<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER 0-26354
LOGAN INTERNATIONAL CORP.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
WASHINGTON 91-1636980
(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)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (604) 683-5767
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
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
<TABLE>
<S> <C>
Class Outstanding at March 31, 1996
----- -----------------------------
Common Stock, $0.01 6,620,726
par value
</TABLE>
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
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<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LOGAN INTERNATIONAL CORP.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
FORM 10-QSB
QUARTERLY REPORT - Page 2
<PAGE> 3
LOGAN INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
ASSETS
Cash $ 253,726 $ 260,684
Investments in available-for-sale securities 230,523 274,685
Real estate 7,992,259 9,340,552
Other assets 21,906 31,066
----------------- ----------------
$ 8,498,414 $ 9,906,987
================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable $ 185,950 $ 309,503
Debt
Secured 3,415,995 5,270,816
Due to affiliate - 200,000
Redeemable preferred stock 143,439 143,439
Interest payable 413,655 459,398
----------------- ----------------
4,159,039 6,383,156
Shareholders' Equity
Common shares 66,207 65,207
Additional paid-in capital 6,268,471 6,219,471
Net unrealised gain on
investment valuation 118,211 95,986
Retained deficit (2,113,514) (2,856,833)
----------------- ----------------
4,339,375 3,523,831
----------------- ----------------
$ 8,498,414 $ 9,906,987
================= ================
</TABLE>
FORM 10-QSB
QUARTERLY REPORT - Page 3
<PAGE> 4
LOGAN INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Revenue
Sale of real estate $ 1,255,000 $ -
Gain from sale of available-for-sale securities 85,569 -
Other 8,800 7,422
---------------- ----------------
1,349,369 7,422
Costs and expenses
Cost of real estate sold and
related selling costs 604,806 -
General and administrative 112,433 157,669
Real estate taxes 39,816 58,332
Interest 105,237 156,578
---------------- ----------------
862,292 372,579
---------------- ----------------
Gain (loss) before extraordinary item 487,077 (365,157)
Extraordinary item, Gain on debt extinguishment 256,242 -
---------------- ----------------
Net (loss) Earnings 743,319 (365,157)
Deficit, beginning of period (2,856,833) (519,636)
---------------- ----------------
Deficit, end of period $ (2,113,514) $ (884,793)
================ ================
Earnings (loss) per share
Loss before extraordinary item $ 0.07 $ (0.06)
Extraordinary item 0.04 -
---------------- ----------------
$ 0.11 $ (0.06)
================ ================
</TABLE>
FORM 10-QSB
QUARTERLY REPORT - Page 4
<PAGE> 5
LOGAN INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities
Gain (loss) before extraordinary item $ 487,077 $ (365,157)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Gain from sale of available-for-sale securities (85,569) -
Amortization 1,260 6,170
---------------- ----------------
402,768 (358,987)
Changes in working capital:
Real estate 599,850 -
Prepaid and other assets 8,525 (51,051)
Accounts receivable (623) (3,213)
Payables (164,659) (159,412)
---------------- ----------------
845,861 (572,663)
Cash flows from financing activities
Borrowing - 1,905,035
Payment of debts (1,004,775) (41,109)
---------------- ----------------
(1,004,775) 1,863,926
Cash flows from investing activities
Purchases of available-for-sale securities - (1,072,194)
Proceeds from sale of available-for-sale
securities 151,956 -
---------------- ----------------
151,956 (1,072,194)
Net increase in cash (6,958) 219,069
Cash, beginning of period 260,684 172,145
---------------- ----------------
Cash, end of period $ 253,726 $ 391,214
================ ================
</TABLE>
FORM 10-QSB
QUARTERLY REPORT - Page 5
<PAGE> 6
LOGAN INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
Note 1 Basis of Presentation
The interim period financial statements have been prepared by the Registrant
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. These interim period statements should be read together with the
statements and the accompanying notes included in the Registrant's latest
annual report on Form 10-KSB. In the opinion of the Registrant, the
accompanying unaudited interim financial statements contain all adjustments
necessary in order to present a fair statement of the results for the interim
periods presented.
Note 2 Earnings per Share
Earnings per share is computed on the weighted average number of shares
outstanding during the period, after considering convertible securities,
warrants and options. The weighted average number of shares was 6,582,264 and
6,493,870 for the three months ended March 31, 1996 and three months ended
March 31, 1995, respectively.
FORM 10-QSB
QUARTERLY REPORT - Page 6
<PAGE> 7
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - for the three months ended March 31, 1996
compared to the three months ended March 31, 1995
Results of Operations
- - - ---------------------
Revenues for the three months ended March 31, 1996 increased to $1.4 million
from $7,422 for the three months ended March 31, 1995 primarily as a result of
a sale of real estate for proceeds of $1.3 million and a gain of $85,569 from
the sale of securities.
Costs and expenses in the first quarter of 1996 increased to $862,292 from
$372,579 in the comparable period of 1995 primarily as a result of the cost of
the real estate sold and related selling costs, which totalled $604,806.
Interest expense in the three months ended March 31, 1996 decreased to $105,237
from $156,578 in the same period of 1995 as a result of reduced indebtedness.
In the first quarter of 1996, the Company transferred 8 parcels of land to a
lender in exchange for an extinguishment of a loan of $1.1 million and related
property taxes and assessment payments which resulted in the Company
recognizing an extraordinary gain of $256,242.
The Company had net income of $743,319 or $0.11 per share in the first three
months of 1996 compared to a net loss of $365,157 or $0.06 per share in the
first quarter of 1995.
Liquidity and Capital Resources
- - - -------------------------------
The Company had cash of $253,726 at March 31, 1996 compared to $260,684 at
March 31, 1995. At the same time, the Company had available for sale
securities of $230,523. In addition, the Company has a $4 million line of
credit with a lender of which $0.6 million was outstanding as at March 31,
1996. The line of credit is secured by certain parcels of real estate, matures
on December 30, 1997 and bears interest at a rate of prime plus 4% per annum.
Since the Company's principle source of revenues is the sale of real estate,
and is therefore unpredictable, the Company utilizes its credit facility to
cover its cash short falls. The Company believes that this credit facility is
adequate for its needs. The Company's ability to satisfy it longer term
liquidity needs is dependant on its ability to sell its real estate assets in a
timely and orderly fashion. If the Company is unable to accomplish the sale of
its real estate assets in this manner, it will have to renegotiate the terms of
financing with current mortgage holders or decide to allow certain mortgage
holders to foreclose on one or more of their properties.
FORM 10-QSB
QUARTERLY REPORT - Page 7
<PAGE> 8
Operating activities provided cash of $845,861 in the first three months of
1996 compared to using cash of $572,663 in the comparable period of 1995
primarily as a result of $1.3 million received from the sale of real estate.
Financing activities used cash of $1.0 million in the first three months of
1996 compared to providing cash of $1.9 million in the same period in 1995
primarily as a result of repayment of indebtedness.
Investing activities provided cash of $151,956 in the first three months of
1996 compared to using cash of $1 million in the same period in 1995 primarily
as a result of the proceeds from the sale of securities. In the first three
months of 1995, the Company sold 37,150 shares of MedNet International Ltd.
("MNT") and realized a gain of $85,569 thereon. The Company currently owns
62,850 shares of MNT.
At March 31, 1996, the Company had notes outstanding evidencing indebtedness of
$2.2 million which is non-recourse to the Company and secured by deeds of trust
on substantially all of the Company's real estate assets. Under the deeds of
trust governing the security for this indebtedness, the Company has an
obligation to make property tax and assessment payments on the secured
properties on a timely basis. Except for a property securing a note in the
amount of $645,881, all of the notes secured by the Company's real property are
in default and the holders of the notes have the right to foreclose on the
properties securing those loans. In the event the holder commences a
nonjudicial foreclosure action, under Washington law the Company has the right
to cure its default by paying all past due taxes and assessments at any time
prior to 10 days before the foreclosure sale. In the event the holder
commences a judicial foreclosure action under Washington law, the Company will
not have the right to cure the default by paying the past due obligations. If
the holder is successful in a judicial foreclosure action, the property will be
sold at a sheriff's sale and the Company will have an eight month period
following such sale to redeem the property by paying the sheriff's sale price
plus interest at 8% per annum.
At the date hereof, the holder of a $555,051 note secured by 56.6 acres of the
Company's Gig Harbour property (which totals 102.6 acres) with a total book
value of $3 million has commenced a legal foreclosure action. Except as
aforesaid, no nonjudicial or judicial foreclosure actions have been commenced
as a result of the Company's failure to make property tax or assessment
payments on a timely basis.
At March 31, 1996, delinquent real estate taxes on the Company's properties
amounted to $640,474. In addition, there is approximately $570,215 in
assessments to local improvement districts ("LIDs") which are delinquent.
Delinquent real estate taxes and LIDs accrue interest at approximately 12% per
annum. Under Washington law, if real estate taxes or LIDs remain delinquent
for three years, the governing jurisdiction can commence foreclosure
proceedings against the property. The Company anticipates that for the
foreseeable future it will permit real estate taxes to remain delinquent, but
will pay such taxes and LIDs as are necessary to prevent foreclosure
proceedings from occurring.
FORM 10-QSB
QUARTERLY REPORT - Page 8
<PAGE> 9
The following table summarizes the repayment schedule of the Company's secured
debt obligations, LIDs and unpaid property taxes at March 31, 1996:
<TABLE>
<S> <C>
1996 $ 826,889
1997 1,428,399
1998 110,120
1999 114,212
2000 448,630
Thereafter 487,745
----------
$3,415,995
</TABLE>
Although all of the Company's real estate assets are encumbered by deeds of
trust and other liens, based on appraisals prepared for the Company, the
Company believes that the value of its real estate assets substantially exceeds
the amount of its secured indebtedness. All of the real estate assets are
undeveloped, which makes the appraisal process inherently less certain than
with developed properties. Accordingly, no assurance can be given that upon
sale of the properties the Company will ultimately realize the appraised value
of such properties.
The Company has no commitments for capital expenditures, although it may need
to provide funds for certain pre-development work on certain real estate assets
in order to enhance their marketability and sale value.
In furtherance of its business plan, the Company intends to acquire controlling
interests in operating businesses as opportunities arise. The Company has not
acquired any such interests to date and has not identified any opportunities at
the date hereof. The Company anticipates that it will require substantial
capital to effect its business plan and anticipates that such capital will be
provided through the sale or exchange of assets, or through debt or equity
financing. No assurance can be given that any necessary capital requirements
will be available when needed.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING SECTION
In 1995, Triad Investment Corporation ("Triad") commenced an action in the
Pierce County Superior Court seeking a declaration that an option agreement
made between it and the Company whereby Triad had a right to purchase
approximately 68 acres of property held by the Company at Gig Harbour,
Washington, for an aggregate of approximately $12.5 million was valid, specific
performance thereof and unspecified damages. The Company believes that the
claims are without merit and intends to vigorously defend the same. The
Company has filed a counter claim against Triad for a declaratory judgment that
the option agreement is terminated, quit title to the subject property and
unspecified damages.
The Company is also subject to routine litigation incidental to its business.
The Company does not believe that the outcome of such litigation will have a
material adverse effect on its business or financial conditions.
FORM 10-QSB
QUARTERLY REPORT - Page 9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
- - - ------- -----------
27 Article 5 Financial Data Schedule for 1st Quarter 1996 Form 10-QSB
(b) Reports of Form 8-K
None
FORM 10-QSB
QUARTERLY REPORT - Page 10
<PAGE> 11
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LOGAN INTERNATIONAL CORP.
/s/ Michael J. Smith
--------------------------------------
Michael J. Smith,
Chief Financial Officer and Director
Date: May 10, 1996
FORM 10-QSB
QUARTERLY REPORT - Page 11
<PAGE> 12
EXHIBIT INDEX
Exhibit
Number Description
- - - ------- -----------
27 Article 5 Financial Data Schedule for 1st Quarter 1996 Form 10-QSB
FORM 10-QSB
QUARTERLY REPORT - Page 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES INCLUDED IN THIS FORM 10-QSB AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 253,726
<SECURITIES> 230,523
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 7,992,259
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,498,414
<CURRENT-LIABILITIES> 0
<BONDS> 3,415,995
143,439
0
<COMMON> 66,207
<OTHER-SE> 4,273,168
<TOTAL-LIABILITY-AND-EQUITY> 1,339,375
<SALES> 1,255,000
<TOTAL-REVENUES> 1,349,369
<CGS> 604,806
<TOTAL-COSTS> 717,239
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,237
<INCOME-PRETAX> 487,077
<INCOME-TAX> 0
<INCOME-CONTINUING> 487,077
<DISCONTINUED> 0
<EXTRAORDINARY> 256,242
<CHANGES> 0
<NET-INCOME> 743,319
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
