===============================================================================
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15 (d)of the Securities Exchange Act of
1934
For the fiscal year ended: July 31, 1996
Commission file No. 0-5304
INCORP, INC
(Exact name of Registrant as specified in its charter)
UTAH 87-0282745
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) identification NO.)
11339 SORRENTO VALLEY ROAD, SUITE C, SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices)
Registrant's telephone number, including area code: (619) 643-1777
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 133 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months or such shorter period that the Registrant
was required to file such reports), and (2) been subject to such filing
requirements for the past 90 days.
(1) YES X NO
---- ----
(2) YES X NO
---- ----
The aggregate market value of the Registrant's common stock held by non-
affiliates ofthe Registrant:$80,000 As Of July 31, 1996
Indicate the Number Of Shares Outstanding Of Each Of The Issuer's Class Of
Common Stock, As Of The Close Of The Period Covered By This Report
Class Outstanding at July 31, 1996
COMMON STOCK, $.01 PAR VALUE 20,756,992
Documents incorporated by reference
NONE
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<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS...........................................3
ITEM 2. PROPERTIES.........................................5
ITEM 3. LEGAL PROCEEDINGS. ................................7
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY
HOLDERS............................................7
PART II
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS........................7
ITEM 6. SELECTED FINANCIAL DATA............................8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......10
ITEM 9. DISAGREEMENT ON ACCOUNTING AND FINANCIAL
DISCLOSURE........................................10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT........................................11
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.............................12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS......................................13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES
AND REPORTS ON FORM 8-K...........................14
SIGNATURE PAGE....................................15
<PAGE>
<PAGE>
PART 1
ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS.
INCORP (hereafter referred to as "Registrant") was incorporated under the
laws of the State of Utah on September 26, 1968, for the sole propose of
investing in real estate Registrant was engaged in limited operations in this
area from inception until 1975. For the period 1975 to 1980, the Registrant
was inactive.
In 1980, Registrant came under new management and during 1980 and 1981,
Registrant acquired several oil and gas properties, two commercial buildings
located in Dallas, Texas and Oklahoma City, Oklahoma. During this time, it
also acquired and operated thirty-one (31) health centers located in Texas and
Oklahoma. In 1982, management elected to concentrate its activities in the oil
and gas business and Registrant disposed of its health centers and the remaining
commercial real estate.
In 1982 and 1983, Registrant issued 5,533,164 shares of its common stock
(adjusted for reverse stock spit in 19832) in exchange for interests in oil and
gas properties located primarily in Montana and Texas. The interests were
acquired from a series of California limited partnerships of which Marquis
Petroleum Corporation ("Marquis") was the sponsor and general partner.
Pursuant to this acquisition, Marquis and its affiliates became controlling
persons of the Registrant. Registrant filed its initial registration statement
under Form 10 with the Securities and Exchange Commission in November, 1982, for
the fiscal year ending July 31, 1982.
During 1983, 1984 and 1985, Registrant commenced a series of transactions
hereby it acquired additional interests in oil and gas and other real property
in exchange for its common stock. In 1986, Registrant came under new
management and since that time, no additional acquisitions have been made.
Registrant assumed a substantial portion of its debt in connection with its
acquisition of oil and gas interests and limited partnership interests in 1982.
Registrant's oil and gas properties consist of minority interests of
varying percentages in oil and gas leases. Since 1986, Registrant has been
unable to exploit its oil and gas properties due to insufficient cash resources.
Only one well in Montana is still producing because of this.
In attempts to solve Registrant's lack of capital, management conducted
discussions with numerous parties concerning some form of business combination
or financing. These discussions proved unsuccessful.
In 1994, management determined that Registrant should explore opportunities
in an industry with significant market size that was not dominated by a few well
capitalized companies. Registrant could participate and expand without
immediate competitive threats from larger participants. During 1994, Registrant
attempted to acquire a retailer in the golfing industry, Golf Manufacturer
Liquidation Centers for a combination of cash and stock. For multiple reasons,
the attempted acquisition was terminated in early 1995.
Registrant, however, based upon the consultation conducted and the
knowledge of the industry that was acquired, determined that the golf industry
offered multiple opportunities to re-constitute the Company.
During 1995 and 1996, the Company pursued the creation of The Golf Show; a
retail operation that was to have been notable for its size and its customer
service quotient. Because of the size of the capital commitment necessary to
open and run a location for the fledgling enterprise, coupled with the inability
of third parties to raise the requisite capital, the Registrant abandoned this
effort in early 1996.
<PAGE>
From the learning curve generated by The Golf Show, Registrant extracted
those elements that made The Golf Show unique. It re-packaged them into a format
that was customer friendly, not capital intense, easily multiplied, and that
filled a niche in the golf industry.
Registrant is now devoting its efforts to the a wholly owned subsidiary,
Back Nine Golf. Back Nine searches for, tests, selects, markets and sells golf
merchandise from lesser known manufacturers directly to the public. Customers
are obtained in selected areas through Independent Representatives who pay a fee
for the right to earn a continuing stream of income from future sales of
merchandise to the customers obtained.
Registrant has obtained office space, hired management personnel to manage
and grow the business, has sold marketing rights to Independent Representatives
and has commenced selling products. Registrant is in the process of raising
capital through a private placement of units consisting of debt and warrants.
In March 1989, Edmund J. Irvine, Jr., a director was named President,
Chief Executive Officer and Chief Financial Officer and Chester A. Teklinski was
named to the Board of Directors to replace Peter Candy who resigned as a
director. In 1992, Mr. Leo Calabrase was named to the Board to replace Mr.
David Tenwick who resigned. Mr. Teklinski resigned from the Board in 1994.
Effective August 17th 1995, the Board appointed Mr. Gary Stougaard to replace
Mr. Teklinski and subsequently added two directors, Mr. Michael A. Pastore and
Mr. Michael O' Neal.
Bruce Devlin, a PGA golf professional and golf course architect, was
appointed to the Board in the Spring of 1996. In addition, Mr. Alan Margulis,
former CEO of Mobile Medical, a NASDAQ company, was added in April of 1996.
In June of 1996, Mr. Leo Calabrase resigned as a Director and Officer of
the Registrant. The Board intends to nominate for election, in addition to the
other Board members, Mr. S. Michael Sharp, Chief Operating Officer of the
Registrant. Mr. Sharp will serve as Secretary to the Corporation. His background
includes both strong teaching credentials and experience with fledgling public
companies.
Registrant's office is currently located at 11339 Sorrento Valley Road,
Suite C, San Diego, California 92121; telephone 619-643-1777. Registrant moved
to these offices in March 1996. Registrant had three full time employees during
the year ended July 31, 1996.
( B ) NARRATIVE DESCRIPTION OF BUSINESS
Registrant, until its recent entry into the golf industry as an operating
company, had been generally engaged in the business of owning minority working
interests in oil and as properties located in the states of Montana and Texas.
For the period covered by this report, August 1, 1995 to July 31, 1996, the
Registrant has been primarily involved as a custodian of the oil and gas
properties.
Registrant's oil and gas interests are subject to working agreements and
operating agreements whereby the reports are operated by an unaffiliated
operator who, for a fee or a carried interest in the well, manages the well
production, sells the production, collects revenues, pays operating expenses and
distributes the remaining revenues, if any, to the working interest owners. In
general, Registrant's working interest agreements require that Registrant
receive a specified percentage of revenues and pay a specified percentage of the
well operating costs.
Registrant's dependence on the revenues from the oil and gas properties
will diminish as revenues from Back Nine Golf increase. In addition, net
revenues from these wells secures a convertible note in the amount of $75,000
issued by the Registrant in a private placement during 1995 and 1996.
<PAGE>
( C ) INDUSTRY COMPETITION
The Registrant encounters strong competition in both of its businesses.
Registrant is at a competitive disadvantage in acquiring new oil and gas
prospects since it must compete with major companies, almost all of which have
greater financial resources and larger technical staffs. In addition,
Registrant may be precluded from participation in opportunities that arise
because of its financial condition.
( D ) GOVERNMENT REGULATIONS
Government Regulation in recent years freed the prices received by
producers of oil and gas. Future regulations of a similar nature may have a
direct impact on prices achieved by Registrant.
The golf industry is unregulated by the federal government. However, state
and local governments, the Professional Golfers Association, and other industry
organizations may have an adverse impact on the Registrant's operating
capabilities. In addition, federal laws and regulations governing imports and
exports could have a material effect upon the business prospects for the
Registrant.
ITEM 2. PROPERTIES
The Registrant owns various working interests in numerous producing and
shut-in oil and gas leases which are located in Montana and Texas.
Registrant presently hold interests in 9 producing oil and gas properties.
Registrant's collective interest in the 9 producing wells gives it ownership of
1.75 net wells. The gross wells were included in Registrant's independent
engineering report for fiscal 1985. Registrant also owns a declining number of
working interests in several oil and gas prospects in Montana which remained
after an exchange of properties with Northland Royalties. In addition, the
Company owns interests in some less than marginal Montana wells which were not
included in 1986 engineering report.
In March 1989, the Registrant held discussions with Pitts Oil company
concerning the sale of Registrant's operating wells in Texas because of
declining revenues. Discussions were terminated when certain reconveyances were
discovered to be non-existent from the time said properties were conveyed to
Registrant. Registrant has not re-opened discussions.
In May of 1989, Registrant completed a swap of certain oil and gas wells
with Northland Royalty. The purpose of the swap was to maintain the
Registrant's net equity at or above that required for continuing inclusion in
the NASDAQ system. It permitted the company to recover previously deferred
expenses, to cancel the 10 year non-cancelable operating agreement with
Northland and reduce the depletion charges.
The transaction resulted in the write-off of an $82,684 liability to
Northland which was offset against current operating expenses.
In June of 1993, Registrant elected to write down the carrying costs of
non-producing wells and to write off accounts payable that were aged beyond
seven years. These write -offs produced a net loss of nearly $87,000 to
shareholders equity.
In October 1994, Registrant, under threat of legal action, exchanged
interests in certain oil and gas interests in a Montana area known as the
Haystack Butte. Operating expenses and revenues had been ascribed to these
properties by the operator, but Registrant had not fulfilled the terms of the
operating agreement. As a result of the transfer, the Company retains a 25%
working interest in one section with one producing well and some random
additional acreage in the area.
Registrant's oil and gas property holdings experienced a decline in
production in reserves due to the production during that period.
<PAGE>
( B ) PRODUCTIVE WELLS AND ACREAGE
Stanley T. Serocki, an independent petroleum engineer, evaluated the
Registrant's proved oil and gas net recoverable reserves as of July 31, 1985,
and previous years. Registrant is unable to furnish information concerning its
proved oil and gas reserves required by FASB statements 19 and 69 and the
Securities and Exchange commission Rules and Regulations because of a lack of
funds with which to retain an independent petroleum engineer to prepare such
estimates. Evaluations were not prepared for fiscal years 1986 through 1996 for
the same reason. Registrant has attempted to provide an estimate (below) of its
current reserves by subtracting the net oil and gas production for Registrants
1992, 1993 , 1994,1995, and 1996 fiscal years from Registrant's net recoverable
as of July 31, 1985.
The estimates presented below are provided by management based on its best
judgment.
<TABLE>
<CAPTION>
YEAR ENDED PROVED RESERVES PROVED DEVELOPED
July 31 RESERVES
Natural Crude Oil Natural Crude Oil
Gas (Bbl) Gas (Bbl)
(Mcf) (Mcf)
- ---------------------------------------------------------------
<C> <C> <C> <C> <C>
1992 336.000 640 336,000 640
1993 290,000 550 290,000 550
1994 244,000 260 244,000 260
1995 199,000 140 199,000 140
1996 150,000 110 150,000 110
</TABLE>
Productive wells and Producing Areas
Registrant's interest in gross and net productive wells located on its
properties as of July 31, 1995, was as follows:
<TABLE>
<CAPTION>
<C> <C> <C> <C>
WELLS LOCATION GROSS NET
- ---------------------------------------------------------------
Gas Texas 8 1.50
Gas Montana 1 .25
</TABLE>
Gross and net developed acres covered by Registrant's properties as of July
31, 1996, were as follows:
<TABLE>
<CAPTION>
<C> <C> <C>
LOCATION GROSS NET
- ---------------------------------------------------------------
Texas 4,344 805
Montana 640 110
</TABLE>
( C ) DRILLING ACTIVITIES
Registrant's has drilled no productive or dry exploratory wells within its
last three fiscal years. Registrant had three marginal wells in Texas plugged
and abandoned.
( D ) PRESENT ACTIVITIES
As of this date, Registrant has no wells in the process of drilling. In
1993, Registrant wrote down by $329,429, the aggregate value of its remaining
wells to more accurately reflect their value.
( E ) DELIVERY COMMITMENT
Registrant has no direct contracts or agreements to provide a fixed and
determinable quantity of oil or gas in the future to any entity.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
On September 25, 1986, Daniel W. Jackson filed a lawsuit against the
Registrant in the Third Judicial District Court in Salt Lake City County, State
of Utah, demanding $20,686 plus court costs, interest and reasonable attorney's
fees. Mr. Jackson alleged that he performed legal services for Registrant on or
before August 6, 1985, for which he was not paid. On September 9, 1988,
Registrant agreed to a motion for summary judgment in the amount of $20,686 plus
pre-judgment interest of $8,681 and post-judgment interest on all amounts at 12%
per annum, calculated from the date of entry until paid.
Registrant reached agreement to settle this matter with Mr. Jackson for
25,000 shares of stock and payment of $1,500.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
( A ) MARKET INFORMATION
The Registrant's common stock was traded in the national over-the-counter
market, and was quoted on the NASDAQ system (Symbol INVT/ INVTE) until December
31, 1988. In January, 1989 the NASD notified the Registrant that its shares
were being de-listed for lack of market-makers. The Registrant's shares were
then quoted in the Pink Sheets provided by the NASD. In June 1989, the
Registrant appealed the decision at a hearing conducted in San Francisco. The
Registrant was notified shortly thereafter that inclusion in the NASDAQ system
was denied because of the lack of active business operations and without a
realistic chance for achieving initial listing requirements within a short
period of time.
Currently, no market exists for the Company's shares, however, based upon
the entry into the golf industry by its Back Nine Golf subsidiary, Registrant
intends to re-list its shares on the NASD's Electronic Bulletin Board. Several
market makers, who are approved to make markets in securities similar to those
of Registrant, have expressed an interest in re-listing the Registrant's shares.
Management anticipates that this will occur early in the coming fiscal year.
The high and low prices for each quarter of each fiscal year were as follows:
<TABLE>
<CAPTION>
1996 SALES PRICE 1995 SALES PRICE
QUARTER ENDED BID HIGH ASKED LOW BID HIGH ASKED LOW BID
- -------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
October 31 N/A N/A N/A N/A
January 31 N/A N/A N/A N/A
April 30 N/A N/A N/A N/A
July 31 N/A N/A N/A N/A
</TABLE>
( B ) HOLDERS
The approximate numbers of Registrant's common stock holders based upon the
transfer records of Registrant as of July 31, 1996, was 592. In addition, 103
shareholders hold stock in Street Name.
During the past fiscal year, Registrant has mailed selected items of
information to its shareholder list. At present, Registrant has been able to
locate and communicate with 369 holders other than those in Street Name.
( C ) DIVIDENDS
Registrant has not paid cash dividends to date and does not anticipate or
contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for Registrant's new
business activities while retaining its oil and gas interests.
ITEM 6 SELECTED FINANCIAL DATA
The following is a five year summary of selected financial data.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JULY 31
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
OIL + GAS SALES (NET) $ 45.015 $ 57,561 $ 57,571 $ 51,537 $ 51,368
NET EARNINGS (LOSS) (388,387) (119,224) (59,869) (118,840) ( 43,875)
TOTAL ASSETS $275,343 $295,263 $329,817 $362,962 $689,219
TOTAL LONG TERM DEBT 0 0 0 0 0
NET GAIN (LOSS)
PER SHARE (0.02) (0.01) (0.01) (0.00) (0.00)
- --------------------------------------------------------------------------------
</TABLE>
No dividends were paid in fiscal 1996 or in the four years prior thereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS
OF OPERATIONS
( a) In General
During fiscal year 1996, Registrant continued to experience severe
financial difficulties. The financial difficulties resulted from a continuing
lack of capital to support the Registrant. The slow sales of golf
distributorships during the fourth quarter of the year and the resultant lack of
equipment sales that would be tied to sales of the distributorships. Further,
oil and gas revenues declined for a variety of reasons such that revenues were
insufficient to make timely payments on the $75,000 of capital raised and
secured by these payments. Registrant anticipates that arrearages will be
made up from other revenue sources associated with its golf business should
such anticipated revenues, in fact, be received.
Management has made arrangements with several broker dealers to offer its
private one million dollar ($1,000,000) placement of debt and warrants.
Registrant believes that this process, while performed at a cost, is a viable
means for raising the requisite capital over the course of the coming fiscal
year while the golf business is developing.
The Back Nine Golf subsidiary of the Registrant seeks out, tests, selects,
markets and sells products of manufacturers of golf merchandise who seek greater
exposure and sales. Customers are obtained from Independent Representatives or
Distributors who pay for the privilege of representing the Company. The
Registrant does not compete with an Independent Representative in a given
market.
The future of the Registrant in the golf business depends primarily on the
number of Independent Representatives enrolled, their customer count and the
amount of business that a customer generates.
It is the intention of Registrant to explore other opportunities in the
golf industry that would complement its distribution and sales capabilities.
Registrant's total stockholder's equity for fiscal 1996 was $(254,036)
compared to $45,601 for fiscal 1995, a reduction of $299,637 occasioned by
operating losses, depletion, and the start up expenses of the Registrant's new
activity. Of the amount lost, over $200,000 represents arrearages on management
contracts. Management personnel have agreed to rewrite these contracts so that
this arrearage can be capped, paid out over time or converted into equity in the
Corporation. The market value for corporate shells similar to the Registrant in
its current state of development is believed to be in excess of the stockholder
equity.<PAGE>
Registrant has been profitable only once since it filed its initial
registration statement with the Securities and Exchange commission in November
1982. Also, Registrant has not generated adequate cash flow from its assets to
pay all its existing obligations on a timely basis. The main source of
operating revenues has been the Registrant's interests in producing gas wells in
Texas. The Texas wells currently produce anywhere from negative balances to
$2,500 in net revenues per month. Net revenues are not predictable.
Registrant does not have the funds necessary to maintain or bring on line
the shut-in wells or to explore the prospects in Montana or expand activities in
Texas.
Registrants day-to-day operating expenses have increased with the
commencement of Registrant's new entrance into the golf business. Registrant's
management has served without cash compensation from 1986 until October 1994.
Registrant's office facilities, storage, clerical assistance and administration
were provided by affiliates of the President pursuant to an agreement, at a cost
of $1500 per month until March 1, 1996 at which time Registrant leased space of
sufficient size to house its expected operation for the first year to eighteen
months.
In the judgment of Management, the continuation of Registrant as a going
concern is dependent upon the following factors:
1. Establish Back Nine Golf as a viable operating golf entity
2. Obtain new capital to implement the Back Nine operation.
3. Reach a satisfactory settlement with the remaining judgment holders.
4. Attract and compensate management to carry out the plan.
(B ) RESULTS OF OPERATION
The production revenues from the oil and gas properties for fiscal
year 1995 were $45,015 as compared to $57,561 for fiscal year 1995. The
decline was actually greater as over $5,000 was received on a one time
basis from Branch Oil and Gas. Revenues from the newly established golf
business were $6,967 plus an additional $7,425 in Distributor Fee income.
( C ) EFFECT OF INFLATION
Registrant does not anticipate that inflation will have a serious impact on
its operations. Inflation will tend to increase operating expenses and cause a
corresponding increase in revenues from the sale of oil and gas production, the
prices asked for golf merchandise and less likely, through the appreciation of
Registrant's oil and gas property values.
( D ) SUBSEQUENT EVENTS
In August, Mr. Michael Sharp was appointed to the Board of Directors and
will serve as Secretary of the Registrant. Mr. Sharp will also serve as
Secretary of the Registrant.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements meeting the requirements of Regulation S-X, with
the exception of un-audited oil and gas reserve data, are listed in line 14 and
are filed by registrant pursuant to Item 8 of this Form.
ITEM 9. DISAGREEMENT ON ACCOUNTING AND FINANCIAL DISCLOSURE
There are not and have not been any disagreements between the Registrant
and any of the accountants on any matter of accounting principles or financial
statement disclosure.<PAGE>
PART III
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AGE DIRECTOR SINCE OFFICE
- ---------------------------------------------------------------------------
Edmund J. Irvine, Jr. 56 1985 Chairman of the Board, Chief
Executive Officer and President
S. Michael Sharp 45 1996 Chief Operating Officer
Gary A. Stougaard 47 1995 Director
Michael A Pastore 44 1996 Director
Michael H O'Neal 59 1996 Director
Alan Margulis 58 1996 Director
Bruce Devlin 47 1996 Director
</TABLE>
BOARD OF DIRECTORS
The Board of Directors of INCORP to be nominated at the next Shareholder
Meeting is comprised of the following individuals:
EDMUND J. IRVINE, JR.
CHAIRMAN OF THE BOARD/CEO OF INCORP
Mr. Irvine graduated from the Wharton School of Business and the New York
Institute of Finance. A former pilot in the Marine Corps, he spent over twenty
years as an executive in investment banking and brokerage with Shearson Hammill,
Prudential Bache and Sutro & Co. From 1982-89, Mr. Irvine supervised his own
brokerage firm. He has served as CEO for two asset based mortgage lending
companies. He will serve as CEO and Chairman and direct strategic planning for
the Company. He is responsible for the creation of Back Nine Golf.
MICHAEL A. PASTORE
Mr. Pastore is a VP for Crown Books. He has been in retail management for 22
years including his own startup. He was a key member of the management team
responsible for the growth of a well-known consumer electronics retailer from 10
million dollars to $430+ million in a period of eight years including an Initial
Public Offering and a secondary offering of securities.
GARY A. STOUGAARD
Mr. Stougaard is a Vice President for Hardage Suite Hotels. He has extensive
project and P&L experience and spent over six years with Ernst and Whinney. He
has directed real estate rehabilitation projects of over $100,000,000. He was
responsible for the recent consummation of a $122,000,000 multi-hotel
refinancing thus facilitating its sale.
MICHAEL H. O'NEAL
Mr. O,Neal is a principal shareholder and officer in the firm of Kinsell,
O'Neal, Newcomb and DeDios, Inc., a firm specializing in municipal finance. He
is a General Securities Principal with over 26 years of experience. He was a
partner in the Los Angeles securities firm of Crowell Weeden & Co., Inc. Mr.
O'Neal is a former Director of the Los Angeles Municipal Bond Club and has
served or headed Boards of other organizations.
ALAN D. MARGULIS
Mr. Margulis was the former CEO, and is now a consultant to, MMI Medical, a $40
million plus sales company that traded on NASDAQ specializing in mobile
diagnostic and maintenance services to hospitals , clinics, and physicians on a
shared cost basis. Mr. Margulis has strong hands on experience at all levels of
engineering, marketing and management. Prior to MMI, Mr. Margulis held a variety
of management and executive positions following service as an officer in the
U.S. Marine Corps and graduation from the University of Maryland.
BRUCE DEVLIN
Mr. Devlin is a touring professional golfer on the Senior PGA circuit and has
acted as a commentator for over six years on ESPN and a major network for both
the PGA and Senior PGA Tours. Mr. Devlin has designed and constructed over 125
golf courses throughout the United States, his native Australia, and throughout
the world.
S. MICHAEL SHARP, PH.D. SECRETARY, CO
Dr. Sharp is a graduate of Chapman University, the University of North Dakota,
the Amos Tuck School of Business at Dartmouth College and California Coast
University. He will serve as Senior vice president, Chief Operating Officer.
Following an academic career in which he held teaching appointments at
several major universities, teaching in the areas of management and
communications, Dr. Sharp has devoted the last fifteen years to the management
of development stage companies, helping them grow to become profitable public
companies. Immediately prior to joining INCORP, Inc. and Back Nine Golf he
served as Vice President of Intelligent Surgical Lasers, Inc.
ITEM 11. EXECUTIVE COMPENSATION
Mr. Irvine received cash compensation during the fiscal year ended July 31,
1996 was $32,430. Of the two other executives who joined the Company in March
1996, Mr. Brouillette was paid $6,375 and Mr. Sharp received $2,500. Mr. Sharp
acted as an interim lender to the Registrant in the amount of $40,000.
Directors of the Registrant do not currently receive any fees for
attending directors meetings. No officer or director received or is owed cash
compensation for meeeting attendance for the Registrant's fiscal year ended July
31, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth: (i) the number of shares owned of record or
beneficially by Registrant's officers and directors as of July 31, 1996;
(ii) the number of shares owned by such persons as a group; and (iii) those
persons known to Registrant to own of record or beneficially more than five per
cent (5%) of Registrant's outstanding common Stock as of July 31, 1994. Unless
otherwise noted, each of the persons reflected in the table possessed the sole
power to vote and the sole power to dispose of the shares indicated, except as
noted.
<TABLE>
<CAPTION>
COMMON STOCK
<S> <C> <C>
NAME AND ADDRESS OF BENEFICIAL OWNER:
Edmund J. Irvine, Jr. 5,548,100* 26.7%
11339 Sorrento Valley Road, #C
San Diego, Calif. 92121
Gary A. Stougaard 925,000 4.4%
5721 Chelsea Ave.
La Jolla, Calif. 92128
S. Michael Sharp, PhD 1,400,000* 6.7%
11339 Sorrento Valley Road #C
San Diego Calif. 92121
Ronald D. Brouillette, Sr. 1,000,000* 4.8%
11339 Sorrento Valley Road, #C
San Diego, Calif. 92121
Directors and Officers 9,473,100 45.6%
* Holdings are based upon certain performance provisions
Other Major Shareholders:
David A. Tenwick 1,600,100 7.7%
480 Medic Way
Worthington, Ohio 43085
Frank DeMarco, Trustee (1) 1,200,000 5.8%
899 El Centro St., Suite 201
South Pasadena, Calif. 91030
Unified Professional Services 1,150,000 5.5%
c/o David Bustrum
1316 North Walnut
LaHabra Heights Calif. 90631
Leo Calabrase, Jr. 1,125,000 5.4%
18173 Verano Drive
San Diego, Calif. 92128
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS
During its fiscal year 1986, Registrant isued 1,600,000 and 400,000 shares
of its Common Stock to Mr. David A. Tenwick and Mr. Edmund J. Irvine, Jr.,
respectively, as compensation for their services as officers of Registrant.
During its fiscal year 1988, Registrant issued 100 shares of its Common
Stock that had been previously authorized to Mr. Edmund J. Irvine, Jr. and to
Mr. David A. Tenwick respectively as compensation for their services as
Directors of Registrant.
During its fiscal year 1989, Registrant issued 1,000,000 shares of its
Common Stock to Edmund J. Irvine, Jr. as compensation for his services as
Registrant's Chairman and Chief Executive Officer and 200,000 share of its
Common Stock to Mr. Chester A. Teklinski as compensation for his services as an
Officer and Director of Registrant.
During its fiscal year 1990, Registrant issued 150,000 shares to Mr. Leo
Calabrase, Jr. for his services in researching and verifying the use of the
Registrant's tax-loss carry-forward in conjunction with the accounting firm of
Ernest and Young.
During its fiscal year 1992, certain partnerships controlled by Marquis
Petroleum Corporation with David M. Anderson acting as General Partner disposed
of a total of 1,074,208 shares of Common Stock of the Registrant in a private
transaction. Mr. Edmund J. Irvine, Jr. increased his holdings by a total
267,000 Common Shares of the Registrant in a private transaction. Mr. Leo
Calabrase increased his holdings by a total of 200,000 Common Shares of the
Registrant. The balance was purchased by Mr. Ian McDougall Harper who,
subsequently, elected to rescind. Two other individuals purchased equal amounts
of the 600,000 shares.
During its fiscal year 1994, Registrant issued 1,250,000 of its Common
Stock to Edmund J. Irvine, Jr. as compensation for his services and 450,000
shares to Mr. Calabrase for his services. In addition, Mr. James S. Redman, a
director, received 300,000 share for his contributions to the Registrant.
During its fiscal year, 1995, the Board authorized the issuance of
7,500,000 shares of common stock for new directors of the Registrant and the
management team to be employed to carry out the plan for rejuvenation of
Registrant. In addition, following the close of the fiscal year, the Board
authorized payment to Mr. Stougaard of 500,000 shares. Of the management shares
issued, 2,500,000 was awarded Edmund J. Irvine, Jr. Under terms of his
employment contract. S. Michael Sharp received 1,400,000 shares under contract
and for services. Ronald D. Brouillette, Sr. Received 1,000,000 in accordance
with the terms of his contract.
Board members each received 125,000 shares for services.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8 - K
A. Financial Statements
B. Consent of Independent Auditors
C. Reports on Form 8-k
None
SIGNATURES
INCORP, Inc.
Dated: December 19, 1996 By: Edmund J. Irvine, Jr.
-------------------------
EDMUND J. IRVINE, JR.
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on December 19, 1996.
-----------
Signature Title
Edmund J. Irvine, Jr. Chief Executive Officer/Director
- ----------------------
EDMUND J. IRVINE, JR.
Leo Calabrase, Jr. Chief Financial Officer/Director
- ----------------------
LEO CALABRASE, JR.
INCORP, INC
FORM 10-K FISCAL YEAR 1995
