Seawright Holdings, Inc.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB/A

Amendment No. 1

(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, 2006
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
or organization)
(I.R.S. Employer
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 9,075,476 shares of its common stock outstanding as of September 14, 2006.


1

EXPLANATORY NOTE

This Amendment No. 1 to the Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2006 ("Amendment No. 1") filed by Seawright Holdings, Inc. (the “Company”) is being filed to reflect certain options to purchase the Company’s common stock that were granted but which were not reflected in Note A and Note G to the Form 10-QSB filed on August 21, 2006 due to administrative error. All other financial and other information in the originally filed 10-QSB for the quarterly period ended June 30, 2006 remains unchanged as the options issued were not considered to have a material impact on all other previously reported figures. This Form 10-QSB/A does not reflect events occurring after the filing of the original Form 10-QSB, or modify or update the disclosure therein in any way other than as required to reflect the amendment set forth herein. The Company’s President and Chief Executive Officer has executed new certifications in connection with the filing of this Amendment No. 1, and copies of these new certifications have been filed as exhibits to this Amendment No. 1.
 
NOTE A-SUMMARY OF ACCOUNTING POLICIES

General

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Accordingly, the results from operations for the three and six months period ended June 30, 2006 are not necessarily indicative of the results that may expected for the year ending December 31, 2006. The unaudited condensed financial statements should be read in conjunction with the December 31, 2005 financial statements and footnotes thereto included in the Company's SEC Form 10 KSB, as amended

Business and Basis of Presentation

Seawright Holdings, Inc. (the "Company") was formed on October 14, 1999 under the laws of the state of Delaware. The Company is a "development stage enterprise" (as defined in statement of Financial Accounting Standards No. 7). The Company is currently engaged in the spring water bottling and distribution business. From its inception through the date of these financial statements, the Company has recognized minimal revenues and has incurred significant operating expenses. Consequently, its operations are subject to all risks inherent in the establishment of a new business enterprise. For the period from inception through June 30, 2006, the Company has accumulated losses of $2,744,409.

The consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiary, Seawright Springs LLC. Significant intercompany transactions have been eliminated in consolidation.

Reclassification

Certain reclassifications have been made to conform prior periods’ data to the current presentation. These reclassifications had no effect on reported losses.
 
Stock Based Compensation

On January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment,” which requires the measurement and recognition of compensation expense for all stock-based awards made to employees based on estimated fair values. SFAS No. 123(R) supersedes previous accounting under Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” for periods beginning in fiscal 2006. In March 2005, the SEC issued Staff Accounting Bulletin (“SAB”) No. 107, providing supplemental implementation guidance for SFAS 123(R). The Company has applied the provisions of SAB No. 107 in its adoption of SFAS No. 123(R).
 
2

NOTE A-SUMMARY OF ACCOUNTING POLICIES (Continued)
 
SFAS No. 123(R) requires companies to estimate the fair value of stock-based awards on the date of grant using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods. The Company adopted SFAS No. 123(R) using the modified prospective application, which requires the application of the standard starting from January 1, 2006, the first day of the Company’s year. The Company’s condensed consolidated financial statements for the six months ended June 30, 2006 reflect the impact of SFAS No. 123(R).

Prior to the adoption of SFAS No. 123(R), the Company accounted for stock-based awards to employees using the intrinsic value method in accordance with APB No. 25, as allowed under SFAS No. 123, “Accounting for Stock-Based Compensation.” Under the intrinsic value method, no stock-based compensation expense for employee stock options had been recognized in the Company’s consolidated statements of operations because the exercise price of the Company’s stock options granted to employees equaled the fair market value of the underlying stock at the date of grant. In accordance with the modified prospective transition method the Company used in adopting SFAS No. 123(R), the Company’s results of operations prior to fiscal 2006 have not been restated to reflect, and do not include, the impact of SFAS No. 123(R).

Stock-based compensation expense recognized during a period is based on the value of the portion of stock-based awards that is ultimately expected to vest during the period.

The following table illustrates the pro forma net income and earnings per share for the three and six months ended June 30, 2005 as if compensation expense for stock options issued to employees had been determined consistent with SFAS No. 123:

   
For the three
months ended
June 30, 2005
  
For the six
months ended
June 30, 2005
  
   
(As restated -
Note I)
  
(As restated -
Note I)
  
Net loss - as reported
  
$
(284,398
)
$
(435,443
)
Add: Total stock based employee compensation expense as reported under intrinsic
 value method (APB. No. 25)
    
-
    
-
  
Deduct: Total stock based employee compensation expense as reported under fair
value based method (SFAS No. 123)
    
-
    
-
  
Net loss - Pro Forma
    
(284,398
)
  
(435,443
)
Net loss attributable to common stockholders - Pro forma
  
$
(284,398
)
$
(435,443
)
Basic (and assuming dilution) loss per share - as reported
  
$
(0.03
)
$
(0.05
)
Basic (and assuming dilution) loss per share - Pro forma
  
$
(0.03
)
$
(0.05
)

Stock-based compensation expense is measured using a multiple point Black-Scholes option pricing model that takes into account highly subjective and complex assumptions. The expected life of options granted is derived from the vesting period of the award, as well as historical exercise behavior, and represents the period of time that options granted are expected to be outstanding. Expected volatilities are based on a blend of historical volatility and implied volatility derived from publicly traded options to purchase the Company’s common stock, which the Company believes is more reflective of the market conditions and a better indicator of expected volatility than solely using historical volatility. The risk-free interest rate is the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the option. There were no options granted during 2005, and all options granted prior to 2005 had fully vested by January 1, 2005.

3
 
NOTE A-SUMMARY OF ACCOUNTING POLICIES (Continued)
 
Revenue Recognition

For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition (“SAB104”), which superseded Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (“SAB101”). SAB 101 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. SAB 104 incorporates Emerging Issues Task Force 00-21 (“EITF 00-21”), Multiple-Deliverable Revenue Arrangements. EITF 00-21 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets.

NOTE G - STOCK OPTIONS AND WARRANTS

Stock Options

The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to consultants of the Company. These options were granted in lieu of cash compensation for services performed or other consideration.

Options Outstanding
  
Options Exercisable
 
Exercise Prices
  
Number
Outstanding
  
Weighted Average Remaining
Contractual Life (Years)
  
Weighed Average
Exercise Price
  
Number
Exercisable
  
Weighted Average Exercise Price
$ 0.50 - 2.00
  
1,575,000
  
4.32
  
$ 1.33
  
1,575,000
  
$ 1.33

Transactions involving options issued to consultants are summarized as follows:

   
 
Number of Shares
  
Weighted Average
Price Per Share
  
Outstanding at January 1, 2004
    
1,500,000
  
$
1.35
  
Granted
   
-
   
-
  
Exercised
    
-
    
-
  
Canceled or expired
    
-
    
-
  
Outstanding at December 31, 2004
    
1,500,000
    
1.35
 
Granted
   
-
   
-
  
Exercised
    
-
    
-
  
Canceled or expired
    
-
    
-
  
Outstanding at December 31, 2005
    
1,500,000
    
1.35
  
Granted
    
75,000
    
0.85
  
Exercised
    
-
    
-
  
Canceled or expired
    
-
    
-
  
Outstanding at June 30, 2006
    
1,575,000
 
$
1.33
  

The Company determined the estimated value of the stock options granted to consultants in exchange for services rendered using the Black-Scholes pricing models.

4

EXHIBITS

31
Certification of Chief Executive Officer and Treasurer (principal executive officer and principal financial officer), pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002, as filed herewith.

32
Certification of Chief Executive Officer and Treasurer (principal executive officer and principal financial officer), pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002, as filed herewith.
 

 
SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
Seawright Holdings, Inc.
 
 
 
 
 
 
Date: September 15, 2006
By:  
/s/ Joel Sens
 
Name: Joel Sens
Title: Chief Executive Officer
 
 
5