SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT UNDER SECTION 13 OF 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File No.
June 30, 1997 0-2040
THE ST. LAWRENCE SEAWAY CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
INDIANA 35-1038443
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
818 Chamber of Commerce Building
320 N. Meridian Street
Indianapolis, Indiana 46204
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (317) 639-5292
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Indicate by check mark whether the registrant (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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at June 30, 1997
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Common Stock, $1.00 par value 393,735
THE ST. LAWRENCE SEAWAY CORPORATION
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FORM 10-Q INDEX
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<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
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<S> <C>
Balance Sheets -June 30, 1997 (UNAUDITED) and March 31, 1997 3
Statements of Income - Three months ended June 30, 1997 and 1996 (UNAUDITED) 4
Statements of Cash Flows - Three months ended June 30, 1997 and 1996 (UNAUDITED) 5
Notes to Financial Statements - June 30, 1997 6
Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II. OTHER INFORMATION 9
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Signatures 10
Exhibit (27) 11
</TABLE>
Page 2
THE ST. LAWRENCE SEAWAY CORPORATION
BALANCE SHEETS
JUNE 30, 1997 (UNAUDITED) AND MARCH 31, 1997
JUNE 30, MARCH 31,
1997 1997
ASSETS
Current assets:
Cash and cash equivalents $1,150,207 1,165,962
Interest and other receivables 1,522 1,522
Prepaid items 1,210 809
Deferred income taxes 2,939 2,014
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Total Current Assets 1,155,878 1,170,307
Land 118,913 118,913
Property and equipment 3,855 4,247
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Total Assets $1,278,646 1,293,467
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payroll taxes withheld and accrued $ 772 1,644
Accounts payable & other 25,107 32,120
Deferred Income 5,472 8,208
Federal & state taxes payable 1,040 0
--------------------------------
Total Current Liabilities 32,391 41,972
Shareholders' equity:
Common stock, par value $1,
4,000,000 authorized, 393,735 issued
and outstanding at the respective dates $ 393,735 393,735
Additional paid-in capital 281,252 281,252
Retained earnings 571,268 576,508
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Total Shareholders' Equity 1,246,255 1,251,495
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Total Liabilities and Shareholders' Equity $1,278,646 1,293,467
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THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
JUNE 30, 1997 AND 1996
(UNAUDITED)
JUNE 30, JUNE 30,
1997 1996
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Revenues:
Farm rentals 2,736 2,736
Interest and dividends 14,222 11,624
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Total revenues 16,958 14,360
Operating costs and expenses:
Farm related operating costs 476 368
Depreciation 392 392
General and administrative 22,087 22,878
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Total operating expenses 22,955 23,638
Income (Loss) before tax provision (5,997) (9,278)
Provision for income taxes/
(tax benefit) (757) (589)
--------------------------------
Net income (loss) (5,240) (8,689)
================================
Per share data:
Weighted average number
of common shares outstanding 393,735 393,735
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Primary earnings per share:
Income (Loss) per share ($0.01) ($0.02)
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THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED
JUNE 30, 1997 AND 1996
(UNAUDITED)
JUNE 30, JUNE 30,
1997 1996
Cash flows from operating activities:
Net income (loss) $ (5,240) (8,689)
Adjustments to reconcile net income to
net cash from operating activities
Depreciation 392 392
(Increase) Decrease in current assets:
Interest and other receivables 0 10,140
Prepaid items (401) 136
Deferred income tax (925) (948)
(Decrease) Increase in current liabilities:
Payroll tax & other (872) 202
Accounts payable (7,013) (3,349)
Deferred income (2,736) (2,736)
Income taxes payable 1,040 388
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Net cash from operating activities (15,755) (4,464)
Cash flows from investing activities: -----------------------------
Net cash from investing activities 0 0
Cash flows from financing activities: -----------------------------
Net cash from financing activities 0 0
Net decrease in cash and cash equivalents (15,755) (4,464)
Cash and cash equivalents, beginning 1,165,962 1,232,478
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Cash and cash equivalents, ending 1,150,207 1,228,014
=============================
Supplemental disclosures of cash flow information:
Cash paid for income taxes 0 0
Cash paid for interest expense 0 0
Page 5
THE ST. LAWRENCE SEAWAY CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997
(UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
for 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.
Operating results for the three month period ending June 30, 1997, are not
necessarily indicative of the results that may be expected for the fiscal year
ending March 31, 1998. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the fiscal year ended March 31, 1997.
NOTE B--RECLASSIFICATION
The 1996 financial statements have been reclassified, where necessary, to
conform to the presentation of the 1997 financial statements.
NOTE C--EARNINGS PER SHARE
Primary earnings per share are computed using the weighted average number
of shares of common stock and common stock equivalents outstanding under the
modified treasury stock method. Common stock equivalents include all common
stock options and warrants outstanding during each of the periods presented.
NOTE D-- STOCK PURCHASE AND DIVIDEND
On March 19, 1997, the Board of Directors of the Company declared a dividend
distribution of 514,191 shares of common stock, $.01 par value (the "Shares") of
Paragon Acquisition Company, Inc. ("Paragon"), and 513,191 non-transferable
rights (the "Subscription Right") to purchase two (2) additional Shares of
Paragon. Paragon is a newly-formed corporation which is seeking to acquire or
merge with an operating business, and thereafter operate as a publicly-traded
company. St. Lawrence purchased the Paragon shares on March 6, 1997, for $5,141,
or $.01 per share, and is distributing one Paragon share and one subscription
right for each share of St. Lawrence Common Stock owned or subject to
exercisable options and warrants as of March 21, 1997 (the "Record Date").
Neither St. Lawrence nor Paragon will receive
Page 6
any cash or other proceeds from the distribution, and St. Lawrence stockholders
will not make any payment for the share and subscription rights. The
distribution to St. Lawrence stockholders is being made by St. Lawrence for the
purpose of providing St. Lawrence stockholders with an equity interest in
Paragon without such stockholders being required to contribute any cash or other
capital in exchange for such equity interest.
On March 21, 1997, the Securities and Exchange Commission declared effective a
Registration Statement on Form S-1 filed by Paragon, registering the
Distribution of Shares and Subscription Rights to St. Lawrence stockholders. The
cost of organizing Paragon and registering the distribution have been borne by
the founders of Paragon.
Paragon is an independent publicly-owned corporation. However, because Paragon
does not yet have a specific operating business, the distribution of the shares
is being conducted in accordance with Rule 419 promulgated under the Securities
Act of 1933, as amended (the "Securities Act"). As a result, the shares,
subscription rights, and any shares issuable upon exercise of subscription
rights, are being held in escrow and are non-transferable by the holder thereof
until after the completion of a business combination with an operating company.
The subscription rights will become exercisable at a price to be determined by
Paragon's Board of Directors (not to exceed $2.00 per subscription right) once a
business combination is identified and described in a post-effective amendment
to Paragon's Registration Statement. While held in escrow, the shares may not be
traded or transferred, and the net proceeds from the exercise of subscription
rights will remain in escrow subject to release upon consummation of a business
combination. There is no current public trading market for the shares and none
is expected to develop, if at all, until after the consummation of business
combination and the release of shares from escrow.
Page 7
THE ST. LAWRENCE SEAWAY CORPORATION
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations -- Three months ended June 30, 1997 as compared to three
months ended June 30, 1996.
Interest and dividend income increased to $14,322 in the three-months ended June
30, 1997, from $11,624 in the previous year. This increase is a result of higher
rates of interest earned on available cash investments.
Farm rental revenue remained unchanged in the three months ended June 30, 1997
from those in the three months ended June 30, 1996.
General and administrative expenses decreased to $22,087 in the three months
ended June 30, 1997 from $22,878 in the three-months ended June 30, 1996.
As a result of the above items, the Company had a loss of $5,997 before taxes in
the three months ended June 30, 1997, as compared to a loss of $9,278 before
taxes in the three months ended June 30, 1996.
Federal and state income tax benefits of $757 were applicable in the three
months ended June 30, 1997 as compared to federal and state income tax benefits
of $589 in the three months ended June 30, 1996.
Liquidity and Capital Resources
At June 30, 1997, the Company had net working capital of $1,123,487 the major
portion of which was in cash and money market funds. St. Lawrence has sufficient
capital resources to continue its current business.
The Company may require the use of its assets for a purchase or partial payment
for an acquisition or in connection with another business opportunity. In
addition, St. Lawrence may incur debt of an undetermined amount to effect an
acquisition or in connection with another business opportunity. It may also
issue its securities in connection with an acquisition or other business
opportunity.
St. Lawrence does not have a formal arrangement with any bank or financial
institution with respect to the availability of financing in the future.
Page 8
THE ST. LAWRENCE SEAWAY CORPORATION
PART II. OTHER INFORMATION
Item 1.
Legal Proceeding - Not Applicable
Item 2.
Changes in Securities - Not Applicable
Item 3.
Defaults upon Senior Securities - Not Applicable
Item 4.
Submission of Matters to a Vote of Security Holders - Not Applicable
Item 5.
Other Information - Not Applicable
Item 6.
Exhibits and Reports on form 8-K -
Item 6(a) Exhibits -
(27) Financial Data Schedule
Item 6(b) Reports on Form 8-K -
A Report on Form 8-K was filed on April 4, 1997, with respect to a
dividend distribution by the Company of 514,191 shares of common
stock, $.01 par value of Paragon Acquisition Company, Inc., and
513,191 non-transferable rights to purchase two additional shares of
Paragon.
Page 9
SIGNATURE
Pursuant to 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.
THE ST. LAWRENCE SEAWAY
CORPORATION
Registrant
Date: 8/11/97 /s/Daniel L. Nir
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Daniel L. Nir
President and Treasurer
(Chief Financial Officer)
Date: 8/11/97 /s/Jack C. Brown
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Jack C. Brown
Secretary
Page 10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,150,207
<SECURITIES> 0
<RECEIVABLES> 1,522
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,155,878
<PP&E> 3,855
<DEPRECIATION> 392
<TOTAL-ASSETS> 1,278,646
<CURRENT-LIABILITIES> 32,391
<BONDS> 0
0
0
<COMMON> 393,735
<OTHER-SE> 852,520
<TOTAL-LIABILITY-AND-EQUITY> 1,278,646
<SALES> 0
<TOTAL-REVENUES> 16,958
<CGS> 0
<TOTAL-COSTS> 22,955
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,997)
<INCOME-TAX> (757)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,420)
<EPS-PRIMARY> ($0.01)
<EPS-DILUTED> ($0.01)
</TABLE>
