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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File No.
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June 30, 2000 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, 2000
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Common Stock, $1.00 par value 393,735
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THE ST. LAWRENCE SEAWAY CORPORATION
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION PAGE
Balance Sheets - June 30, 2000 (UNAUDITED) and March 31, 2000.................3
Statements of Income - Three months ended June 30, 2000 and 1999
(UNAUDITED)................................................................4
Statements of Cash Flows - Three months ended June 30, 2000 and
1999(UNAUDITED)............................................................5
Notes to Financial Statements - June 30, 2000................................6-7
Management's Discussion and Analysis of Financial Condition and
Results of Operations ..................................................8-9
PART II. OTHER INFORMATION...................................................10
Signatures....................................................................11
Exhibit (27)..................................................................12
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THE ST. LAWRENCE SEAWAY CORPORATION
BALANCE SHEETS
JUNE 30, 2000 (UNAUDITED) AND MARCH 31, 2000
<TABLE>
<CAPTION>
(Unaudited)
JUNE 30, MARCH 31,
2000 2000
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ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,502,694 $ 999,649
Interest and other receivables 2,143 2,037
Prepaid items 7,649 2,441
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Total Current Assets 1,512,486 1,004,127
Land 0 118,913
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Total Assets $ 1,512,486 $ 1,123,040
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & other $ 20,655 18,785
Federal & state taxes payable 7,386 0
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Total Current Liabilities 28,041 18,785
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 377,252 377,252
Retained earnings 713,458 333,268
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Total Shareholders' Equity 1,484,445 1,104,255
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Total Liabilities and Shareholders' Equity $ 1,512,486 $ 1,123,040
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</TABLE>
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THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
2000 1999
=============================
<S> <C> <C>
Revenues:
Farm rentals $ 0 $ 2,736
Interest and dividends 13,820 11,215
Sale of Land 392,235 0
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Total revenues 406,055 13,951
Operating costs and expenses:
Farm related operating costs 0 399
Depreciation 0 392
General and administrative 19,052 17,141
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Total operating expenses 19,052 19,932
Income (Loss) before tax provision 387,003 (3,981)
Provision for income taxes net of net operating
loss carryforward/(tax benefit) 6,813 (425)
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Net income (loss) 380,190 (3,556)
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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 $0.97 ($0.01)
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</TABLE>
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THE ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED
JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
2000 1999
================================
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $380,190 $(3,556)
Adjustments to reconcile net income to
net cash from operating activities
Gain on Sale of Land (392,235) 0
Depreciation 0 392
(Increase) Decrease in current assets:
Interest and other receivables (106) 9,023
Prepaid items (5,208) (690)
Deferred income tax 0 (426)
(Decrease) Increase in current liabilities:
Payroll tax & other 0 0
Deferred Income 0 (2,736)
Accounts payable 1,870 (8,842)
Income taxes payable 7,386 0
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Net cash from operating activities (8,103) (5,455)
Cash flows from investing activities:
Sale of land 511,148 0
Purchase of equipment 0 0
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Net cash from investing activities 511,148 0
Cash flows from financing activities:
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Net cash from financing activities 0 0
Net decrease in cash and cash equivalents 503,045 (5,455)
Cash and cash equivalents, beginning 999,649 1,031,389
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Cash and cash equivalents, ending $1,502,694 $1,025,934
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Supplemental disclosures of cash flow information:
Cash paid for income taxes 6,649 0
Cash paid for interest expense 0 0
</TABLE>
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THE ST. LAWRENCE SEAWAY CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2000
(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 nine month period ending June 30, 2000, are not
necessarily indicative of the results that may be expected for the fiscal year
ending March 31, 2001. 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, 2000.
NOTE B--RECLASSIFICATION
The 1999 financial statements have been reclassified, where necessary, to
conform to the presentation of the 2000 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
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 514,191 non-transferable
rights (the "Subscription Right") to purchase two (2) additional Shares of
Paragon. Paragon's business purpose is to seek to acquire or merge with an
operating business, and thereafter to operate as a publicly-traded company. St.
Lawrence purchased the Paragon shares on March 6, 1997, for $5,141, or $.01 per
share, and distributed 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 received any cash or other proceeds from the distribution, and St.
Lawrence stockholders did not make any payment for the share and subscription
rights. The distribution to St. Lawrence stockholders was 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.
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Paragon is an independent publicly-owned corporation. However, because Paragon
did not have a specific operating business at the time of the distribution, the
distribution of the shares was 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 issueable 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 a business combination and the release of shares from
escrow. In addition, because more than eighteen months have expired since
Paragon's Registration Statement on Form S-1 was declared effective, it is
possible that Rule 419 will prohibit the distribution, or require an additional
or new registration statement to be filed and approved. The Company is not
involved in Paragon's operations or filings, and has provided the following
information solely based on information made know to it by representatives of
Paragon.
NOTE E. DISPOSITION OF ASSETS
On February 23, 2000, the Company conducted a real estate auction and
entered into definitive sales and purchase agreements with seven non-affiliated
individual purchasers to sell all of the land owned by the Company. The real
estate was sold at auction for an aggregate gross sales price of $567,500. At
closing, an aggregate $13,225 price reduction was made due to acreage
corrections revealed by the survey delivered at closing and due to deletion from
the sale property of an electrical substation not owned by the Company. All
sales were closed as of June 14, 2000, and net proceeds of $506,510 were
delivered to the Company as of that date. In fiscal year ending March 31, 2001,
the Company will be subject to tax on the net gain, after related selling
expenses, from the sale that exceeds the existing net operating losses of
approximately $375,000, plus any additional net operating losses incurred in
fiscal year 2001.
The Company devoted the property to farming activities under a cash lease
method. The property was leased to farmers who were directly responsible for the
operation thereof and who paid the Company a rental fee covering a ten-month
period of use of the property. The Company generally received these rental
payments at the beginning of the planting season. The Company was responsible
for real estate taxes, insurance, and minor expenses. As a result of the sale of
the property and termination of the farm tenant agreement prior to the calendar
year 2000 planting season, the Company will not realize any farm rental income
in the fiscal year ending March 31, 2001.
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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, 2000 as compared to three
months ended June 30, 1999.
Interest and dividend income increased to $13,820 in the three months ended June
30, 2000, from $11,215 in the three months ended June 30, 1999. This increase is
a result of a higher amount of dollars invested in the three months ended June
30, 2000.
Farm rental revenue decreased to zero (0) in the three months ended June 30,
2000, from $2,736 in the three months ended June 30, 1999. The decrease is due
solely to the termination of the existing farm tenant agreement as a result of
the sale of the farm property of the Company to which such agreement relates.
General and administrative expenses increased to $19,052 in the three months
ended June 30, 2000 from $17,141 in the three-months ended June 30, 1999, as
illustrated by the following table. This increase is largely due to increased
professional fees incurred, in part, in connection with the sale of the Schleman
Farm.
THREE MONTHS ENDED
JUNE 30,
2000 1999
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Executive Compensation, Management Fees,
Salaries, and Employee Benefits $ 4,388 $ 4,725
Office Rent and Company Operations
(including Farm Operations) $ 3,545 $ 4,756
Stock Services, Proxy, Annual Meeting, and
SEC Report Compliance $ 1,118 $ 2,392
Professional Fees (accounting & legal) $10,000 $ 4,781
Payroll, excise and other taxes $ 6,813 $ 652
As a result of the above items the Company received income before provision for
income taxes of $387,003 in the three months ended June 30, 2000, as compared to
a loss before provision for income taxes of $3,981 in the comparable period a
year earlier.
Indiana gross tax of $6,813 was applicable in the three months ended June 30,
2000, as compared to federal and state income tax benefits of $425 that were
applicable in the three months ended June 30, 1999. No federal tax provision is
applicable in the three months ended June 30, 2000 due to the net operating loss
carryforward of approximately $375,000.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had net working capital of $1,484,445
substantially all 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
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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.
YEAR 2000
Through June 30, 2000, the Company had not experienced any difficulties with its
management and information systems in connection with the turnover from 1999 to
2000. In addition, no Y2K problems have been experienced by the Company directly
or indirectly with respect to its significant service providers; including the
Company's Farm Management Company, stock transfer agent, landlord and certified
public accountants.
OUTLOOK
This Form 10-Q contains statements which are not historical facts, but are
forward-looking statements which are subject to risks, uncertainties and
unforeseen factors that could affect the Company's ability to accomplish its
strategic objectives with respect to acquisitions and developing new business
opportunities, as well as its operations and actual results. All forward-looking
statements contained herein, reflect Management's analysis only as of the date
of the filing of this Report. Except as may be required by law, the Company
undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date hereof. In addition to
the disclosures contained herein, readers should carefully review risks and
uncertainties contained in other documents which the Company files from time to
time with the Securities and Exchange Commission.
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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- None
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 -
No reports on Form 8-K were required to be filed for the quarter for
which this report is filed.
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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
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Registrant
/s/ Daniel L. Nir
Date: 8/11/00 -----------------------------------
Daniel L. Nir
President and Treasurer
(Chief Financial Officer)
Date: 8/11/00 /s/Jack C. Brown
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Jack C. Brown
Secretary
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