UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 10-K
| | | |
| (Mark One) | | |
| [X] | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| | | |
| | FOR THE FISCAL YEAR ENDED MARCH 31, 2010 | |
| | | |
| | OR | |
| | | |
| [ ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| | | |
| | For the transition period from _______________ to _______________ | |
Commission File number: 0-2040
| ST. LAWRENCE SEAWAY CORPORATION |
(Exact name of small business issuer as specified in its charter) |
| | | |
| Delaware | | 26-0818050 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | 200 Connecticut Avenue, Norwalk, Connecticut 06854 | |
| | (Address of principal executive offices) (Zip Code) | |
| | | |
| | (203) 853-8700 | |
| | (Registrant’s telephone number, including area code) | |
| Securities registered under Section 12(b) of the Exchange Act: |
| | | |
| Title of each class | | Name of each exchange on which registered |
| None | | None |
| | | |
| Securities registered under Section 12(g) of the Exchange Act: |
| | | |
| | Common Stock | |
| | par value $0.01 per share |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ] No [X]
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 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]
The issuer’s revenues for its fiscal year ended March 31, 2010 were $100,886.
The aggregate market value of common stock held by non-affiliates of the issuer as of March 31, 2010 was approximately $325,000.
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of common stock of the issuer outstanding as of March 31, 2010 was 518,736.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
ST. LAWRENCE SEAWAY CORPORATION
FORM 10-K INDEX
| | | PAGE |
| Forward Looking Statements | | |
| | | |
| PART I | | |
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| Item 1 – Description of Business | | 1-2 |
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| Item 2 – Description of Property | | 3 |
| | | |
| Item 3 – Legal Proceedings | | 3 |
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| Item 4 – Submission of Matters to a Vote of Security Holders | | 3 |
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| PART II | | |
| | | |
| Item 5 – Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities | | 4 |
| | |
| Item 6 – Management’s Discussion and Analysis or Plan of Operation | | 4-6 |
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| Item 7 – Financial Statements – Years ended March 31, 2010 and 2009 | | 6 |
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| Item 8 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 6-7 |
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| Item 8A – Controls and Procedures | | 7 |
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| Item 8B – Other Information | | 7 |
| | | |
| PART III | | |
| | | |
| Item 9 – Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act | | 7-8 |
| | |
| Item 10 – Executive Compensation | | 9 |
| | | |
| Item 11 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 9-11 |
| | |
| Item 12 – Certain Relationships and Related Transactions | | 11 |
| | | |
| Item 13 – Exhibits | | 12 |
| | |
| Item 14 – Principal Accountant Fees and Services | | 13 |
| | | |
| SIGNATURES | | 26 |
FORWARD LOOKING STATEMENTS
Certain statements in this Report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform act of 1995. When used in this Report, words such as “may,” “should,” “seek,” “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “goal,” “intend,” “strategy,” and similar expressions are intended to identify the Company’s future plans, operations, business strategies, operating results, and financial position. Forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause the Company’s actual results, performance or achievements to differ materially from those described or implied in the forward-looking statement and cause its goals and strategies to not be achieved.
These risks and uncertainties many of which are not within our control, include, but are not limited to:
| · | general economic and business conditions; |
| · | the Company’s ability to find a candidate for, enter into an agreement with respect to, and consummate, a merger, reverse merger, acquisition or business combination or other financial transaction that is acceptable, both as to a candidate and as to transaction terms and conditions; |
| · | competition for transactions of the nature the Company is seeking; |
| · | potential future regulatory restrictions that could limit or pose restrictions on, or make less advantageous to potential candidates, transactions of the nature the Company is seeking; and |
| · | The availability of additional financing on satisfactory terms if a delay is encountered in consummating a transaction that the Company is seeking. |
You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Report. We do not undertake any responsibility to publicly update or revise any forward-looking statement, report or financial information.
PART-I
Item 1 – Description of Business.
St. Lawrence Seaway Corporation (the “Company”) was an Indiana corporation organized on March 31, 1959. Prior to 1998, the Company principally engaged in farming, timber, harvesting and other traditional agricultural activities. In 2002 the Company became engaged in investing in drug development programs and in evaluating other alternatives to its former business, including continuing its evaluation of operating companies for acquisition, merger, reverse merger, financial transactions or investments. Pending any such transaction, the Company will continue its practice of maintaining any cash assets in relatively liquid interest/dividend bearing money market investments. Eventually such assets may be used for an acquisition or for a partial payment of an acquisition or for the commencement of a new business.
RECENT DEVELOPMENTS
(A) The Company entered into a Stock and Warrant Purchase Agreement (the “Purchase Agreement”) as of January 10, 2007, as amended on April 16, 2007 and April 18, 2007, with Bernard Zimmerman & Company, Inc., an investment and merchant banking organization (the “Investor”), pursuant to which the Investor agreed to purchase: (i) 75,000 shares of the Company’s common stock for a total purchase price of $75,000; and (ii) a ten year warrant for a total purchase price of $2,500 which permits the Investor to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $1.00 per share (the “Warrant”). The Warrant is exercisable immediately. The common stock and the Warrant were sold to the Investor pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. The common stock that was sold to the Investor represented at the August 31, 2007 closing of this transaction, and continues to represent as of the date hereof, approximately 14.5% of the outstanding common stock of the Company, provided that no changes occur to the number of shares outstanding in subsequent periods.
On July 10, 2007, the shareholders of the Company approved the transaction outlined in the above paragraph. An integral part of the transaction was the following items:
| 1. | The approval of a proposal to amend and restate, in its entirety, the Company’s by-laws. |
| 2. | The approval of a proposal to reincorporate the Company in Delaware from Indiana. |
| 3. | The approval of a proposal to amend and restate in its entirety the Company’s Restated Articles of Incorporation, as amended, to, among other things: |
| (a) | approve the increase in the number of authorized shares of the Company from 4,000,000 shares, all of which are Common Stock, to 50,010,000 shares, consisting of 48,500,000 shares of Common Stock, 510,000 shares of a “tracking stock” known as Class A Common Stock and 1,000,000 shares of preferred stock, and to decrease the par value of the Common Stock from One Dollar ($1.00) to One Cent ($0.01); |
| (b) | approve the authorization of 1,000,000 shares of a blank check preferred class of stock, par value $0.01; and |
| (c) | approve the authorization of a non-transferable, non-tradeable, non-voting and non-certificated “tracking stock” class of securities known as the Class A Common Stock; |
| 4. | The issuance of the “tracking stock” know as the Class A Common Stock to the Record Holders in connection with, and upon consummation of the transaction described above, which closed after the distribution of the Class A Common Stock to existing shareholders, and, as such, the Investor received no “tracking stock”. |
Immediately prior to the August 31, 2007, closing under the Purchase Agreement, the Company reincorporated in Delaware via statutory merger and issued to all stockholders of record as of that date a tracking stock evidencing the Company’s medical investments. The tracking stock, designated as Class A Common Stock, is non-voting, non-saleable, non-transferable, non-certificated and held in book-entry form only. The Purchase Agreement contemplates no issuance of Class A Common Stock to the Investor in connection with the Investor’s acquisition of the Company’s common stock and the Warrant on August 31, 2007. No person who acquires common stock of the Company after August 31, 2007 shall be issued or be entitled to the benefits of the tracking stock. For additional terms and conditions of the Purchase Agreement (including the proposals to reincorporate in Delaware and to issue the tracking stock), please see the Company’s Form 8-K filed on January 10, 2007, the Company’s Form 8-K filed on April 19, 2007, and the Company’s proxy statement, filed on May 30, 2007 concerning the proposals that were voted upon and approved at the stockholders’ meeting held on July 10, 2007 and the Form 8-K filed on August 31, 2007.
In connection with the closing under the Purchase Agreement, and in accordance with the vote of a majority of shareholders of the Company, the incorporator of the surviving Company named Mssrs. Bernard Zimmerman (the principal of the Investor), Ronald A. Zlatniski, Duane L. Berlin and Edward B. Grier as members of the Company’s Board of Directors as Chairman of the Board of Directors, President, Chief Financial Officer and Treasurer, and Mr. Berlin was appointed as Secretary.
(B) On January 21, 2010 the Company entered into a Unit Purchase and Mutual Release Agreement with T-3 Therapeutics, LLC (T-3) for the sale of the Company’s entire membership interest in T-3 for $100,000 (the “Agreement”), payable in cash upon execution of the Agreement. Reference is made to the full text of the Agreement, a copy of which is attached to the Company’s Form 8-K filed on January 21, 2010 with the Securities and Exchange Commission.
Disclosure of the Company’s establishment of its Class A Tracking Stock (representing the Company’s medical-related investments, which include its New York University Research Funding investment, which has been deemed of no value, and its T-3 investment), held in street name only and owned by those shareholders of record as of August 31, 2007 entitled to future proceeds from the sale of the Company’s medical investments, was set forth in the Company’s definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on May 30, 2007. On August 31, 2007, there were outstanding 443,736 shares of Class A Tracking Stock.
On January 21, 2010, the Company’s Board of Directors approved the redemption of all of the Company’s issued and outstanding Class A Tracking Stock for $0.19 per share, after deducting current and anticipated expenses. The redemption was effectuated on March 12, 2010 to shareholders of record on August 31, 2007. The Company will use the nominal balance of cash available after the redemption to pay costs and expenses associated therewith.
Financing Arrangements. The Company currently has no debt or borrowed funds or similar obligations or contingencies. The Company does not have a formal arrangement with any bank or financial institution with respect to the availability of financing in the future.
Licenses and Trademarks. The business of the Company is not currently dependent upon any patent, trademark, franchise or license.
Governmental Regulation. The Company believes it is in compliance with all federal, state and local regulations.
Employees. The Company has no employees at this time.
Item 2 – Description of Property.
At March 31, 2010 and 2009, the Company did not own any real estate. The Company leases office space and office services on a month-to-month arrangement at a cost of $500 per month from the Company’s law firm, a principal of which is a Director of our Company.
Item 3 – Legal Proceedings.
Not applicable.
Item 4 – Submission of Matters to a Vote of Security Holders.
See Forms 8-K filed on August 31, 2007 and September 7, 2007 with respect to the transactions approved by the shareholders of the varied items submitted to the shareholders at the Annual Meeting of Shareholders on July 10, 2007.
See Form 8-K filed on January 21, 2010 with respect to the sale of the Company’s Medical Investment and the redemption of the Company’s Class “A” Tracking Stock.
PART-II
Item 5 – Market For Common Equity, and Related Stockholder Matters.
Market Information. The Company’s common stock is not currently listed for trading on any exchange but does trade on the OTC Bulletin Board. The following table sets forth the high and low sales price for each quarterly period during the fiscal years ended March 31, 2010 and 2009, as reported by the OTC Bulletin Board. The common stock is quoted under the ticker symbol “STLS.OB.” Such price data may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. The information shown below was obtained from Bloomberg Finance, L.P.
| | Quarter | | High | | Low |
| | | | | | | |
| 2010 | | First | | $ 0.82 | | $ 0.65 |
| | | | | | | |
| | | Second | | $ 1.05 | | $ 0.60 |
| | | | | | | |
| | | Third | | $ 1.02 | | $ 1.00 |
| | | | | | | |
| | | Fourth | | $ 1.02 | | $ 0.66 |
| | | | | | | |
| 2009 | | First | | $ 1.45 | | $ 0.98 |
| | | | | | | |
| | | Second | | $ 1.20 | | $ 0.98 |
| | | | | | | |
| | | Third | | $ 0.90 | | $ 0.75 |
| | | | | | | |
| | | Fourth | | $ 1.05 | | $ 0.75 |
On March 31, 2010 the bid price was $1.02.
Number of Stockholders. As of March 31, 2010, there were approximately 1,130 holders of record of the Company’s common stock. This number does not include beneficial owners whose shares are held in “street name.”
Dividends. It is the present policy of the Board of Directors of the Company to retain earnings, if any, to finance the continued operations of the Company. No cash dividends were paid during the fiscal years ended March 31, 2010 and 2009 and no cash dividends are expected to be paid in the foreseeable future. See Recent Developments – Page 2 for a description of the redemption of the Company’s Class “A” Tracking Stock.
Item 6 – Management’s Discussion and Analysis of Financial Condition and Results of Operation.
You should read the following discussion and analysis of the Company’s financial condition and results of operations together with the Company’s financial statements and related notes included further in this report. The notes to the financial statements set forth the Company’s critical accounting policies.
Please see “Note 4 Medical Investment” in the Notes to the Financial Statements contained under Item 7 for a description of the medical investments the Company made during 2002 and subsequent additional investments and the write-off of such investments in the year ended March 31, 2008. In the year ended March 31, 2010 the Company sold its Medical Investment in T-3 Therapeutics and redeemed its Class A Tracking Stock. See Page 2 for further information concerning the sale of the Company’s medical investment.
Selected Financial Data is not included herein because the Company is a smaller reporting company.
Results of Operations for the year ended March 31, 2010 as compared to the year ended March 31, 2009.
Interest and dividend income decreased to $886 for the year ended March 31, 2010 as compared to $2,199 for the year ended March 31, 2009. This decrease is attributable to lower cash balances available for investment during the fiscal year ended March 31, 2010 as compared to the fiscal year ended March 31, 2009 and lower interest rates received on such cash balances.
In the year ended March 31, 2010, the Company sold its Medical Investment in T-3 Therapeutics for $100,000 and has been taken the proceeds into income. This investment had previously been written off. Please see Page 2 for further information concerning this transaction.
General and administrative expenses increased to $37,122 for the year ended March 31, 2010 as compared to $32,900 for the year ended March 31, 2009. The increase in general and administrative expenses is primarily due to an increase in operating and stockholder expenses and increased activity in possible reverse merger transactions.
No income tax was paid for the fiscal years ended March 31, 2010 and March 31, 2009.
Please refer to the Financial Statements (included herein) for full details of the Statement of Operations for the years ended March 31, 2010 and 2009.
As a result of the above items, the Company had income of $63,764 before any provision for income taxes for the fiscal year ended March 31, 2010 as compared to a loss of $(30,701) before provision for income taxes for the fiscal year ended March 31, 2009.
Liquidity and Capital Resources
Please see “Recent Developments”, Page 2 and Notes 3 and 4 to the Financial Statements included in this Form 10-K for a description of the Purchase Agreement described therein and the sale of the Company’s Medical Investment in January 2010.
Cash and cash equivalents decreased from $69,524 at March 31, 2007 to $53,370 at March 31, 2010. Most significantly, cash increased by $127,501 in connection with the equity purchases made on August 31, 2007, which were made pursuant to the Purchase Agreement and in connection with the exercise of warrants to purchase 16,667 shares of the Company’s common stock at $3.00 per share made by Mr. Joel Greenblatt, the former Chairman of the Board, in August 2007 offset by expenses in connection with the transactions described herein as well as cash losses sustained in the Company’s operations in the year ended March 31, 2008 and 2009 offset by a gain in the year ended March 31, 2010.
Cash and cash equivalents decreased from $83,916 at March 31, 2009 to $53,370 at March 31, 2010 due to cash losses sustained in the Company’s operations in the year ended March 31, 2010 offset by the gain on the sale of the Company’s investment in T-3 Therapeutics and the distribution to shareholders of August 31, 2007 of $0.19 per share. Please see Page 2 and Notes 3 and 4 to the financial statements included herein.
The Company does not have a formal arrangement with any bank or financial institution with respect to the availability of financing in the future.
The Company has no commitment for any capital expenditure and foresees none. However, the Company will incur fees and expenses incident to its reporting duties as a public company, and expenses relating to its office operations. The Company’s cash requirements for the next twelve months are relatively modest, consisting principally of legal, accounting and other expenses relating to filings required under the Securities Exchange Act of 1934 as well as office and administrative expenses.
Critical Accounting Policies and Estimates. Management’s Discussion and Analysis of Financial Conditions and Results of Operations discusses, among other things, the Company’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. On an on-going basis, management evaluates its estimates and judgments, including those relating to investments, liabilities and operating expenses. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of the financial statements.
“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which reflect the Company’s current views with respect to future events and financial performance. The words “believe,” “expect,” “anticipate,” and similar expressions identify forward-looking statements. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed in any such forward-looking statements, including those mentioned below and those detailed from time to time in the Company’s filings with the Securities and Exchange Commission.
Item 7 - Financial Statements.
Included herein starting on Page 14 of this Form 10-K.
Item 8 - Changes in and Disagreements with Accountant on Accounting and Financial Disclosure
On December 31, 2007, St. Lawrence Seaway Corporation (the “Company”) accepted the resignation of its previous independent accountants, Mahoney, Sabol & Company, LLP (the “Previous Accountants”), and on January 2, 2008, engaged Braver, P.C. (the “New Accountants”) as the Company’s new principal independent registered public accounting firm to audit its financial statements for the fiscal year ended March 31, 2008.
The reports of the Previous Accountants on the Company’s financial statements for each of the Company’s fiscal years ended March 31, 2006 and 2007 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty (except for a going concern uncertainty), audit scope or accounting principles.
The decision to change independent accountants was approved by the Board of Directors of the Company.
During the period from April 1, 2005 through December 31, 2007, no events described in Item 304(a)(l)(iv) of Regulation S-B promulgated by the Securities and Exchange Commission occurred with respect to the Company.
During the fiscal years ended March 31, 2007 and 2006, and through December 31, 2007, the Company had no disagreement with the Previous Accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of the Previous Accountants, would have caused the Previous Accountants to make reference to the subject matter of the disagreement in connection with its report on the Company’s financial statements for such fiscal periods. The Company provided the Previous Accountants with a copy of the necessary disclosures.
During the period from April 1, 2005 through December 31, 2007, the Company did not consult with the New Accountants regarding (1) the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered with respect to the Company’s financial statements for which advice was provided that was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue or (2) any matter that was either the subject of a “disagreement” or a response to Items 304(a)(l)(iv) of Regulation S-B.
Item 8A – Controls and Procedures
Annual Report of Management on Internal Controls Over Financial Reporting.
The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal controls over financial reporting is a process designed by, or under the supervision of, the Company’s Chief Executive Officer, who is also the Company’s Chief Financial Officer, to provide reasonable assurance to the Company’s Board of Directors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Internal controls over financial reporting including those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Company’s transactions and dispositions of the Company’s assets; (2) provide reasonable assurances that the Company’s transactions are recorded as necessary to permit preparation of the Company’s financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
The Company’s management assessed the effectiveness of the Company’s internal controls over financial reporting as of March 31, 2010 and concluded that such internal controls are effective. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Controls – Integrated Framework.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal controls over financial reporting pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
During the Company’s fourth fiscal quarter and during the fiscal year ended March 31, 2010, there were no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 8B – Other Information
Not applicable.
PART-III
Item 9 – Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
Set forth in the following table are the names and ages of all persons who were members of the Board of Directors of the Company at March 31, 2010, all positions and offices with the Company held by such persons, their business experience, the period during which they have served as members of the Board of Directors and other directorships in reporting companies held by them.
| NAME | | AGE | | POSITION |
| | | | | |
| Bernard Zimmerman | | 77 | | Chairman of the Board, Chief Executive Officer, |
| | | | | President, and Principal Financial Officer |
| Duane L. Berlin | | 51 | | Secretary and Director |
| Ronald A. Zlatniski | | 46 | | Director |
| Edward B. Grier III | | 52 | | Director |
Bernard Zimmerman is the President and majority stockholder of Bernard Zimmerman & Company, Inc., a private merchant banking and financial consulting firm. Mr. Zimmerman is a Certified Public Accountant and has over 35 years experience in the merger, acquisition and business combination transaction fields. Since July 2003, Mr. Zimmerman has also served as the President and Chief Executive Officer of FCCC, Inc. a company engaged in seeking mergers, reverse mergers, acquisitions or other business combinations and financial transactions and from July 2004 until September 30, 2009 served as President and Chairman of the Board and as a Director until December 31, 2009 of GVC Venture Corp. a company engaged in similar activities. Mr. Zimmerman also served as a Director and audit committee and compensation committee chairman of Sbarro, Inc. for more than 20 years until January 2007 when the company was sold.
Duane L. Berlin is the Principal and Managing Attorney of Lev & Berlin, P.C., a Connecticut-based law firm, that represents public and private entities. Mr. Berlin was also a partner and Managing Director of Westwood Capital Partners, an SEC registered securities broker dealer from 2000 through 2003. Mr. Berlin serves as a director of no other public entities.
Ronald A. Zlatniski is a private investor as well as an operational specialist at Franklin Street Partners, a private investment management firm and trust company. Mr. Zlatniski serves as a director of no other public entities.
Edward B. Grier, III has served as a director of the Company since 1993. Mr. Grier has served as a Limited Partner of Gracie Capital, L.P. since January 1999; a Vice President of Gotham Capital, LP from 1992-1994 and a limited partner of Gotham Capital, LP from January 1, 1995 through December 31, 1998. Mr Grier is a director of no other public entities.
Directors of the Company were elected by a plurality of the votes cast at the last Annual Meeting of Shareholders. Each Director’s current term of office will expire at the next Annual Meeting of Shareholders or when a successor is duly elected and qualified. The Company held its Annual Meeting of Shareholders on July 10, 2007. Executive officers of the Company are elected annually for a term of office expiring at the Board of Directors meeting immediately following the next succeeding Annual Meeting of Shareholders, or until their successors are duly elected and qualified. There was no Annual Meeting held during 2009 or 2008.
While the Company does not have a formal audit committee, the Board of Directors has determined that Mr. Grier meets the requirements adopted by the Securities and Exchange Commission (the “SEC”) for qualification as an “audit committee financial expert”.
Code of Ethics. The Board of Directors has adopted a Code of Ethics, as defined under the federal securities laws, that applies to all directors and officers of the Company. A copy of the Code of Ethics has been filed with the SEC as Exhibit 14 to the Company’s Annual Report on Form 10-K for 2004.
Section 16(a) Beneficial Ownership Reporting Compliance . Based solely on a review of Forms 3 and 4 and amendments thereto furnished to the Company during the fiscal year ended March 31, 2010 and amendments thereto furnished to the Company with respect to the fiscal year ended March 31, 2010, to the best of the Company’s knowledge no director, officer or beneficial owner of more than 5% of the Company’s equity securities failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the fiscal year ended March 31, 2010.
Item 10 – Executive Compensation.
Except as noted below, neither the Company’s Chief Executive Officer nor any other executive officer of the Company (collectively the “Named Executives”) received a salary, bonus or other annual compensation for rendering services to the Company during the fiscal years ended March 31, 2010, and 2009.
Summary Compensation Table. As permitted by Item 402 of Regulation S-B, the Summary Compensation Table has been omitted as there was no compensation awarded to, earned by or paid to any executive officer, which is required to be reported in such Table for any fiscal year covered thereby. In addition, no transactions between the Company and a third party where the primary purpose of the transaction was to furnish compensation to any executive officer were entered into for any fiscal year covered thereby.
Option/SAR Grants in Fiscal Years Ended March 31, 2010 and 2009. No options or stock appreciation rights were granted in the fiscal year ended March 31, 2010 and 2009. On September 20, 2002, the options originally granted to Mr. Brown on June 18, 1983, then a Director of the Company, were amended by extending the expiration date thereof from September 21, 2002 to September 21, 2007. Such options expired on September 21, 2007.
Aggregated Option/SAR Exercises in Fiscal Year Ended March 31, 2010 and Fiscal Year-End Option/SAR Values. The Company had a stock option plan originally adopted by the shareholders on June 12, 1978, and revised and approved by the shareholders on June 13, 1983, September 21, 1987 and August 28, 1992. The options granted thereunder expired on September 21, 2007. There are currently no outstanding stock options outstanding.
Long-Term Incentive Plans - Awards in Fiscal Year Ended March 31, 2010. Not applicable.
Compensation of Directors. The By-laws of the Company provide for Directors to receive a fee of $100 for each meeting of the Board of Directors which they attend plus reimbursement for reasonable travel expense. No fees were paid to Directors for meetings in fiscal year 2010 and 2009 as all fees were waived.
Compensation Committee Interlock and Insider Participation. The Board of Directors does not have any standing nominating or compensation committees or any other committees performing similar functions. Therefore, there are no relationships or transactions involving members of the Compensation Committee during the fiscal year ended March 31, 2010 required to be reported pursuant to Item 402(j) of Regulation S-B. The entire Board of Directors acts as the Company’s audit committee.
Item 11 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Security Ownership of Certain Beneficial Owners. The following table sets forth as of March 31, 2010, with respect to the persons known to us to be the beneficial owners of 5% or more of the Company’s common stock. We know of no person, other than those listed in the Management’s Shareholdings Table, below, who owns more than 5% of the Company’s common stock other than is shown on the Table of Ownership on the following page.
COMMON STOCK
PRINCIPAL SHAREHOLDERS TABLE
March 31, 2010
Security Ownership
The following table, together with the accompanying footnotes, sets forth information, as of March 31, 2010, regarding stock ownership of all persons known by St Lawrence to own beneficially more than 5% of the Company’s outstanding common stock, and named executives, all directors, and all directors and officers of St. Lawrence as a group:
Name and Address of | | Amount of Beneficial Ownership | | | | | | Options and Warrants Exercisable Within 60 Days | | | | | | | |
| | | | | | | | | | | | | | | | |
| Joel M. Greenblatt | | | 81,251 | | | | 15.7 | % | | | - | | | | 81,251 | | | | 15.7 | % |
100 Jericho Quadrangle Jericho, NY 11753 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Walter P. Carucci | | | 32,433 | (4) | | | 6.3 | % | | | - | | | | 32,433 | | | | 6.3 | % |
| Carr Securities Corp. | | | | | | | | | | | | | | | | | | | | |
| c/o Carr Securities Corp. | | | | | | | | | | | | | | | | | | | | |
| 14 Vanderventer Avenue | | | | | | | | | | | | | | | | | | | | |
| Port Washington, NY 11050 | | | | | | | | | | | | | | | | | | | | |
Name and Address of | | Amount of Beneficial Ownership | | | | | | Options and Warrants Exercisable Within 60 Days | | | | | | | |
| | | | | | | | | | | | | | | | |
| Executive Officers and Directors | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Bernard Zimmerman | | | 75,000 | (2) | | | 14.5 | % | | | 250,000 | (1) (2) | | | 325,000 | | | | 42.3 | % |
| Chairman of the Board, President | | | | | | | | | | | | | | | | | | | | |
| and Chief Financial Officer | | | | | | | | | | | | | | | | | | | | |
18 High Meadow Road Weston, CT 06883 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Duane L. Berlin Secretary 200 Connecticut Avenue Norwalk, CT 06854 | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | |
Edward B. Grier, III Gracie Capital Investment Partners 590 Madison Avenue, 28th Floor New York, NY 10022 | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Ronald A. Zlatniski | | | 12,000 | (3) | | | 2.3 | % | | | - | | | | 12,000 | | | | 2.3 | % |
4206 Cypress Grove Lane Greensboro, NC 27455 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| All directors and executive officers as a group (four persons) | | | 87,000 | | | | 16.8 | % | | | 250,000 | | | | 337,000 | | | | 43.8 | % |
| | | | | | | | | | | | | | | | | | | | | |
(1) Mr. Zimmerman is the beneficial owner of a warrant to purchase 250,000 shares of common stock of the Company at an exercise price of $1.00 per share subject to dilution and other provisions, as outlined in the warrant agreement. Such warrants expire on August 31, 2017.
(2) These shares and warrants are owned by Bernard Zimmerman & Company, Inc. an affiliate of Bernard Zimmerman.
(3) Mr. Zlatniski disclaims beneficial ownership of 1,000 shares owned by his wife and is not included herein.
(4) Based upon Schedule 13G filed on February 9, 2010 and includes 32,333 shares owned individually by Mr. Carucci as well as 100 shares owned by Carr Securities Corp. Mr. Carucci asserts sole power to vote, dispose of and direct the disposition of such shares owned individually and by Carr Securities Corp.
Securities Authorized For Issuance Under Equity Compensation Plans
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities referenced in column (a) |
| | (a) | | (b) | | (c) |
| | | | | | |
| Equity compensation plans approved by security holders | None | | None | | None |
| | | | | | |
| Equity compensation plans not approved by security holders | None | | None | | None |
| | | | | | |
| | | | | | |
ITEM 12. Certain Relationships and Related Transactions.
Pursuant to the Purchase Agreement with the Investor (Bernard Zimmerman & Company, Inc.), (as outlined under “Recent Developments – Page 1”) on August 31, 2007, the Company sold 75,000 unregistered shares of common stock, par value $0.01 (the “Common Stock”),, for $1.00 per share (for a total of $75,000) and 250,000 warrants to purchase 250,000 shares of Common Stock for $0.01 per warrant (for a total of $2,500), as described in Form 8-K, filed by the Company on September 6, 2007. The warrants are exercisable immediately with an exercise price of $1.00 per share.
On August 31, 2007, Mr. Joel Greenblatt, the former Chairman of the Board of Directors of the Company, exercised warrants to purchase 16,667 shares of Common Stock at $3.00 per share (for a total of $50,001). On June 13, 2006, Mr. Greenblatt exercised warrants to purchase 16,667 shares of Common Stock at $3.00 per share (for a total of $50,001).
All outstanding options and warrants expired on September 21, 2007 (with the exception of the Warrants issued on August 31, 2007 to the Investor in connection with the transaction described under Recent Developments, (see Page 1).
See Form 8-K, filed by the Company on August 31, 2007 and September 6, 2007, for a description of the transaction outlined on pp. 1-2 of this Form 10-K. Also please refer to the notice of annual meeting and the proxy statement mailed to all shareholders on May 30, 2007 on Form DEF-14A for a description of all proposals submitted to the shareholders for a vote at the Annual Meeting of Shareholders held on July 10, 2007. All proposals were approved by a majority vote of the shareholders.
Item 13 – Exhibits.
(31.1) Certification by Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
(32.1) Certification by Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Item 14 – Principal Accountant Fees and Services.
The independent auditor for the Company for the fiscal years ended March 31, 2007 and 2006 was the firm of Mahoney Sabol & Company, LLP.
Mahoney Sabol & Company, LLP (“MSC”) was engaged as the Company’s independent public accountants as of May 25, 2006. MSC billed the Company an aggregate of $18,400 for the audit of the financial statements in total for the years ended March 31, 2007 and 2006. See Item 8.
The appointment of Braver P.C. as the auditors for the Company became effective January 4, 2008 and they billed the Company $3,000 for the audit of the Company’s financial statements which was included in the Company’s Annual Report on Form 10-K for each of the years ended March 31, 2009 and 2008. Braver also billed the Company a total of $1,000 covering the preparation of the Company’s federal and state tax returns for the years ended March 31, 2009 and 2008. They will bill the Company a total of $4,500 for the audit of the Company’s financial statements and review of the Form 10-K for the year ended March 31, 2010 and the review of the Form 10-Q’s for the quarters ended June 30, 2009, September 30,2009 and December 31, 2009. Tax fees for the year ended March 31, 2010 will be $1,500 covering the preparation of the Company’s federal, state and franchise tax returns.
The following aggregate fees were billed to the Company for professional services rendered by its independent auditors for the fiscal years ended March 31, 2009 and 2008:
| | | 2009 | | | 2008 | |
| | | | | | | | | |
| Audit Fees: | | $ | 3,000 | | | $ | 3,000 | |
| | | | | | | | | |
| Audit-Related Fees: | | $ | - | | | $ | - | |
| | | | | | | | | |
| Tax Fees: | | $ | 1,000 | | | $ | 1,000 | |
| | | | | | | | | |
| All Other Fees: | | $ | - | | | $ | - | |
The Board of Directors, acting as the Company’s Audit Committee, has not adopted pre-approval policies and procedures with respect to services provided by the independent auditor, as all services are approved by the Board prior to the services being provided.
Item 7 – Financial Statements
Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Shareholders of St. Lawrence Seaway Corporation
Norwalk, Connecticut
We have audited the accompanying balance sheets of St. Lawrence Seaway Corporation (the Company) as of March 31, 2010 and 2009, and the related statements of operations, shareholders’ equity, and cash flows for the years then ended. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 2010 financial statements referred to above present fairly, in all material respects, the financial position of St. Lawrence Seaway Corporation as of March 31, 2010, and 2009, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, and may require additional capital during fiscal 2011 to fund continuing operations. These items raise substantial doubt about the Company’s ability to continue as a going concern through March 31, 2011. Management’s plans in regards to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Braver P.C.
Certified Public Accountants
Providence, Rhode Island
Date: June 11, 2010
ST. LAWRENCE SEAWAY CORPORATION
BALANCE SHEETS
(Audited)
ASSETS | | March 31, 2010 | | | March 31, 2009 | |
| Current assets: | | | | | | | |
| | | | | | | | |
| Cash and cash equivalents | $ | 53,370 | | | $ | 83,916 | |
| | | | | | | | |
| Total current assets | | 53,370 | | | $ | 83,916 | |
| | | | | | | | |
| | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | |
| | | | | | | | |
| Current liabilities: | | | | | | | |
| | | | | | | | |
| Accounts payable and accrued expenses | $ | 7,000 | | | $ | 6,000 | |
| | | | | | | | |
| Total current liabilities | | 7,000 | | | | 6,000 | |
| | | | | | | | |
| Commitments and contingencies | | | | | | | |
| | | | | | | | |
| Shareholders’ equity: | | | | | | | |
| | | | | | | | |
| Preferred Stock, par value $0.01, 1,000,000 shares authorized, none issued and outstanding. | | - | | | | - | |
| | | | | | | | |
| Common stock, par value $0.01 per share; 48,500,000 authorized; 518,736 shares at 3/31/10 and 3/31/09 issued and outstanding | | 5,188 | | | | 5,188 | |
| | | | | | | | |
| Common stock, Class A (tracking) par value $0.01 per share; 510,000 authorized; -0- shares at 3/31/10 and 443,736 shares at 3/31/09 issued and outstanding | | - | | | | 4,437 | |
| | | | | | | | |
| Additional paid-in capital | | 1,390,492 | | | | 1,481,365 | |
| | | | | | | | |
| Retained deficits | | ( 1,349,310) | | | | (1,413,074 | ) |
| | | | | | | | |
| Total shareholders’ equity | | 46,370 | | | $ | 77,916 | |
| | | | | | | | |
| Total liabilities and shareholders’ equity | $ | 53,370 | | | $ | 83,916 | |
See Notes to financial statements
ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF OPERATIONS
(Audited)
| | | FOR THE YEARS ENDED MARCH 31, | |
| | | | |
| | | 2010 | | | 2009 | |
| Revenues: | | | | | | | | |
| | | | | | | | | |
| Sale of Medical Investment | | $ | 100,000 | | | | - | |
| | | | | | | | | |
| Interest and dividends | | | 886 | | | $ | 2,199 | |
| | | | | | | | | |
| Total revenues | | | 100,886 | | | | 2,199 | |
| | | | | | | | | |
| Operating costs and expenses: | | | | | | | | |
| | | | | | | | | |
| General and administrative | | | 37,122 | | | | 32,900 | |
| | | | | | | | | |
| Total operating expenses | | | 37,122 | | | | 32,900 | |
| | | | | | | | | |
| Income (Loss) before tax provision | | | 63,764 | | | | (30,701) | |
| | | | | | | | | |
| Provision for income taxes/(tax benefit) | | | - | | | | - | |
| | | | | | | | | |
| Net Income (Loss) | | $ | 63,764 | | | $ | (30,701) | |
| | | | | | | | | |
| Per Share Data: | | | | | | | | |
| | | | | | | | | |
Weighted average number of common shares outstanding basic and diluted | | | 518,736 | | | | 518,736 | |
| | | | | | | | | |
| Earnings per share: | | | | | | | | |
| Basic and diluted Income (Loss) per share | | $ | 0.12 | | | $ | (0.06 | ) |
See Notes to Financial Statements
ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| | | | | | | | | | | | | | | | | Total | |
| | | Class A | | | Common Stock | | | Paid-In | | | Accumulated | | | Stockholders’ | |
| | | Shares | | | Shares | | | Amount | | | Capital | | | Deficit | | | Equity | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Balance March 31, 2007 (audited) | | | | | | 427,069 | | | $ | 4,271 | | | $ | 866,718 | | | $ | (755,493 | ) | | $ | 115,496 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of Class A Shares | | | 443,736 | | | | | | | $ | 4,437 | | | $ | (4,437 | ) | | | | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Sale of Warrants | | | | | | | - | | | | - | | | $ | 2,500 | | | | | | | $ | 2,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Sale of Common Shares | | | | | | | 75,000 | | | $ | 750 | | | $ | 74,250 | | | | | | | $ | 75,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Exercise of Warrants | | | | | | | 16,667 | | | $ | 167 | | | $ | 49,834 | | | | | | | $ | 50,001 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value of Warrant Issuance | | | | | | | | | | | | | | $ | 492,500 | | | | | | | $ | 492,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net (Loss) for the year ended March 31, 2008 (audited) | | | | | | | | | | | | | | | | | | $ | (626,880 | ) | | $ | (626,880 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance March 31, 2008 (audited) | | | 443,736 | | | | 518,736 | | | $ | 9,625 | | | $ | 1,481,365 | | | $ | (1,382,373 | ) | | $ | 108,617 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net (Loss) for the year ended March 31, 2009 (audited) | | | | | | | | | | | | | | | | | | $ | (30,701 | ) | | $ | (30,701 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance March 31, 2009 (audited) | | | 443,736 | | | | 518,736 | | | $ | 9,625 | | | $ | 1,481,365 | | | $ | (1,413,074 | ) | | $ | 77,916 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Income for the year ended - March 31, 2010 (audited) | | | | | | | | | | | | | | | | | | $ | 63,764 | | | $ | 63,764 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Redemption of Class “A” Tracking Stock (443,776 shares) | | | (443,736 | ) | | | - | | | $ | (4,437 | ) | | $ | (90,873 | ) | | | - | | | $ | (95,310 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance March 31, 2010 (audited) | | | - 0 - | | | | 518,736 | | | $ | 5,188 | | | $ | 1,390,492 | | | $ | (1,349,310 | ) | | $ | 46,370 | |
See Notes to Financial Statements
ST. LAWRENCE SEAWAY CORPORATION
STATEMENTS OF CASH FLOWS
(Audited)
| | | For the Years Ended | |
| | | | |
| | | March 31, 2010 | | | March 31, 2009 | |
| Cash flows from operating activities | | | | | | |
| | | | | | | |
| Net Income (Loss) | | $ | 63,764 | | | $ | (30,701 | ) |
| | | | | | | | | |
| Adjustments to reconcile net loss to net cash from operating activities | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| (Increase) Decrease in current assets: | | | - | | | | - | |
| | | | | | | | | |
| | | | | | | | | |
| (Decrease) Increase in current liabilities: | | | | | | | | |
| | | | | | | | | |
| Accounts payable | | | 1,000 | | | | (2,000 | ) |
| | | | | | | | | |
| Net cash provided by (used in) operating activities | | | 64,764 | | | | (32,701 | ) |
| | | | | | | | | |
| | | | | | | | | |
| Cash flows from investing activities: | | | - | | | | - | |
| | | | | | | | | |
| Net cash from investing activities | | | - | | | | - | |
| | | | | | | | | |
| | | | | | | | | |
| Cash flows from financing activities | | | | | | | | |
| | | | | | | | | |
| Redemption of Class “A” Tracking Stock (including expenses) | | | (95,310 | ) | | | - | |
| | | | | | | | | |
| Net cash provided by (used in) financing activities | | $ | (95,310 | ) | | $ | - | |
(Continued on next page)
(continued from previous page)
| | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | 30,546 | | | | (32,701 | ) |
| | | | | | | | | |
| Cash and cash equivalents, beginning | | | 83,916 | | | | 116,617 | |
| | | | | | | | | |
| Cash and cash equivalents, ending | | $ | 53,370 | | | $ | 83,916 | |
| | | | | | | | | |
| | | | | | | | | |
| Supplemental disclosures of cash flow information: | | | | | | | | |
| | | | | | | | | |
| Cash paid for income taxes | | $ | - | | | $ | - | |
| | | | | | | | | |
| Cash paid for interest expense | | $ | - | | | $ | - | |
| | | | | | | | | |
| | | | | | | | | |
| Supplemental disclosures of non-cash investing and financing activities: | | | | | | | | |
| | | | | | | | | |
| The Company issued 443,736 shares of Class A Common Stock tracking stock in accordance with the Purchase Agreement (see Notes 3 and 4) in a non-cash transaction and redeemed such shares in the fiscal year ended March 31, 2010 (see Note 4) | | | | | | | | |
See Notes to the Financial Statements
ST. LAWRENCE SEAWAY CORPORATION
(Audited)
Notes to Financial Statements
March 31, 2010
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accompanying policies observed in the preparation of the financial statements for The St. Lawrence Seaway Corporation (the “Company”).
BASIS OF PRESENTATION:
The accounts are maintained on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America for financial statement purposes. Under this method, revenue is recognized when earned and expenses are recognized when incurred.
GOING CONCERN:
The financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses of $30,701 in the year ended March 31, 2009 and additional losses in previous years, offset by net income of $63,764 in the year ended March 31, 2010. In March 2010 a distribution of $95,310 was made to redeem the Company’s Class “A” Tracking Stock. These net losses have significantly weakened the Company’s financial condition and its ability to meet current operating expenses. The Company’s working capital has decreased to $46,370 at March 31, 2010. The appropriateness of using the going concern basis is dependent on, among other things, the Company’s ability to raise additional capital to fund operating losses, and further reduce operating expenses. The uncertainty of obtaining these goals raises doubt about the Company’s ability to continue as a going concern through March 31, 2011. The financial statements do not include any adjustments to the carrying value of the assets and liabilities that might be necessary as a consequence of these uncertainties.
EARNINGS PER SHARE:
The Company follows FASB ASC 260 (formerly, (SFAS No. 128), “Earnings Per Share”. ASC 260 simplifies the standards for computing earnings per share (EPS) and makes them comparable to international EPS standards. Basic EPS is based on the weighted average number of common shares outstanding for the period, excluding the effects of any potentially dilutive securities. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period.
Basic and diluted income (loss) per common share was calculated using the following number of shares:
| | | Year ended March 31, | |
| | | 2010 | | | 2009 | |
| | | | | | | | | |
Weighted average number of shares outstanding – Common Basic and diluted | | | 518,736 | | | | 518,736 | |
| | | | | | | | | |
ST. LAWRENCE SEAWAY CORPORATION
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES:
The Company utilizes the asset and liability method of accounting for deferred income taxes as prescribed by the FASB ASC 740 (formerly, SFAS 109) “Accounting for Income Taxes.” This method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the tax return and financial statement reporting bases of certain assets and liabilities.
No material deferred tax benefits or liabilities exist as of the dates of the balance sheets.
CASH AND CASH EQUIVALENTS:
The Company has defined cash as including cash on hand and cash in interest bearing and non-interest bearing operating bank accounts. Highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents.
The Company maintains cash balances at one financial institution at March 31, 2010. The account at March 31, 2010 is insured by the Federal Deposit Insurance Corporation (FDIC) for balances up to $250,000.
USE OF ESTIMATES:
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts 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.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In January 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-01, Accounting for Distributions to Shareholders with Components of Stock and Cash-a consensus of the FASB Emerging Issues Task Force,(Topic 505). This Accounting Standards Update clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earning Per Share). The Company is currently evaluating the impact of ASU 2010-01 on the Company’s financial statements.
In June 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-01, Topic 105 — Generally Accepted Accounting Principles — amendments based on Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. This ASU reflected the issuance of FASB Statement No. 168. This Accounting Standards Update amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 168, The FASB Accounting Standards Codification ™ and the Hierarchy of Generally Accepted Accounting Principles. This Accounting Standards Update includes Statement 168 in its entirety, including the accounting standards update instructions contained in Appendix B of the Statement. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. The Codification is effective for interim and annual periods ending after September 15, 2009, and as of the effective date, all existing accounting standard documents will be superseded. The Codification is effective for the Company in the second quarter of 2009, and accordingly, our Quarterly Report on Form 10-Q for the quarter ending September 30, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
CONCENTRATIONS OF CREDIT RISK:
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The company has adopted FASB ASC 825 (formerly, SFAS no. 107), “Fair Value of Financial Instruments”, which requires disclosure of the fair value of financial instruments for which the determination of fair value is practicable. The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amounts of the Company’s financial instruments (cash and cash equivalents) approximate their fair value because of the short maturity of these instruments.
STOCK BASED COMPENSATION:
The company adopted “Share-Based Payment”, FASB ASC 718 (formerly, SFAS 123(R)). ASC 718 requires expense for all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. For the Company, this statement was effective as of April 1, 2006. The Company adopted the modified prospective method, under which compensation cost is recognized beginning with the effective date. The modified prospective method recognizes compensation cost based on the requirements of ASC 718 for all share-based payments granted after the effective date and, for all awards granted to employees prior to the effective date that remain unvested on the effective date. The Company was not required to record any expenses under ASC 718 for share based awards currently outstanding. However, the amount of expense recorded under ASC 718 will depend upon the number of share based awards granted in the future and their valuation.
Subsequent Events
The Company has evaluated events that occurred subsequent to March 31, 2010 through the financial statement issue date of June 11, 2010 and determined that there were no recordable or reportable subsequent events.
NOTE 2 – SHAREHOLDERS’ EQUITY
All share amounts have been retrospectively restated to reflect the reduction in par value from $1.00 to $0.01 based upon authorization by the Company’s shareholders (see Note 3). Basic and diluted earnings per share are computed using the weighted average number of shares of common stock and common stock equivalents outstanding under the treasury stock method. Common stock equivalents include all common stock options and warrants outstanding during each of the periods presented. Earnings per share information associated with the Class A shares has not been presented as there were no earnings or losses associated with these shares; accordingly, such per share amounts are nil.
NOTE 3 – PURCHASE AGREEMENT
The Company entered into a Stock and Warrant Purchase Agreement (the "Purchase Agreement") as of January 10, 2007, as amended on April 16, 2007 and April 18, 2007, with Bernard Zimmerman & Company, Inc., an investment and merchant banking organization (the "Investor"), pursuant to which the Investor agreed to purchase: (i) 75,000 shares of the Company's common stock for a total purchase price of $75,000; and (ii) a ten year warrant for a total purchase price of $2,500 which permits the Investor to purchase up to 250,000 shares of the Company's common stock at an exercise price of $1.00 per share (the "Warrant"). The Warrant is exercisable immediately. The common stock and the Warrant were sold to the Investor pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. The common stock that was sold to the Investor represented at the August 31, 2007 closing of this transaction, and continues to represent as of the date hereof, approximately 14.5% of the outstanding common stock of the Company, provided that no changes occur to the number of shares outstanding in subsequent periods.
On July 10, 2007, the shareholders of the Company approved the transaction outlined in the above paragraph. Integral parts of the transaction were the following items:
| 1. | The approval of a proposal to amend and restate, in its entirety, the Company’s by-laws. |
| 2. | The approval of a proposal to reincorporate the Company in Delaware from Indiana. |
| 3. | The approval of a proposal to amend and restate in its entirety the Company’s Restated Articles of Incorporation, as amended, to, among other things: |
(a) approve the increase in the number of authorized shares of the Company from 4,000,000 shares, all of which are Common Stock, to 50,010,000 shares, consisting of 48,500,000 shares of Common Stock, 510,000 shares of a “tracking stock” known as Class A Common Stock and 1,000,000 shares of preferred stock, and to decrease the par value of the Common Stock from One Dollar ($1.00) to One Cent ($0.01);
(b) �� approve the authorization of 1,000,000 shares of a blank check preferred class of stock, par value $0.01; and
(c) approve the authorization of a non-transferable, non-tradable, non-voting and non-certificated “tracking stock” class of securities known as the Class A Common Stock;
| 4. | The issuance of the “tracking stock” known as the Class A Common Stock to the Record Holders in connection with, and upon consummation of the transaction described above, which closed after the distribution of the Class A Common Stock to existing shareholders, and, as such, the Investor received no “tracking stock”. |
Immediately prior to the August 31, 2007 closing under the Purchase Agreement, the Company reincorporated in Delaware via statutory merger and issued to all stockholders of record as of that date a tracking stock evidencing the Company's medical investments. The tracking stock, designated as Class A Common Stock, is non-voting, non-saleable, non-transferable, non-certificated and held in book-entry form only. The Purchase Agreement contemplates no issuance of Class A Common Stock to the Investor in connection with the Investor's acquisition of the Company's common stock and the Warrant on August 31, 2007. No person who acquires common stock of the Company after August 31, 2007 shall be issued or be entitled to the benefits of the tracking stock.
See Page 2 – Recent Developments for information concerning the redemption of the Company’s Class “A” Tracking Stock on March 12, 2010.
NOTE 4 -- MEDICAL INVESTMENTS
In periods prior to March 31, 2007, the Company made certain investments in two medical research organizations. Reference is made to the Company’s 10-KSB for the fiscal year ending March 31, 2007 for a full description of the two medical investments. The investment in New York University Research was written off the Company’s books in the fiscal year ended March 31, 2005 as having no value. As a result of the Purchase Agreement (see Note 3), the Company’s investment in T3 Therapeutics was written off in the six months ended September 30, 2007. In accordance with the Purchase Agreement, a Class “A” common stock (a tracking stock) was issued to all Company stockholders of record except the Investor on August 31, 2007, the closing date of that transaction. All subsequent stockholders will not be entitled to receive any shares or benefits of the tracking stock, which is non-certificated, non-voting, non-transferable and non-saleable, and will be held only in book entry form in the records of the Company’s transfer agent. Any funds or other remuneration received from this investment will inure only to those persons who were stockholders of record, with the exception of the Investor, on August 31, 2007. Therefore, this investment is deemed to not have any current value and $83,400 was written off the Company’s financial statements as at the six months ended September 30, 2007. However, the Class A common stock (the “Tracking Stock”) that was allocated to the shareholders of the Company on August 31, 2007 will continue to be maintained on the books of the Company at the office of the Company’s registrar and transfer agent until such time as the Medical Investment is liquidated, permanently impaired or deemed worthless. At August 31, 2007, March 31, 2008, and March 31, 2009, there were 443,736 shares of Class A Common Stock issued and outstanding. See Recent Developments (Page 2) for information concerning the redemption of the Company’s Class “A” Tracking Stock on March 12, 2010 and the sale of the Company’s investment in T-3 Therapeutics.
A reconciliation of the medical investment is as follows:
| Balance March 31, 2005 (as restated) | | $ | 680,000 | |
| Add: Follow-on investment, November 16, 2005 | | $ | 50,000 | |
| Subtotal | | $ | 730,000 | |
| Less: | | | | |
| Impairment loss | | $ | (630,000 | ) |
| Equity in Loss of T3 Therapeutics | | $ | (16,600 | ) |
| Balance, March 31, 2007 | | $ | 83,400 | |
| Write off at September 30, 2007 | | $ | (83,400 | ) |
| | | | | |
| Balance at March 31, 2009 and 2008 | | $ | -0- | |
As of August 31, 2007, the date of the closing of the transactions contemplated by the Purchase Agreement, Mr. Edward B. Grier, a current member of the Company’s board of directors, was a 2.5% owner of T-3 Therapeutics and had an option to purchase an additional ownership interest of approximately 2.5%, both of which he continues to own.
See Recent Developments (Page 2) for information concerning the redemption of the Company’s Class “A” Tracking Stock on March 12, 2010 and the sale of the Company’s investment in T-3 Therapeutics.
NOTE 5 – FAIR VALUE OF COMMON STOCK AND COMMON STOCK WARRANTS
The transaction entered into by the Company and the Investor on August 31, 2007 (see Note 3) required the Company to issue 250,000 Warrants to the Investor, exercisable immediately, with an exercise price of $1.00 per warrant. The Warrants were sold to the Investor for $0.01 per warrant. With regard to the sale and issuance of 75,000 common shares, the Company recorded such sale at fair value, which the Company believes to be $1.00 (the price paid by the Investor).
In accordance with FASB ASC 718 (formerly FASB 123R), the Company calculated the estimated fair value of warrants utilizing a Black-Scholes model. The assumptions used in the Black-Scholes model are based on the date the warrants are granted. The risk-free rate is based on US Treasury securities with a remaining term which approximates the estimated life assumed at the date of grant. The expected life until exercise was based on management’s estimate and the warrants ten year life. The following table includes the assumptions used in estimating fair values and the resulting weighted average fair value of warrants issued as part of the Purchase Agreement:
| Risk free rate | 4.54% |
| | |
| Warrant term | 10 years |
| | |
| Expected dividend rate | none |
| | |
| Expected volatility | 150% |
Based on the Black-Scholes valuation method, the warrants were determined to have an estimated fair value of $1.98 per warrant at issuance. Accordingly, the Company recorded the difference between the estimated fair value of the warrant $495,000 and the cost of the warrant $2,500 as compensation expense and a corresponding increase to accumulated paid-in capital.
NOTE 6 – INCOME TAXES
At March 31, 2010 the Company had a net operating loss carry-forward for income tax reporting purposes of approximately $560,000 to be offset against future taxable income through 2029, resulting in a change in the valuation allowance for the year ended December 31, 2010 of ($410,000) and $50,000, respectively. Current tax laws limit the amount of loss available to be offset against taxable future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or grater chance the carry-forwards will expire unused. Accordingly, the potential tax benefits of the loss carry-forward are offset by a valuation allowance of the same amount. As of March 31, 2010, approximately $346,000 in net operating losses have expired and approximately $64,000 was used for the March 31, 2010 tax year.
| | | March 31, | |
| | | 2010 | | | 2009 | |
| | | | | | | |
| Net Operating Losses | | $ | 560,000 | | | $ | 970,000 | |
| | | | | | | | | |
| Valuation Allowance | | | (560,000 | ) | | | (970,000 | ) |
| | | | - | | | | - | |
No taxes were due on the Company’s income for the year ended March 31, 2010 due to tax loss carry forwards available for federal and state tax purposes.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | ST. LAWRENCE SEAWAY CORPORATION |
| | | |
| | | |
| | By: | |
| | | Bernard Zimmerman |
| | | Chairman of the Board, President, Chief Executive Officer and Chief Financial Officer |
| | | |
| | Date: | June 14, 2010 |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | | | | |
| | | | Title | | | | Date |
| | | | | |
| | | | President, Chairman of the Board, Chief Executive Officer and Chief Financial Officer | | | | June 14, 2010 |
| Bernard Zimmerman | | | | | | | | |
| | | | | |
| | | | Director | | | | June 14, 2010 |
| Ronald A. Zlatniski | | | | | | | | |
| | | | | | | | | |
| | | | Secretary and Director | | | | June 14, 2010 |
| Duane L. Berlin | | | | | | | | |
| | | | | | | | | |
| | | | Director | | | | June 14, 2010 |
| Edward B. Grier III | | | | | | | | |
