SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____ to_____
Commission File Number 001-12212
DRUMMOND FINANCIAL CORPORATION
(Name of Small Business Issuer in Its Charter)
Delaware 95-4426690
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
400 Burrard Street, Suite 1250
Vancouver, British Columbia, Canada V6C 3A6
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: (604) 683-5312
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common stock, $.01 par value
15 Year Variable Rate Bonds
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. [ ]
The issuer's revenues for the most recent fiscal year were $4.3 million.
The aggregate market value of the voting and non-voting equity of the Registrant
held by non-affiliates of the Registrant on September 22, 1997 was approximately
$2.2 million.
<PAGE>
The number of shares outstanding of the registrant's Common Stock, as of
September 22, 1997 was 2,718,600.
DOCUMENTS INCORPORATED BY REFERENCE
None
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<PAGE>
ITEM 9. DIRECTORS, EXECUTIVES OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF
THE EXCHANGE ACT
The following table sets forth information regarding each director and
executive officer of the Registrant.
<TABLE>
<CAPTION>
Term of Office
Expires at the
Name Position with the Company Age Annual Meeting in
<S> <C> <C> <C>
Leonard Petersen Director 41 1999
(1)(3)
Michael J. Smith President, Chief Executive Officer, Chief 48 1997
(2) Financial Officer and Director
Rene Randall (3) Director 47 1998
Roy Zanatta Vice President and Secretary 32
(1) Member of Audit Committee
(2) Member of Loan Committee
(3) Member of Stock Option and Compensation Committee
</TABLE>
Leonard Petersen. Mr. Petersen was appointed as a director in May 1995.
Since 1990 he has served as a director and senior officer of Pemcorp Management,
Inc. From 1987 to 1990 he was a chartered accountant with Davidson & Company.
Mr. Petersen has also served as a director of Similkansen Hydro-Power Ltd. and
of SGI Capital Corporation since 1993 and of Vincent Resources Ltd. from 1988 to
1993.
Michael J. Smith. Mr. Smith was appointed as a director in March 1995, and
served as Chairman of the Board until May 26, 1995, at which time he was
appointed President and Chief Executive Officer. In June 1995, Mr. Smith also
assumed the duties of Chief Financial Officer. He is officer and director of
Ballinger Corporation, the Company's largest shareholder. He was a Trustee of
Mercer International, Inc. ("MII") and was the Executive Vice President, Chief
Financial Officer and Secretary of MII from 1988 to 1996. Mr. Smith was one of
the founders of Prentiss Howard Group, a company organized in 1979 which assists
domestic and international companies with investments, mergers and acquisitions.
Mr. Smith is also President and a director of MFC Bancorp Ltd. ("MFC Bancorp"),
which owns all of the outstanding shares of Ballinger Corporation and all of the
outstanding shares of Preferred Stock of the Company.
Rene Randall. Mr. Randall was elected to the Board of Directors of the
Company in September 1996. Mr. Randall has held various administrative and
executive positions with MII and its affiliated companies since 1985. He is a
director of Conqueror Holdings Ltd., a British Columbia merchant banking
company.
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<PAGE>
There are no material relationships between any companies of which Messrs.
Smith, Lee or Randall are an officer or director and any company of which Mr.
Petersen is an officer or director.
Roy Zanatta. Mr. Zanatta first joined the Company as Secretary in March
1995 and became a Vice President in May 1995. Mr. Zanatta is also currently an
independent consultant, and has been associated with MII in various capacities
since 1993. During 1992 and 1993 he was employed as a management consultant by
the British Columbia Hydro and Power Authority, a major electric utility. From
1991 to 1992 he was employed as a project manager with the Canadian Standards
Association. Mr. Zanatta earned a B.A.Sc. degree in 1987 from the University of
British Columbia, and an M.B.A. from McGill University in 1991. Mr. Zanatta was
appointed Secretary of MFC Bancorp in April 1996 and a director of MFC Bancorp
in October 1996.
Compliance with Section 16(a) of the Exchange Act
Based solely upon the Company's review of the reports filed with the
Securities and Exchange Commission ("SEC") by the Company's current and former
officers, directors and 10 percent shareholders for the period July 1, 1996 to
June 30, 1997, the Company believes that all such required reports were filed on
a timely basis.
ITEM 10. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Summary Compensation Table
Options
Name and Principal Position Year Salary Number of Shares
<S> <C> <C> <C>
Michael J. Smith (1) 1997 --- ---
President, Chief Executive Officer and 1996 --- ---
Chief Financial Officer 1995 --- ---
- -----------
(1) Mr. Smith did not receive any compensation from the Company for
services as an executive officer in fiscal 1995, 1996 and 1997. Mr.
Smith did however receive the $6,000 annual fee for service as a
director in each of those years. Mr. Smith declined to accept the grant
of stock options for 25,000 shares of Common Stock which are
automatically granted to each nonemployee director upon appointment to
the Board of Directors.
</TABLE>
Stock Options
There was no grants of stock options to the Named Executive Officers
during the year ended June 30, 1997.
At June 30, 1997, no stock options were held by any Named Executive
Officer.
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<PAGE>
Profit Sharing Plan
As an incentive to key employees who contribute to the success of the Company,
the Board of Directors adopted a profit sharing plan ("Profit Sharing Plan") to
enable key employees and directors to participate in the Company's success as
reflected by its earnings. The Board of Directors recently amended the Profit
Sharing Plan to provide that it is to be funded by crediting the Incentive Fund
under the Profit Sharing Plan with 10% of pre-tax earnings for fiscal 1996, 7.5%
for fiscal 1997 and 5.0% for each fiscal year thereafter. The Plan is
administered by the Stock Option and Compensation Committee of the Company's
Board of Directors. Selection to participate in the Profit Sharing Profit
Sharing Plan and the amount to be awarded under the Plan is determined by the
Committee upon the recommendation of the Company's Chairman and the President
and Chief Financial Officer. For the fiscal years ended June 30, 1996 and 1997,
no payments were made by the Company pursuant to the Profit Sharing Plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of October 24, 1997, the information with
respect to Common Stock and Preferred Stock ownership of each person known by
the Company to own beneficially more than 5% of the shares of the Common Stock
or Preferred Stock, each of the Named Executive Officers, each director, and all
officers and directors as a group. This does not include holders holding in
"street" and "nominee" name. Except as noted, the persons named have sole voting
and investment power with respect to all of the shares of Common Stock and
Preferred Stock owned by them.
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned
Name and Address Directly or Indirectly (1) Percent of Class (2)
---------------- ------------------------- --------------------
<S> <C> <C> <C>
Preferred Common
Gibralt Holdings Ltd. 558,150 20.5%
1177 West Hastings Street, Suite 2000
Vancouver, British Columbia V6E 2K3
Ballinger Corporation 940,900 26.8
700 West Georgia Street, Suite 1900
Vancouver, British Columbia V7Y 1G5
MFC Bancorp Ltd. 3,000,000 940,900(3) 47.9
6, Cours De Rive
P.O. Box 3540
1211 Geneve 3
Switzerland
Michael J. Smith 3,000,000(4) 940,900(4) 47.9
6, Cours De Rive
P.O. Box 3540
1211 Geneve 3
Switzerland
Rene Randall 0 0
400 Burrard Street, Suite 1250
Vancouver, British Columbia V6C 3A6
Leonard Petersen 25,000 0.7
609 Granville Street, Suite 1270
Vancouver, British Columbia V7Y 1G6
Roy Zanatta 3,000,000(4) 940,900(4) 47.9
2 Stratford Place
London, W1N 9AE
United Kingdom
All Directors and Officers as a group 3,000,000 965,900(4) 48.6
(4 persons)
-------------
(1) Includes shares subject to outstanding stock options exercisable within
60 days of October 24, 1997, as follows: Leonard Petersen (25,000), and
directors and officers as a group (25,000).
(2) Percentage ownership is based on shares owned (including shares subject
to outstanding stock options exercisable within 60 days of October 24, 1997),
divided by total shares outstanding plus, for each person, the shares that
person has the right to acquire within 60 days of October 24, 1997, adjusted to
give effect to the voting power attributable to the Preferred Stock.
(3) MFC Bancorp is the sole shareholder of Ballinger Corporation and,
pursuant to the rules of the SEC, is deemed to be the indirect beneficial owner
of all of the shares owned by Ballinger Corporation.
(4) Includes the 940,900 shares of Common Stock owned directly by Ballinger
Corporation, for which Mr. Smith serves as an officer and sole director, and
indirectly by MFC Bancorp, and the 3,000,000 shares of Preferred Stock owned
directly by MFC Bancorp, for which Mr. Smith serves as President and a director,
and Mr. Zanatta serves as Secretary and a director, and of which shares Mr.
Smith and Mr. Zanatta are deemed to be the indirect beneficial owners pursuant
to the rules of the SEC. Mr. Smith and Mr. Zanatta each disclaim beneficial
ownership of all of such shares.
</TABLE>
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<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements with MFC Bancorp and MII
During the years ended June 30, 1996 and 1997, the Company paid an aggregate of
$456,000 and $300,000, respectively, in fees to MFC Bancorp, MII and a third
affiliate for accounting and administrative services provided to the Company and
reimbursement for office expenses.
During the year ended June 30, 1996, MFC Bancorp purchased 3,000,000 shares of
Preferred Stock from the Company for $6,000,000 cash. During such year, the
Company also purchased 60,000 shares of preferred stock of Logan International
Corp. for $6,000,000 cash. MFC Bancorp owns 70.2% of the outstanding Common
Stock of Logan International Corp.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has caused the amendment to this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: October 27, 1997 DRUMMOND FINANCIAL CORPORATION
By: /s/ Michael J. Smith
Michael J. Smith
President
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