================================================================================ 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. - ----------------- ------------------- June 30, 2000 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 June 30, 2000 ----- ---------------------------- Common Stock, $1.00 par value 393,735 ================================================================================ THE ST. LAWRENCE SEAWAY CORPORATION FORM 10-Q INDEX PART I. FINANCIAL INFORMATION PAGE Balance Sheets - June 30, 2000 (UNAUDITED) and March 31, 2000.................3 Statements of Income - Three months ended June 30, 2000 and 1999 (UNAUDITED)................................................................4 Statements of Cash Flows - Three months ended June 30, 2000 and 1999(UNAUDITED)............................................................5 Notes to Financial Statements - June 30, 2000................................6-7 Management's Discussion and Analysis of Financial Condition and Results of Operations ..................................................8-9 PART II. OTHER INFORMATION...................................................10 Signatures....................................................................11 Exhibit (27)..................................................................12 THE ST. LAWRENCE SEAWAY CORPORATION BALANCE SHEETS JUNE 30, 2000 (UNAUDITED) AND MARCH 31, 2000 (Unaudited) JUNE 30, MARCH 31, 2000 2000 ============================ ASSETS Current assets: Cash and cash equivalents $ 1,502,694 $ 999,649 Interest and other receivables 2,143 2,037 Prepaid items 7,649 2,441 ---------------------------- Total Current Assets 1,512,486 1,004,127 Land 0 118,913 ---------------------------- Total Assets $ 1,512,486 $ 1,123,040 ============================ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable & other $ 20,655 18,785 Federal & state taxes payable 7,386 0 ---------------------------- Total Current Liabilities 28,041 18,785 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 713,458 333,268 ---------------------------- Total Shareholders' Equity 1,484,445 1,104,255 ---------------------------- Total Liabilities and Shareholders' Equity $ 1,512,486 $ 1,123,040 ============================ 3 THE ST. LAWRENCE SEAWAY CORPORATION STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) JUNE 30, JUNE 30, 2000 1999 ============================= Revenues: Farm rentals $ 0 $ 2,736 Interest and dividends 13,820 11,215 Sale of Land 392,235 0 ----------------------------- Total revenues 406,055 13,951 Operating costs and expenses: Farm related operating costs 0 399 Depreciation 0 392 General and administrative 19,052 17,141 ----------------------------- Total operating expenses 19,052 19,932 Income (Loss) before tax provision 387,003 (3,981) Provision for income taxes net of net operating loss carryforward/(tax benefit) 6,813 (425) ------------------------------ Net income (loss) 380,190 (3,556) ============================== Per share data: Weighted average number of common shares outstanding 393,735 393,735 ------------------------------- Primary earnings per share: Income (Loss) per share $0.97 ($0.01) ================================ 4 THE ST. LAWRENCE SEAWAY CORPORATION STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) JUNE 30, JUNE 30, 2000 1999 ================================ Cash flows from operating activities: Net income (loss) $380,190 $(3,556) Adjustments to reconcile net income to net cash from operating activities Gain on Sale of Land (392,235) 0 Depreciation 0 392 (Increase) Decrease in current assets: Interest and other receivables (106) 9,023 Prepaid items (5,208) (690) Deferred income tax 0 (426) (Decrease) Increase in current liabilities: Payroll tax & other 0 0 Deferred Income 0 (2,736) Accounts payable 1,870 (8,842) Income taxes payable 7,386 0 -------------------------------- Net cash from operating activities (8,103) (5,455) Cash flows from investing activities: Sale of land 511,148 0 Purchase of equipment 0 0 -------------------------------- Net cash from investing activities 511,148 0 Cash flows from financing activities: -------------------------------- Net cash from financing activities 0 0 Net decrease in cash and cash equivalents 503,045 (5,455) Cash and cash equivalents, beginning 999,649 1,031,389 -------------------------------- Cash and cash equivalents, ending $1,502,694 $1,025,934 ================================ Supplemental disclosures of cash flow information: Cash paid for income taxes 6,649 0 Cash paid for interest expense 0 0 5 THE ST. LAWRENCE SEAWAY CORPORATION NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 2000 (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 June 30, 2000, are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2001. 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, 2000. NOTE B--RECLASSIFICATION The 1999 financial statements have been reclassified, where necessary, to conform to the presentation of the 2000 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. 6 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, are being held in escrow and are non-transferable by the holder thereof until after the completion of a business combination with an operating company. The subscription rights will become exercisable at a price to be determined by Paragon's Board of Directors (not to exceed $2.00 per subscription right) once a business combination is identified and described in a post-effective amendment to Paragon's Registration Statement. While held in escrow, the shares may not be traded or transferred, and the net proceeds from the exercise of subscription rights will remain in escrow subject to release upon consummation of a business combination. There is no current public trading market for the shares and none is expected to develop, if at all, until after the consummation of a business combination and the release of shares from escrow. In addition, because more than eighteen months have expired since Paragon's Registration Statement on Form S-1 was declared effective, it is possible that Rule 419 will prohibit the distribution, or require an additional or new registration statement to be filed and approved. The Company is not involved in Paragon's operations or filings, and has provided the following information solely based on information made know to it by representatives of Paragon. 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. 7 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 June 30, 2000 as compared to three months ended June 30, 1999. Interest and dividend income increased to $13,820 in the three months ended June 30, 2000, from $11,215 in the three months ended June 30, 1999. This increase is a result of a higher amount of dollars invested in the three months ended June 30, 2000. Farm rental revenue decreased to zero (0) in the three months ended June 30, 2000, from $2,736 in the three months ended June 30, 1999. The decrease is due solely to the termination of the existing farm tenant agreement as a result of the sale of the farm property of the Company to which such agreement relates. General and administrative expenses increased to $19,052 in the three months ended June 30, 2000 from $17,141 in the three-months ended June 30, 1999, as illustrated by the following table. This increase is largely due to increased professional fees incurred, in part, in connection with the sale of the Schleman Farm. THREE MONTHS ENDED JUNE 30, 2000 1999 ---- ---- Executive Compensation, Management Fees, Salaries, and Employee Benefits $ 4,388 $ 4,725 Office Rent and Company Operations (including Farm Operations) $ 3,545 $ 4,756 Stock Services, Proxy, Annual Meeting, and SEC Report Compliance $ 1,118 $ 2,392 Professional Fees (accounting & legal) $10,000 $ 4,781 Payroll, excise and other taxes $ 6,813 $ 652 As a result of the above items the Company received income before provision for income taxes of $387,003 in the three months ended June 30, 2000, as compared to a loss before provision for income taxes of $3,981 in the comparable period a year earlier. Indiana gross tax of $6,813 was applicable in the three months ended June 30, 2000, as compared to federal and state income tax benefits of $425 that were applicable in the three months ended June 30, 1999. No federal tax provision is applicable in the three months ended June 30, 2000 due to the net operating loss carryforward of approximately $375,000. LIQUIDITY AND CAPITAL RESOURCES At June 30, 2000, the Company had net working capital of $1,484,445 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 8 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. YEAR 2000 Through June 30, 2000, the Company had not experienced any difficulties with its management and information systems in connection with the turnover from 1999 to 2000. In addition, no Y2K problems have been experienced by the Company directly or indirectly with respect to its significant service providers; including the Company's Farm Management Company, stock transfer agent, landlord and certified public accountants. 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. 9 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- None Item 5. OTHER INFORMATION - Not Applicable Item 6. EXHIBITS AND REPORTS ON FORM 8-K - Item 6(a) Exhibits - (27) Financial Data Schedule 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. 10 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: 8/11/00 ----------------------------------- Daniel L. Nir President and Treasurer (Chief Financial Officer) Date: 8/11/00 /s/Jack C. Brown ----------------------------------- Jack C. Brown Secretary 11