FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED
For the transition period from _______________ to____________
Commission File Number: 0-8149
SOUTHWEST CAPITAL CORPORATION
(Exact of small business issuer in its charter)
New Mexico 01-89156004
___________ ____________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification no.)
1650 University Blvd., N.E., Suite 100,
Albuquerque, New Mexico 87102
_______________________________________ _____
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 505-243-4949
Securities registered pursuant to Section 12(b) of the
Exchange Act:
None
Securities registered pursuant to Section 12(g) of the
Exchange Act:
$No Par Value Common Stock
_____________________________
(Title of Class)
Check whether the issuer (1) 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 X No .
______ ________
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this
form, and no disclosure will be contained, to the best
of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB. X
______
State issuer's revenues for its most recent fiscal year. $-0-
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and asked prices of such
stock, as of a specified date within the past 60 days. (See
definition of affiliate in Rule 12b-2 of the Exchange Act).
$711,291 (based on an estimated market value of $1.00 per share)
________
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date: $0.001 par value common stock, its only class of equity
securities, as of March 3, 1998: 1,568,791
__________
PART I
Item 1. Business.
Company's Historic Development.
Southwest Capital Corporation (the "Company") was formed in
1964 under the laws of the State of New Mexico as a small loan
company. During 1977, the Company quit the small loan business
and began purchasing contracts receivable secured by real estate.
In January of 1976, the Company formed a subsidiary corporation
under the laws of the State of New Mexico, Southwest Capital
Investments, Inc., which, in April of 1976, was granted authority
to participate in the Small Business Administration's Small
Business Investment program. In January of 1980, the Company
acquired a California corporation which was in the business of
making small loans to small businesses. Subsequently, this
subsidiary was consolidated with Southwest Capital Investments,
Inc. and relocated to the company's corporate offices in
Albuquerque, New Mexico. Southwest Capital Investments, Inc. was
managed by the Company as a Small Business Investment Company
through the date of its disposal by the Company as discussed
below.
In August of 1984, the Company purchased an office building
in Albuquerque, New Mexico and relocated its corporate offices to
that building. In January of 1988, it sold the office building,
but continued to retain its corporate offices in the building
until July of 1989. The Company currently uses office space
located at 1650 University Blvd. N.E., Albuquerque, New Mexico
87102, Suite 100.
The Company operated Southwest Capital Investments, Inc.,
("SCII") as a small business investment company ("SBIC") licensed
with the Small Business Administration ("SBA") and the Company
was a Business Development Company ("BDC") under the Investment
Company Act of 1940 (the "40 Act"). As an SBIC, SCII purchased
equity securities, debentures and loans. SCII was generally able
to borrow, or have guaranteed by the SBA, three times its private
capital. However, SCII's income and assets had continually
declined over the years and in April, 1989, it was informed by
the SBA that its capital was impaired. Management began
discussions width the SBA looking toward curing its capital
deficiency, but was unable to obtain additional capital for the
subsidiary, and its income and assets continued to decline during
the first half of 1989.
Unable to find additional capital for SCII, the Company's
management determined that it would be in the Company's best
interest to divest itself of SC1I and to acquire a new business,
which it did with the acquisition of Beef Technologies, Inc.
("BTI"), on the terms discussed below. Following the Company's
decision to sell SCII, Martin J. Roe, the Company's President and
a Director, offered to exchange 125,000 shares of Company common
stock owned by him for all of the issued and outstanding shares
of SC1I. That offer was accepted by the Company on July 13, 1989,
effective June 30, 1989, and was completed on March 16, 1990,
following approval by the SBA of the transfer of the license to
Mr. Roe. In 1991 SCII surrendered its license to SBA and began a
liquidation of its assets under the supervision of the SBA.
Effective June 30, 1989, the Company acquired all of the
issued and outstanding common stock of Beef Technologies, Inc.
("BTI"), a New Mexico corporation. BTI was organized on June 9,
1989, to exploit certain technology and business plans related to
the production and marketing of lean, low cholesterol beef, a
process developed by George W. Rhodes. The Company issued 800,000
of its common shares for the BTI shares. As a part of that
transaction, George W. Rhodes and James T. McWilliams were
appointed to the Company's Board of Directors and Robert J.
Reithel and Bernard S. Shapiro, who were Company Directors at
that time, resigned. On July 13, 1989, Valerie G. Wetherill
resigned as the Company's Vice- President and Secretary. On July
17, 1989, Martin J. Roe resigned as the Company's Treasurer; on
August 7, 1989, he resigned as the Company's President; and in
1990, he resigned as Director. Mr. McWilliams served as interim
President. Sara V. Rhodes, a Certified Public Accountant and the
wife of George W. Rhodes, was elected by the Board of Directors
to the positions of Secretary and Treasurer.
In April of 1991, the Company decided to implement the BTI
technology in a small California pilot program. Imperial Capital
Corporation, a finance corporation controlled by George Feaster,
a director of SWC's board, advanced the funds necessary to raise
94 head in Holtville and Imperial, California The concept was to
check alfalfa and feedlot performance and subsequently test the
market for the products in the Southern California area At the
encouragement of a potential client, Mannings Beef Products
International ("Mannings") these animals were not implanted with
steroids in order to render them acceptable to U. S. health food
stores. Unfortunately, the specific health food store that
Mannings sold beef products to later added additional
specifications which could not be met. These requirements
eliminated them as a potential buyer for this small herd. The
cattle gained only 2.02 pounds per day for the entire period This
disappointing result was almost a full pound less than any of
management's previous experiences and approximately one-half
pound less than industry standards. The meat quality, as attested
by Manning, was superb. The weight gain rate, however, was less
than expected. Management believed the weight performance was a
function of not implanting the cattle, as is the normal practice.
The results created costs per pound far in excess of those
experienced by BTI previously in its New Mexico market.
The Company was unable to place any of the test program lean
beef into the U. S. health food system at the customary 1,050
pound slaughter weights. Therefore, the animals were taken to
full slaughter weight conditions. Forty head were purchased in
January, 1992 by Mannings for their Japanese affiliate. Mannings
is owned by Zenchiku, Ltd. of Tokyo which exports U. S. beef to
Japan. They prefered to purchase extra heavy animals (over 1,500
lbs.) and normally paid an $.11 per pound premium on the hoof.
They purchased forty 1,200 pound steers from the Company for a
trial program including taste testing in Japan. On February 6,
1992 Mannings informed the Company that BTI animals were the
"best ever slaughtered at their plant." Management, however, was
unable to secure any significant purchase commitments during 1992
at the premiums necessary to assure profitable margins to the
Company. Such contracts were necessary to attract new capital
necessary to fund a commercially scaled beef program. As a
result, once the pilot program was concluded, efforts by
management to further exploit the technology were limited by
Company resources, and the project was terminated.
On March 23, 1995, George W. Rhodes, Chairman of the Board
and James T. McWilliams, Director and Vice President of the
Registrant, sold in a private transaction, 350,000 shares each of
the Registrants common shares to four individuals as disclosed on
Form 8-K/A, dated March 23, 1995, incorporated herein by
reference. At an annual meeting of the shareholders of the
Registrant, held on January 31, 1995, the following persons were
elected Directors and subsequently appointed Officers of the
Registrant: Laurence S. Zipkin, President and Director, Nasser
Kazeminy, Secretary/Treasure and Director and Alan R. Geiwitz,
Vice President and Director. The current management has actively
solicited and pursued investment possibilities in the form of
acquisition of privately held business'. To date several
companies have been analyzed as potential acquisition candidates,
however, as of this date, no firm agreement has been reached with
any of the companies with whom the Registrant has engaged in
acquisition or merger discussions.
Item 2. Description of Properties.
The Registrant utilizes office space at 1650 University
Blvd., N.E., Albuquerque, New Mexico 87102. The space utilized by
the Registrant is negigable and it pays no rent for its use.
Item 3. Legal Proceedings.
Insofar as known to the Company's management, there are no
legal or administrative actions now pending or contemplated
against the Company, its current or former management or any of
its subsidiary corporations.
Item 4. Submission of Matters to a Vote of Securities Holders.
No matters were submitted to a vote of shareholders during
the fourth quarter of the company's fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Registrant's common stock has been listed in by the National
Daily Quotation Bureau, Inc. in its Pink Sheets and the OTC
Bulletin Board under the symbol "SWCC". The high and low bid
prices during each quarter of 1996 and 1997 are as follows
<TABLE>
1996 high low 1997 high low
____ ____ ____ ____ ____ ____
<S> <C> <C> <S> <C> <C>
first quarter $ 1.50 $ 1.50 first quarter $1.50 $1.375
second quarter 1.50 1.375 second quarter 1.50 1.375
third quarter 1.50 1.375 third quarter 1.50 1.375
fourth quarter 1.50 1.50 fourth quarter 1.50 1.375
</TABLE>
There were approximately 900 holders of the Company's common
stock on December 31, 1997. The Company has paid no dividends
on its common stock for more than the past five years, including
the fiscal year ended December 31, 1997.
Item 4. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The following paragraphs present Management's discussion and
analysis of the financial condition and results of operations of
the Company at the present time.
Liquidity and Capital Resources
Liquidity, as discussed herein, refers to the Company's
ability to generate adequate amounts of cash to meet its cash
needs.
At December 31, 1997, the Company had cash and interest
bearing assets of $2,837 and liabilities of $30,189 which
includes loans of $24,000 made by the registrants current
management. At present, the Company has no employees and will be
wholly dependent on the personal efforts of its appointed
officers and directors, who are engaged full time in other
activities, endeavors and professions.
The Company is presently without significant income. Based
on the present level of operations, management believes that the
Company funds on hand and continued loan availability from its
management are suffecant to maintain the Company for the year
ended December 1998. Management continues to seek out
opportunities to improve the Company's financial position.
There is no assurance that the Company, however, will be
successful in raising new capital.
Results of Operations
The Company's net loss of $13,299 for 1997 represents
interest, and general and administrative costs for the
previous twelve months.
Interest expense incurred in 1997 was $1,743 and interest
expense incurred during 1996 was $1,076. General and administrative
expenses increased from $8,329 incurred in 1996 to $11,556 in
1997 which increase was due primarily to increased shareholder
expenses. General and Administrative costs are primarily due to
the cost of retaining an independent stock transfer company to
transfer the stock of the Company, the retention of outside
accounting services and independent outside auditors as well as
costs associated with shareholder expense.
The Company's net loss of $13,299 in 1997 represents a
increase of $3,894 from the $9,405 loss recorded in 1996. This
increase resulted primarily from the increase in shareholder
expense incurred during 1996. The Registrant had no operating
income in 1997 or 1996, while expenses were comprised of the cost
of, general and administrative expenses.
Item 7. Financial Statements.
Report of Independent Certified Public Accountants
Stockholders
Southwest Capital Corporation
We have audited the accompanying consolidated balance sheet of
Southwest Capital Corporation and Subsidiary, as of December 31,
1997, and the related consolidated statements of operations,
stockholders' deficit, and cash flows for each of the two years in
the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
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 statements are 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 financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of Southwest Capital Corporation and Subsidiary, as of
December 31, 1997, and the consolidated results of their
operations and their consolidated cash flows for each of the two
years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
February 20, 1998
Southwest Capital Corporation and Subsidiary
CONSOLIDATED BALANCE SHEET
December 31, 1997
ASSETS
CURRENT ASSETS
Cash $ 2,837
=======
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 2,703
Accrued liabilities 3,486
------
Total current liabilities 6,189
NOTES PAYABLE TO RELATED PARTIES (note B) 24,000
STOCKHOLDERS' DEFICIT
Common stock - no par value; authorized, 10,000,000 shares;
issued and outstanding, 1,568,791 shares 1,568,791
Additional paid-in capital 1,659,054
Accumulated deficit (3,255,197)
-----------
(27,352)
-----------
$ 2,837
===========
The accompanying notes are an integral part of this statemment.
Southwest Capital Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
1997 1996
--------- --------
Expenses
General and administrative $ 11,556 $ 8,329
Interest 1,743 1,076
--------- --------
NET LOSS $ 13,299 $ 9,405
========= ========
Net loss per common share $ (.01) $ (.01)
========= ========
Weighted average common shares outstanding 1,568,791 1,568,791
========= =========
The accompanying notes are an integral part of these statements.
Southwest Capital Corporation
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
Years ended December 31, 1997 and 1996
<TABLE>
Additional
Common stock paid-in Accumulated
----------------
Shares Amount capital deficit Total
------ ------ --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at 12-1-1996 1,568,791 $1,568,791 $1,659,054 $(3,232,493) $(4,648)
Net loss for 1996 - - - (9,405) (9,405)
---------- ---------- ---------- ------------ --------
Balance at 12-31-96 1,568,791 1,568,791 1,659,054 (3,241,898) (14,053)
Net loss for 1997 - - - (13,299) (13,299)
---------- ---------- ---------- ------------ ---------
Balance at 12-31-96 1,568,791 $1,568,791 $1,659,054 $(3,255,197) $(27,352)
========== ========== ========== ============ =========
</TABLE>
The accompanying notes are an integral part of this statement.
Southwest Capital Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
1997 1996
--------- -------
Increase (Decrease) in Cash
Cash flows from operating activities
Net loss $ (13,299) $ (9,405)
Adjustments to reconcile net loss to net cash
used in operating activities
Changes in operating assets and liabilities
Increase in accounts payable and accrued
liabilities 2,932 1,359
------- ------
Net cash used in operating activities (10,367) (8,046)
Cash flows from financing activities
Proceeds from notes payable 8,000 6,000
------- ------
NET DECREASE IN CASH (2,367) (2,046)
Cash at beginning of year 5,204 7,250
------- ------
Cash at end of year $ 2,837 $ 5,204
======= =======
The accompanying notes are an integral part of these statements.
Southwest Capital Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
Southwest Capital Corporation (the "Company"), a New Mexico
corporation, acts primarily as a holding company and has had no
business operations since 1992. At December 31, 1997, the
Company's activities generally consist of paying general and
administrative costs of the Company. At present, the Company has
no employees and is wholly dependent on the personal efforts of its
officers and directors, who are engaged full-time in other
activities, endeavors, and professions.
A summary of the significant accounting policies consistently
applied in the preparation of the accompanying consolidated
financial statements follows.
1. Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned inactive subsidiary, Beef
Technologies, Inc. All significant intercompany transactions and
balances have been eliminated.
2. Loss Per Share
Basic loss per share has been computed using the weighted average
number of common shares outstanding during each period. Diluted
loss per share is the same as basic loss per share because the
Company has only common stock outstanding.
3. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes; accordingly,
actual results could differ from those estimates.
NOTE B - NOTES PAYABLE TO RELATED PARTIES
Notes payable to related parties are comprised of two
uncollateralized notes (at $16,000 and $8,000) bearing interest at
10%, due to two individuals who are officers, directors, and
stockholders. The notes have no specified payment terms but are
not callable until after December 31, 1998.
NOTE C - INCOME TAXES
Income taxes are accounted for under Statement of Financial
Accounting Standards No. 109 ("SFAS"), Accounting for Income Taxes.
Under this method, deferred income taxes are recognized for the tax
consequences of temporary differences between the financial
statement carrying amounts and the tax bases of existing assets and
liabilities using the presently enacted tax rates.
The Company files a consolidated income tax return. Net operating
losses, subject to certain limitations, are available to offset
future taxable income and income taxes payable, if any. At December
31, 1997, the Company's consolidated net operating loss carryforwards
were approximately $335,000 for tax reporting purposes. These
carryforwards, if not utilized, will expire in the years 2000
through 2012. At December 31, 1997, the Company had deferred tax
assets related to net operating loss carryforwards of approximately
$130,000. The deferred tax assets have been completely eliminated
through a valuation allowance as the Company cannot currently
conclude that it is more likely than not that the benefit will be
realized. The valuation allowance for tax assets increased $5,000
during both of the years ended December 31, 1997 and 1996.
NOTE D - FINANCIAL INSTRUMENTS
The following table includes various estimated fair value
information as of December 31, 1997 as required by SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. Such
information, which pertains to the Company's financial instruments,
is based on the requirements set forth in SFAS No. 107 and does not
purport to represent the aggregate net fair value of the Company.
The carrying amounts in the table below are the amounts at which
the financial instruments are reported in the consolidated
financial statements.
All of the Company's financial instruments are held for purposes
other than trading.
The following methods and assumptions were used to estimate the
fair value of each class of financial instruments for which it is
practicable to estimate that value:
1. Cash
The carrying amount approximates fair value because of the short
maturity and highly liquid nature of those instruments.
2. Notes Payable
These amounts have no fixed maturities and it is not practicable to
estimate fair value.
The carrying amounts and estimated fair values of the Company's
financial instruments, as of December 31, 1997, are as follows:
Carrying Estimated
amount fair value
-------- ----------
Financial assets
Cash $ 2,837 $ 2,837
Financial liabilities
Notes payable for which it is not
practicable to
estimate fair value (24,000) -
SIGNATURE
In accordance with Section 13 or l5(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.
SOUTHWEST CAPITAL CORPORATION
s/Laurence S. Zipkin
By: _______________________________ March 28, 1998
Laurence S. Zipkin,
President and Chief Executive Officer
Dated: March 28, 1998
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dated indicated, thereunto duly
authorized.
SOUTHWEST CAPITAL CORPORATION
s/Laurence S. Zipkin
By: _______________________________ March 28, 1998
Laurence S. Zipkin, Director
s/Nasser J. Kazeminey
By: ________________________________ March 28, 1998
Nasser J. Kazeminey, Secretary/Treasurer
Director
s/Alan R. Geiwtz
By: _______________________________ March 28, 1998
Alan R. Geiwtz, Vice President
Chief Financial Officer and Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,837
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,837
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,837
<CURRENT-LIABILITIES> 6,189
<BONDS> 0
0
0
<COMMON> 1568791
<OTHER-SE> (1,585,844)
<TOTAL-LIABILITY-AND-EQUITY> 2,837
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,556
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,743
<INCOME-PRETAX> (13,299)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,299)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,299)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
