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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from...............to...............
Commission file number 0-18330
ENEX 88-89 INCOME AND RETIREMENT
FUND - Series 5, L.P.
(Name of small business issuer in its charter)
New Jersey 76-0259722
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 Rockmead Drive
Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (713) 358-8401
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Interest
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes x No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[x]
State issuer's revenues for its most recent fiscal year. $48,447
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock as of a specified date within
the past 60 days (See definition of affiliate in Rule 12b-2 of the Exchange
Act):
Not Applicable
Documents Incorporated By Reference:
None
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<PAGE>
PART I
Item 1. Description of Business
General
Enex 88-89 Income and Retirement Fund - Series 5, L.P. (the "Company") was
formed under the New Jersey Uniform Limited Partnership Act (1976) on September
20, 1988 and commenced operations on August 28, 1989 with aggregate
subscriptions of $1,150,169, $1,138,667 of which was received from 226 limited
partners, including investors whose distributions from earlier partnerships
sponsored by the Company's general partner, Enex Resources Corporation ("Enex"),
were automatically invested in the Company.
The Company is engaged in the oil and gas business through the ownership of
non-operating interests in producing oil and gas properties, as detailed in Item
2, below. A non-operating interest typically entitles the holder to receive a
specified share of such production, without obligation to develop or operate
such property, or bear any development or operating costs (such obligations
being assumed by the owner of the working interest in the property).
The Company's non-operating interests are net profits royalties or other
royalty interests which entitle the Company to a share of gross revenues from
producing oil and gas properties measured by a specified percentage of the net
profits realized by the owners of the underlying working interests in such
properties, after deducting operating costs, geological and engineering costs,
property, severance and other taxes, and certain other specified expenses. If
such taxes, operating costs or other expenses exceed gross revenues in any
specified measuring period, a net profits royalty holder will not be liable for
payment of any portion of such excess, but a percentage of such excess equal to
the specified percentage of net profits (together with interest thereon) will be
carried over to subsequent periods and will reduce future amounts accruing to
the holder. The Company's net profits royalties and other non-operating
interests are generally derived from working interests in oil and gas properties
owned by other affiliates of Enex.
The Company owns royalty interests in certain oil and gas properties. A
"royalty interest" is an interest retained by the lessor in the lease and
payable out of 100% of proceeds before deducting any other interests.
The Company does not own working interests nor does it engage directly in
any drilling, completing or operating activities, but may benefit from such
activities undertaken by the owners of the working interests in properties
burdened by the Company's non-operating interests. The Company's operations are
concentrated in a single industry segment.
The principal executive office of the Company is maintained at Suite 200,
Three Kingwood Place, Kingwood, Texas 77339. The telephone number at this office
is (713) 358-8401. The Company has no regional offices.
The Company has no employees. On March 1, 1996, Enex and its subsidiaries
employed 24 persons.
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Marketing
The marketing of oil and gas produced by the Company is affected by a
number of factors which are beyond the Company's control, the exact nature of
which cannot be accurately predicted. These factors include the quantity and
price of crude oil imports, fluctuating supply and demand, pipeline and other
transportation facilities, the marketing of competitive fuels, state and federal
regulation of oil and gas production and distribution and other matters
affecting the availability of a ready market. All of these factors are extremely
volatile.
Union Pacific Resources and Coalinga Corporation accounted for 75% and 21%,
respectively, of the company's total sales in 1995. Union Pacific Resources and
Coalinga Corporation accounted for 78% and 15%, respectively, of the company's
total sales in 1994. No other purchaser individually accounted for more than 10%
of such sales. Although the Company marketed a significant portion of its sales
to the above noted companies, such a concentration does not pose a significant
risk due to the commodity nature of the Company's products.
The operators of the Company's properties are noted in Item 2 below.
Although a significant portion of the Company's properties were operated by a
limited number of operators, this concentration does not pose a significant risk
since the Company's rights are secured by joint operating agreements.
Environmental and Conservation Regulation
State regulatory authorities in the states in which the Company owns net
profits interests in producing properties are empowered to make and enforce
regulations to prevent waste of oil and gas and to protect correlative rights
and opportunities to produce oil and gas for owners of a common reservoir. Each
of such regulatory authorities also regulates the amount of oil and gas produced
by assigning allowable rates of production, which may be increased or decreased
in accordance with supply and demand. Requirements regarding the prevention and
clean-up of pollution and similar environmental matters are also generally
applicable. The costs, if any, that may be incurred in this regard cannot be
predicted.
The existence of such regulations has had no material adverse effects on
the Company's operations to date, and the cost of compliance has not yet been
material. There are no material administrative or judicial proceedings arising
under such laws or regulations pending against the Company. The Company is
unable to assess or predict the impact that compliance with environmental and
pollution control laws and regulations may have on its future operations,
capital expenditures, earnings or competitive position.
Tax Laws
The operations of the Company are affected by the federal income tax laws
contained in the Internal Revenue Code of 1986, as amended (the "Code"). In
general, the limited partners of the Company will generate income from the
receipt of royalties and net profits interests and will be entitled to a
depletion deduction. Net income, if any, will generally be characterized as
portfolio income under the Code and will be taxed in the same manner as
dividends and interest.
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ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 5, L.P.
BALANCE SHEET, DECEMBER 31, 1995
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ASSETS
<TABLE>
<CAPTION>
1995
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CURRENT ASSETS:
<S> <C>
Cash $ 1,590
Accounts receivable - oil & gas sales 12,176
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Total current assets 13,766
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,011,033
Less accumulated depreciation and depletion 947,313
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Property, net 63,720
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TOTAL $ 77,486
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,015
Payable to general partner 14,003
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Total current liabilities 16,018
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NONCURRENT PAYABLE TO GENERAL PARTNER 42,010
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PARTNERS' CAPITAL:
Limited partners 14,400
General partner 5,058
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Total partners' capital 19,458
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TOTAL $ 77,486
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Number of $500 Limited Partner units outstanding 2,300
</TABLE>
See accompanying notes to financial statements.
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II-4
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Martin J. Freedman. Mr. Freedman, age 71, was one of the General Partner's
founders and a member of its Board of Directors as well as a board member of
Enex Securities Corporation until June of 1986. He was reappointed to the Board
on April 19, 1990 to fill a vacancy. He is a member of the Compensation and
Options Committee. He is currently President of Freedman Oil & Gas Company,
engaged primarily in the management of its exploration and producing properties,
and the managing partner Martin J. Freedman & Company which has an interest in
approximately one hundred producing oil and/or gas wells. Mr. Freedman is a
lifetime member of the Denver Petroleum Club as well as being a lifetime member
of the Denver Association of Petroleum Landmen. He was an officer and Director
and/or founder of several former private and public companies. Mr. Freedman
entered the oil and gas business in 1954 when he joined Mr. Marvin Davis of the
Davis Oil Company. In 1956, he became President of Central Oil Corporation, a
company engaged in oil and gas exploration. From 1958 on, Mr. Freedman operated
as Martin J. Freedman Oil Properties and was President of Oil Properties, Inc.,
a private corporation. Mr. Freedman attended Long Island University and New York
University. He received a bachelor's degree in Psychology and also attended New
York University's graduate school.
James Thomas Shorney. Mr. Shorney, age 70, has been a Director of the
General Partner since April of 1990 and is a member of the Compensation and
Options Committee. He has been a petroleum consultant and Secretary/Treasurer of
the Shorney Company, a privately held oil and gas exploration company, from 1970
to date. From 1970 to 1976, he also served as a petroleum consultant in Land and
Lease Research Analysis Studies for the GHK Company. He was an oil and gas lease
broker from 1962 to 1970 and employed by Shell Oil Company in the Land
Department from 1954 to 1962. Before joining Shell Oil Company, he served as
Public Information Officer in the U.S. Army Air Force from 1950 to 1953
including attending Georgetown University Graduate School in 1952. Mr. Shorney
graduated from the University of Oklahoma with a B.A. degree in Journalism in
1950. From 1943 to 1945, he served in the U.S. Army Air Force as an air crew
member on a B-24 Bomber. Mr. Shorney is a member of the Oklahoma City
Association of Petroleum Landmen on which he has served as Director and
Secretary/Treasurer. He is an active member of the American Association of
Petroleum Landmen. In 1975, Mr. Shorney was first listed in the London Financial
Times' Who's Who in World Oil and Gas.
Robert D. Carl, III. Mr. Carl, age 42, was appointed a Director of the
General Partner on July 30, 1991 and is a member of the Audit Committee. He is
President, Chief Executive Officer and Chairman of the Board of Health Images,
Inc., a public company whose securities are traded on NYSE, which provides fixed
site magnetic resonance imaging ("MRI") services. From 1978 to 1981, Mr. Carl
also served as President of Carl Investment Associates, Inc. a registered
investment advisor. In 1981, Mr. Carl joined Cardio-Tech, Inc., as general
counsel and as an officer and Director. Upon the sale and reorganization of
Cardio-Tech, Inc. into Cardiopul Technologies in 1982, he served as its
Executive Vice President and as a Director. In March, 1985 he was elected
President, Chief Executive Officer and Chairman of Cardiopul Technologies which
spun off its non-imaging medical services business and changed its name to
Health Images, Inc. Mr. Carl received a B.A. in History from Franklin and
Marshall College, Lancaster, Pennsylvania in 1975 and a J.D. from Emory
University School of Law, Atlanta, Georgia in 1978. Mr. Carl is a trustee of
Franklin & Marshall College and is a member of the State Bar of Georgia.
On January 4, 1996, the SEC filed a complaint in the United States District
Court for the District of Columbia against Mr. Carl alleging that Mr. Carl
violated Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act"),
and Rule 16a-2 and 16a-3 (and former Rule 16a-1) thereunder, by failing to
timely file reports concerning thirty-eight securities transactions in his
mother's brokerage accounts involving shares of Health Images, Inc. stock.
The SEC took the position that because Mr. Carl (1) provided substantial
financial
III-2
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support to his mother, (2) commingled his mother's assets with his own,
(3) provided a substantial portion of the funds used to purchase the shares
in question, and (4) received from his mother a substantial portion of the
sales proceeds, he, therefore, had a pecuniary interest in, and was a
beneficial owner of, the shares in question.
In response to the SEC's action, Mr. Carl disgorged to Health Images, Inc.
approximately $92,400 in short-swing profits from the trading in his mother's
account, plus interest thereon of approximately $52,600. The SEC further
requested the court to impose a $10,000 civil penalty against Mr. Carl pursuant
to Section 21(d)(3) of the Exchange Act. Without admitting or denying the
allegations in the complaint, Mr. Carl consented to the entry of a final
judgement imposing the $10,000 penalty. On January 12, 1996, a federal judge
entered the final judgement in this matter, and Mr. Carl has since filed amended
reports on Forms 4 and 5 reflecting these transactions in his mother's accounts.
In relation to the same matter, the SEC has issued an administrative Order
pursuant to Section 21C of the Exchange Act against Mr. Carl, finding that he
violated Section 16(a) and the rules thereunder and requiring him to cease and
desist from committing or causing any violation or future violation of those
provisions. Without admitting or denying allegations in the SEC's Order, Mr.
Carl consented to the entry of the Order.
Robert E. Densford. Mr. Densford, age 38, was appointed a Director of the
General Partner on September 11, 1991. He joined the General Partner as
Controller on May 1, 1985 and became Vice President-Finance, Secretary and
Treasurer on March 1, 1989. From January 1983 to April 1985, he was Senior
Accountant for Deloitte Haskins & Sells in Houston, Texas, auditing both closely
held and publicly owned oil and gas companies. From September 1981 to December
1982, he was a staff accountant for Coopers & Lybrand in Houston. Mr. Densford
is a C.P.A. and holds a B.B.A. degree in Accounting and an M.S. degree in Oil
and Gas Accounting from Texas Tech University and is a member of the American
Institute of Certified Public Accountants and the Texas Society of Certified
Public Accountants.
James A. Klein. Mr. Klein, age 32, joined the General Partner as Controller
in February 1991. In June 1993, he was appointed President and Principal of Enex
Securities Corporation. From June 1988 to February 1991, he was employed by
Positron Corporation in Houston. From July 1987 to May 1988, he was employed by
Transworld Oil Company in Houston and from September 1985 until July 1987, he
was an accountant with Deloitte Haskins & Sells in Houston, Texas, auditing oil
and gas and oil service companies. Mr. Klein is a Certified Public Accountant
and holds a B.A. in Accounting (1985) from the University of Iowa. He is a
member of the American Institute of Certified Public Accountants and the Iowa
Society of Certified Public Accountants.
Item 10. Executive Compensation
The Company has no Directors or executive officers.
The Company does not pay a proportional or fixed share of the compensation
paid to the officers of the General Partner.
The Company reimburses the General Partner for direct costs and
administrative costs incurred on its behalf. Administrative costs allocated to
the Company are computed on a cost basis in accordance with standard industry
practices by allocating the time spent by the General Partner's personnel among
all projects and by allocating rent and other overhead on the basis of the
relative direct time charges. The Company incurred $27,335 and $34,009 of such
administrative costs payable to the General Partner in 1995 and 1994,
respectively.
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Item 11. Security Ownership of Certain Beneficial Owners and Management
$500 Limited
Name of Partner Units Percent
Title of Class Beneficial Owner Owned Directly of Class
Limited Partner Enex Resources 102 4.4509%
Item 12. Certain Relationships and Related Transactions
See the Statements of Operations included in the Financial
Statements in Item 7 of this report for information concerning general and
administrative costs incurred by Enex and allocated to the Company, and Note 1
to such Financial Statements for information concerning payments to Enex
Securities Corporation, a wholly owned subsidiary of Enex and to Enex for
certain offering and organization expenses incurred by the Company.
See Item Number 2 - "Description of Property" in this report for a
description of the properties operated by Enex. Enex operates susch properties
under the terms of a Joint Operating Agreement ("JOA"). Overhead charges allowed
to third parties under the JOA in accordance with the Council of Petroleum
Accountants Societies are not charged to the Company. Such costs are considered
to be within the general and administrative overhead charges allocated to the
Company.
Item 13. Exhibits and Reports on Form 8-K
Sequential
Page No.
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(a) Exhibits
(3) a. Certificate of Limited Partnership, as amended.
Incorporated by reference to Exhibit 3(a) to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1988.
b. Amended Agreement of Limited Partnership. Incorporated by
reference to Exhibit 3(a) to the Registration Statement on
Form S-1 (No. 33-18776) of Enex 88-89 Income and Retirement
Fund filed with the Securities and Exchange Commission on
April 22, 1989.
(4) Not Applicable
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
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SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ENEX 88-89 INCOME AND RETIREMENT
FUND - SERIES 5, L.P.
By: ENEX RESOURCES CORPORATION
the General Partner
November 7, 1996 By: /s/ G. B. Eckley
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G. B. Eckley, President
In accordance with the Exchange Act, this report has been
signed below on November 7, 1996, by the following persons in the capacities
indicated.
ENEX RESOURCES CORPORATION General Partner
By: /s/ G. B. Eckley
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G. B. Eckley, President
/s/ G. B. Eckley
President, Chief Executive
------------------ Officer and Director
G. B. Eckley
/s/ R. E. Densford Vice President, Secretary, Treasurer,
Chief Financial Officer and Director
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R. E. Densford
/s/ James A. Klein Controller and Chief Accounting Officer
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James A. Klein
S-1
