SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. _______)*
Lincoln Logs Ltd.
___________________________________________________
(Name of Issuer)
Common Stock, $0.01 par value
___________________________________________________
(Title of Class of Securities)
533788303
___________________________________________________
(CUSIP Number)
Austin W. Marxe, 153 East 53rd Street, 51st Floor,
New York, New York 10022 (212) 832-5300
___________________________________________________
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 25, 1997
___________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box X .
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect
to the subject class of securities, and for any subsequent
amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section
18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
CUSIP NO.: 533788303 Page 2 of 10 Pages
- ------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Special Situations Fund III, L.P.
F13-3737427
MGP Advisers Limited Partnership*
F13-3263120
- ------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) X
(b)
- ------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------
(4) SOURCE OF FUNDS 00
- ------------------------------------------------------------
(5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
- ------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ------------------------------------------------------------
NUMBER OF (7) SOLE VOTING POWER See Marxe/Greenhouse
SHARES -----------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER None
OWNED BY -----------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER See Marxe/Greenhouse
REPORTING -----------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER None
- ------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 912,000**
- ------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
- ------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.8%***
- ------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IV/IA
- ------------------------------------------------------------
* AWM Investment Company, Inc., a Delaware corporation,
is the General Partner of this entity.
** Includes 750,000 shares issuable upon conversion of
outstanding convertible subordinated debentures.
*** Determined by reference to the number of securities
outstanding contained in the Company's last filing with
the Commission and assuming conversion of outstanding
convertible subordinated debentures in accordance with
Rule 13d-3(d)(1).
<PAGE>
CUSIP NO.: 533788303 Page 3 of 10 Pages
- ------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Special Situations Cayman Fund, L.P.
98-0132442
AWM Investment Company, Inc.
11-3086452
- ------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) X
(b)
- ------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------
(4) SOURCE OF FUNDS 00
- ------------------------------------------------------------
(5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
- ------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- ------------------------------------------------------------
NUMBER OF (7) SOLE VOTING POWER See Marxe/Greenhouse
SHARES -----------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER None
OWNED BY -----------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER See Marxe/Greenhouse
REPORTING -----------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER None
- ------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 205,000*
- ------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
- ------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.9%**
- ------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IV/IA
- ------------------------------------------------------------
* Includes 200,000 shares issuable upon conversion of
outstanding convertible subordinated debentures.
** Determined by reference to the number of securities
outstanding contained in the Company's last filing with
the Commission and assuming conversion of outstanding
convertible subordinated debentures in accordance with
Rule 13d-3(d)(1).
<PAGE>
CUSIP NO.: 533788303 Page 4 of 10 Pages
- ------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Austin W. Marxe
- ------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) X
(b)
- ------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------
(4) SOURCE OF FUNDS PF
- ------------------------------------------------------------
(5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
- ------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------
NUMBER OF (7) SOLE VOTING POWER 1,141,000*
SHARES -----------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER None
OWNED BY -----------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER 1,141,000*
REPORTING -----------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER None
- ------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 1,141,000**
- ------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
- ------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.2%***
- ------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IN
- ------------------------------------------------------------
* Includes 24,000 shares owned directly by Austin W.
Marxe.
** Includes 950,000 shares issuable upon conversion of
outstanding convertible subordinated debentures.
*** Determined by reference to the number of securities
outstanding contained in the Company's last filing with
the Commission and assuming conversion of outstanding
convertible subordinated debentures in accordance with
Rule 13d-3(d)(1).
<PAGE>
CUSIP NO.: 533788303 Page 5 of 10 Pages
- ------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
David M. Greenhouse
- ------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) X
(b)
- ------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------
(4) SOURCE OF FUNDS PF
- ------------------------------------------------------------
(5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
- ------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------
NUMBER OF (7) SOLE VOTING POWER 1,127,500*
SHARES -----------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER None
OWNED BY -----------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER 1,127,500*
REPORTING -----------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER None
- ------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 1,127,500**
- ------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
- ------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59.5%***
- ------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
IV/IA
- ------------------------------------------------------------
* Includes 10,500 shares owned directly by David M.
Greenhouse.
** Includes 950,000 shares issuable upon conversion of
outstanding convertible subordinated debentures.
*** Determined by reference to the number of securities
outstanding contained in the Company's last filing with
the Commission and assuming conversion of outstanding
convertible subordinated debentures in accordance with
Rule 13d-3(d)(1).
<PAGE>
Page 6 of 10 Pages
Item 1. Security and Issuer. This Schedule relates to the
Common Stock, $0.01 par value per share (the "Common
Stock"), issued by Lincoln Logs Ltd., a New York corporation
(the "Company"). The Company's principal executive offices
are located at Riverside Drive, Chestertown, New York 12817.
Item 2. Identity and Background. (a) This Schedule is
filed on behalf of (i) Special Situations Fund III, L.P., a
Delaware limited partnership ("SSF III"), (ii) Special
Situations Cayman Fund, L.P. a Cayman Islands limited
partnership (the "Cayman Fund"), (iii) MGP Advisers Limited
Partnership, a Delaware limited partnership ("MGP"), (iv)
AWM Investment Company, Inc., a Delaware corporation
("AWM"), (v) Austin W. Marxe ("Marxe") and (vi) David M.
Greenhouse ("Greenhouse"). Each of the foregoing is
hereinafter referred to, individually, as a "Reporting
Person" and, collectively, as the "Reporting Persons."
(b) The principal office and business address of
the Reporting Persons, other than the Cayman Fund, is 153
East 53rd Street, 51st Floor, New York, New York 10022. The
principal office and business address of the Cayman Fund is
c/o CIBC Bank and Trust Company (Cayman) Limited, CIBC Bank
Building, P.O. Box 694, Grand Cayman, Cayman Islands,
British West Indies.
(c) The principal business of SSF III and the
Cayman Fund (individually, a "Fund" and, collectively, the
"Funds") is to invest in equity and equity-related
securities. The principal business of MGP is to act as the
managing general partner of and the investment adviser to
SSF III. The principal business of AWM is to act as the sole
general partner of MGP and as the sole general partner of
and the investment adviser to the Cayman Fund. MGP and AWM
are referred to herein, individually, as an "Adviser" and,
collectively, as the "Advisers." The principal occupation
of Marxe and Greenhouse, both of whom are United States
citizens, is to serve as the sole officers, directors and
shareholders of the AWM, and, as such, have the right to
direct the voting of proxies or consents with respect to
stockholder matters relating to the shares of equity
securities owned or held by the Funds.
(d) None of the Reporting Persons has, during the
last five years, been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) None of the Reporting Persons has, during the
last five years, been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a
<PAGE>
Page 7 of 10 Pages
judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation
with respect to such laws.
(f) See Items 2(a)-(c) above.
Item 3. Source and Amount of Funds or Other Consideration.
Each Fund utilized available cash to purchase the shares of
Common Stock and the debentures convertible into Common
Stock (the "Debentures" and collectively with the Common
Stock, the "Securities"). Each Fund acquired the Securities
held by it in the ordinary course of business more than 60
days prior to the date hereof. The Common Stock owned by
Marxe and Greenhouse was acquired in open market
transactions for cash.
The aggregate amount of funds each of the
Reporting Persons used to acquire its respective Securities
is as follows: (a) SSF III acquired its Securities for an
aggregate purchase price of $307,968, (b) the Cayman Fund
acquired its Securities for an aggregate purchase price of
$45,000, (c) Marxe acquired his Common Stock for an
aggregate purchase price of $7,020 and (d) Greenhouse
acquired his Common Stock for an aggregate purchase price of
$10,912.
Item 4. Purpose of Transaction. Each of the Reporting
Persons acquired his or its respective Securities for
investment purposes and not with the purpose of changing or
influencing control of the Company.
The Reporting Persons agreed, as of the date
hereof, to form a group for the purpose of seeking
appropriate and responsive representation on the Board of
Directors of the Company (the "Board"). In reviewing
potential responses to the Company's weak financial position
and poor market performance, Marxe and Greenhouse, prior to
the date hereof, engaged in several conversations with
certain of the current directors of the Board expressing
dissatisfaction with the Company's current financial
condition and performance and requesting certain changes to
the Board. In this regard, Marxe and Greenhouse requested
representation on the Company's slate of directors to be
elected at its Annual Meeting of Shareholders to be held on
August 11, 1997 (the "Annual Meeting"). As of the date
hereof, no satisfactory response has been provided by the
Company.
It is the present intention of the Reporting
Persons to solicit proxies from certain of the Company's
shareholders in compliance with the Act for the purpose of
<PAGE>
Page 8 of 10 Pages
electing a slate of directors in opposition to the slate
nominated by the Company for election at the Annual Meeting.
If the Reporting Persons do not or cannot cause the election of
such opposition slate of directors, they may consider the
calling of a special meeting of shareholders for the purpose
of seeking changes in, and/or additions to, the Board.
In the event that a slate of directors proposed by
the Reporting Persons are elected by the Company's
shareholders at the Annual Meeting, it is expected that the
new Board will take steps to respond to the weak financial
condition of the Company and seek to increase the market
value of the Company by considering various strategic
alternatives, including, without limitation, a
recapitalization of the Company's outstanding debt and
equity, an equity financing or financings for additional
capital and/or a sale or merger of the Company. However,
there can be no assurances that any of such transactions
will be consummated. It is also expected that the new Board
will replace certain members of management.
The Reporting Persons intend to continually assess
the market for the Common Stock, as well as the Company's
financial position and operations. The Reporting Persons do
not have present plans to acquire additional Common Stock at
the present time, but may determine, subject to applicable
law, to acquire additional Common Stock and/or to convert
Debentures in the future depending on, among other things,
the prevailing market price of the Common Stock. The
Reporting Persons may determine, from time to time or at any
time, to sell or otherwise dispose of some or all of the
Common Stock owned by them, depending upon a continuing
assessment and upon future developments. In making any such
determination, the Reporting Persons will consider their
goals and objectives, other business opportunities available
to them, as well as general economic and stock market
conditions. The foregoing actions may be taken by one or
more of the Reporting Persons and, while currently there are
no plans to do so, possibly in combination with others. The
Reporting Persons may also consider whether other
shareholders of the Company will become members of the
group.
Except as set forth herein, the Reporting Persons
have no plans or proposals to engage in any transactions
involving the Company or the securities of the Company, as
set forth in Items 4(a)-(j) of the form of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) The aggregate percentage of shares of Common
<PAGE>
Page 9 of 10 Pages
Stock reported owned by each Reporting Person herein is
based upon 945,749 shares outstanding, which is the total
number of shares of Common Stock outstanding as of June 25,
1997, as reported by the Company in its preliminary proxy
statement on Schedule 14A filed with the Securities and
Exchange Commission on July 15, 1997, plus the amount of
outstanding Debentures calculated in accordance with Rule
13d-3(d)(1), to the extent applicable. See cover pages to
this Schedule, Items (7)-(9), (11) and (13) for each
Reporting Person. In the aggregate, the Reporting Persons
beneficially own a total of 1,151,500 shares of Common Stock
(approximately 60.7%).
(b) See cover pages to this Schedule, Items (7)-
(9), (11) and (13) for each Reporting Person, setting forth
the aggregate number and percentage of the shares of Common
Stock beneficially owned by each Reporting Person, the
number of such shares as to which there is sole or shared
power to vote, or to direct the vote, and sole or shared
power to dispose, or to direct the disposition. Each of
Marxe and Greenhouse have power to vote, or to direct the
vote, and have power to dispose, or to direct disposition,
with respect to 1,117,500 shares of Common Stock
beneficially owned by the Funds because of their positions
as principals of the Advisers.
(c) The Reporting Persons effected no
transactions in shares of Common Stock within 60 days from
the date hereof.
(d) No person other than each respective
beneficial owner of shares of Common Stock referred to
herein is known to have the right to receive or the power to
direct the receipt of dividends from or the proceeds from
the sale of such shares.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer. See
Item 2 and Item 4 of this Schedule. The partnership
agreement for each of the Funds provides for the Adviser to
each such Fund (and, accordingly, Marxe and Greenhouse) to
exercise sole voting and dispositive power with respect to
the shares of Common Stock and also provides for an annual
allocation to the Advisers of a portion of the profits
generated by transactions engaged in by the Funds. There
are no written agreements among the Reporting Persons with
respect to the matters set forth in Item 4 of this Schedule.
Item 7. Material to be Filed as Exhibits.
None.
<PAGE>
Page 10 of 10 Pages
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
July 25, 1997
Special Situations Fund III, L.P.
By: MGP Advisers Limited Partnership, General Partner
By: AWM Investment Company, Inc., General Partner
By: /s/Austin W. Marxe
----------------------------------------------
Austin W. Marxe, President
Special Situations Cayman Fund, L.P.
By: AWM Investment Company, Inc., General Partner
By: /s/Austin W. Marxe
---------------------------------------------
Austin W. Marxe, President
MGP Advisers Limited Partnership
By: AWM Investment Company, Inc., General Partner
By: /s/Austin W. Marxe
---------------------------------------------
Austin W. Marxe, President
AWM Investment Company
By: /s/Austin W. Marxe
--------------------------
Austin W. Marxe, President
/s/Austin W. Marxe
----------------------------
Austin W. Marxe
/s/Davis M. Greenhouse
----------------------------
David M. Greenhouse
