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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                             ----------------------

                                    FORM 10-K

                             ----------------------

 X  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--- ACT OF 1934


                    FOR THE FISCAL YEAR ENDED MARCH 31, 1999

                                       OR

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--- ACT OF 1934

For the transition period from _____________ to ____________


                         Commission file number 0-2040
                         -----------------------------


                       THE ST. LAWRENCE SEAWAY CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          Indiana                                       35-1038443
          -------                                       ----------
 (State or other jurisdiction            (I.R.S. Employer Identification Number)
of corporation or organization)


    320 N. Meridian St., Suite 818                        46204
    ------------------------------                        -----
       Indianapolis, Indiana                            (Zip Code)
(Address of principal executive offices)


                             ----------------------
                                 (317) 639-5292
               (Registrant's telephone number including area code)
                             ----------------------

          Securities registered pursuant to Section 12(g) of the Act:

                                                      Name of Exchange on
        Title of each class                             Which Registered
        -------------------                           -------------------
Common Stock, par value $1.00 per share                       None


Securities registered pursuant to Section 12(b) of the Act: None
                                                            ----


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.          Yes [x] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of 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.                  Yes [x] No [ ]

The  aggregate  market  value of  Common  stock  held by  non-affiliates  of the
registrant as of June 10, 1999 was approximately $729,414.00.

The number of shares of Common Stock of the  registrant  outstanding  as of June
25, 1999 was 393,735.


                                        1

<PAGE>


                       THE ST. LAWRENCE SEAWAY CORPORATION

                                     PART I

ITEM 1 - BUSINESS


        RECENT DEVELOPMENTS

        On March 19, 1997,  the Board of Directors  of The St.  Lawrence  Seaway
Corporation  (herein  "St.  Lawrence"  or the  "Company")  declared  a  dividend
distribution  (the  "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 Rights") to purchase two (2)
additional Shares of Paragon. Paragon was incorporated by its founders under the
laws of  Delaware  on June 19,  1996,  for the  purpose of seeking to acquire or
merge with an operating business, and thereafter to operate as a publicly-traded
company.  Paragon  offered to sell Shares for par value of $.01 per Share to St.
Lawrence, and in turn, have such Shares distributed to St. Lawrence Shareholders
to broaden its shareholder  base. St.  Lawrence  purchased the Paragon Shares on
March 6, 1997, for total  consideration of $5,141,  using readily available cash
assets of the Company.

St. Lawrence has undertaken the Paragon  transaction  with the goal of providing
St. Lawrence  shareholders  with an additional  opportunity to participate in an
acquisition  or merger of  businesses  through  Paragon,  without  requiring any
additional  investment  by  such  shareholders.  The  Company  believes  that by
acquiring for St. Lawrence  stockholders an equity interest in Paragon,  and the
right to acquire  additional  ownership on the same terms as Paragon's  majority
shareholder,  St.  Lawrence  shareholders  will  thereby  have an  interest in a
greater  number of vehicles  available to effect a merger,  acquisition or other
business  combination,  and therefore,  an increased opportunity to benefit from
such transactions.

The cash payment of $5,141 by St.  Lawrence in exchange  for the Paragon  Shares
and  Subscription  Rights to be distributed to St.  Lawrence  stockholders,  was
determined  by St.  Lawrence to represent a nominal  investment  in light of the
potential  benefits to St. Lawrence  shareholders which may be available through
their ownership of the Shares,  the possible exercise of Subscription  Rights to
purchase  additional  Shares  and  the  fact  that  PAR  Holding,  the  majority
shareholder of Paragon,  agreed to purchase a significant  number of Shares at a
price substantially higher than the price paid by St. Lawrence.

Because Paragon did not yet have a specific operating business, 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  issuable  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



                                        2

<PAGE>


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 18 months have expired since Paragon's  Registration Statement 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  purchase  of  Shares  and  Subscription  Rights  by St.  Lawrence,  and the
Distribution,  was made by St.  Lawrence for the purpose of  distributing to St.
Lawrence  stockholders an equity  interest in Paragon without such  stockholders
being required, either individually or directly, to contribute any cash or other
capital in exchange for such equity interest.

At the time of the  Distribution on or about March 21, 1997, St. Lawrence mailed
to each of its Shareholders a copy of Paragon's  Prospectus.  Significant points
explained in the Prospectus (and noted to St.  Lawrence  shareholders in a cover
letter accompanying the Prospectus) include:

              --St. Lawrence  shareholders were not required to make any payment
              to receive the Paragon shares.  Payment will only be required from
              St.  Lawrence  shareholders  if  they  decide  to  exercise  their
              Subscription Rights to purchase additional Paragon Shares;

              --The costs of organizing and operating Paragon have been borne by
              the founders of Paragon. Neither St. Lawrence nor its shareholders
              have any future obligations to Paragon, financial or otherwise.

              --There  is no  change  in  ownership  of St.  Lawrence,  and  St.
              Lawrence shareholders remain free to purchase or sell St. Lawrence
              common stock at all times.  Restrictions on transfer only apply to
              the Paragon  shares.  St. Lawrence common stock and Paragon common
              stock are entirely separate in all respects.

              --Paragon  and  St.  Lawrence  are  independent  companies,   with
              separate management, and will be operated as independent companies
              in the future.

None of the officers and  directors of Paragon are officers and directors of St.
Lawrence, and Paragon and St. Lawrence have arrangements, fiduciary obligations,
understandings   or  intentions  to  allocate   acquisition  or  other  business
opportunities  between them. Any opportunities  identified by the managements of
the  respective  companies  are expected to be examined and pursued,  if at all,
independently of each other. With each of Paragon and St. Lawrence independently
available for business  combinations and other  acquisition  opportunities,  St.
Lawrence  management  believes  that the  potential  to benefit  St.  Lawrence's
shareholders has been enhanced.

        DESCRIPTION OF BUSINESS

        The  Company is engaged  in a search  for other  business  opportunities
which may or may not be related to its present agricultural, cash management and
other investment activities.



                                        3

<PAGE>


        (a)  Agricultural  Activities -- At March 31, 1999, St. Lawrence was the
owner of one parcel of agricultural  real estate in Northern Indiana  comprising
approximately 195 acres. This real estate,  known as Schleman Farm, is primarily
devoted to farming activities under the cash lease method of operation. The cash
lease  method of  operation  involves the leasing of the property to farmers who
are directly  responsible for the operation of the Farm and who pay St. Lawrence
a rental fee covering a ten-month period for the use of the property for farming
and related activities. St. Lawrence generally receives these rental payments at
one time or in  semi-annual  installments.  Real  estate  taxes and other  minor
expenses,  such as insurance,  are the  responsibility  of St.  Lawrence in some
instances.

        St.  Lawrence  has engaged the  services of a farm  management  company,
Halderman Farm Management Service, Inc., of Wabash, Indiana ("Halderman"). Under
the current contract,  Halderman manages, and is responsible for the negotiation
of all leases,  tenant  contracts,  and general  operations  and programs of the
Schleman Farm.  Halderman is compensated on a quarterly  per-acre fee basis.  It
has managed the current and former farm  properties of the Company for more than
ten years.

        (b) CASH  MANAGEMENT  AND OTHER  INVESTMENTS  -- During the fiscal  year
ended March 31, 1999,  the Company  continued  its practice of  maintaining  its
other  assets  in  relatively  liquid  interest/dividend  bearing  money  market
investments. The Company is engaged in a search for other business opportunities
and,  accordingly,  such assets may be used for an  acquisition or for a partial
payment of an acquisition or for the commencement of a new business.

        FINANCING ARRANGEMENTS

        The  Company's  real estate is  unencumbered.  Furthermore,  the Company
currently   has  no  debt  for  borrowed   funds  or  similar   obligations   or
contingencies. The Company may incur debt of an undetermined amount to effect an
acquisition  or commence a new  business.  St.  Lawrence  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, ETC.

        The business of St. Lawrence is not currently dependent upon any patent,
trademark, franchise or license.

        GOVERNMENTAL REGULATION

        St. Lawrence  believes it is in compliance  with all federal,  state and
local regulations including all applicable environmental matters.



                                        4

<PAGE>


        SEASONALITY

        Although  farm  operations  are  generally  conducted  during the summer
months,  St.  Lawrence  receives the  majority of its rental and other  payments
based upon a  definitive  schedule  and  therefore  seasonal or weather  factors
generally do not have an effect on the revenues of the Company.

        EMPLOYEES

        The Company has no employees at this time. Mr. Jack C. Brown,  Secretary
of St. Lawrence receives a monthly fee of $500 for administrative  services that
he  renders  to the  Company.  Such  fee is paid  pursuant  to a month  to month
arrangement. Secretarial and bookkeeping services are provided to the Company at
cost by an employee of a management company with whom the Company shares  office
space.

ITEM 2 - PROPERTIES

        At March 31, 1999,  the Company  owned one parcel of  agricultural  real
estate in Porter County,  Indiana  comprising  approximately  195 acres.  Only a
portion of the  property,  known as  Schleman  Farm,  is  suitable  for  farming
purposes. The balance is wooded and from time-to-time is suitable to some extent
for timber harvesting operations. In the past, St. Lawrence has harvested excess
timber  from  its  various  properties.   Such  timber  harvesting  occurred  at
intermittent  times and there can be no  assurances  that  there  will be timber
activities at Schleman Farm in the future.

ITEM 3 - LEGAL PROCEEDINGS

        St. Lawrence is not a party to nor is any of its property the subject of
any material legal proceedings.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        Not applicable.




                                        5

<PAGE>


                                     PART II

ITEM 5 - MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


        MARKET INFORMATION

        The Company's  common stock is not  currently  listed for trading on any
exchange.  The following table sets forth the high and low closing bid price for
each quarterly  period during the fiscal years 1998 and 1997, as reported by the
National Quotation Bureau, Inc. from the pink sheets and the OTC Bulletin Board.
Such price data reflects inter-dealer prices, without retail mark-up,  mark-down
or commission and may not represent actual transactions.


        Fiscal Year           Quarter               High                  Low

            1999               First               $2.875                 $2.75
                              Second                $2.75                $2.375
                               Third                $2.50                 $2.25
                              Fourth                $2.50                $1.875
            1998               First                $2.50                 $2.25
                              Second                $2.25                 $2.25
                               Third                $2.75                 $2.25
                              Fourth               $3.125                 $2.75

        DIVIDENDS

          It is the present policy of the Board of Directors of St.  Lawrence to
retain earnings, if any, to finance the future expansion of the Company. No cash
dividends  were paid this year and no cash  dividends are expected to be paid in
the future.




                                        6

<PAGE>


      NUMBER OF STOCKHOLDERS

        As of June 14, 1999, there were approximately 1,291 holders of record of
the Company's Common Stock.

ITEM 6 - SELECTED FINANCIAL DATA

                             Selected Financial Data
                              Years Ended March 31,

The following table sets forth selected  financial  information  with respect to
the Company for the five fiscal years ended March 31, 1999. Certain  information
with respect to the fiscal years ended March 31, 1996 and March 31,1995 has been
restated.  All  information  set forth in the following  table should be read in
connection with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and in conjunction with the Company's  audited  Financial
Statements and Notes thereto appearing elsewhere in this Report.

<TABLE>
<CAPTION>

                                            1999           1998             1997            1996            1995
                                            ----           ----             ----            ----            ----
<S>                                        <C>            <C>               <C>            <C>             <C>


REVENUES:
Interest & Dividends                        51,069         56,704            54,545         59,858          55,311
Farm Rentals & Sales                         9,120          9,120             9,120          9,120           9,804
Gain on Sale of Farm
      Properties, net                            0              0                 0              0               0

Other                                            0              0                 0              0               0
                                        ----------     ----------       -----------    -----------     -----------
Total                                       60,189         65,824            63,665         68,978          65,115
                                            ------         ------           -------        -------         -------

COSTS & EXPENSES:

Farm Related                                 1,613          1,734             2,056          1,243           1,634
      General and                          102,102        112,092           105,220        141,748         148,053
  Administrative
Consulting                                   6,000          6,000             6,000         44,400          44,400
Depreciation                                 1,568          1,568             1,568          1,438             588
                                         ---------      ---------         ---------      ---------          ------
Total                                      111,283        121,394           114,844        188,829         194,675

</TABLE>



                                        7

<PAGE>

<TABLE>
<CAPTION>

                                              1999           1998              1997           1996            1995
                                              ----           ----              ----           ----            ----
<S>                                       <C>            <C>               <C>           <C>             <C>
Income (Loss) Before
     Income Taxes                          (51,094)       (55,570)          (51,179)      (119,851)       (129,560)

Income Tax
         Expense (Benefit)                     690            787               965            735          (5,429)
                                               ---            ---               ---            ---          -------
       Net Income (Loss)                   (51,784)       (56,357)          (52,144)      (120,586)       (124,131)

Income (Loss) per
         Common Share                       (0.13)          (0.14)            (0.13)         (0.31)          (0.32)
                                            ------          ------            ------         ------          ------

Weighted Average Number
   of Common Shares
   Outstanding                             393,735         393,735          393,735         393,735         393,735



                                            1999           1998             1997            1996            1995
                                            ----           ----             ----            ----            ----

BALANCE SHEET DATA:

Total Assets                            1,165,360      1,231,852         1,293,467      1,370,874        1,453,225

Total Liabilities                          22,006         36,714            41,972         62,094           23,859

Shareholders' Equity                    1,143,354      1,195,138         1,251,495      1,308,780        1,429,366


</TABLE>


                                        8

<PAGE>



ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

      YEAR ENDED MARCH 31, 1999, AS COMPARED TO YEAR ENDED MARCH 31, 1998.

        Interest  and  dividend  income  decreased  to $51,069 in the year ended
March 31, 1999, from $56,704 in the previous year primarily due to a decrease in
the cash balances invested.

        Farm rental  revenues of $9,120 were comparable in the years ended March
31, 1999,  and 1998. The Company has discussed with local real estate agents the
possibility of instituting a rent increase at Schleman Farm. Based on the market
rents  currently  being  obtained in Northern  Indiana,  a rent  increase is not
feasible at this time.

        General and  administrative  expenses  decreased to $102,102 in the year
ended March 31, 1999 from $112,092 in the year ended March 31, 1998  principally
due to decreases in  professional  fees paid to the  Company's  accountants  and
legal counsel,  and decreases in employee salaries and stock transfer and annual
meeting expenses, all as illustrated by the following comparison table:


                                                           YEAR ENDED MARCH 31,

                                                             1999          1998
                                                             ----          ----

Executive Compensation, Salaries, Management Fees
    and Employee Benefits                                  $27,926       $33,128
Office Rent and Operations                                  16,224        14,650
Stock Services, Proxy, Annual Meeting and
    SEC Report Compliance                                   13,645        18,114
Professional Fees (accounting & legal)                      45,576        49,496
Payroll, excise and other taxes                              3,175         2,654


       The  Company had a loss of $51,094  before  taxes in the year ended March
31, 1999, as compared to a loss of $55,570  before taxes in the year ended March
31, 1998.

        The income tax paid in the current year was $690.  An income tax of $787
was paid in the year ended March 31, 1998.


                                        9

<PAGE>


      YEAR ENDED MARCH 31, 1998, AS COMPARED TO YEAR ENDED MARCH 31, 1997.

       Interest and dividend income increased to $56,704 in the year ended March
31, 1998,  from $54,545 in the previous year primarily due to stable or slightly
increased interest rates.

       Farm rental  revenues of $9,120 were  comparable in the years ended March
31, 1998,  and 1997. The Company has discussed with local real estate agents the
possibility of instituting a rent increase at Schleman Farm. Based on the market
rents  currently  being  obtained in Northern  Indiana,  a rent  increase is not
feasible at this time.

       General and  administrative  expenses  increased  to $112,092 in the year
ended March 31, 1998 from $105,220 in the year ended March 31, 1997  principally
due to an increase in office rent, an increase in  professional  fees associated
with the Company's recent response to certain  shareholder and SEC informational
inquiries regarding the Company's 10-K for the fiscal year ended March 31, 1997,
and an increase in personnel  costs  associated with a small salary increase and
partial  reimbursement of health insurance for the Company's sole employee,  all
as illustrated by the following comparison table:


                                                        YEAR ENDED MARCH 31,

                                                         1998              1997
                                                         ----              ----

Executive Compensation, Salaries and
   Employee Benefits                                   $33,128           $31,478
Office Rent and Operations                              14,650            11,382
Stock Services, Proxy, Annual Meeting and
    SEC Report Compliance                               18,114            19,595
Professional Fees (accounting & legal)                  49,496            44,362
Payroll, excise and other taxes                          2,654             3,711


       The  Company had a loss of $55,570  before  taxes in the year ended March
31, 1998, as compared to a loss of $51,179  before taxes in the year ended March
31, 1997.

        The income tax paid in the current year was $787.  An income tax of $965
was paid in the year ended March 31, 1997.



                                       10

<PAGE>


RESULTS OF OPERATIONS

      YEAR ENDED MARCH 31, 1997, AS COMPARED TO YEAR ENDED MARCH 31, 1996.

       Interest and dividend income decreased to $54,545 in the year ended March
31, 1997,  from $59,858 in the previous  year. The decrease is a result of lower
interest rates received on cash invested in the year ended March 31, 1997.

       General and  administrative  expenses  decreased  to $105,220 in the year
ended March 31, 1997 from $141,748 in the year ended March 31, 1996  principally
due to reduced legal and other professional expenses currently recognized in the
Company's  Statement  of  Income  as of March  31,  1997.  The  following  table
summarizes  the  significant  components  of  these  expenses,  and  presents  a
comparison of such  components  for the years ended March 31, 1997 and March 31,
1996:


                                                           YEAR ENDED MARCH 31,

                                                       1997                1996
                                                       ----                ----

Executive Compensation, Salaries and
   Employee Benefits                                 $31,478             $29,855
Office Rent and Operations                            11,382              11,491
Stock Services, Proxy, Annual Meeting and
    SEC Report Compliance                             19,595              16,908
Professional Fees (accounting & legal)                44,362              85,166
Amortization and Depreciation                          1,568               1,438
Payroll, excise and other taxes                        3,711               3,380


     The  higher  professional  fees for the year  ended  March  31,  1996,  are
attributable  to the formation and subsequent  dissolution  of the St.  Lawrence
Fund, a wholly-owned  subsidiary of the Company,  which was intended to register
under the Investment Company Act of 1940 and to invest in securities.  Reference
is made to the Company's Forms 8-K filed January 19, 1996, and June 3, 1996, for
further information regarding the St. Lawrence Fund.



                                       11

<PAGE>


      LIQUIDITY AND CAPITAL RESOURCES

      At March 31, 1999, the Company had net working capital of $1,023,330,  the
major  portion 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.

Year 2000

        The  Company  has  substantially  completed  review  of  the  Year  2000
compliance  of its  management  and  information  systems.  With  respect to its
internal systems,  the Company has found that no significant  compliance efforts
are required  since it does not rely  heavily on  computers  in its  operations.
Indeed,  the Company's  sole computer is used strictly for word  processing  and
spreadsheet preparation.

        As part of its  ongoing  Year 2000  preparations,  in March,  1998,  the
Company sent written  requests for Year 2000  information to its farm management
company,  independent  accountant  and its transfer  agent.  In response to such
requests for information,  the Company's transfer agent reported that all of its
hardware  and  software  was  currently  Year  2000  "ready";  that it  would be
conducting a full blown test in a Year 2000 environment in October,  1998, after
which it expected to be able to confirm that it is Year 2000 compliant;  that it
had been  examined by the New York State  Banking  Department  and been found to
have made satisfactory progress on its Year 2000 plan; and that it had also made
the  appropriate  filing  with the SEC in  accordance  with  Rule  17Ad-18.  The
Company's farm management  company  reported that it believed its computers were
ready to handle the Year 2000  turnover  and that it was  awaiting  confirmation
from the bank where the farm  account  is  located  as to the Bank's  readiness.
Finally,  the Company's accountant reported that it was reviewing the guidelines
and  recommended  policies  established  by the American  Institute of Certified
Public  Accountants and addressing  specific concerns through a firmwide upgrade
of  computer  systems  and  financial  software  which  would  be  tested  after
installation  of the  upgrades  was  completed  in 1999.  The Company  requested
compliance  updates from its service  providers in June,  1999,  and is awaiting
replies to such requests.



                                       12

<PAGE>

OUTLOOK

        This Form 10-K contains  statements which are not historical  facts, but
are  forward-looking  statements which are subject to risks,  uncertainties  and
unforseen  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,  including without  limitation,  those relating to
Year 2000 readiness,  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.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Annexed hereto starting on Page 21.

ITEM 9 -  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

Not applicable.



                                       13

<PAGE>


                                    PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        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, 1998, 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 held by them.

<TABLE>
<CAPTION>

                                                        Business
                                                        Experience
Directors/Position                         Director     During Last                          Other
In Company                  Age            Since        Five Years                        Directorships
------------------          ---            --------     -----------                       -------------
<S>                        <C>             <C>        <C>                                     <C>
Jack C. Brown               80              1959       Attorney at Law                         None
Secretary                                              Indianapolis,
                                                       Indiana
                                                       since 1945.

Joel M. Greenblatt          41              1993       Managing Partner                        Director since August
Chairman of the                                        of Gotham                               1994 of Alliant
Board                                                  Capital III L.P.                        Techsystems, Inc., a
                                                       ("Gotham") and its                      Delaware corporation
                                                       predecessors since 1985                 which supplies
                                                       Gotham is a private                     weapons systems
                                                       investment partnership                  to the military and
                                                       which owns securities,                  its allies.
                                                       equity interests, distressed
                                                       debt, trade claims and
                                                       bonds, derivatives, and
                                                       options and warrants of
                                                       issuers engaged in a variety
                                                       of businesses.


Daniel L. Nir               38              1993       Manager of Gracie Capital,              Director since August
President and                                          L.P. since December, 1998,              1994 of Alliant
Treasurer                                              Manager of Sargeant Capital             Techsystems, Inc., a
                                                       Ventures, LLC                           Delaware corporation
                                                       since December, 1997;                   which supplies weapons
                                                       Managing Partner of                     systems to the United
                                                       Gotham Capital III, L.P.,               States military and its
                                                       prior thereto.                          allies.
</TABLE>



                                       14


<PAGE>

<TABLE>
<S>                        <C>             <C>        <C>                                     <C>

Edward B. Grier             41              1993       Partner of Gracie Capital, L.P.         None
Vice President                                         since December, 1998; Vice
                                                       President of Gotham Capital from
                                                       1991-1994 and a limited  partner
                                                       of Gotham  from  January 1, 1995
                                                       through  December 31, 1998.  Mr.
                                                       Grier  was  Vice   President  of
                                                       Smith New  Court,  a merger  and
                                                       restructuring advisory firm from
                                                       1990-91,  a  research  associate
                                                       with  Paine  Webber,  Inc.  from
                                                       1987-90,  and a senior financial
                                                       analyst  with Transworld
                                                       Corporation from 1985-87.
</TABLE>

        Directors of the Company are elected by a plurality of the votes cast at
the 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.  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.

        Compliance with Section 16(a) of the Exchange Act

        Based  solely  on a  review  of  Forms 3 and 4 and  amendments  thereto,
furnished to the Company during the fiscal year ended March 31, 1999 and Forms 5
and amendments  thereto furnished to the Company with respect to the fiscal year
ended March 31, 1999, no director,  officer or beneficial owner of more than 10%
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  years ended
March 31, 1999 and March 31, 1998.

ITEM 11 - EXECUTIVE COMPENSATION

        Except as noted below, neither the Company's Chief Executive Officer nor
any  other  executive   officers  of  the  Company   (collectively   the  "Named
Executives")  received salary,  bonus or other annual compensation for rendering
services to the Company during the fiscal years ended March 31, 1999,  March 31,
1998 and March 31, 1997.

        During  the  fiscal  years  ended  March 31,  1995 and  March 31,  1996,
pursuant  to an  Agreement  dated  as of  September  30,  1993  between  Bernard
Zimmerman & Co., Inc. and the Windward Group, L.L.C.,  principal  stockholder of
the Company, Bernard Zimmerman & Co. was paid an aggregate $36,000 for




                                       15

<PAGE>


services provided for the benefit of the Company. All such payments were made by
the Windward Group, L.L.C. on behalf of the Company.  They were recognized as an
expense by the Company and treated as a  contribution  of capital by Windward to
the Company.  No such  payments were made during the fiscal year ended March 31,
1997, March 31, 1998 or March 31, 1999.

        During each of the three fiscal  years ended March 31,  1997,  March 31,
1998 and March 31,  1999,  the Company  paid to Jack C. Brown,  Secretary  and a
Director,  a monthly fee of $500 for administrative  services that he renders to
the Company. Such fee is on a month to month arrangement.

        SUMMARY COMPENSATION TABLE

        As permitted  by Item 402 of  Regulation  S-K, the Summary  Compensation
Table has been  intentionally  omitted as there was no compensation  awarded to,
earned by or paid to the Named  Executives  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 a Named Executive were entered into
for any fiscal year covered thereby.

        OPTION/SAR GRANTS IN FISCAL YEAR ENDED MARCH 31, 1999

        No options or Stock appreciation  rights were granted in the fiscal year
ended March 31, 1999.

         Aggregated Option/SAR Exercises in Fiscal Year Ended March 31, 1999 and
         Fiscal Year-End Option/SAR Values

         The  Company  has  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 Company currently has
one outstanding  Stock Option  Agreement  entered into pursuant to the Plan. The
options  granted  thereunder  expires on September 21, 2002. The following table
summarizes  options  exercised during fiscal year 1999 and presents the value of
unexercised  options held by the Named  Executives at fiscal year end. There are
currently no outstanding stock appreciation rights.



                                       16

<PAGE>
<TABLE>
<CAPTION>



                                     Value of Unexercised      Number of Unexercised
                                     Options/SAR's                                                In-The Money
                                                                   Shares                        Options/SAR's
                            Acquired     Value              At Fiscal Year-End                 At Fiscal Year-End
                           On Exercise   Realized       (#)                (#)              ($)           ($)
Name                          #            ($)       Exercisable      Unexercisable      Exercisable Unexercisable
----                       ------------------------- -----------      --------------     ----------- -------------
<S>                         <C>           <C>          <C>              <C>            <C>            <C>

Joel M. Greenblatt           0             0            0                0              0              0

Daniel L. Nir                0             0            0                0              0              0

Edward B. Grier, III         0             0            0                0              0              0

Jack C. Brown                0             0            15,000           0             45,000          0

</TABLE>

Long-Term Incentive Plans - Awards in Fiscal Year Ended March 31, 1999

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. The Company paid $100 to Jack Brown for attendance at
the annual  meeting of  Stockholders.  No other fees were paid to Directors  for
meetings in fiscal year 1999.

As discussed  above,  during the fiscal year ended March 31,  1999,  the Company
paid  Jack C.  Brown,  Secretary  and a  Director,  a  monthly  fee of $500  for
administrative services that he renders to the Company.

COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION

The  Board  of  Directors  does  not  have any  standing  audit,  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, 1999 required to
be reported pursuant to Item 402(j) of Regulation S-K.




                                       17

<PAGE>


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth as of June  15,  1999  the  beneficial  share
ownership of all  beneficial  owners of 5% or more of the Company's  securities,
all directors and executive  officers of the Company owning  securities,  and of
all officers and directors as a group.


                                        Amount and
                                        Nature of
Beneficial                              Beneficial                     Percent
Owner                                   Ownership                      of Class
----------                              ----------                     --------
The Windward Group, L.L.C.              150,000(1)                       29.5%
100 Jericho Quadrangle
Suite 212
Jericho, NY 11753

Joel M. Greenblatt                      150,000(2)                       29.5%
100 Jericho Quadrangle
Suite 212
Jericho, NY 11753

Daniel L. Nir                           150,000(2)                       29.5%
100 Jericho Quadrangle
Suite 212
Jericho, NY 11753


--------
         (1)Includes  100,000  Shares subject to a currently  exercisable  Stock
Warrant  issued to the  Windward  Group L.L.C.  pursuant to a Warrant  Agreement
dated  September  24,  1986,  and  amended on July 6, 1992,  August 28, 1992 and
September 15, 1997.

         (2)Includes  100,000  Shares subject to a currently  exercisable  Stock
Warrant  issued to the  Windward  Group L.L.C.  pursuant to a Warrant  Agreement
dated  September  24,  1986,  and  amended on July 6, 1992,  August 28, 1992 and
September  15, 1997.  Ownership of Mr. Nir and Mr.  Greenblatt  is indirect as a
result of their  membership  interest in The Windward Group,  L.L.C. Mr. Nir and
Mr. Greenblatt disclaim individual  beneficial  ownership of any common stock of
the Company.

                                       18

<PAGE>




Jack C. Brown                         20,456(3)                     4.02%
320 N. Meridian St.
Suite 818
Indianapolis, IN 46204

Edward B. Grier III                      0                            *
100 Jericho Quadrangle
Suite 212
Jericho, NY 11753


All directors and
 officers as a group                  170,456                       33.5%
(4 persons)
---------------------
*Less than 1%

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not applicable.










--------
         (3)Includes  15,000  shares  subject  to  currently  exercisable  stock
options  granted on June 11, 1983,  as amended,  and  expiring on September  21,
2002, with a per share exercise price of $3.00.

No other person or group has reported  that it is the  beneficial  owner of more
than 5% of the outstanding Common Stock of the Company.



                                       19

<PAGE>


                                     PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(a) Financial Statements:                                            Page No.
-------------------------                                            --------

        Independent Auditor's Report                                   23
        Balance Sheets                                                 24
        Statements of Income                                           25
        Statement of Shareholders' Equity                              26
        Statements of Cash Flow                                        27

        Notes to Financial Statements                                  28

    Financial Schedules:
    --------------------
        X -       Supplementary Income Statement                       32
                  Information

Schedules other than those listed above are omitted for the reason that they are
not  required or not  appropriate  or the required  information  is shown in the
financial statements or notes thereto.

(b) Reports on Form 8-K

              No  Reports  on Form 8-K  were  filed by the  Company  during  the
quarter ended March 31, 1999.

(c) Exhibits

              (3)     (i) Articles of  Incorporation  of The St. Lawrence Seaway
                      Corporation,  as amended.  (Incorporated  by  reference to
                      Exhibit  (C)  (3)  (i) to the  Annual  Report  of The  St.
                      Lawrence  Seaway  Corporation  for the  fiscal  year ended
                      March 31, 1991.)

                      (ii)  By-Laws  of  The  St.  Lawrence  Seaway  Corporation
                      (Incorporated  by reference to Exhibit (C) (3) (ii) to the
                      Annual Report of The St.  Lawrence  Seaway  Corporation on
                      Form 10-K for the fiscal year ended March 31, 1987.)

              (10)    (i) Stock  Option  Agreements,  each dated  September  21,
                      1987, between The St. Lawrence Seaway Corporation and each
                      of Jack C. Brown,  Philip I. Berman,  and Albert Friedman.
                      (Incorporated  by reference to Exhibit (C) (10) (i) to the
                      Annual Report of The St.  Lawrence  Seaway  Corporation on
                      Form 10K for the fiscal year ended March 31, 1988.)

                         (ii) Agreement,  dated July 31, 1986 by and between The
                         St. Lawrence Seaway Corporation and Bernard Zimmerman &
                         Company,  Inc.  (Incorporated by reference to Exhibit 2
                         to the 10-Q of The St. Lawrence Seaway  Corporation for
                         the 6 months ended June 30, 1986.)





                                       20

<PAGE>


                         (iii)  St.   Clair  Farm   Property   Option  and  Sale
                         Agreement,  dated  March  31,  1992.  (Incorporated  by
                         reference  to the  Exhibit (C) (10) (iii) to the Annual
                         Report of The St. Lawrence  Seaway  Corporation on Form
                         10K for the fiscal year ended March 31, 1992.)

                         (iv) Airport Farm Property  Option and Sale  Agreement,
                         dated March 25,  1993.  (Incorporated  by  reference to
                         Form 10-K for the  Fiscal  Year  ended  March 31,  1993
                         ("the 1993 10-K")).

                         (v) Amendment No. 1 to Stock Option  Agreement  between
                         The St. Lawrence  Seaway  Corporation and Jack C. Brown
                         dated  August 28, 1992.  (Incorporated  by reference to
                         the 1993 10-K.)

                         (v)(a)   Amendment  to  Stock  Option  Agreement  dated
                         September 15, 1997  (Incorporated  by reference to Form
                         10-K for the fiscal  year  ended  March 31,  1998, (the
                         "1998 10-K"))

                         (vi) Amendment No. 1 to Stock Option Agreement  between
                         The St. Lawrence Seaway Corporation and Albert Friedman
                         dated  August 28, 1992.  (Incorporated  by reference to
                         the 1993 10-K.)

                         (vii)  Amendment No. 1 to the Warrant issued to Bernard
                         Zimmerman   &  Co.   Inc.   dated   August  28,   1992.
                         (Incorporated by reference to the 1993 10-K).

                         (vii)(a)  Amendment  No.  2 to  Common  Stock  Purchase
                         Warrant,  dated  September  15, 1997  (Incorporated  by
                         reference to the 1998 10-K)

                         (viii)  Stock Option  Agreement,  dated August 28, 1992
                         between The St. Lawrence  Seaway  Corporation and Wayne
                         J.  Zimmerman.  (Incorporated  by reference to the 1993
                         10-K.)

                         (ix) Stock Sale Agreement,  dated June 24, 1993 between
                         Bernard   Zimmerman   &  Co.,   Inc.   and   Industrial
                         Development  Partners.  (Incorporated  by  reference to
                         Exhibit  7(a)  to  Current  Report  on Form  8-K  dated
                         September 30, 1993).

                         (x)  Assignment and  Assumption  Agreement  dated as of
                         July 30,  1993.  (Incorporated  by reference to Exhibit
                         7(b) to Current Report on Form 8-K dated  September 30,
                         1993.)

                 (27)    Financial Data Schedule -- Filed herewith.




                                       21

<PAGE>


        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this report has been  signed  below by the  following  persons  (who  included a
majority  of the Board of  Directors)  on behalf  of the  registrant  and in the
capacities indicated on June 25, 1999.

        Signatures                     Title                           Date
        ----------                     -----                           ----

/s/ Daniel L. Nir                President, Treasurer              June 25, 1999
-----------------------          and Director
Daniel L. Nir
(Principal Financial
Officer)



/s/ Joel M. Greenblatt           Chairman of the Board,            June 25, 1999
----------------------
Joel M. Greenblatt               and Director
(Principal Executive
Officer)


/s/ Jack C. Brown                Secretary and Director            June 25, 1999
-----------------------
Jack C. Brown



/s/ Edward B. Grier III          Director                          June 25, 1999
-----------------------
Edward B. Grier III




                                       22

<PAGE>



SALLEE & COMPANY, INC.
  CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------

                                                            MEMBER
                                                            AICPA
                                                            TAX DIVISION
                                                            DIVISION OF FIRMS:
                                                            SEC PRACTICE SECTION
                                                            INDIANA CPASOCIETY

Board of Directors
The St. Lawrence Seaway Corporation
Indianapolis, Indiana

                         REPORT OF INDEPENDENT AUDITORS

We have  audited the  accompanying  balance  sheets of The ST.  LAWRENCE  SEAWAY
CORPORATION as of March 31, 1999 and 1998, and the related statements of income,
shareholders  equity,  and cash flows for each of the three  years in the period
ended March 31, 1999. These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of The St. Lawrence
Seaway  Corporation  as of March  31,  1999 and  1998,  and the  results  of its
operations  and its case flows for each of the three  years in the period  ended
March 31, 1999 in conformity with generally accepted accounting principles.

May 24, 1999
                                                     /s/ Sallee & Company, Inc.


1509 J STREET,  P.O.  BOX  1148,  BEDFORD,  INDIANA  47421,  812-275-4444  (FAX)
812-275-3300




                                       23

<PAGE>




                       THE ST. LAWRENCE SEAWAY CORPORATION
                                 BALANCE SHEETS
                             MARCH 31, 1999 AND 1998

<TABLE>
<CAPTION>

ASSETS                                                                    1999             1998
------                                                                    ----             ----
<S>                                                               <C>                 <C>
Current Assets:
         Cash and cash equivalents                                 $ 1,031,389         $1,105,940
         Interest and other receivables                                 10,731              1,644
         Prepaid items                                                   1,202                662
         Deferred tax benefits                                           2,014              2,014
                                                                   -----------         ----------
                  Total Current Assets                             $ 1,045,336         $1,110,260

Property and fixed assets:
         Land                                                      $   118,913         $  118,913
         Property & equipment, net                                       1,111              2,679
                                                                   -----------         ----------
                  Total Assets                                     $ 1,165,360         $1,231,852
                                                                   ===========         ==========


LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
         Payroll taxes withheld and accrued                      $           0        $       772
         Accounts payable & other                                       13,798             27,734
         Deferred income                                                 8,208              8,208
                                                                 --------------        ----------
                  Total Liabilities                              $      22,006        $    36,714
                                                                 =============         ==========

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                                             372,367            424.151
                                                                 -------------        -----------
                  Total Shareholders' Equity                     $ 1,143,354          $ 1,195,138
                                                                 -----------          -----------
         Total Liabilities and Shareholders' Equity              $ 1,165,360          $ 1,231,852
                                                                 ===========          ===========
</TABLE>


The accompanying notes are an integral part of these financial statements.





                                       24

<PAGE>


                       THE ST. LAWRENCE SEAWAY CORPORATION
                              STATEMENTS OF INCOME


                              YEARS ENDED MARCH 31,
<TABLE>
<CAPTION>

                                                              1999              1998             1997
                                                              ----              ----             ----
<S>                                                       <C>               <C>              <C>
Revenues:
         Farm rentals                                      $    9,120        $    9,120       $    9,120
         Interest and dividends                                51,069            56,704           54,545
                                                           ----------        ----------       ----------
         Total Revenues                                    $   60,189        $   65,824        $  63,665


Operating Costs and Expenses:
         Farm related operating costs                      $    1,613        $    1,734       $    2,056
         Depreciation                                           1,568             1,568            1,568
         Consulting fees-Note 3                                 6,000             6,000            6,000
         General and administrative expenses                  102,102           112,092          105,220
                                                           ----------         ---------        ---------
Total Operating Expenses                                   $  111,283        $  121,394         $114,844



Income (Loss) before income taxes                             (51,094)          (55,570)         (51,179)

Income Taxes/(Tax Benefit)                                        690               787              965
                                                           ----------        ----------      ------------
Net Income (Loss)                                          $  (51,784)          (56,357)         (52,144)


Per Share Data:
         Weighted average number of
         common shares outstanding                          $393,735          $393,735         $393,735
                                                            --------          --------         --------


Basic earnings per common
and common equivalent shares                               $   (0.13)            (0.14)            (0.13)
                                                           ==========        ==========       ===========

</TABLE>

The accompanying notes are an integral part of these financial statements.





                                       25

<PAGE>










                       THE ST. LAWRENCE SEAWAY CORPORATION
                        STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                             Common Stock                      Additional
                                             Number of         Par             Paid-in        Retained
                                             Shares           Value $1         Capital        Earnings
                                             ---------        --------         -------        --------
<S>                                         <C>              <C>              <C>            <C>
Balances at April 1, 1996                     393,735         $393,735         $377,252       $537,793

   Net loss for 1997                                                                           (52,144)
   Distribution of Paragon Stock                                                                (5,141)
                                              ---------------------------------------------------------
Balances at March 31, 1997                    393,735         $393,735         $377,252       $480,508

   Net loss for 1998                                                                           (56,357)
                                              ---------------------------------------------------------
Balances at March 31, 1998                    393,735         $393,735         $377,252       $424,151

   Net loss for 1999                                                                          ( 51,784)
                                              ---------------------------------------------------------
Balance at March 31, 1999                     393,735         $393,735         $377,252       $372,367
                                              =======         ========         ========       ========

</TABLE>




The accompanying notes are an integral part of these financial statements.








                                       26

<PAGE>


                       THE ST. LAWRENCE SEAWAY CORPORATION
                             STATEMENTS OF CASH FLOW
                    YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
                                                                  1999             1998              1997
                                                                  ----             ----              ----
<S>                                                          <C>              <C>               <C>
Cash Flows From Operating Activities:
         Net Income (Loss)                                    $(51,784)        $  (56,357)       $ (52,144)
         Adjustments to reconcile net income to
            net cash from operating activities                   1,568              1,568            1,568
            Depreciation
(Increase) Decrease in Current Assets:                          (9,087)             (122)            9,582
         Other receivables
         Prepaid items                                            (540)              147              (260)
(Decrease) Increase in Current Liabilities:
         Payroll tax & other                                      (772)             (872)            1,190
         Accounts payable                                      (13,936)           (4,386)          (21,311)
                                                            -----------       -----------       -----------
Net Cash From Operating Activities                             (74,551)          (60,022)          (61,375)

Cash Flows From Investing Activities:
         Purchase of equipment                                       0                 0                0
         Proceeds from asset sales                                   0                 0                0
                                                             ----------       -----------       -----------
 Net Cash from Investing Activities                                  0                 0                0


Cash Flows From Financing Activities:
         Purchase of Paragon Stock                                   0                 0             (5,141)
                                                             ----------       -----------       ------------
Net Cash From Financing Activities                                   0                 0             (5,141)


Net Increase in Cash and Cash Equivalents                      (74,551)          (60,022)           (66,516)


Cash and Cash Equivalents, beginning                        $1,105.940         $1,165,962        $1,232,478
                                                            ----------         ----------        ----------
Cash and Cash Equivalents, ending                           $1,031,389         $1,105,940        $1,165,962
                                                            ==========

Supplemental Disclosures of Cash Flow Information:
         Cash paid for income taxes                             1,000                 960              122
         Cash paid for interest expenses                            0                   0                0


</TABLE>


The accompanying notes are an integral part of these financial statements.





                                       27

<PAGE>


                       THE ST. LAWRENCE SEAWAY CORPORATION



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant  accompanying policies observed in
the  preparation  of  the  financial  statement  for  The  St.  Lawrence  Seaway
Corporation (the "Company").

BASIS OF PRESENTATION:

The accounts are  maintained  on the accrual  method or accounting in accordance
with generally accepted accounting  principles for financial statement purposes.
Under this method, revenue is recognized when earned and expenses are recognized
when incurred.

LAND:

Land was purchased in 1961 for agriculture  related  purposes and is recorded at
the original historical cost of $118,913.

EARNINGS PER SHARE:

In 1997, the Financial  Accounting Standards Board (the "FASB") issued Statement
No. 128,  "Earnings Per Share"  ("SFAS  128"),  which is effective for financial
statements  issued for periods after  December 15, 1997. In accordance  with the
provisions for this statement, basic earnings per share is computed based on the
weighted  average  number of common  shares  outstanding  during  the period and
excludes any potential  dilution.  Diluted earnings per share reflects potential
dilution from the exercise of options or warrants into common shares. Due to the
antidilutive nature of the Company's current stock option and warrant issued, no
diluted  earnings  per share is  presented in these  financial  statements.  The
adoption of this  statement  had no effect on previously  reported  earnings per
share data.

INCOME TAXES:

The provision for income taxes charged against  earnings relates to all items of
revenue and expense recognized for financial  accounting purposes during each of
the years presented.  The actual current tax liability may be different than the
charge  against  earnings  due to the effect of cash rents  received  in advance
resulting in deferred  income tax.  These deferred tax benefits are temporary in
nature and will offset upon the  expiration  of all land  rental  contracts.  No
material  deferred  tax  benefits  or  liabilities  exist as of the dates of the
balance sheets.




                                       28

<PAGE>


                       THE ST. LAWRENCE SEAWAY CORPORATION



RECLASSIFICATION:

The 1998 and 1997 financial statements have been reclassified,  where necessary,
to conform to the presentation of the 1999 financial statements.


CASH FLOWS:

For purposes of reporting cash flows, cash and cash equivalents include all cash
in banks and cash accumulation funds.

DEPRECIATION:

Property and equipment, consisting of small office equipment, is stated at cost.
Depreciation  is  computed  using  the  straight-line  method  over a  five-year
estimated  useful life.  Expenditures  for  maintenance  and repairs that do not
extend  useful  lives  are  charged  to income as  incurred.  Total  accumulated
depreciation as of March 31, 1999 and 1998, was $7,606 and $6,308 respectively.

USE OF ESTIMATES:

The preparation of financial  statements in accordance  with generally  accepted
accounting principles 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.

NOTE 2. SHAREHOLDERS' EQUITY

The Company has a common stock warrant  outstanding  for the purchase of 100,000
shares of common stock at $3.00 per share. The warrant was originally  issued in
connection  with the sale by the Company of 50,000 shares of common stock during
1986 to  Bernard  Zimmerman  & Co.  Inc.  The  warrant  and  common  stock  were
subsequently  sold and  transferred  to The  Windward  Group,  L.L.C.  (formerly
Industrial Development  Partners),  pursuant to an agreement dated September 30,
1993. The warrant expires on September 21, 2002.

The Company has 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 revised plan provides that 15,000
shares of the Corporation's stock be set aside at an exercise price of $3.00 per
share for Mr. Jack C. Brown, a Director of the Company. Mr. Brown's



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<PAGE>


                       THE ST. LAWRENCE SEAWAY CORPORATION




option is currently  exercisable  with respect to all 15,000  shares and, if not
exercised, will expire on September 21, 2002.

The Company has 4,000,000 authorized $1 par value common shares. As of March 31,
1999 and 1998, there were 393,735 common shares issued and outstanding.

NOTE 3. RELATED PARTIES

During the fiscal years ending March 31, 1999,  1998 and 1997,  the Company paid
to Jack C. Brown,  Secretary  and a Director,  an annual  administrative  fee of
$6,000,  which was paid monthly in the amount of $500.

NOTE 4. INCOME TAXES

As of March 31,  1999,  the  Company  has loss  carryforwards  of  approximately
$335,000  that may be used to offset future  taxable  income.  If not used,  the
carryforwards  will begin to expire in 2012. Due to the  possibility  that these
loss amounts will not be  recognized  in the future,  no tax benefits  have been
recognized in these  financial  statements.  Provisions for current and deferred
federal and state tax liabilities are immaterial to these financial statements.

NOTE 5. 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.




                                       30

<PAGE>


                       THE ST. LAWRENCE SEAWAY CORPORATION



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.

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 issuable 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.




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<PAGE>


                       THE ST. LAWRENCE SEAWAY CORPORATION


                                   SCHEDULE X


                       THE ST. LAWRENCE SEAWAY CORPORATION
                   SUPPLEMENTARY INCOME STATEMENT INFORMATION
                    YEARS ENDED MARCH 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>

          COLUMN A                                                   COLUMN B
          --------                                                   --------
           ITEM                                               CHARGED TO COSTS AND EXPENSES

                                                                  YEARS ENDED MARCH, 31


                                                           1999            1998             1997
                                                           ----            ----             ----
<S>                                                       <C>             <C>              <C>
Maintenance and repairs                                    $1,677          $1,378           $1,113

Depreciation and amortization of
 intangible assets, preoperating
 costs and similar deferral                                $1,568          $1,568           $1,568

Taxes, other than payroll and
 income taxes                                              $2,137           $ 787           $1,844

Royalties                                                   NONE            NONE             NONE
Advertising costs                                           NONE            NONE             NONE


</TABLE>



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