UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 000-26354
LOGAN INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
Washington 91-1636980
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 1250, 400 Burrard Street
Vancouver, British Columbia, Canada V6C 3A6
(Address of principal executive offices) (Postal Code)
Registrant's telephone number, including area code: (604) 683-5767
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title of Class)
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 (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|_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $841,257 as of March 24, 1998, computed on the
basis of the closing price on such date.
As of March 24, 1998, there were 10,837,808 shares of the Registrant's Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE>
FORWARD-LOOKING STATEMENTS
Statements in this report, to the extent they are not based on historical
events, constitute forward-looking statements. Forward-looking statements
include, without limitation, statements regarding the outlook for future
operations, forecasts of future costs and expenditures, evaluation of market
conditions, the outcome of legal proceedings, the adequacy of reserves, or other
business plans. Investors are cautioned that forward-looking statements are
subject to an inherent risk that actual results may vary materially from those
described herein. Factors that may result in such variance, in addition to those
accompanying the forward-looking statements, include changes in interest rates,
prices and other economic conditions; actions by competitors; natural phenomena;
actions by government and regulatory authorities; uncertainties associated with
legal proceedings; technological development; future decisions by management in
response to changing conditions; and misjudgments in the course of preparing
forward-looking statements.
<PAGE>
This Amendment No. 1 on Form 10-K/A amends the Registrant's Annual Report on
Form 10-K filed March 31, 1998.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth information regarding the nominee for
election as a director, each director whose term of office will continue after
the Annual Meeting of Shareholders of Logan International Corp.
(the "Company") to be held on July 9, 1998, and the Company's executive officer.
<TABLE>
<CAPTION>
Expiration of
Name Current Position with the Company Age Term as a Director
<S> <C> <C> <C>
Michael J. Smith Chairman, President, Chief Financial
Officer and Director 50 1999
Leonard Petersen Director 44 1998
Roland Waldvogel Director 32 2000
Michael J. Smith became President and Chairman of the Company during
1996 and has served as Chief Financial Officer and a director since January
1994. From that date until 1996, he was Executive Vice President of the Company.
Mr. Smith was Chief Financial Officer of Mercer International Inc. from May 1988
until 1996. He is President, Chief Executive Officer and a director of MFC. Mr.
Smith is Chief Executive Officer, Chief Financial Officer and a director of
Drummond and of ICHOR Corporation.
Leonard Petersen has been a director of the Company since January 1994.
Since 1990, he has served as a director and a senior officer of Pemcorp
Management, Inc. He was a chartered accountant with Davidson & Company from 1987
to 1990. Mr. Petersen is a director of ICHOR Corporation.
Roland Waldvogel has been a director of the Company since January 1994.
He is a Swiss resident who is an independent trust officer in Switzerland. He
was formerly with Fidinam Trust Company, Zurich, Switzerland.
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act") requires that the Company's officers and directors, and any
beneficial owner of more than 10% of the Company's outstanding shares of common
stock, $0.01 par value per share ("Common Shares"), file reports of ownership
and changes of ownership with the Securities and Exchange Commission (the
"SEC"). Officers, directors and beneficial owners of more than 10% of the
outstanding Common Shares are required by SEC regulation to furnish the Company
with copies of all such reports they file.
Based solely on the review of the copies of such reports received by
the Company, and on written representations by the Company's officers and
directors regarding their compliance with the applicable reporting requirements
under Section 16(a) of the Exchange Act, the Company believes that, with respect
to its fiscal year ended December 31, 1997, all of its officers and directors
filed all required reports under Section 16(a) in a timely manner.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information on the annual compensation
for each of the Company's last three fiscal years of the Company's Chief
Executive Officer. None of the Company's executive officers received aggregate
annual remuneration from the Company in excess of $100,000 during the fiscal
year ended December 31, 1997.
<TABLE>
<CAPTION>
Annual Compensation Long-Term
Compensation
Other Annual Securities All Other
Name and Principal Year Salary($) Bonus($) Compensation($) Underlying Compensation($)
Position Options/
<S> <C> <C> <C> <C> <C> <C>
SARs(#)
Michael J. Smith 1997 $50,000 0 0 0 0
Chief Executive Officer 1996 $50,000 0 0 230,000(1) 0
1995 $50,000 0 0 0 0
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</TABLE>
(1) Cancelled in December 1996 by agreement between Mr. Smith and the
Company.
Employment Agreement
Mr. Smith has entered into an employment agreement with the Company
dated as of June 23, 1994. The agreement generally provides, subject to certain
termination provisions, for continued employment of Mr. Smith for a period of 36
months with automatic one-month renewals, so that the contract at all times has
a remaining term of 36 months. The agreement provides for a base salary and
other compensation as determined by the board of directors. The agreement
contains change-in-control provisions pursuant to which, if a change in control
(as defined in the agreement) occurs, Mr. Smith may only be discharged for
cause. In the event Mr. Smith is terminated without cause or resigns for good
reason (as defined in the agreement) within eighteen months of the change in
control, he shall be entitled to a severance payment of three times his annual
salary under the agreement and all unvested rights in any stock option or other
benefit plans shall vest in full. If Mr. Smith is terminated without cause or
resigns for good reason after eighteen months of the change in control, he shall
be entitled to a severance payment of a proportionate amount based on the length
of time remaining in the term of the agreement of three times his annual salary
under the agreement and all unvested rights in any stock option or other benefit
plans shall vest in full. In addition, Mr. Smith will continue to receive
equivalent benefits as were provided at the date of termination for the
remaining term of the agreement.
Stock Options
No stock options were granted to Mr. Smith during 1997. In December
1996, Mr. Smith and the Company agreed to cancel outstanding options held by Mr.
Smith to purchase 230,000 Common Shares.
<PAGE>
Compensation of Directors
The directors do not receive cash compensation for service as a
director. The Company reimburses the directors and officers for their expenses
incurred in connection with their duties as directors and officers of the
Company.
The following Report of the Directors on Executive Compensation and the
Peformance Graph included in this Amendment No. 1 to the Company's Form 10-K for
the year ended December 31, 1997 shall not be deemed to be incorporated by
reference by any general statement incorporating for reference the Company's
Form 10-K, as amended, into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under the Acts.
Report of the Directors on Executive Compensation
The Company is actively marketing certain of its real estate assets and
redeploying others to finance the acquisition of controlling interests in
operating businesses. In this phase of identifying and evaluating acquisition
candidates, the Board of Directors believes that an adjustment in Mr. Smith's
compensation is unwarranted. Accordingly, the Board of Directors maintained Mr.
Smith's 1997 compensation at the level specified in his employment agreement.
/s/ Michael J. Smith /s/ Leonard Petersen /s/ Roland Waldvogel
Performance Graph
The information set forth in the table below and the graph on the
following page compares the value of the Common Shares to the Nasdaq Market
Index and to the MG Industry Group Index for Real Estate Investment Trusts
prepared by Media General Financial Services. Each of the total cumulative
returns presented assumes a $100 investment on July 17, 1995, the date on which
the Company's Common Shares began trading publicly, and reinvestment of
dividends.
<TABLE>
<CAPTION>
Company Name Fiscal Year Ending December 31
or Index July 17, 1995
------------------------------------------------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C> <C>
Logan International Corp. 100.00 14.29 14.29 16.07
Nasdaq Market Index 100.00 102.74 127.67 156.17
MG Group Index 100.00 107.97 144.35 170.08
</TABLE>
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding the
beneficial ownership of the Company's Common Shares and 5% Cumulative Voting
Preferred Stock Series B, $0.01 par value per share (the "Preferred Shares") as
of May 21, 1998, by each shareholder who is known by the Company to own more
than five percent of each class outstanding. On that date, the Company had
10,837,808 Common Shares and 60,000 Preferred Shares outstanding. The following
is based solely on statements filed with the Securities and Exchange Commission
and other information the Company believes to be reliable. None of the Company's
executive officers or directors owns any of the Company's equity securities.
<TABLE>
<CAPTION>
Number of Percent of Number of Percent of Percent of
Name and Address of Common Shares Common Shares Preferred Preferred Voting
------- ------- ------- ------- -------
Beneficial Owner Shares Shares Shares
<S> <C> <C> <C> <C> <C>
MFC Bancorp Ltd. 7,640,960 70.5% 60,000(1) 100.0% 71.1%(1)
6 Cours de Rive
CH 1211 Geneva, Switzerland
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</TABLE>
(1) Includes 60,000 Preferred Shares over which MFC Bancorp Ltd. ("MFC")
shares voting and dispositive power with Drummond Financial
Corporation ("Drummond"). MFC beneficially owns 47.9% of the
outstanding voting securities of Drummond Financial Corp.
("Drummond"), comprised of shares of Common Stock of Drummond as to
which MFC shares voting and dispositive power with its wholly-owned
subsidiary, Ballinger Corporation, and all of Drummond's Series 1,
Preferred Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1996, the Company sold the shares of a subsidiary of the Company
that had as its only asset a parcel of real estate. The property had
environmental problems that made it difficult to develop or sell. The Company
agreed to share the proceeds of sale equally with MFC, because MFC facilitated
the sale to a foreign purchaser. The sale resulted in a $417,000 profit to the
Company. The Company received $1,250,000 of the purchaser's $1,752,000 cash
downpayment. The balance of the $3,340,000 purchase price is due in September
1998. Mr. Smith is the President, Chief Executive Officer and a Director of MFC.
On January 1, 1997, MFC purchased an unaffiliated lender from which the
Company had a line of credit on which it had borrowed $498,000 at December 31,
1996. On January 10, 1997, the Company paid the lender in full.
Drummond established a $750,000 credit facility for ICHOR Corporation
("ICHOR") and its wholly-owned subsidiary, ICHOR Services, Inc., pursuant to a
loan agreement effective January 15, 1997, as amended effective June 30, 1997.
The demand loan is secured by all of the personal property of ICHOR and ICHOR
Services, Inc. and accrues interest at 10% per annum. After June 30, 1997,
Drummond increased the credit facility on the same terms to $780,000. That
amount was the principal balance outstanding at December 31, 1997 and the amount
currently outstanding. Mr. Smith is President, Chief Executive Officer, Chief
Financial Officer and a director of Drummond, and Mr. Petersen is a director of
Drummond.
<PAGE>
At December 31, 1997, the Company owed MFC $1,088,000 for advances
including $263,000 for management fees and reimbursable expenses accrued in
1996. MFC's obligation is secured by all of the Company's personal property. MFC
continues to provide management services to the Company but has not charged the
Company for them since 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Index to Financial Statements
Independent Auditors' Report*
Consolidated Balance Sheets*
Consolidated Statements of Operations*
Consolidated Statements of Changes in Shareholders' Equity*
Consolidated Statements of Cash Flows* Notes to Financial Statements*
*Incorporated by reference to the Corporation's Annual Report on Form
10-K dated March 31, 1998.
(2) List of Exhibits
EXHIBIT DESCRIPTION
3.1 Articles of Incorporation.(1)
3.2 Amendment to Articles of Incorporation dated
November 5, 1993.(1)
3.3 Amendment to Articles of Incorporation dated
April 22, 1994.(1)
3.4 Amendment to Articles of Incorporation dated
April 14, 1995.(1)
3.5 Amendment to Articles of Incorporation dated
July 10, 1996.(2)
3.6 Bylaws.(1)
10.1 Revolving Credit Agreement between EHP Finco Ltd.
And the Corporation.(1)
10.2 1994 Employee Incentive Plan.(1)
10.3 Executive Employment Agreement between the Corporation
and Mr. Smith.(1)
10.4 Subscription Agreement between the Corporation and
Drummond Financial Corporation (formerly CVD
Financial Corporation) dated June 20, 1996.(2)
10.5 Subscription Agreement between the Corporation and
MFC Bancorp Ltd. (formerly Arbatax International Inc.)
dated December 2, 1996. Incorporated by reference to
the Schedule 13D/A with respect to shares of the Corporation
dated December 16, 1996.
10.6 Assignment Agreement between the Corporation and
MFC Bancorp Ltd. dated December 2, 1996.(3)
10.7 Purchase and Sale Agreement between the Corporation and
ICHOR Corporation dated December 13, 1996.(3)
10.8 Debt Settlement Agreement between the Corporation and
ICHOR Corporation dated September 30, 1997.(4)
10.9 Debt Settlement Agreement between the Corporation and
ICHOR Corporation dated February 20, 1998.(4)
21 List of Subsidiaries of the Registrant.(5)
27 Article 5 - Financial Data Schedule for the year ended
December 31, 1997.(5)
(1)Incorporated by reference to the Corporation's Registration
Statement on Form 10-SB.
(2)Incorporated by reference to the Corporation's Form 8-K dated
June 27, 1996.
(3)Incorporated by reference to the Corporation's Form 8-K dated
December 18, 1996.
(4)Incorporated by reference to the Schedule 13D/A with respect to
shares of ICHOR Corporation dated March 13, 1998.
(5)Incorporated by reference to the Corporation's Annual Report on
Form 10-K dated March 31, 1998.
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
LOGAN INTERNATIONAL CORP.
Date: May 29, 1998 By: /s/ Michael J. Smith
--------------------------
Michael J. Smith
President and Chief Financial Officer
<PAGE>
LOGAN INTERNATIONAL CORP.
EXHIBIT INDEX
EXHIBIT DESCRIPTION
3.1 Articles of Incorporation.(1)
3.2 Amendment to Articles of Incorporation dated
November 5, 1993.(1)
3.3 Amendment to Articles of Incorporation dated
April 22, 1994.(1)
3.4 Amendment to Articles of Incorporation dated
April 14, 1995.(1)
3.5 Amendment to Articles of Incorporation dated
July 10, 1996.(2)
3.6 Bylaws.(1)
10.1 Revolving Credit Agreement between EHP Finco Ltd.
And the Corporation.(1)
10.2 1994 Employee Incentive Plan.(1)
10.3 Executive Employment Agreement between the Corporation
and Mr. Smith.(1)
10.4 Subscription Agreement between the Corporation and
Drummond Financial Corporation (formerly CVD
Financial Corporation) dated June 20, 1996.(2)
10.5 Subscription Agreement between the Corporation and
MFC Bancorp Ltd. (formerly Arbatax International Inc.)
dated December 2, 1996. Incorporated by reference to the
Schedule 13D/A with respect to shares of the Corporation
dated December 16, 1996.
10.6 Assignment Agreement between the Corporation and MFC Bancorp
Ltd. dated December 2, 1996.(3)
10.7 Purchase and Sale Agreement between the Corporation an
ICHOR Corporation dated December 13, 1996.(3)
10.8 Debt Settlement Agreement between the Corporation and
ICHOR Corporation dated September 30, 1997.(4)
10.9 Debt Settlement Agreement between the Corporation and
ICHOR Corporation dated February 20, 1998.(4)
21 List of Subsidiaries of the Registrant.(5)
27 Article 5 - Financial Data Schedule for the year ended
December 31, 1997.(5)
(1)Incorporated by reference to the Corporation's Registration Statement on
Form 10-SB.
(2)Incorporated by reference to the Corporation's Form 8-K dated
June 27, 1996.
(3)Incorporated by reference to the Corporation's Form 8-K dated
December 18, 1996.
(4)Incorporated by reference to the Schedule 13D/A with respect to
shares of ICHOR Corporation dated March 13, 1998.
(5)Incorporated by reference to the Corporation's Annual Report on
Form 10-K dated March 31, 1998.
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