UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2001
Commission file number 0-12172
Lincoln Logs Ltd.
(Exact name of small business issuer as specified in its charter)
New York 14-1589242
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Riverside Drive, Chestertown, New York 12817
(Address of principal executive offices)
(518) 494 - 5500
(Issuer's telephone number)
Neither name, address nor fiscal year has changed since last report
(Former name, former address and former fiscal year, if changed since last
report.)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes ___X_____ No_________
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at June 14, 2001
Common Stock, $ .01 par value 7,255,059
- 1 -
LINCOLN LOGS LTD. AND SUBSIDIARIES
INDEX
Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Consolidated balance sheets as of
April 30, 2001 and January 31, 2001 3 - 4
Consolidated statements of operations
for the three months ended
April 30, 2001 and 2000 5
Consolidated statements of changes in
stockholders' equity for the three months
ended April 30, 2001 and the twelve months
ended January 31, 2001 6
Consolidated statements of cah flows
for the three months ended
April 30, 2001 and 2000 7
Notes to consolidated financial statements 8 - 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION 11 - 13
PART II. OTHER INFORMATION 14
SIGNATURES 15
- 2 -
LINCOLN LOGS LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 2001 AND JANUARY 31, 2001
ASSETS
------
April 30, January 31,
2 0 0 1 2 0 0 1
(Unaudited) (Audited)
------------ ------------
CURRENT ASSETS:
Cash and cash equivelants $ 244,170 $ 286,226
Trade accounts receivable, net of $16,000
allowance for doubtful accounts 135,637 140,440
Inventories (principally raw materials) 1,276,821 1,148,453
Prepaid expenses and other current
assets 555,622 548,952
Prepaid income taxes 235 ---
Mortgage and note receivable 21,517 18,758
---------- ----------
Total current assets 2,234,002 2,142,829
---------- ----------
PROPERTY, PLANT AND EQUIPMENT:
Land 835,241 835,241
Buildings and improvements 2,382,409 2,338,757
Machinery and equipment 833,197 703,197
Furniture and fixtures 1,474,952 1,471,850
Transportation equipment 149,277 149,277
---------- ----------
5,675,076 5,498,322
Less: accumulated depreciation (3,459,914) (3,422,714)
---------- ----------
Total property, plant and
equipment - net 2,215,162 2,075,608
---------- ----------
OTHER ASSETS:
Mortgage receivable 66,441 70,409
Assets held for resale 113,298 113,298
Cash surrender value of life insurance 98,348 98,348
Deposits and other assets 10,993 136,389
---------- ----------
Total other assets 289,080 418,444
---------- ----------
TOTAL ASSETS $4,738,244 $4,636,881
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
( continued )
- 3 -
LINCOLN LOGS LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS ( continued )
APRIL 30, 2001 AND JANUARY 31, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
April 30, January 31,
2 0 0 1 2 0 0 1
(Unaudited) (Audited)
---------- -----------
CURRENT LIABILITIES:
Current installments of long-term debt $ 126,066 $ 26,046
Trade accounts payable 1,146,445 1,003,098
Customer deposits 1,900,308 1,511,860
Accrued payroll, related taxes and
withholdings 118,959 103,659
Accrued income taxes -- 1,374
Due to related parties 99,426 97,802
Accrued expenses 601,293 685,844
---------- ----------
Total current liabilities 3,992,497 3,429,683
LONG-TERM DEBT, net of current installments:
Convertible subordinated debentures:
Related parties 160,000 200,000
Others 10,000 10,000
Notes payable-related parties 150,000 183,349
Mortgage payable 198,750 ---
Other 123,988 45,736
Other long-term liability 98,348 98,348
----------- ----------
Total liabilities 4,733,583 3,967,116
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, $ .01 pare value;
authorized 1,000,000 shares; issued
and outstanding - 0 - shares -- --
Common stock, $ .01 par value; authorized
10,000,000 shares; issued
7,759,299 77,593 77,593
Additional paid-in capital 5,681,554 5,681,554
Accumulated deficit (4,870,051) (4,204,947)
----------- ----------
889,096 1,554,200
Less: cost of 504,240 shares of common
stock in treasury (884,435) (884,435)
----------- ------------
Total stockholders' equity 4,661 669,765
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $4,738,244 $4,636,881
============= ============
<FN>
See accompanying notes to consolidated financial statements.
- 4 -
LINCOLN LOGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 2001 AND 2000
(UNAUDITED)
(CAPTION)
Three Months Ended
April 30,
-------------------
2 0 0 1 2 0 0 0
--------- --------
NET SALES $1,122,910 $1,672,691
COST OF SALES 765,825 1,064,075
---------- ----------
GROSS PROFIT 357,085 608,616
---------- ----------
OPERATING EXPENSES:
Commissions 153,336 222,481
Selling, general and administrative 868,829 734,431
---------- ----------
Total operating expenses 1,022,165 956,912
---------- ----------
(LOSS) FROM OPERATIONS (665,080) (348,296)
---------- ----------
OTHER INCOME (EXPENSE):
Interest income 4,826 6,017
Interest expense (24,770) ( 14,843)
Other 19,920 17,848
---------- ----------
Total other income (expense) - net (24) 9,022
---------- ----------
(LOSS) BEFORE INCOME TAXES (665,104) (339,274)
INCOME TAXES --- ---
---------- ----------
NET (LOSS) $(665,104) $(339,274)
========== ==========
PER SHARE DATA :
Basic and diluted (loss) per share $(.09) $(.05)
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
- 5 -
LINCOLN LOGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED APRIL 30, 2001 (UNAUDITED) AND
THE TWELVE MONTHS ENDED JANUARY 31, 2001
Number Par Additional Total
of value paid-in (Accumulated Treasury stockholders'
shares amount capital deficit) stock equity
--------- --------- ---------- ------------ ------------ -------------
Balance at January 31, 2000 7,759,299 $ 77,593 $5,681,554 $(4,037,396) $( 884,435) $ 837,316
Net (loss) - 2001 --- --- --- (167,551) --- (167,551)
---------- ---------- ---------- ---------- ------------- ------------
Balance at January 31, 2001 7,759,299 $ 77,593 $5,681,554 $(4,204,947) $( 884,435) $ 669,765
Net(loss)-3 months ended April 30, 2001 --- --- --- (665,104) --- (665,104)
---------- ----------- ---------- ------------ ---------- -------------
Balance at April 30, 2001 7,759,299 $ 77,593 $5,681,554 $(4,870,051) $( 884,435) $ 4,661
========== ============ =========== ============ ============= ==============
<FN>
See accompanying notes to consolidated financial statements.
- 6 -
LINCOLN LOGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 2001 AND 2000
(UNAUDITED)
Three Months Ended
April 30,
----------------------------
2 0 0 1 2 0 0 0
---------- ---------
OPERATING ACTIVITIES:
Net (loss) $ (665,104) $ (339,274)
Adjustments to reconcile net (loss) to
net cash (used) provided by operating
activities:
Depreciation and amortization 37,330 39,050
Changes in operating assets and liabilities:
Decrease (increase) in trade
accounts receivable 4,803 ( 57,447)
(Increase) in inventories (128,368) (262,264)
(Increase) in prepaid expenses and
other current assets ( 6,670) ( 97,559)
(Increase) in prepaid income taxes ( 235) ---
Decrease (increase) in deposits and
other assets 130,465 ( 43,686)
Increase in trade
accounts payable 143,347 112,451
Increase in customer deposits 388,448 581,799
(Decrease) increase in accrued expenses
and other current liabilities ( 69,251) 165,068
Increase (decrease) in due to
related parties 1,624 ( 23,459)
(Decrease) in accrued income taxes ( 1,374) ( 7,700)
--------- ----------
Net cash (used) provided by
operating activities ( 164,985) 66,979
--------- ----------
INVESTING ACTIVITIES:
Additions to property, plant and equipment ( 46,754) ( 79,670)
Issuance of note receivable --- ( 50,000)
Payments on note receivable 879 5,376
Payments on mortgage receivable 330 474
--------- ----------
Net cash (used) by investing activities ( 45,545) (123,820)
--------- ----------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 225,000 ---
Loan origination fees ( 5,199) ---
Repayments of long-term debt ( 51,327) ( 1,487)
----------- -----------
Net cash provided (used) by financing
activities 168,474 ( 1,487)
----------- -----------
Net (decrease) in cash and
cash equivelants ( 42,056) ( 58,328)
Cash and cash equivelants at
beginning of period 286,226 356,306
----------- -----------
Cash and cash equivelants at
end of period $ 244,170 $ 297,978
=========== ==========
<FN>
See accompanying notes to consolidated financial statements.
- 7 -
LINCOLN LOGS LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2001 AND 2000
(1) BASIS OF PRESENTATION
The financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary for a
fair presentation of results for the interim periods.
The results of operations for the three-month periods ended April 30, 2001
and 2000 are not indicative of the results to be expected for the full year,
due to the seasonal nature of the business.
These unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
January 31, 2001.
(2) LOSS PER SHARE
Basic loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding during the respective periods.
The weighted average number of common shares used to compute basic loss per
share was 7,255,059 for the three-month periods ended April 30, 2001 and
April 30, 2000, respectively.
Diluted loss per share is computed based on the weighted average number of
common shares outstanding during the respective periods. When the effects are
dilutive, the convertible subordinated debentures are assumed to have been
converted into common stock at the beginning of the period after giving
retroactive effect to the elimination of interest expense, net of income tax
effect, applicable to the convertible subordinated debentures. Stock options
and warrants are included in the computation of earnings per share under the
treasury stock method if the effect is dilutive. Diluted loss per share is
the same as basic loss per share because the effect of including stock
options, warrants and the assumed conversion of the convertible subordinated
debentures would be anti-dilutive.
(3) INCOME TAXES
The Company accrues income tax expense on an interperiod basis as necessary,
and accrues income tax benefits only when it is more likely than not that such
tax benefits will be realized. No income tax expense or benefit was accrued
in the three months ended April 30, 2001 and 2000.
-8-
NOTES TO CONSOLIDATED DINANCIAL STATEMENTS - Continued
(4) INDEBTEDNESS
Through April 30, 2001, the Company has authorized and issued $600,000 of
Series B Convertible Subordinated Debentures (the "B" Debentures), and
$300,000 of Series C Convertible Subordinated Debentures (the "C" Debentures)
(all of the aforementioned series of convertible debentures are collectively
known as the "Debentures"). The Debentures bear interest, payable quarterly,
at an annual rate of 12%. The B Debentures were originally due on May 15,
1999, and the C Debentures are due on February 25, 2002.
The B Debentures may be redeemed by the Company at its option, in
whole or in part, at any time on or after January 30, 1998. The C Debentures
may be redeemed by the Company at its option, in whole or in part, at any time
on or after April 25, 1999. The holders of the B Debentures have the right,
upon appropriate notice, to convert the B Debentures, in $10,000 units, into
shares of the Company's common stock at the rate of one (1) share for each
$.20 of principal amount. The holders of the C Debentures have the right, upon
appropriate notice, to convert the C Debentures, in $10,000 units, into shares
of the Company's common stock at the rate of one (1) share for each $.16 of
principal amount. The B Debentures also have detachable stock purchase
warrants, giving the holder the right, over a five-year period, to purchase
shares of the Company's common stock at the quoted market price of the Company's
common stock, $.375 on the commitment date. The total number of shares of
common stock originally subject to warrants was 1,500,000, fifty (50%) percent
of the number of shares subject to conversion. As of April 30, 2001 and
January 31 2001, there were 812,500 warrants outstanding, respectively.
The Debentures are collateralized by a security interest granted by the Company
in the assets of the Company and by mortgages on certain parcels of real
property owned by the Company, which are located in Chestertown, New York and
Auburn, California.
As discussed above, the original maturity date of the B Debentures was
May 15, 1999. Prior to May 15, 1999, holders of B Debentures with a face
amount of $200,000 agreed to extend the maturity date to May 15, 2001. In
February 2001, holders of B Debentures with a face amount of $160,000 agreed
to extend the maturity date to May 15, 2003. During fiscal year 1999,
$275,000 of B Debentures were converted into common stock of the Company, and
687,500 shares of the Company's common stock were issued upon the exercise of
warrants related to the $275,000 of B Debentures that were converted. In
January 2000, $125,000 of B Debentures were repaid.
On July 29, 1999, a shareholder, officer and director, who owned B Debentures
and C Debentures exercised his right to convert his holdings into common
stock of the Company. The face amount of the B Debentures converted into
common stock of the Company was $30,000. The face amount of the C Debentures
converted into common stock of the Company was $250,000. The Company issued
1,712,500 shares (150,000 shares related to the conversion of the B Debentures
and 1,562,500 shares related to the conversion of the C Debentures) and paid
accrued interest to the date of conversion.
- 9 -
NOTES TO CONSOLIDATED DINANCIAL STATEMENTS - Continued
In December 2000, the Company issued a Note Payable to an officer, director
and shareholder of the Company in the amount of $83,349 bearing interest,
payable monthly, at a rate of 12% and due on August 15, 2002. The note is
unsecured. In March 2001, $33,349 of this Note Payable was repaid.
In December 2000, the Company issued a Note Payable to an officer, director
and shareholder of the Company in the amount of $100,000 bearing interest,
payable monthly, at a rate of 12% and due on August 15, 2003. The note is
unsecured. The proceeds of the note were used to acquire a parcel of
real property.
In February 2001, the Company issued a Note Payable to a commercial bank
in the amount of $225,000 bearing interest at prime plus 2%. The terms of the
note call for monthly payments of $1,875 plus interest. The note matures in
March 2011. The note is collateralized by a mortgage granted on the Company's
Northern Regional Sales Office.
(5) SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
During the three months ended April 30, 2001, cash was paid in the amounts
of $25,920 for interest and $1,609 for income taxes. During the three months
ended April 30, 2000, cash was paid in the amounts of $15,681 for interest
and $8,169 for income taxes.
Non-cash investing and financing activity:
During the first quarter ended April 30, 2001, the Company recorded an
increase in machinery and equipment of $130,000 and a related increase in
long-term debt in the same amount representing a capital lease.
During the first quarter ended April 30, 2000, there were no non-cash
investing and financing activities.
(6) SUBSEQUENT EVENT
On May 14, 2001, an officer, director and shareholder of the Company
purchased an outstanding B Debenture in the amount of $10,000 from an
unrelated third party holder of said debenture. The officer, director
and shareholder agreed to extend the due date of said debenture to
May 15, 2003, as similar B Debenture holders had done in February 2001.
Accordingly, this debt has been reflected as a long-term liability in
the accompanying consolidated financial statements.
(7) RECLASSIFICATIONS
Certain amounts in the Consolidated Statements of Operations for the
three months ended April 30, 2000 have been reclassified to conform with
the presentation for the three months ended April 30, 2001.
-10-
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
RESULTS OF OPERATIONS
Three months ended April 30, 2001 vs. April 30, 2000
Net sales were $1,122,910 for the three months ended April 30, 2001 as
compared to $1,672,691 in the same period in 2000, a decrease of $549,781,
or 33% When compared with the previous year, there was a 36% decrease in the
number of units shipped, and the average sales value per unit shipped
increased 3%. The net increase in sales value per unit shipped was the
result of several factors. A ten-percent price increase effective
March 1, 2000 contributed to increased per unit value, and a decrease in
the average size of models shipped during this period had the effect of
reducing the average per unit value. The decrease in units shipped was
due to numereous late winter snowstorms that caused postponements of
deliveries.
Gross profit amounted to $357,086, or 32% of net sales for the three months
ended April 30, 2001 as compared to $608,616, or 36% for the same period in
2000. Gross profit decreased for the three months ended April 30, 2001 as
compared to the three months ended April 30, 2000 due to a slight increase in
sales discounts allowed, and increases in direct labor and mahufacturing
overhead expenses, as a percentage of sales. Discounts allowed were slightly
higher during the three months ended April 30, 2001 due to more generous sales
promotions used periodically during fiscal 2001. While material, direct labor
and manufacturing overhead costs all decreased in absolute dollars, direct
labor and manufacturing costs increased as a percentage of sales due to the
lower number of units shipped during the first quarter ended April 30, 2001.
Material costs decreased by 2.5%, which was reflective of lower building
material costs during the period compared to the previous year. Direct
labor and manufacturing costs declined 5.4% from the prrevious year due
principally to cost control efforts.
Total operating expenses of $1,022,165, or 91% of net sales, increased
$65,253 from the previous year's amount of $956,912, or 57% of net sales.
The overall increase in total operating expenses was 7%. Sales
commissions were $153,336 for the three months ended April 30, 2001 and
$222,481 for the three months ended April 30, 2000. Commissions were 14%
and 13% of sales in 2001 and 2000, respectively. Selling, general and
administrative expenses were $868,829 for the three months ended April 30,
2001 compared with $734,431 in the same period of the previous year, an
increase of $134,398, or 18%. Selling, general and administrative expenses
were 77% and 44% of net sales in 2001 and 2000, respectively. The increase
in these expenses was primarily the result of increased spending on
advertising, trade show expositions, postage and delivery costs and
professional fees. The Company also incurred expenses for a shareholders'
meeting during the three months ended April 30, 2001 that did not occur
during the same period in the previous year.
- 11 -
LIQUIDITY AND CAPITAL RESOURCES
The Company had a working capital deficiency at both April 30, 2001 and
April 30, 2000 of $1,758,495 and $1,315,289, respectively. For the three
months ended April 30, 2001 working capital decreased $471,641 as compared
to a decrease of $424,047 in the same period in 2000. As of the Company's
fiscal year end at January 31, 2001 current liabilities exceeded current
assets by $1,286,854. At April 30, 2001 the Company's backlog of undelivered
contracts was approximately $17,406,000. Cash was primarily used during
the three-month period ended April 30, 2001 to fund the operating loss,
to purchase inventory, to pay for accrued expenses and other current
liabilities, to continue to construct a new sales model and to repay
long-term debt. Cash was primarily provided through the receipt of customer
deposits, an increase in accounts payable and the issuance of long-term debt.
For the three months ended April 30, 2001, the Company's operations used
cash in the amount of $164,985. Comparatively, the Company's operations
provided cash in the amount of $66,979 for the three months ended April 30,
2000. Overall, the Company experienced a net decrease in its cash position
of $42,056 during the three months ended April 30, 2001 as compared to a net
decrease in its cash position of $58,328 during the three months ended
April 30, 2000.
As shown in the consolidated financial statements, the Company incurred a
net loss during the quarter ended April 30, 2001 of $665,104. As of April 30,
2001, current liabilities exceeded current assets by $1,758,495. However, the
Company had net stockholders' equity of $4,661 at April 30, 2001. Over the
past several years the Company has principally relied upon funds generated by
operations and the assistance of major vendors who have provided extended
payment terms to the Company to support the Company's operations. While
the Company's results from operations have shown some improvement over the
past several years, there is, however, no assurance that the Company will be
able to generate adequate funds from these sources. A reduction in the
Company's sales activity, or a reduction in vendor assistance could further
reduce its liquidity and make it difficult for the Company to continue its
operations.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
It should be noted that in this Management's Discussion and Analysis or Plan
of Operations contians "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, and are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. The terms "believe", "anticipate", "intend", "goal",
"ex[ect" and similar expressions may identify forward-looking statements.
These forward-looking statements represent the Company's current expectations
or beliefs concerning future events. The matters covered by these statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those set forth in the forward-looking statements,
including the Company;s dependence on weather-related factors, introduction
and customer acceptance of new products, the impact of competition and price
erosion, as well as supply and manufacturing constraints and other risks and
uncertainties. The foregoing list should not be construed as exhaustive, and
the Company disclaims any obligation subsequently to revise any forward-looking
statements to reflect events or circumstances after the date of such statements,
or to reflect the occurrence of anticipated or unanticipated events. The
Company wishes to caution reasers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made.
12
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board ("FASB")Statement No. 133, "Accounting
for Derivative Instruments and Hedging Activities," issued in June 1998 and
effective for all fiscal quarters of fiscal years beginning after June 15,
1999, with earlier applicaion permitted, requires companies to recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. In June, 1999, FASB
issued Statement of Financial Accounting Standards ("SFAS") No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of
the Effective Date of FASB Statement No. 133-an amendment of FASB Statement
No. 133" which delayed the effective date of SFAS No. 133 to fiscal years
beginning June 15, 2000. Management has evaluated the impact of the
application of the new rules on the Company's Consolidated Financial
Statements and concluded that there is no impact on its results of
operations or its financial position.
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements", issued in December 1999 by the Securities and Exchange
Commission summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB No. 101A , issued in March 2000, and SAB No. 101B, issues in June 2000, both
delay the implementation of SAB No. 101. The Company implemented SAB No. 101
and the application of the new rules had no impact on the results of operations
or the financial position on the Company's Consolidated Financial Statements.
Financial Accounting Standards Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation - an
Interpretation of APB Opinion No. 25", issued in March 2000 and effective
July 1, 2000, but certain conclusions in FIN 44 cover specific events that
occurred after either December 15, 1998 or January 12,2000, clarifies the
application of APB Opinion No. 25. and, among other issues, clarifies the
definition of an employee for purposes of applying APB Opinion No. 25; the
criteria for determining whether a plan qualifies as a non-compensatory
plan; the accounting consequences of various modifications to the terms
of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. The
Company has applied applicable provisions of FIN 44, which did not have
a material effect on the Company's Consolidated Financial Statements.
- 13 -
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on
February 8, 2001. At the Annual Meeting of Shareholders,
the shareholders elected all deven members of the Board of
Directors to serve until the 2001 Annual Meeting of Shareholders.
The following sets forth the number of votes for and withheld
from each of the seven directors:
Name For Withheld
---- --- --------
John D. Shepherd 6,508,642 81,061
Richard C. Farr 6,538,534 51,149
Samuel J. Padula 6,538,730 50,973
Steven Patlin 6,538,730 50,973
Reginald W. Ray, Jr. 6,538,730 50,973
William J. Thyne 6,538,730 50,973
Leslie M. Apple 6,538,598 51,105
The only other item of business at the Company's Annual meeting
of Shareholders was to ratify the appointment of
PricewaterhouseCoopers LLP to serve as the Company's independent
auditors for the fiscal year ending January 31, 2001. The
proposal was passed by the following vote: For - 6,535,781,
Against - 3,281, Abstain - 50,641.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit Index
None
b. Reports on form 8-K
None
- 14 -
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LINCOLN LOGS LTD.
/ s / John D. Shepherd
John D. Shepherd
Chairman of the Board, President and
Chief Executive Officer
June 14, 2001
/ s / William J. Thyne
William J. Thyne
Executive Vice President, Chief
Financial Officer, Secretary and Treasurer
June 14, 2001
- 15 -