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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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
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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 $599,409 as of March 23, 1999, computed on the
basis of the closing price on such date.
As of March 23, 1999, there were 10,837,808 shares of the Registrant's Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 1998 Proxy Statement to be filed within 120 days
of the period ended December 31, 1998 are incorporated by reference into Part
III.
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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.
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TABLE OF CONTENTS
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PAGE
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PART I
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ITEM 1. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ITEM 2. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . 6
PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 7
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . 9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . .12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . .12
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. . . . . . . . .12
ITEM 11. EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . .12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .13
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . .13
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
3
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PART I
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ITEM 1. BUSINESS
The Corporation
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Logan International Corp. was incorporated in the State of Washington on
September 15, 1993 and commenced operations in April 1994. In this document,
unless the context otherwise requires, the "Corporation" or "Logan" refers to
Logan International Corp. and its subsidiaries. The Corporation is a
subsidiary of MFC Bancorp Ltd. ("MFC"), which owns approximately 71% of the
Corporation's shares of common stock. A subsidiary of MFC owns $6 million of
preferred shares in the capital stock of the Corporation.
Business of the Corporation
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The Corporation operates in the financial services industry, engaged primarily
in the real estate business. All of the Corporation's real estate assets are
located in the Puget Sound region of the State of Washington, are undeveloped
and a substantial portion are in a pre-development state. Logan intends, as
opportunities arise, to monetize its real estate assets to finance the
acquisition of controlling interests in operating businesses. Logan may also
acquire additional real estate assets. Logan does not intend to develop any of
its undeveloped real estate properties, but in certain instances may
participate in development joint venture arrangements as an interim step in
the sale or monetization of a property, and will continue pre-development work
on the properties to the extent necessary to protect or enhance their value.
The development of real property in the State of Washington is subject to
multiple layers of government regulation, including state law and certain
ordinances of the city and county wherein the property is located.
Environmental regulations at the federal, state and local levels with regard
to wetlands, stormwater retention and discharge, wildlife, tree preservation,
slopes and groundwater recharge have greatly increased the cost and
uncertainty related to the development of property in the State of Washington
and have lengthened the time necessary to receive development permits.
Consequently, fewer developers are buying property in the State of Washington
and these developers tend to wait until the permitting process is near
completion before committing to a purchase.
The type and intensity of development of real property in the State of
Washington is subject to the comprehensive plan and zoning designation of the
property within the city or county in which the property is located. Property
development is also affected by sensitive areas, such as wetlands, streams or
wildlife habitat, located on the site. Both the local government and the Army
Corps of Engineers have jurisdiction over wetland areas. Upon delivery of a
development proposal, the appropriate government agency will examine the site
and delineate wetland areas. These areas must either be left undisturbed with
sufficient buffers for protection or a mitigation plan for the designated
areas must be approved. Due to the broad definition of wetlands, it is common
for undeveloped property in the western Washington area to have some wetlands
designated. The majority of the Corporation's properties have had some
wetland areas designated.
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In 1990, the Washington legislature passed the Growth Management Act ("GMA")
to "guide the development and adoption of comprehensive plans and development
regulations" in Washington State. The goal of the comprehensive development
plans is to, among other things, reduce the development density in rural
areas, encourage affordable housing and a variety of housing densities,
maintain and conserve natural resource industries and lands and protect and
enhance the environment and the availability of water.
Under the GMA, the counties in which the Corporation's properties are located
have a several year period in which to develop county-wide growth plans that
will designate those areas in which growth will be accommodated over the next
20 years. As a result of the uncertainty which has arisen from the
formulation of these growth plans, the permitting process relating to the
development of property in these counties has been delayed. It is believed,
however, that all of the Corporation's properties are located in areas where
additional growth will be permitted.
The Corporation intends to use the proceeds from the sale or monetization of
its real estate assets to acquire controlling equity interests in operating
businesses. In addition, the Corporation may seek to exchange its real estate
assets for equity interests in certain other companies. The Corporation will
seek to acquire interests in those companies that it believes its expertise in
financial restructuring and asset management will add value to the
Corporation's investment. In order to accomplish such acquisitions, the
Corporation may engage in joint ventures with affiliated companies.
In December 1998, the Corporation transferred its 50.9% interest in the shares
of common stock of ICHOR Corporation ("Ichor") to a wholly-owned subsidiary of
its parent corporation. Ichor is a Delaware corporation whose shares of
common stock are quoted on the NASDAQ SmallCap Market.
At December 31, 1998, the Corporation had no full-time employees. The
executive officers of the Corporation devote such time to the business of the
Corporation as is required.
ITEM 2. PROPERTIES
The Corporation's administrative offices are located on premises leased by an
affiliate of its parent company in Vancouver, British Columbia, Canada.
The Corporation's undeveloped real estate properties are located in the Puget
Sound region of Washington State and consist of 8 parcels totaling
approximately 111 acres which are zoned for various commercial uses including
retail, office and business park, and 2 parcels totaling approximately 37
acres which are zoned for medium to high residential use. The Corporation is
seeking to sell these parcels and does not intend to fully develop the
majority of them prior to sale. The Corporation typically engages in such
preliminary development work as is necessary to maximize the value of the
parcels prior to their sale.
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Gig Harbour Property
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The Corporation owns approximately 102 acres of undeveloped real property
which was, in early 1997, annexed to the City of Gig Harbour, Washington,
which is located at the west end of the Tacoma Narrows Bridge from Tacoma,
Washington. The annexation provides for much higher intensity development
than was allowed under its previous jurisdiction (Pierce County), and opens
the way for a new major thoroughfare to be built through the middle of the
property that connects State Highway 16 and the North entrance of Gig Harbour.
Of the total acreage, 50 acres are now zoned for retail/commercial uses, 35
acres for medium density (8 units per acre) residential use and 17 acres for
business park/professional office. The retail portion of the property is
under an option agreement for development into a regional shopping center.
The Corporation may develop all or a portion of the remaining land through
partnerships, joint ventures or other economic associations with local
developers. The Corporation's current involvement is limited to pre-
development work, including infrastructure (roads, sewer and water services),
preliminary permits, market studies, feasibility studies and related
activities.
All utilities are available to the site, but the extension of utilities would
be required prior to development of the site. In addition, internal roadways
will need to be constructed to provide access to the site and the site will
require grading prior to development. The Corporation has not determined
whether it will be involved in any of the actual site work. The City of Gig
Harbour is planning an extension of a street past the site, which when
completed, will provide access to the site from the City of Gig Harbour and
State Highway 16. This street extension may take up to 18 months to complete.
ITEM 3. LEGAL PROCEEDINGS
The Corporation is subject to routine litigation incidental to its business
from time to time. The Corporation does not believe that the outcome of such
litigation will have a material adverse effect on its business or financial
condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) Market Information. The Corporation's common stock is quoted on the NASD
OTC Bulletin Board under the symbol "LGIC". The following table sets forth
the quarterly high and low sales price per share of the Corporation's common
stock for the periods indicated:
Fiscal Quarter Ended High Low
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1997
March 31. . . . . . . . . . . . . . $ 0.32 $ 0.25
June 30 . . . . . . . . . . . . . . 0.35 0.25
September 30. . . . . . . . . . . . 0.38 0.25
December 31 . . . . . . . . . . . . 0.38 0.13
1998
March 31. . . . . . . . . . . . . . $ 0.38 $ 0.25
June 30 . . . . . . . . . . . . . . 0.50 0.13
September 30. . . . . . . . . . . . 0.13 0.13
December 31 . . . . . . . . . . . . 0.38 0.13
(b) Shareholders. At March 23, 1999, the Corporation had approximately 1,652
holders of record of its common stock.
(c) Dividends. The Corporation has not paid any dividends on its common
stock and does not anticipate that it will pay any dividends in the
foreseeable future.
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ITEM 6. SELECTED FINANCIAL DATA
The following table reflects selected consolidated financial data for the
Corporation for each of its last five fiscal years. Effective December 31,
1998, the Corporation transferred its holdings of shares of common stock of
Ichor. Ichor's results of operations for the fiscal years ended December 31,
1998 and 1997, respectively, and its assets and liabilities as at December 31,
1997 and 1996, respectively, are included in the financial data presented
below. The Corporation commenced operations in April 1994.
<TABLE>
<CAPTION>
For the Year Ended December 31,
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1998 1997 1996(1) 1995(2) 1994
---------- ---------- ---------- ---------- ----------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Sales of real estate $ 1,016 $ 3,250 $ 3,627 $ - $ 2,110
Other income 625 252 191 93 92
General and
administrative expenses 1,152 1,166 1,052 2,598 543
Interest expense 360 949 325 808 710
Income (loss) from
continuing operations 466 411 (5) (3,313) (520)
Net income (loss) 466 (2,618) 252 (2,337) (520)
COMMON SHARE DATA(3)
Income (loss) from continuing
operations per common share 0.02 0.01 (0.03) (0.51) (0.13)
Net income (loss) per
common share 0.02 (0.27) 0.01 (0.36) (0.13)
Weighted average common
shares outstanding (in
thousands) 10,838 10,838 6,862 6,513 4,096
BALANCE SHEET DATA
Working capital (2,082) 3,774 7,162 3,896 5,489
Total assets 16,083 15,760 19,315 9,907 13,042
Long-term obligations 205 646 327 646 -
Total stockholders' equity 8,705 9,392 12,249 3,524 5,489
</TABLE>
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(1) Includes an extraordinary item related to the early extinguishment of
debt totaling $257,000 ($0.04 per common share).
(2) Includes an extraordinary item related to the early extinguishment of
debt totaling $976,000 ($0.15 per common share).
(3) Basic and diluted common share data is the same.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and
financial condition of the Corporation for the years ended December 31, 1998,
1997 and 1996, respectively, should be read in conjunction with the
Corporation's audited consolidated financial statements and related notes
included elsewhere herein.
Effective December 31, 1998, the Corporation transferred its holdings of
shares of common stock of Ichor. Ichor's results of operations for the fiscal
years ended December 31, 1998 and 1997, respectively, and its assets and
liabilities as at December 31, 1997 and 1996, respectively, have been included
in the Corporation's financial statements. As Ichor sold its environmental
remediation services business in April 1997 and a waste oil recycling facility
in December 1997, these operations have been accounted for as discontinued
operations for the year ended December 31, 1997. Certain reclassifications
have been made to the prior periods' financial statements to conform to the
current period's presentation.
Results of Operations for the Year Ended December 31, 1998 Compared to the
- --------------------------------------------------------------------------
Year Ended December 31, 1997
- ----------------------------
Revenues for the year ended December 31, 1998 decreased to $3.1 million from
$3.5 million for the year ended December 31, 1997. In the year ended December
31, 1998, the Corporation sold real estate for $1.0 million, compared to $3.3
million in the comparative period of 1997. In the current period, the
Corporation reported a non-cash accounting gain on disposal of subsidiaries of
$1.4 million. Effective March 31, 1998, the Corporation's then 50.9% owned
subsidiary, Ichor, sold its wholly-owned subsidiary, ICHOR Services, Inc.
("Services"), and recognized a non-cash accounting gain on the sale as a
result of the disposal of net liabilities of Services. Effective December 31,
1998, the Corporation transferred its holdings of shares of common stock of
Ichor.
Costs and expenses for the year ended December 31, 1998 decreased to $2.5
million from $4.1 million for the year ended December 31, 1997. The cost of
real estate sold and related selling costs decreased to $0.9 million in the
year ended December 31, 1998 from $1.9 million in the comparable period of
1997, primarily as a result of a reduction in the sale of real estate.
Interest expense decreased to $0.4 million in the year ended December 31, 1998
from $0.9 million in the same period of 1997, primarily as a result of
decreased indebtedness resulting from the disposition by Ichor of Services.
General and administrative expenses were $1.2 million for the years ended
December 31, 1998 and 1997, respectively.
The Corporation had net income of $0.5 million, or $0.02 per share, in the
year ended December 31, 1998. In the year ended December 31, 1997, the
Corporation had a net loss of $2.6 million, or $0.27 per share, which included
a loss of $3.0 million, or $0.28 per share, from discontinued operations.
9
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Results of Operations for the Year Ended December 31, 1997 Compared to the
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Year Ended December 31, 1996
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Revenues for the year ended December 31, 1997 decreased to $3.5 million from
$3.8 million for the year ended December 31, 1996, as a result of a reduction
in the sale of real estate.
Costs and expenses for the year ended December 31, 1997 increased to $4.1
million from $3.8 million in the comparable period of 1996, primarily as a
result of the inclusion of Ichor's results of operations for the year ended
December 31, 1997. General and administrative expenses increased to $1.2
million in the year ended December 31, 1997 from $1.1 million in the
comparable period of 1996. The Corporation's interest expense increased to
$0.9 million in the year ended December 31, 1997 from $0.3 million in the year
ended December 31, 1996. The cost of real estate sold and related selling
costs decreased to $1.9 million in the year ended December 31, 1997, from $2.4
million in the comparable period of 1996, primarily as a result of a reduction
in the sale of real estate.
The Corporation reported income from continuing operations of $0.4 million in
the year ended December 31, 1997, compared to a loss of $5,000 in the year
ended December 31, 1996.
In the year ended December 31, 1997, the Corporation reported a loss from
discontinued operations of $3.0 million. The Corporation reported a loss of
$1.2 million from the operation of a waste oil recycling facility and a loss
of $1.4 million from the sale of the facility in the year ended December 31,
1997. The Corporation reported a loss from the operation of Ichor's
environmental remediation services operations of $0.4 million in the year
ended December 31, 1997.
In the year ended December 31, 1996, the Corporation recognized an
extraordinary gain of $0.3 million from the transfer of real estate in
exchange for the extinguishment of debt.
The Corporation's net loss in the year ended December 31, 1997 was $2.6
million, or $0.27 per share, compared to net income of $0.3 million, or $0.01
per share, in the year ended December 31, 1996.
Liquidity and Capital Resources
- -------------------------------
The Corporation had cash of $0.6 million at December 31, 1998, compared to
$0.5 million at December 31, 1997.
Net cash provided by operating activities was $4.5 million in the year ended
December 31, 1998, compared to $0.8 million in the year ended December 31,
1997. Borrowings from the Corporation's parent company and its subsidiaries
provided cash of $4.4 million in the year ended December 31, 1998, compared to
$1.2 million in the comparable period of 1997. A decrease in accounts and
notes receivable provided cash of $0.6 million in the year ended December 31,
1998, compared to an increase in accounts and notes receivable using cash of
$2.2 million in the same period of 1997. Sales of and a decrease in real
estate held for development and sale provided cash of $0.8 million in the year
ended December 31, 1998, compared to $1.5 million in the year ended December
31, 1997.
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Investing activities used cash of $6.3 million in the year ended December 31,
1998, primarily for the purchase of a note receivable in the amount of $1.4
million and the purchase of common shares of the Corporation's parent
corporation.
Financing activities provided cash of $2.0 million in the year ended December
31, 1998, compared to using cash of $1.2 million in the year ended December
31, 1997. A net increase in indebtedness provided cash of $25,000 in the year
ended December 31, 1998, compared to a net decrease in indebtedness using cash
of $1.0 million in the comparative period of 1997. The Corporation paid $0.3
million in dividends on its preferred stock in the year ended December 31,
1998, compared to $0.2 million in the comparative period of 1997.
At December 31, 1998, the Corporation had $1.7 million in outstanding notes
which are secured by deeds of trust on a portion of the Corporation's real
estate assets and are non-recourse to the Corporation. Pursuant to such deeds
of trust, the Corporation is obligated to make property tax and assessment
payments on the secured properties on a timely basis.
At December 31, 1998, overdue property taxes on the Corporation's properties
amounted to $0.1 million. In addition, there were approximately $0.2 million
in assessments to local improvement districts ("LIDs"). Overdue property
taxes and LIDs accrue interest at approximately 12% per annum. Under
Washington State law, if property taxes or LIDs remain delinquent for three
years, the governing jurisdiction can commence foreclosure proceedings against
the property. The Corporation anticipates that for the foreseeable future it
will permit property taxes to remain overdue, but may pay such taxes and LIDs
as are necessary to prevent foreclosure proceedings from occurring. No non-
judicial or judicial foreclosure actions have been commenced as a result of
the Corporation's failure to make property tax or assessment payments on a
timely basis.
The following table summarizes the repayment schedule of the Corporation's
debt obligations, LIDs and unpaid property taxes at December 31, 1998:
Year Ending Dollars in
December 31, Thousands
------------ ----------
1999 $ 1,811
2000 41
2001 41
2002 41
2003 41
Thereafter 41
----------
$ 2,016
==========
The Corporation has no commitments for capital expenditures in relation to its
undeveloped real estate, although it may need to provide funds for pre-
development work on certain parcels in order to enhance their marketability
and sale value.
The Corporation believes that its assets should enable the Corporation to meet
its current ongoing liquidity requirements.
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Year 2000
- ---------
Many of the world's computer systems currently record years in a two-digit
format. These computer systems will be unable to properly interpret dates
beyond the year 1999, which could lead to business disruptions and is commonly
referred to as the "Year 2000" issue. Based on its current information,
management of the Corporation has determined that the Year 2000 issue will not
pose significant operational problems for its computer systems as it only
utilizes commercially available software and personal computers, which are
Year 2000 compliant. The total cost to the Corporation of Year 2000
compliance activities has not been and is not currently anticipated to be
material to its financial position or results of operations in any given year.
In addition, management of the Corporation has initiated communications with
clients to ascertain their Year 2000 readiness and develop contingency plans
as required, and management intends to address this issue with any prospective
client. The determination by management and costs relating to the Year 2000
issue are based on management's best estimates, which were derived utilizing
numerous assumptions of future events. However, there can be no assurance
that these estimates will be achieved and actual results could vary materially
from those anticipated.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data required with
respect to this Item 8, and as identified in Item 14 of this annual report,
are included in this annual report commencing on page 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
12
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
PART IV
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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 Comprehensive Income
Consolidated Statements of Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Financial Statements
(2) List of Exhibits
----------------
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.
Incorporated by reference to the Corporation's Form 8-K dated June
27, 1996.
3.6 Bylaws.(1)
10.1 1994 Employee Incentive Plan.(1)
10.2 Executive Employment Agreement between the Corporation and Mr.
Smith.(1)
10.3 Debt Settlement Agreement between the Corporation and ICHOR
Corporation dated September 30, 1997.(2)
10.4 Debt Settlement Agreement between the Corporation and ICHOR
Corporation dated February 20, 1998.(2)
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10.5 Purchase Agreement between the Corporation and MFC Merchant Bank
S.A. dated January 4, 1999. Incorporated by reference to the
Schedule 13D/A with respect to shares of Ichor dated January 4,
1999.
21 List of subsidiaries of the Registrant.
27 Article 5 - Financial Data Schedule for the year ended December 31,
1998.
- --------------
(1) Incorporated by reference to the Corporation's Registration Statement on
Form 10-SB.
(2) Incorporated by reference to the Schedule 13D/A with respect to shares of
Ichor dated March 13, 1998.
(b) Reports on Form 8-K
-------------------
None.
14
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PETERSON SULLIVAN P.L.L.C.
601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206) 382-7777 FAX 382-7700
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Shareholders
Logan International Corp.
We have audited the accompanying consolidated balance sheets of Logan
International Corp. and subsidiaries as of December 31, 1998 and 1997, and the
related statements of operations, comprehensive income, changes in
shareholders' equity, and cash flows for the years ended December 31, 1998,
1997 and 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Logan
International Corp. and its subsidiaries as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for the years ended
December 31, 1998, 1997 and 1996, in conformity with generally accepted
accounting principles.
/s/ Peterson Sullivan P.L.L.C.
February 23, 1999
Seattle, Washington
15
<PAGE> 16
LOGAN INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
(In Thousands of Dollars)
1998 1997
---------- ----------
ASSETS
Current Assets
Cash $ 595 $ 452
Cash held in escrow - 617
Accounts receivable, less allowance for doubtful
accounts of none in 1998 and $562 in 1997 632 2,417
Note receivable - 680
Real estate held for development and sale 3,785 4,544
Other assets 79 36
---------- ----------
Total current assets 5,091 8,746
Investments 10,992 7,014
---------- ----------
$ 16,083 $ 15,760
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 323 $ 327
Accrued liabilities 139 641
Due to affiliates 4,900 1,868
Debt 1,811 2,136
---------- ----------
Total current liabilities 7,173 4,972
Long-Term Debt 205 646
---------- ----------
Total liabilities 7,378 5,618
Minority Interest - 750
Shareholders' Equity
Preferred stock, Series B, $.01 par value,
100,000 shares authorized, 60,000 issued and
outstanding at December 31, 1998 and 1997 1 1
Common stock, $.01 par value, 100,000,000 shares
authorized, 10,837,808 issued and outstanding
at December 31, 1998 and 1997 108 108
Additional paid-in capital 14,673 14,673
Retained deficit (5,230) (5,396)
Accumulated other comprehensive income (loss) (847) 6
---------- ----------
8,705 9,392
---------- ----------
$ 16,083 $ 15,760
========== ==========
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 17
LOGAN INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1998, 1997 and 1996
(In Thousands of Dollars, Except Earnings Per Share)
1998 1997 1996
---------- ---------- ----------
Revenue
Sales of real estate $ 1,016 $ 3,250 $ 3,627
Gain on disposals of subsidiaries 1,419 - -
Other 625 252 191
---------- ---------- ----------
3,060 3,502 3,818
Costs and expenses
Cost of real estate sold and related
selling costs 939 1,944 2,446
General and administrative 1,152 1,166 1,052
Interest 360 949 325
---------- ---------- ----------
2,451 4,059 3,823
---------- ---------- ----------
Income (loss) from continuing
operations before minority interest
and discontinued operations 609 (557) (5)
Minority interest (143) 968 -
---------- ---------- ----------
Income (loss) from continuing operations 466 411 (5)
Discontinued operations (any tax benefits
from losses are fully reserved)
Loss from operation of environmental
remediation services segment - (430) -
Loss from operation of waste oil
recycling facility - (1,224) -
Loss on sale of waste oil recycling
facility - (1,375) -
---------- ---------- ----------
Loss from discontinued operations - (3,029) -
---------- ---------- ----------
Income (loss) before extraordinary item 466 (2,618) (5)
Extraordinary item, gain on
extinguishment of debt (no tax is
provided because of available net
operating losses) - - 257
---------- ---------- ----------
Net income (loss) $ 466 $ (2,618) $ 252
========== ========== ==========
Basic earnings (loss) per common share
Income (loss) from continuing
operations $ .02 $ .01 $ (.03)
Discontinued operations - (.28) -
Extraordinary item - - .04
---------- ---------- ----------
Net income (loss) per common
share $ .02 $ (.27) $ .01
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 18
LOGAN INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 1998, 1997 and 1996
(In Thousands of Dollars)
1998 1997 1996
---------- ---------- ----------
Net income (loss) $ 466 $ (2,618) $ 252
Other comprehensive loss, net of tax
Unrealized gains (losses) on securities
Unrealized holding losses arising
during the period (853) (66) 199
Less reclassification adjustment
for gains included in net income - - (175)
---------- ---------- ----------
Other comprehensive loss (853) (66) (24)
---------- ---------- ----------
Comprehensive income (loss) $ (387) $ (2,684) $ 228
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 19
LOGAN INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1998, 1997 and 1996
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Number of Income (Loss),
Number of Preferred Preferred Additional Unrealized
Common Shares Shares Common Paid-in Retained (Loss) on
Shares Series B Series B Shares Capital Deficit Securities Total
---------- --------- --------- ------ ---------- -------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December
31, 1995 6,520,726 - $ - $ 65 $ 6,220 $ (2,857) $ 96 $ 3,524
Sale of preferred shares - 60,000 1 - 5,999 - - 6,000
Sale of common shares 4,217,082 - - 42 2,405 - - 2,447
Shares issued on debt
modification 100,000 - - 1 49 - - 50
Current period change in
other comprehensive loss - - - - - - (24) (24)
Net income for the year - - - - - 252 - 252
---------- --------- --------- ------ ---------- -------- ------------ -------
Balance at December
31, 1996 10,837,808 60,000 1 108 14,673 (2,605) 72 12,249
Current period change in
other comprehensive loss - - - - - - (66) (66)
Net loss for the year - - - - - (2,618) - (2,618)
Dividend - - - - - (173) - (173)
---------- --------- --------- ------ ---------- -------- ------------ -------
Balance at December
31, 1997 10,837,808 60,000 1 108 14,673 (5,396) 6 9,392
Current period change in
other comprehensive loss - - - - - - (853) (853)
Net income for the year - - - - - 466 - 466
Dividend - - - - - (300) - (300)
---------- --------- --------- ------ ---------- -------- ------------ -------
Balance at December
31, 1998 10,837,808 60,000 $ 1 $ 108 $ 14,673 $ (5,230) $ (847) $ 8,705
========== ========= ========= ====== ========== ======== ============ =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 20
LOGAN INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998, 1997 and 1996
(In Thousands of Dollars)
1998 1997 1996
---------- ---------- ----------
Cash Flows from Operating Activities
Net income (loss) $ 466 $ (2,618) $ 252
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities
Gain on sale of available-for-sale
securities - - (175)
Gain on disposal of subsidiaries (1,419) - -
Extraordinary item - - (257)
Decrease in cash held in escrow 145 637 -
Decrease in real estate held for
development and sale 759 1,542 1,796
(Increase) decrease in accounts and
notes receivable 613 (2,247) (417)
Decrease in accounts payable and
accrued liabilities (524) (621) (6)
Increase in amount due to affiliates 4,434 1,185 -
Net assets of discontinued segments - 2,723 -
Other (6) 240 273
---------- ---------- ----------
Net cash provided by operating
activities 4,468 841 1,466
Cash Flows from Investing Activities
Purchases of investments (4,880) - (9,341)
Acquisition of subsidiary, net of
cash acquired - - 628
Proceeds from the sale of available-
for-sale securities - - 313
Increase in note receivable (1,400) - -
---------- ---------- ----------
Net cash used in investing
activities (6,280) - (8,400)
Cash Flows from Financing Activities
Proceeds from debt 465 2,180 104
Payment of debt (440) (3,205) (1,069)
Proceeds from common stock issuance - - 2,447
Proceeds from preferred stock issuance - - 6,000
Proceeds from preferred stock issuance
by a subsidiary 2,230 - -
Dividend (300) (173) -
---------- ---------- ----------
Net cash provided by (used in)
financing activities 1,955 (1,198) 7,482
---------- ---------- ----------
Net increase (decrease) in cash 143 (357) 548
Cash, beginning of year 452 809 261
---------- ---------- ----------
Cash, end of year $ 595 $ 452 $ 809
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
20
<PAGE> 21
LOGAN INTERNATIONAL CORP. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(In Thousands of Dollars, Except for Per Share Amounts)
Note 1. Nature of Operations and Significant Accounting Policies
Nature of Operations
- --------------------
Logan International Corp. ("the Company") is in the financial services
industry which currently includes investments in real estate. The Company is
a 71% - owned subsidiary of MFC Bancorp Ltd. ("MFC").
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of the Company and
its subsidiary. All significant intercompany accounts and transactions have
been eliminated. Unless otherwise stated, all notes to financial statements
relate to continuing operations.
Cash
- ----
Cash balances are occasionally in excess of federally insured amounts. Cash
held in escrow represented amounts which were subject to withdrawal
restrictions.
Investments
- -----------
The Company holds certain of its marketable investments (including those in
the common stock of MFC) as available-for-sale securities which are stated at
fair value. Any unrealized holding gains or losses of available-for-sale
securities are reported as a separate component of shareholders' equity until
realized. If a loss in value in available-for-sale securities is considered
to be other than temporary, it is recognized in the determination of net
income. Cost is based on the specific identification method to determine
realized gains or losses. Investments in nonmarketable securities (consisting
of preferred stock of MFC) are stated at the lower of cost or net realizable
value.
Real Estate Held for Development and Sale
- -----------------------------------------
Real estate held for development and sale is stated at the lower of cost or
net realizable value as determined by management based on current market
conditions in the same geographic region. The Company's real estate is
treated as inventory which is to be disposed of in the near-term and is,
therefore, classified as a current asset.
21
<PAGE> 22
Note 1. (Continued)
Environmental Conservation
- --------------------------
Liabilities for environmental conservation are recorded when it is probable
that obligations have been incurred and the amounts can be reasonably
estimated. Any potential recoveries of such liabilities are to be recorded
when there is an agreement with a reimbursing entity. No such liabilities
were recorded in these consolidated financial statements.
Taxes on Income
- ---------------
The Company accounts for income taxes under an asset and liability approach
that requires the recognition of deferred tax assets and liabilities for
expected future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating future tax
consequences, the Company generally considers all expected future events other
than enactments of changes in the tax laws or rates.
Earnings Per Share
- ------------------
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding in
the period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares; however, there were no dilutive securities for 1998, 1997 and
1996.
The weighted average number of shares outstanding was 10,837,808 for the years
ended December 31, 1998 and 1997, and 6,862,348 for the year ended December
31, 1996. The income or (loss) from continuing operations to compute the
amount attributable to common shareholders includes the recognition of
preferred stock dividends in arrears of $300 for each of the years ended
December 31, 1998 and 1997, respectively.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
22
<PAGE> 23
Note 1. (Continued)
Comprehensive Income
- --------------------
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" is effective for years beginning after December 15, 1997. The primary
objective of this statement is to report and disclose a measure of all changes
in equity of an entity that result from transactions and other economic events
of the period other than transactions with owners. Of the various methods
allowed to accomplish this objective, the Company has elected to provide
separate statements of comprehensive income.
New Accounting Standards
- ------------------------
Statement of Financial Accounting Standards No. 131, "Disclosure About
Segments of an Enterprise and Related Information," is effective for years
beginning after December 15, 1997. This statement requires use of the
"management approach" model for segment reporting. The management approach
model is based on the way a company's management organizes segments within the
company for making operating decisions and assessing performance. Management
operates the Company as one segment: financial services. Information for
management purposes does not require the segmenting of financial services
activities. Operating revenues are realized primarily from third party
sources in the United States. All long-lived assets are located in the United
States. Since there is one segment, no additional segment disclosures are
considered necessary for continuing operations.
Statement of Financial Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" established accounting and reporting
standards for derivative instruments and for hedging activities. This
statement requires that an entity recognize all derivatives as either assets
or liabilities in the statement of financial position and measure those
instruments at fair value. Because the Company does not engage in any
derivatives or hedging activities, there should be no impact on its financial
statements.
Statement of Financial Standards No. 134, "Accounting for Mortgage-Backed
Securities Retained After the Securitization of Mortgage Loans Held for Sale
by a Mortgage Banking Enterprise" establishes accounting and reporting
standards for certain activities of mortgage banking enterprises and other
enterprises that conduct operations that are substantially similar to a
mortgage banking enterprise. Because the Company does not engage in any
mortgage banking activities, there should be no impact on the Company's
financial statements.
23
<PAGE> 24
Note 2. Discontinued Operations
During 1997, a subsidiary, Ichor Corporation ("Ichor"), sold its remediation
services segment for $147 in cash. As part of the sale transaction, current
assets and liabilities of the segment were retained. Also, in 1997, Ichor
sold all of its waste oil facility assets for $320 in cash plus a note for
$680 which was paid in 1999. Both segments were accounted for as discontinued
operations in 1997.
A subsidiary of Ichor was sold in 1998 at a non-cash accounting gain of $437.
The gain resulted from the assumption of the subsidiary's liabilities by the
third party purchaser.
Effective December 31, 1998, the Company transferred all of its shares of
common stock in Ichor to a wholly-owned subsidiary of MFC. As a result of the
transaction, the Company had a net non-cash accounting gain of $982. Further,
the Company may receive future proceeds from the subsidiary based on the
ultimate disposition of these shares to third parties.
Note 3. Investments
The Company has investments in available-for-sale securities which have been
classified as long-term at December 31, 1998, 1997 and 1996. These securities
may be summarized as follows:
1998 1997 1996
---------- ---------- ----------
Proceeds from sales $ - $ - $ 313
Realized gains - - 175
Fair value of securities at December
31 (of which $4,563 represents MFC
common stock for 1998) 4,792 814 201
Cost of securities at December 31 (of
which $4,830 represents MFC common
stock for 1998) 5,639 808 129
---------- ---------- ----------
Unrealized (loss) gain in shareholders'
equity at December 31 $ (847) $ 6 $ 72
========== ========== ==========
24
<PAGE> 25
Note 3. (Continued)
Included in long-term investments are 82,200 MFC Class A Preferred Shares,
Series 1, carried at the original cost of $6,200. Since no trading market
exists for these shares, management believes the fair value is equal to cost
based on the book value of the investee. These shares are convertible, have
an annual dividend rate of $3.65 per share, are redeemable at any time and are
retractable after 2002 subject to certain conditions. The shares are
redeemable and retractable at $70.00 per share plus any accrued and unpaid
dividends. The shares are convertible at $3.65 per share of common stock for
the first year and then increased by $.18 increments each year through 2002
with no adjustment thereafter. The Company received $290 and $172 in
dividends in 1998 and 1997, respectively, on these shares.
Note 4. Debt
1998 1997
---------- ----------
Nonrecourse notes payable collateralized by
real estate:
Interest at 15%; due August 30, 1999 $ 1,035 $ 830
Interest at 15%; due August 30, 1999 450 360
Interest at 12%; due August 30, 1999 170 -
Amounts due to an insurance company in monthly
installments of $38. No interest was charged
on this debt. No interest was imputed since
the amount is not material. - 757
Other 10 10
---------- ----------
1,665 1,957
Less current portion (1,665) (1,597)
---------- ----------
$ - $ 360
========== ==========
25
<PAGE> 26
Note 4. (Continued)
In addition to notes payable, the Company also has assessments due to local
improvement districts ("LID") and unpaid property taxes which are priority
liens on real estate. LID assessments payable are summarized as follows:
1998 1997
---------- ----------
LID, interest at 9%; payable in annual installments
of $41 plus interest $ 245 $ 327
LID, interest at 7.75%; $68 payable in March 1997
and in annual installments of $13 plus interest
thereafter - 126
---------- ----------
$ 245 $ 453
========== ==========
Property taxes in the amount of $106 and $372 were not paid as of December 31,
1998 and 1997, respectively. These amounts along with the current portions of
notes payable and LID assessments payable have been combined and are
classified as current liabilities.
As of December 31, 1998, the principal maturities of debt are as follows:
1999 $ 1,811
2000 41
2001 41
2002 41
2003 41
Thereafter 41
-----------
$ 2,016
===========
Based on borrowing rates available to the Company for debt with similar terms
and average maturities, management believes that the fair value of the
Company's debt approximates the amounts disclosed in this note.
Note 5. Preferred Stock
The Company's Preferred Shares, Series B are voting and require that dividends
be paid annually at 5% in arrears on December 31 (amounting to approximately
$300 at December 31, 1998). Should dividends not be paid as required,
interest at 8% is to be accrued on the unpaid amount. The Company may redeem
these shares at any time at an aggregate price which includes all unpaid
dividends, accrued interest and a redemption premium of 10% based on the
amount paid for the shares. Upon liquidation, these shares are entitled to
receive the same amounts as redemption
26
<PAGE> 27
Note 5. (Continued)
in priority to the common or other shares. As long as any of the Preferred
Shares, Series B remain outstanding, the Company cannot pay dividends on
common or other junior shares, redeem less than all of these shares or issue
additional preferred stock unless all unpaid dividends including interest have
been paid. In any event, no shares may be issued in priority to the Preferred
Shares, Series B shares without the approval of the preferred shareholders.
All 60,000 issued and outstanding shares are held by a subsidiary of MFC.
Note 6. Income Tax
The reconciliation of income tax from continuing operations computed at the
U.S. federal statutory rate to the Company's effective tax for years ended
December 31 is as follows:
1998 1997 1996
---------- ---------- ----------
Tax at U.S. statutory rate $ 158 $ 139 $ -
Minority interest 49 (329) -
Permanent difference associated with the
gain on disposal of subsidiary (334) - -
Valuation allowance 66 213 -
Other 61 (23) -
---------- ---------- ----------
$ - $ - $ -
========== ========== ==========
The significant components of the Company's deferred tax asset is as follows:
1998 1997
---------- ----------
Available net operating loss carryforwards $ 746 $ 3,654
Tax basis in real estate acquired in excess
of carrying value 439 457
---------- ----------
1,185 4,111
Valuation allowance (1,185) (4,111)
---------- ----------
Net deferred tax asset $ - $ -
========== ==========
27
<PAGE> 28
Note 6. (Continued)
The Company's net operating loss carryforwards of $2,195 will expire in the
years ending December 31, 2010, 2011 and 2013 at $251, $1,695, and $249,
respectively. The utilization of these losses is subject to annual
limitations due to the Internal Revenue Code. At December 31, 1997, $2,992 of
the deferred tax asset was attributable to the net operating loss
carryforwards of a subsidiary which was disposed of in 1998.
Any tax benefits resulting from the determination of other comprehensive
income have been fully reserved.
Note 7. Real Estate Transactions
The Company has an option agreement to sell approximately 46 acres out of a
larger parcel of real estate held for sale for approximately $7,300 which
expired August 31, 1998. However, the agreement has been extended to August
30, 1999, by the payment of a $50 fee.
During 1996, the Company sold a subsidiary which had as its only asset a
parcel of real estate. The proceeds from the sale of $3,340 were shared
equally with MFC because of MFC's assistance in concluding the sale. The
Company's profit from this sale was included in the 1996 financial statements.
The remaining amount due on the sale of $417 is included in accounts
receivable at December 31, 1998 and 1997. The receivable is due September
1999 and is secured with the real estate. Management estimates that the fair
value of the receivable approximates carrying value based on similar
transactions in the market.
Note 8. Transactions With Affiliates
At December 31, 1998, due to affiliates was an account payable to another
subsidiary of MFC which was used by the Company to purchase 500,000 shares of
MFC's common stock. The Company received a dividend payment of $10 on these
shares.
At December 31, 1998 and 1997, another subsidiary of MFC Bancorp held a
warrant to purchase 125,000 shares of the Company's stock at $.50 per share by
December 31, 2000. The warrants were priced in excess of the average trading
price of the Company's shares in 1998 and 1997.
At December 31, 1997, due to affiliates included $1,088 to MFC for advances
and a $780 advance to Ichor from another MFC subsidiary.
28
<PAGE> 29
Note 9. Supplementary Disclosures with Respect to the Statement of Cash Flows
Cash paid for interest during the years ended December 31, 1998, 1997 and
1996, was $528, $598 and $32, respectively.
Significant noncash transactions in 1998:
1. The Company transferred its shares in Ichor to another subsidiary of MFC.
2. The Company sold a subsidiary to a purchaser who assumed the subsidiary's
liabilities.
Significant noncash transactions in 1997:
1. Ichor received a $680 note as a part of the sale of its waste oil
recycling facility which was paid in 1999.
2. A subsidiary of MFC converted $750 of debt due from Ichor into 75,000
shares of Ichor's preferred stock which is reflected as minority interest
at December 31, 1997.
Significant noncash transactions in 1996:
1. The Company transferred parcels of land to a lender in exchange for
extinguishment of debt of $1,196. An extraordinary gain of $257 was
recognized as a result of this transaction. In addition, the Company
transferred a parcel of land to a lender in exchange for extinguishment of
debt of $511. No gain or loss was recognized as a result of this
transaction.
2. The Company exchanged a subsidiary of MFC in a transaction valued at
$2,425 for common stock and a note receivable from Ichor.
3. The waste oil recycling facility was acquired in satisfaction of a loan of
$2,425.
4. The Company issued 100,000 common shares at $.50 per share to a lender for
the release of a conversion right.
29
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: March 26, 1999. LOGAN INTERNATIONAL CORP.
By: /s/ Michael J. Smith
-----------------------------------------------
Michael J. Smith
President, Chief Financial Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Michael J. Smith Date: March 26, 1999
- --------------------------------------
Michael J. Smith
President, Chief Financial Officer and
Director
/s/ Leonard Petersen Date: March 26, 1999
- --------------------------------------
Leonard Petersen
Director
/s/ Roland Waldvogel Date: March 26, 1999
- --------------------------------------
Roland Waldvogel
Director
30
<PAGE> 31
EXHIBIT INDEX
Exhibit Number 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. Incorporated by reference to the
Corporation's Form 8-K dated June 27, 1996.
3.6 Bylaws.(1)
10.1 1994 Employee Incentive Plan.(1)
10.2 Executive Employment Agreement between the
Corporation and Mr. Smith.(1)
10.3 Debt Settlement Agreement between the Corporation
and ICHOR Corporation dated September 30,
1997.(2)
10.4 Debt Settlement Agreement between the Corporation
and ICHOR Corporation dated February 20, 1998.(2)
10.5 Purchase Agreement between the Corporation and
MFC Merchant Bank S.A. dated January 4, 1999.
Incorporated by reference to the Schedule 13D/A
with respect to shares of Ichor dated January 4,
1999.
21 List of subsidiaries of the Registrant.
27 Article 5 - Financial Data Schedule for the year
ended December 31, 1998.
- ---------------
(1) Incorporated by reference to the Corporation's Registration Statement on
Form 10-SB.
(2) Incorporated by reference to the Schedule 13D/A with respect to shares of
Ichor dated March 13, 1998.
LOGAN INTERNATIONAL CORP.
EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT
Shareholding at Year End
Name of Subsidiary Jurisdiction of Incorporation (Direct)
- ------------------ ----------------------------- ------------------------
Inverness Province of British Columbia, 100%
Enterprises Ltd. Canada
<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-K AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 595
<SECURITIES> 0
<RECEIVABLES> 632
<ALLOWANCES> 0
<INVENTORY> 3,785
<CURRENT-ASSETS> 5,091
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,083
<CURRENT-LIABILITIES> 7,173
<BONDS> 0
0
1
<COMMON> 108
<OTHER-SE> 8,596
<TOTAL-LIABILITY-AND-EQUITY> 16,083
<SALES> 1,016
<TOTAL-REVENUES> 3,060
<CGS> 939
<TOTAL-COSTS> 2,451
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 360
<INCOME-PRETAX> 466
<INCOME-TAX> 0
<INCOME-CONTINUING> 466
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 466
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
