==================================================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q --------- QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended Commission File No. December 31, 2001 0-2040 - ----------------- --------------------- THE ST. LAWRENCE SEAWAY CORPORATION ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) INDIANA 35-1038443 ------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 818 Chamber of Commerce Building 320 N. Meridian Street Indianapolis, Indiana 46204 - ---------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (317) 639-5292 --------------- 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Class Outstanding at February 2, 2002 ----- ------------------------------- Common Stock, $1.00 par value 393,735 ====================================================================================================THE ST. LAWRENCE SEAWAY CORPORATION FORM 10-Q INDEX PART I. FINANCIAL INFORMATION PAGE Balance Sheets - December 31, 2001 and March 31, 2001.............................................3 Statements of Income - Three months ended December 31, 2001 and 2000 (UNAUDITED)....................................................................................4 Statements of Income - Nine months ended December 31, 2001 and 2000 (UNAUDITED)....................................................................................5 Statements of Cash Flows - Nine months ended December 31, 2001 and 2000 (UNAUDITED) .......................................................................6 Notes to Financial Statements - December 31, 2001................................................7-9 Management's Discussion and Analysis of Financial Condition and Results of Operations ....................................................................10-11 PART II. OTHER INFORMATION.......................................................................12 Signatures........................................................................................13 2 THE ST. LAWRENCE SEAWAY CORPORATION BALANCE SHEETS DECEMBER 31, 2001 AND MARCH 31, 2001 DECEMBER 31, MARCH 31, 2001 2001 ==================================== ASSETS Current assets: Cash and cash equivalents $ 1,457,551 1,479,010 Interest and other receivables 0 3,033 Prepaid items 0 9,649 ------------------------------------ Total Current Assets 1,457,551 1,491,692 Land 0 0 ------------------------------------ Total Assets $ 1,457,551 1,491,692 ==================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable & other $ 13,173 6,674 Federal & state taxes payable 401 8,167 ------------------------------------ Total Current Liabilities 13,574 14,841 Shareholders' equity: Common stock, par value $1, 4,000,000 authorized, 393,735 issued and outstanding at the respective dates 393,735 393,735 Additional paid-in capital 377,252 377,252 Retained earnings 672,990 705,864 ------------------------------------ Total Shareholders' Equity 1,443,977 1,476,851 ------------------------------------ Total Liabilities and Shareholders' Equity $ 1,457,551 1,491,692 ==================================== 3 THE ST. LAWRENCE SEAWAY CORPORATION STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000 (UNAUDITED) DECEMBER 31, DECEMBER 31, 2001 2000 ==================================== Revenues: Interest and dividends $ 7,699 22,967 ------------------------------------ Total revenues 7,699 22,967 Operating costs and expenses: General and administrative 23,300 24,596 ------------------------------------ Total operating expenses 23,300 24,596 Income (Loss) before tax provision (15,601) (1,629) Provision for income taxes/ (tax benefit) 105 308 ------------------------------------- Net income (loss) $ (15,706) (1,937) ===================================== Per share data: Weighted average number of common shares outstanding 393,735 393,735 ------------------------------------ Primary earnings per share: Income (Loss) per share ($0.04) ($0.00) ===================================== 4 THE ST. LAWRENCE SEAWAY CORPORATION STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED DECEMBER 31, 2001 AND 2000 (UNAUDITED) DECEMBER 31, DECEMBER 31, 2001 2000 ==================================== Revenues: Interest and dividends $ 34,450 60,483 Sale of land, net 0 392,235 ------------------------------------ Total revenues 34,450 452,718 Operating costs and expenses: General and administrative 66,923 67,936 ------------------------------------ Total operating expenses 66,923 67,936 Income (Loss) before tax provision (32,473) 384,782 Provision for income taxes/ (tax benefit) 401 7,402 ------------------------------------ Net income (loss) (32,874) 377,380 ==================================== Per share data: Weighted average number of common shares outstanding 393,735 393,735 ------------------------------------ Primary earnings per share: Income (Loss) per share ($0.08) $0.96 ==================================== 5 THE ST. LAWRENCE SEAWAY CORPORATION STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2001 AND 2000 (UNAUDITED) December 31, December 31, 2001 2000 ==================================== Cash flows from operating activities: Net income (loss) $ (32,874) $377,380 Adjustments to reconcile net income to Net cash from operating activities Gain from Sale of Land 0 (392,235) (Increase) Decrease in current assets: Interest and other receivables 3,033 2,037 Prepaid items 9,649 (6,208) (Decrease) Increase in current liabilities: Accounts payable 6,499 (13,015) Income taxes payable 7,766 7,975 ------------------------------------ Net cash from operating activities (21,459) (24,066) Cash flows from investing activities: Sale of Land 0 511,148 ------------------------------------ Net cash from investing activities 0 511,148 Cash Flows from financing activities: Net cash from financing activities 0 0 Net (decrease) increase in cash and (21,459) 487,082 cash equivalents Cash and cash equivalents, beginning 1,479,010 999,649 ------------------------------------ Cash and cash equivalents, ending $ 1,457,551 $1,486,731 ==================================== Supplemental disclosures of cash flow Information: Cash paid for income taxes 0 7,227 Cash paid for interest expense 0 0 6 THE ST. LAWRENCE SEAWAY CORPORATION NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 31, 2001 (UNAUDITED) NOTE A--BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ending December 31, 2001 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2002. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the fiscal year ended March 31, 2001. NOTE B--RECLASSIFICATION The 2000 financial statements have been reclassified, where necessary, to conform to the presentation of the 2001 financial statements. NOTE C--EARNINGS PER SHARE Primary 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. NOTE D--STOCK PURCHASE AND DIVIDEND On March 19, 1997, the Board of Directors of the Company declared a dividend distribution of 514,191 shares of common stock, $.01 par value (the "Shares") of Paragon Acquisition Company, Inc. ("Paragon"), and 514,191 non-transferable rights (the "Subscription Right") to purchase two (2) additional Shares of Paragon. Paragon's business purpose is to seek to acquire or merge with an operating business, and thereafter to operate as a publicly-traded company. St. Lawrence purchased the Paragon shares on March 6, 1997, for $5,141, or $.01 per share, and distributed one Paragon share and one subscription right for each share of St. Lawrence Common Stock owned or subject to exercisable options and warrants as of March 21, 1997 (the "Record Date"). Neither St. Lawrence nor Paragon received any cash or other proceeds from the distribution, and St. Lawrence stockholders did not make any payment for the share and subscription rights. The distribution to St. Lawrence stockholders was made by St. Lawrence for the purpose of providing St. Lawrence stockholders with an equity interest in Paragon without such stockholders being required to contribute any cash or other capital in exchange for such equity interest. On March 21, 1997, the Securities and Exchange Commission declared effective a Registration Statement on Form S-1 filed by Paragon, registering the Distribution of Shares and Subscription Rights to St. Lawrence stockholders. The cost of organizing Paragon and registering the distribution have been borne by the founders of Paragon. 7 Paragon is an independent publicly-owned corporation. However, because Paragon did not have a specific operating business at the time of the distribution, the distribution of the shares was conducted in accordance with Rule 419 promulgated under the Securities Act of 1933, as amended (the "Securities Act"). As a result, the shares, subscription rights, and any shares issueable upon exercise of subscription rights, were put into escrow. While held in escrow, the shares could not be traded or transferred. In April and June, 2001, Paragon's Board of Directors voted to discontinue the search for a Target Business, withdraw its S-1 Registration Statement and dissolve as soon as possible. A Post-Effective Amendment terminating the Registration Statement and de-registering the securities described therein was filed with the SEC on June 22, 2001. The dissolution of Paragon was completed effective June 29, 2001. As a result, subscription rights held by St. Lawrence stockholders have been effectively cancelled. NOTE E--DISPOSITION OF ASSETS On February 23, 2000, the Company conducted a real estate auction and entered into definitive sales and purchase agreements with seven non-affiliated individual purchasers to sell all of the land owned by the Company. The real estate was sold at auction for an aggregate gross sales price of $567,500. At closing, an aggregate $13,225 price reduction was made due to acreage corrections revealed by the survey delivered at closing and due to deletion from the sale property of an electrical substation not owned by the Company. All sales were closed as of June 14, 2000, and net proceeds of $506,510 were delivered to the Company as of that date. In fiscal year ending March 31, 2001, the Company will be subject to tax on the net gain, after related selling expenses, from the sale that exceeds the existing net operating losses of approximately $375,000, plus any additional net operating losses incurred in fiscal year 2001. The Company devoted the property to farming activities under a cash lease method. The property was leased to farmers who were directly responsible for the operation thereof and who paid the Company a rental fee covering a ten-month period of use of the property. The Company generally received these rental payments at the beginning of the planting season. The Company was responsible for real estate taxes, insurance, and minor expenses. As a result of the sale of the property and termination of the farm tenant agreement prior to the calendar year 2000 planting season, the Company will not realize any farm rental income in the fiscal year ending March 31, 2001. NOTE F--OTHER EVENTS The Company has entered into a Research Funding Agreement with New York University School of Medicine, New York, New York, under which the Company will provide funding for the further development of certain NYU medical discoveries and technology, in return for which the Company will be entitled to receive License Fees from the future commercial uses of such discoveries. Such technology is subject to pending NYU Patent application and generally relates to treatment of certain prostate enlargements and prostate cancers. Under the Agreement, the Company has agreed to provide research funding of $25,000 for each of eight calendar quarters, in exchange for which the Company would be entitled to receive 1.5% of future license revenues from the sale, license or other commercialization of the NYU Patents. The Company has the option to provide additional funds for up to three additional years of development, in exchange for which the Company's share of license revenue from the NYU Patents would increase to a maximum of 3.75%. Development and commercialization of the NYU Patent is highly speculative and subject to numerous uncertainties, both scientific, financial, practical and commercial. 8 In a separate matter, the Company has also entered into a non-binding letter of intent under which it will provide development funding to a newly-formed private company for specified drug treatment protocols for thyroid and cardiovascular disease. Such treatments are in early stage development and involve the use of novel formulations of hormones, delivered in controlled release formulations. Funding provided by the Company would be used for the purpose of financing development of new formulations of such hormone, and to conduct animal and human clinical trials. Research has been initiated by a private company (the "Development Company") founded by physicians at a major metropolitan New York City area hospital. If consummated, the terms of the letter of intent call for the Company to acquire, subject to adjustment, a 25% ownership stake in the Development Company, in exchange for its commitment to provide development funding of $750,000 over an approximately one-year period, with follow-on investment of an additional $750,000 if certain preliminary FDA testing approvals are secured. If the product is licensed by Development Company to a pharmaceutical partner during this period, the Company would be entitled to a portion of Development Company's resulting royalties and progress payments. The amount of ownership to be received by the Company would be subject to adjustment, based upon ownership and license arrangements that the Development Company makes with laboratories that provide research and formulation expertise and assets, development or licensing partners, or other sources of financing. The Company has loaned the Development Company Forty Thousand Dollars, secured by such entities assets, in connection with entering the letter of intent. Consummation of the transaction is expected in the first quarter of 2002. Development and commercialization of the treatment protocols is highly speculative and subject to numerous uncertainties, both scientific, practical, financial and commercial. 9 THE ST. LAWRENCE SEAWAY CORPORATION Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS -- Three months ended December 31, 2001 as compared to three months ended December 31, 2000. Interest and dividend income decreased to $7,699 in the three months ended December 31, 2001, from $22,967 in the three months ended December 31, 2000. This decrease is a result of lower rates of interest earned on invested funds. General and administrative expenses decreased to $23,300 in the three months ended December 31, 2001 from $24,596 in the three months ended December 31, 2000. This decrease reflects savings realized on general office expenses and annual meeting costs. As a result of the above items, the Company had a loss of $15,601 before provision of income taxes in the three months ended December 31, 2001, as compared to a loss of $1,629 before provision of income taxes in the three months ended December 31, 2000. Indiana gross tax of $105 was provided for in the three months ended December 31, 2001 as compared to Indiana gross tax of $308 in the three months ended December 31, 2000. No federal tax provision is applicable in the three month periods ended December 31, 2001 and 2000. RESULTS OF OPERATIONS - Nine months ended December 31, 2001, compared to nine months ended December 31, 2000. Interest and dividend income decreased to $34,450 in the nine months ended December 31, 2001, from $60,483 in the same period ended December 31, 2000. This decrease is a result of lower rates of interest earned on invested funds. General and administrative expenses of $66,923 and $67,936, respectively, were comparable in the nine months ended December 31, 2001, and December 31, 2000, as illustrated by the following table: 10 NINE MONTHS ENDED DECEMBER 31, 2001 2000 ---- ---- Executive Compensation, Management Fees, Salaries, and Employee Benefits $13,023 $12,556 Office Rent and Company Operations (including Farm Operations) $11,363 $10,965 Stock Transfer Services, Proxy, Annual Meeting, and SEC Report Compliance $ 6,993 $11,274 Professional Fees (accounting & legal) $35,544 $33,141 Payroll, excise and other taxes $ 0 $ 0 As a result of the above items the Company had a loss before provision for income taxes of $32,473 in the nine months ended December 31, 2001 as compared to income before provision for income taxes of $384,782 in the comparable period a year earlier. Indiana gross tax of $401 was provided for in the nine months ended December 31, 2001 as compared to Indiana gross tax of $7,402 that was applicable in the nine months ended December 31, 2000. No federal tax provision is applicable in the nine month periods ended December 31, 2001 and 2000. LIQUIDITY AND CAPITAL RESOURCES At December 31, 2001, the Company had net working capital of $1,443,977, substantially all of which was in cash and money market funds. St. Lawrence has sufficient capital resources to continue its current business. The Company may require the use of its assets for a purchase or partial payment for an acquisition or in connection with another business opportunity. In addition, St. Lawrence may incur debt of an undetermined amount to effect an acquisition or in connection with another business opportunity. It may also issue its securities in connection with an acquisition or other business opportunity. St. Lawrence does not have a formal arrangement with any bank or financial institution with respect to the availability of financing in the future. OUTLOOK This Form 10-Q contains statements which are not historical facts, but are forward-looking statements which are subject to risks, uncertainties and unforeseen factors that could affect the Company's ability to accomplish its strategic objectives with respect to acquisitions and developing new business opportunities, as well as its operations and actual results. All forward-looking statements contained herein, reflect Management's analysis only as of the date of the filing of this Report. Except as may be required by law, the Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. In addition to the disclosures contained herein, readers should carefully review risks and uncertainties contained in other documents which the Company files from time to time with the Securities and Exchange Commission. 11 THE ST. LAWRENCE SEAWAY CORPORATION PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDING - Not Applicable Item 2. CHANGES IN SECURITIES - Not Applicable Item 3. DEFAULTS UPON SENIOR SECURITIES - Not Applicable Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Company held its Annual Meeting of Stockholders on December 12, 2001. (b) Not applicable. (c) At the stockholders meeting, the Company's nominees for director were elected by the following votes: NOMINEE VOTES IN FAVOR VOTES TO WITHHOLD AUTHORITY Joel M. Greenblatt 222,437 1,495 Daniel L. Nir 222,304 1,628 Jack C. Brown 221,305 2,127 Edward B. Grier III 222,437 1,495 Item 5. OTHER INFORMATION - Not Applicable Item 6. EXHIBITS AND REPORTS ON FORM 8-K - Item 6(a) Exhibits - None Item 6(b) Reports on Form 8-K - No reports on Form 8-K were required to be filed for the quarter for which this report is filed. 12 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE ST. LAWRENCE SEAWAY CORPORATION Registrant /s/Daniel L. Nir -------------------------------------------- Date: 2/14/02 Daniel L. Nir President and Treasurer (Chief Financial Officer) Date: 2/14/02 /s/Jack C. Brown -------------------------------------------- Jack C. Brown Secretary 13
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Carbon Energy (CRBO) 10-Q2001 Q4 Quarterly report
Filed: 14 Feb 02, 12:00am