statement of Operations for the three months ended March 31, 1999 and March
31, 1998
Statement of Cash Flows for the three months ended March 31, 1999 and March
31, 1998
Statement of Changes in Stockholder's Equity from May 7, 1996 to March 31,
1999
2
<PAGE>
SW Ventures Inc.
Balance Sheet
For the Three Months Ended March 31, 1999
and the Year Ended December 31, 1998
March 31 December 31
1999 1998
----------- ----------------
(Unaudited)
Assets
Current Assets:
Cash $ 301 $ 8,900
Accounts Receivable 9,726 3,748
Inventory 894 292
----------- ----------------
Total Current Assets 10,921 12,940
----------- ----------------
Mineral Property & Equipment:
Mineral property 144,200 144,200
Less cost depletion (24,880) (19,263)
Office equipment 4,291 4,291
Less accumulated depreciation (1,185) (970)
------------- --------------
Net Mineral Property &
Equipment 122,426 128,258
------------- ---------------
Total Assets $ 133,347 $ 141,198
============= ===============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,773 $ 4,125
Advances from officer 500 8,889
------------- --------------
Total Current Liabilities 8,273 13,014
Stockholders' Equity:
Common Stock, $.001 par value; authorized
50,000,000 shares, issued and outstanding
3,416,066 shares on March 31, 1999
and 3,416,066 on December 31, 1998 3,416 3,416
Paid-in capital 167,268 167,268
Accumulated deficit (45,610) (42,500)
------------- --------------
Total Stockholders' Equity 125,074 128,184
------------- --------------
Total Liabilities & Stockholders' Equity $ 133,347 $141,198
============= ===============
3
<PAGE>
SW Ventures, Inc.
Statement of Operations
For the three month period Ended March 31, 1999 and 1998
Three Months Ended
March 31, 1999 March 31, 1998
(Unaudited) (Unaudited)
----------------- ---------------
Oil revenue $ 21,415 $ 19,980
Oil production costs & taxes 9,121 6,467
Cost depletion 5,617 2,685
General & administrative expenses 9,572 5,824
Depreciation expense 215 99
----------------- ---------------
Total expenses 24,525 15,075
----------------- ---------------
Income (Loss) Before Income taxes (3,110) 4,905
Income tax provision - -
----------------- ----------------
Net Income (Loss) $ (3,110) $ 4,905
================= ===============
Basic and diluted net
income (loss) per common share $ (0.001) $ 0.002
================= ===============
Weighted average shares outstanding 3,416,066 3,092,500
================= ===============
4
<PAGE>
SW Ventures, Inc.
Statement of Cash Flows
For the three month period ended March 31, 1999 and 1998
For the For the
Three Month Three Month
Period Ended Period Ended
March 31, 1999 March 31, 1998
(Unaudited) (Unaudited)
-------------- ----------------
Cash flows used in operating activities:
Net income (loss) $ (3,110) $ 4,905
Adjustments to reconcile income(loss)
to net cash used in operating activities:
Depreciation expense & cost depletion 5,832 2,783
Changes to operating assets & liabilities:
Decrease (Increase)in accounts receivable (5,978) (921)
(Decrease) Increase in accounts payable 3,648 (4,300)
Decrease (Increase) in inventory (602) -
------------- --------------
Net cash provided (used) by operating
activities ( 210) 2,467
Cash flows used in investing activities:
Purchase of equipment & mineral properties - (45,338)
-------------- ---------------
Net cash used in investing activities - 45,338
Cash flows provided by (used in) financing activities:
Common stock issued for cash - 33,750
Advance from officer 500 6,500
Repayment of advance from officer (8,889)
Offering costs for common stock issuance - (20)
-------------- ---------------
Cash provided (used) by financing activities (8,389) 40,230
Net increase (decrease) in cash (8,599) (2,641)
Cash, beginning period 8,900 8,424
-------------- ---------------
Cash, end of period $ 301 $ 5,783
============== ===============
No cash paid for income taxes or interest.
Supplemental non cash activities:
Issuance of common stock for loan
From affiliate $ 0 $ 9,000
============== ===============
5
<PAGE>
SW Ventures, Inc.
Statements of Changes in Stockholders' Equity
From May 7, 1996 (Inception) to the year ended December 31, 1998
and the three month period ended March 31, 1999
<TABLE>
<CAPTION>
$.001
Par value
Common Common Accumu-
Stock Stock Paid-in lated Total
Shares Amount Capital Deficit Equity
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Shares issued to founders
on May 7, 1996 1,475,000 $ 1,475 $ 9,525 $ - $ 11,000
Shares issued for legal fees
(securities registration)
on May 7, 1996 115,000 115 735 - 850
Shares issued for cash on
December 6, 1996 260,000 260 12,740 - 13,000
Net loss for the period from
May 7, 1996 (inception)
through December 31, 1996 (14,728) (14,728)
----------- ---------- ---------- --------- ----------
Balances, December 31, 1996 1,850,000 1,850 23,000 (14,728) 10,122
Shares issued for cash
May 16, 1997 60,000 60 2,940 - 3,000
Shares issued for compensation
May 16, 1997 55,000 55 2,695 - 2,750
Shares issued for legal fees
(securities registration)
on May 16, 1997 35,000 35 1,715 - 1,750
Shares issued for cash (private
placement offering) on
September 26, 1997 net of
offering costs of $17,600 1,000,000 1,000 81,400 - 82,400
Net loss for the year ended
December 31, 1997 (31,153) (31,153)
----------- --------- ---------- --------- ---------
Balances, December 31, 1997 3,000,000 3,000 111,750 (45,881) 68,869
Shares issued to officer upon
conversion of loan on
January, 1998 90,000 90 8,910 - 9,000
Shares issued for cash (in
private placement offering)
net of offering costs of
$1,976: (275,000 in April;
27,646 in June; 23,420
in Sept.) 326,066 326 46,608 - 46,934
Net income for year ended
December 31, 1998 - - - 3,381 3,381
---------- --------- ---------- --------- ---------
Balance at December 31,1998 3,416,066 3,416 167,268 (42,500) 128,184
Net loss for the three
months ended March 31, 1999 - - - (3,110) (3,110)
---------- --------- ---------- --------- ---------
Balance at March 31, 1999 3,416,066 $ 3,416 $ 167,268 $(45,610) $125,074
========== ========== ========== ========= =========
</TABLE>
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion provides information which management believes
is relevant to an assessment and understanding of the Company's plan of
operation. The discussion should be read in conjunction with the consolidated
financial statements and notes thereto.
RESULTS OF OPERATIONS
The Company has received revenues from operations since October of 1997
when it received its first revenues from oil production from the Montana
Berger Well #1. A second well, the Montana Berger Well #2 began production in
April of 1998.
QUARTERS ENDED MARCH 31, 1998 AND 1999: The Company had net loss of
$3,110 its first quarter of 1999, as compared to net income of $4,904 in the
first quarter of 1998. The Company had revenues from oil production for the
first three months of 1999 of $21,415 compared to revenues of $19,979 in the
first three months of 1998. The Company's revenues from oil production,
therefore, were almost equal with only a 7% increase over the first quarter
of 1999, although oil production costs and taxes increased 33% in 1999 over
the first quarter of 1998, and depletion expenses more than doubled. This is
due to the fact that the Company had two producing wells in its first quarter
of 1999 as opposed to one producing well in the first quarter of 1998 with oil
prices lower in 1999 (averaging $7.90 bbl. during the first quarter) compared
to the first quarter of 1998 (averaging $8.90 bbl). In addition, production
is down on the Company's initial well, the Montana Berger Well #1, which
averaged 3,996 bbls. per month in the first quarter of 1998 as opposed to
2,965 bbls. per month in the first quarter of 1999. The Company recognizes
cost depletion based upon the production from its wells as compared to total
estimated reserve quantities of the wells and therefore cost depletion levels
are a function of production quantities.
During the first three months of 1999, general and administrative
expenses rose from $5,825 in 1998 to $9,573, despite a reduction in both
legal/accounting fees and consulting fees between the same two first quarter
periods. This increase was due to mostly to a more than $3,000 increase in
the first three months of 1999 in travel expenses over the same period last
year which were incurred by the Company in connection with investigating other
business opportunities.
YEARS ENDED DECEMBER 31, 1998 AND 1997: The Company had net income of
$3,381 for the year ended December 31, 1998, as compared to a net loss of
$31,153 for 1997. The Company had revenues from oil production in 1998 of
$76,903 compared to revenues of $22,007 in 1997. The change from net loss to
net income from 1997 to 1998 is attributable to an increase in oil production
revenues. Although the Company saw a total overall increase in expenses from
1997 to 1998 of $20,057, the increase in oil production revenues was over
$54,000. The increase in production is due to the fact that the Company
realized revenues from production for only a little over two months in 1997 as
opposed to a full year in 1998.
General administrative expenses increased from $13,478 in 1997 to
$21,367 in 1998. This increase was due to the commencement of the payment of
compensation to an officer of the Company of $1,000 per month beginning in
February of 1998, for various services rendered on behalf of the Company in
connection with her duties as Secretary/Treasurer, in-house accounting,
7
<PAGE>
initial drafting of various documentation including the Company's offering
memorandum, dated March 16, 1998, its Registration Statement on Form 10-SB,
and amendments thereto, and other required disclosure documentation.
The Company changed legal counsel during 1998 and significantly
reduced its legal fees from $30,340 in 1997 to $6,389 in 1998. Depreciation
expenses rose from $228 in 1997 to $742 in 1998 and cost depletion on the
Company's wells rose from $1,705 in 1997 to $17,558 in 1998.
The Company funded mineral property investments in 1998 by selling
shares of its common stock to public investors for cash in the amount $48,910.
In addition, the Company received cash advances from an officer and director
in the amount of $11,200, which was repaid out of production revenues; $2,311
was repaid in 1998 and the balance was repaid in January of 1999. An
additional $9,764 of the costs of mineral property investment came from
production revenues. In 1997, the Company funded its initial mineral
property investment of $74,325 from proceeds of an offering in which 1,000,000
shares were purchased by investors for gross proceeds to the Company of
$100,000. It also received a cash advance from an officer and director of
$9,000 which was converted into 90,000 shares of common stock in January of
1998. The foregoing 90,000 shares are "restricted".
YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996. The Company
had a net loss of $14,728 as of December 31, 1996, which increased to $31,153
in 1997. The increase in net loss was due to an increase in the Company's
legal expenses. The Company did not receive any revenues from operations in
1996, as opposed to its year ended 1997 when it received revenues from oil
production of $22,700. In connection with its initial revenues from
operations in 1997, which began in mid-October, the Company also incurred
related production expenses and taxes totaling $7,409. The Company had no
production expenses or production taxes in 1996. General and administrative
costs in 1997 were $13,478 as opposed to $14,728 in 1996, which makes 1996
expenses proportionately higher because the Company's year ended 1996 was not
a full year (the Company's inception being May 7, 1996), and is mainly
attributable to costs related to start-up. Legal expenses in 1997 were
$30,340 as opposed to -0- in 1996 and were incurred in connection with the
drafting of the Company's first offering memorandum.
The Company funded its losses in 1996 through the issuance of shares of
common stock for cash contributions which equaled $14,728. In 1997, the
Company conducted an offering of 1,000,000 shares of its common stock to the
public and received gross proceeds of $100,000, and net proceeds of $82,400,
$74,345 of which went to the Company's initial investment in mineral property
(the Prospect).
LIQUIDITY AND CAPITAL RESOURCES.
The Company has had revenues from operations in each of the last two
years. The Company's cash requirements consist of its office expenditures,
legal and accounting fees to comply with securities registration filing
requirements, oil production taxes and expenses, and certain consulting fees.
The Company relies on revenues from operations to cover its cash requirements.
During the last year and the first quarter of 1999, revenues were sufficient
to meet the Company's cash requirements to fund day to day operations as well
as a portion of mineral property investments. The Company also relied on sales
of its common stock and advances from an officer and director to fund the
balance of its mineral property investments during its last fiscal year
although it has not made any material purchases of property or equipment
8
<PAGE>
during the first quarter of 1999. The Company anticipates that it will have
sufficient revenues in 1999 to fund its operations, provided it continues to
receive revenues from oil production. Revenues from oil production to the
Company, however, have decreased due to the significant decrease in the price
per barrel of oil in the marketplace, and an increase in associated production
expenses which began in the fourth quarter ended December 31, 1998. The
Company expects lower oil prices to persist throughout 1999. However, the
Montana Prospect Drilling Program (in which Company has a 21.25% working
interest)(the "Program")has been receiving a larger than normal bonus per
barrel for its low gravity, high asphalt crude oil due to a reduced supply of
the same in the market. The higher than normal bonus will continue at least
through the end of the Company's second quarter, if not longer.
YEAR 2000
Management believes that the Company's accounting and operational systems
are year 2000 compliant. Prior to the Company's filing of its last Quarterly
Report on Form 10-QSB, the Company contacted the Operator of the wells; the
Operator indicated to The Company that it expects no material year 2000 issues
because none of the systems used at the wells sites in which the Company has
an interest are run by computer systems. The Company is not dependent on
computers other than for its internal bookkeeping which is done on a system
that is Year 2000 compliant. The Company has no relationship with any third
parties which are dependent on computers other than its bank. The Company's
bank has reported that it is Year 2000 compliant.
FORWARD-LOOKING STATEMENTS
When used in this Form 10-QSB, in filings by the Company with the
Securities and Exchange Commission (the "SEC"), in the Company's press
releases or other public or stockholder communications, or in oral statements
made with the approval of an authorized executive officer of the Company, the
words or phrases "would be," "will allow," "intends to," "will likely result,"
"are expected to," "will continue," "is anticipated," "estimate," "project,"
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
ANY FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-QSB REFLECT
MANAGEMENT'S BEST JUDGMENT BASED ON FACTORS CURRENTLY KNOWN AND INVOLVE RISKS
AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY MATERIALLY.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None
9
<PAGE>
Item 5. Other Information.
Subsequent to the Company's first quarter ended, on April 14, 1999, the
Company executed and Asset Contribution Agreement with Bachkine & Meyer
Industries S.A. ("Bachkine"), a British Virgin Islands corporation, whereby
the Company will acquire certain proprietary technology from Bachkine. For
additional information, see the Company's Current Report on Form 8-K and
attached Exhibit, filed with the Securities and Exchange Commission on April
29, 1999, and incorporated herein be reference.)
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
No. Description
- ----- ---------------
10 Asset Contribution Agreement, incorporated by reference to Exhibit
10 of the Company's Current Report on 8-K dated April 14, 1999 and
filed on April 29, 1999
(b) Reports on Form 8-K.
On April 29, 1999, the Company filed a Current Report on Form 8-K with
the Securities and Exchange Commission. The following items were reported on:
Item 1. Changes in Control of the Registrant; Item 2, Acquisition and
Disposition of Assets; Item 5. Other Events; Item 6. Resignation of Officers
and Directors; Item 7. Financial Statements and Exhibits; and Item 9. Sales of
Equity Securities Pursuant to Regulation S.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SW VENTURES, INC.
(Registrant)
Date: May 13, 1999 By: /s/ Guido Cloetens
------------------------
Guido Cloetens
Director, President and
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATMENTS FOR THE PERIOD ENDED MARCH 31, 1999, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 301
<SECURITIES> 0
<RECEIVABLES> 9,726
<ALLOWANCES> 0
<INVENTORY> 894
<CURRENT-ASSETS> 10,921
<PP&E> 148,491
<DEPRECIATION> 26,065
<TOTAL-ASSETS> 133,347
<CURRENT-LIABILITIES> 8,273
<BONDS> 0
0
0
<COMMON> 3,416
<OTHER-SE> 121,658
<TOTAL-LIABILITY-AND-EQUITY> 133,347
<SALES> 21,415
<TOTAL-REVENUES> 21,415
<CGS> 0
<TOTAL-COSTS> 9,121
<OTHER-EXPENSES> 15,404
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,110)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,110)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,110)
<EPS-PRIMARY> (0.001)
<EPS-DILUTED> (0.001)
</TABLE>
