UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
March 26, 1997
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1996
Commission file number: 0-26322
IAC, Inc.
a Nevada corporation
IRS Number 88-0303769
714 "C" Street, San Rafael, California 94901
(800) 554-1250
Securities registered under 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
Common Stock, $.001 par value OTC Bulletin Board
Check whether 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 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: $157,340.
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.
The average bid and asked price at the close of trading on March 25,
1997 was $.39. Aggregate market value of common stock held by non-affiliates
on that date was $846,350.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under the plan confirmed by the court. Yes ____ No ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
4,272,578 shares at March 25, 1997
DOCUMENTS INCORPORATED BY REFERENCE
see Item 13.
Transitional Small Business Disclosure Format (Check one): Yes ___ No _X_
<PAGE>
PART I
Item 1. Description of Business.
History:
International Association Services, Limited, a British Virgin Islands
corporation, was formed on November 21, 1990, as an association of podiatrists
who wanted to meet to discuss and address common concerns and interests. This
group of podiatrists, then as now, has had a management agreement with Dr.
Michael Wener. In 1991, The Academy of Ambulatory Foot Surgery, Inc. requested
Dr. Wener to look into possibilities of obtaining a group medical malpractice
insurance policy for members of The Academy and the Association. On April 10,
1992, the company filed a DBA registration in California as International
Associations' Coalition, Inc. ("Coalition"). On June 25, 1993, Dr. Wener formed
a Nevada corporation, International Associations' Coalition, Inc. and did not
renew the BVI registration; the California DBA was therefore terminated. The
Nevada corporation continues to operate and provide services to the podiatrists.
In late 1994, Lease Rite, Inc. a former subsidiary of a SEC registered
company, Trvlsys, Inc., formed a wholly owned subsidiary, IAC, Inc., a Nevada
corporation, and merged with it. In January, 1995, Dr. Wener assigned his
management contract with International Associations' Coalition, Inc. to IAC,
Inc.
In past years, the group has attracted a growing number of members
because of its insurance program and other association benefits. In 1992 there
were approximately 30 members, in 1993, 50 members and since then, the group has
numbered between 70 and 90 members. Members of the Association have been
notified that IAC, Inc. is in the process of raising capital to form a Risk
Retention Group ("RRG") for podiatrists. The intent is to provide a vehicle for
members to share in the extreme success of Dr. Wener's insurance management
skills. The new RRG, when formed, would have a management contract with IAC,
Inc. which would be based on a percentage of collected premium.
Coalition is a group of Podiatrists who have joined together because of
common interests and goals. One of the major benefits of membership is group
medical malpractice insurance for eligible members. To date, the insurers have
been domiciled "off-shore" and therefore are increasingly unacceptable to many
states, hospitals and HMO's. The recent trend has been to accept only "domestic"
carriers and this has hampered the expansion of the group. One of the reasons
for forming a Risk Retention Group for the Podiatrists is that RRG's are
authorized by the Federal Risk Retention Act of 1986, are supervised by their
local (domicile) State Insurance Departments and, under the Act, are acceptable
carriers throughout the United States. Additionally, the capital requirements
for forming a Risk Retention Group are determined by the state which oversees
the company.
IAC, Inc. is providing management services to International
Associations' Coalition, Inc. and its successor, Health Professionals Coalition,
Inc. ("Health"), until a RRG is formed. When the RRG is formed, the members of
Coalition will transfer to the RRG and the Company will provide similar services
to the RRG as well as any management functions necessary to operate the RRG.
Current services include:
Collection and forwarding of applications for membership
in Health and assistance to insurer in determining,
according to insurer guidelines, suitability for inclusion
in its group medical malpractice insurance program;
Determination and collection of suitable dues and fees
for members;
Payment of appropriate premiums to insurance
carriers;
Scheduling and conducting risk management
seminars for members;
Processing claims for forwarding to the insurance carrier;
Analysis of claims as requested by insurance company
attorneys;
Review and dissemination of standards of care and provide
liaison between members, their insurance company, and
their attorneys.
In late 1995, the Company formed a Nevis reinsurance company, Mt. Tam
Re, Inc., for the purpose of providing reinsurance for the planned RRG and for
other reinsurance activities.
Business Plan:
Upon formation of the RRG, IAC, Inc. will increase its advertising and
public relations efforts in an effort to acquire more participants in the RRG.
The company intends to advertise in trade periodicals and other media. Once the
RRG for podiatrists is established, the Company intends to expand its business
by forming RRG's for other groups in need of insurance coverage such as
landscape architects, dentists, accountants, attorneys, oral surgeons,
chiropractors and insurance brokers.
According to the American Podiatric Medical Association, there are
approximately 15,000 podiatrists in the U.S. and approximately one third belong
to RRG's. Membership in RRG's is on the rise because of the changing
requirements for domestic malpractice insurance.
Regulation is provided by state insurance regulators who oversee the
operation of risk retention groups. The company has excellent relationships with
several state insurance departments.
At December 31, 1996, the Company had approximately $11,000 in cash.
The negative cash flow in 1996 was the result of increased compensation to the
Chairman and an increase in legal fees and administrative costs. Net cash used
in operating activities was $37,854 in 1996, down dramatically from the year
earlier level of $71,234. Approximately 89% of the Company's net loss for the
year was derived from non-cash promotional and insurance activities.
Nevertheless, the Company must obtain funding for its RRG to be able to maintain
and expand its business (see Note 1 of the Financial Statements). Currently, Dr.
Wener is the only employee of the company. Accounting and legal services are
contracted for and other employees will be added as needed.
Item 2. Description of Property
The Company has no property.
Item 3. Legal Proceedings.
See Note 1 of the Financial Statements regarding the Consent Cease and
Desist Order issued by the Insurance Commissioner of Texas.
Item 4. Submission of Matters to a Vote of Security Holders There were no
matters submitted to security holders.
Item 5. Market for Common Equity and Related Stockholder Matters.
The Company's common stock began trading on the OTC Bulletin Board in
the last quarter of 1995. Therefore, quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions. There are approximately 300 holders of the common stock. Although
there are no restrictions on the issuance of dividends, there have been no
dividends issued on the Company's common equity to date.
Quotations for the Company's common stock from the approval date for
quotations are as follows:
1996
Q1 Q2 Q3 Q4
High $1.00 $.875 $1.75 $1.375
Low .25 .25 .375 .125
1995
Q1 Q2 Q3 Q4
High NA NA NA $.875
Low NA NA NA .375
Item 6. Management's Discussion and Analysis or Plan of Operation.
The following discussion relates to the audited financial statements for the
years ended December 31, 1996 and 1995 which are included in Item 7 below.
Management fees in 1996 declined $13,000 or 9% from the preceding year. This was
due to a decrease in premiums written to the podiatrists group under management.
Gross premiums collected declined from $550,000 in 1995 to $494,000 in 1996.
While there was a 12% increase in members in 1996, there was a decrease in
insurance premiums due to competitive pressures from other insurance carriers.
Revenues in 1996 included a $7,500 gain from the sale of an equity security held
at December 31, 1995 and a $11,250 reinsurance premium received by the Company's
subsidiary, Mt. Tam Re, Inc. The reinsurance policy was terminated in December,
1996.
During the third quarter, the Board of Directors authorized an increase in the
salary of the CEO from $5,000 to $10,000 per month reflecting the increased time
required to conduct the company's affairs. This resulted in the 37% increase in
compensation expense in 1996.
In 1996, the Company issued 355,000 tradable shares to four unrelated parties to
assist IAC in its promotional activities. These shares were valued at the
current fair market value of $1 per share at the time of issuance and
promotional expense of $355,000 was recognized. (See Note 4 to the consolidated
financial statements.)
Administrative expenses increased largely as a result of an increase in legal
fees of $15,000 and the nonrecurring cost of $47,500 associated with providing
retroactive coverage for certain insurance claims against members of the
podiatrists group. IAC issued 200,000 shares of restricted stock to Pacific Rim
Insurance Company as consideration for providing the required retroactive
coverage. The restricted shares were valued at 40% of the current fair market
value at the time of issuance. The increase in legal fees resulted from two
proposed acquisitions which were not consummated and discussions with the Texas
Insurance Commissioner which led to the Cease and Desist Order (see discussion
below and Note 1 to the consolidated financial statements).
Liquidity: During the past two years, IAC has used about $110,000 of cash in its
operations with the result that cash reserves have declined to about $12,000 at
December 31, 1996. If the Company does not increase revenues or drastically
reduce expenses, it will fully use its cash resources in 1997.
Moreover, on March 5, 1997, the Company and Health Professionals Coalition, Inc.
Signed a Consent Cease and Desist Order (Cease and Desist Order) issued by the
Texas Insurance Commissioner that insurance coverage for podiatrists resident in
Texas must be terminated effective April 21, 1997. In 1996, Health & Coalition,
in the aggregate, collected insurance premiums of $95,000 from podiatrists
residing in Texas. IAC received related management fees of approximately $26,000
in 1996. The Cease and Desist Order provides that IAC and Health can in the
future, accept payment of premiums only if first authorized to conduct business
in Texas. Such authorization will be dependent upon formation of a risk
retention group (RRG), or retention of an insurance broker and insurer licensed
in Texas. Pacific Rim is not licensed in Texas. Management is attempting to
retain a broker licensed in Texas, who in turn could locate an insurer licensed
in Texas. There can be no assurance that these efforts will be successful by
April 21, 1997 or at a later date. If these efforts are not successful, the
financial impact on IAC's liquidity will be significant.
The Company has been seeking funding for the initial capitalization of a Risk
Retention Group (RRG) for podiatrists. The Company entered into a contract with
a potential investor in October, 1996 to provide $600,000 in capital for the
RRG. However, as of March 26, 1997, such funding has not been received. Without
a RRG, IAC is unable to substantially expand its marketing efforts to
podiatrists around the country and reduce its dependence upon the limited number
of members of Health.
<PAGE>
Item 7. Financial Statements
March 26, 1997
To the Board of Directors of IAC, Inc.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
In our opinion, the accompanying consolidated balance sheet and
the related consolidated statements of operations and accumulated deficit,
changes in stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of IAC, Inc. at December 31, 1996 and
1995 and the results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles. 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 audit. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has incurred operating losses
during the past two years, and its revenues in 1997 may be significantly reduced
due to receipt of nonrecurring revenue in 1996 and the Consent Cease and Desist
Order entered into with the Texas Insurance Commissioner. As described in Note
1, the prospective impact of this Order depends on management's successful
efforts to make alternative arrangements including the funding of a Risk
Retention Group. The foregoing raises substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Odenberg, Ullakko, Muranishi & Co.
<PAGE>
IAC, Inc.
Consolidated Balance Sheet
December 31
1996 1995
-------------------------------
ASSETS
CURRENT ASSETS
Cash in bank $11,713 $37,967
Prepaid expense 14,480
Refundable payroll taxes 3,973
Receivable from related party 22,809
-------------------------------
TOTAL CURRENT ASSETS 26,193 64,749
-------------------------------
OTHER ASSETS
Investment in equity security 10,000
Organizational costs, net of amortization 2,149 2,869
------------- -----------------
TOTAL ASSETS $28,342 $77,618
===============================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $5,845 $3,470
Accrued liabilities 377 317
-----------------------------
$6,222 $3,787
-----------------------------
STOCKHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares
authorized; 630,000 shares outstanding 2,500 2,500
Capital stock, $.001 par value, 25,000,000 shares
authorized; 4,272,578 and 3,693,578
shares outstanding respectively 4,273 3,694
Additional paid in capital 695,125 283,604
Accumulated deficit (679,778) (215,967)
----------------------------
22,120 73,831
----------------------------
$28,342 $77,618
============================
See accompanying notes to consolidated financial statements.
<PAGE>
IAC, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
AND ACCUMULATED DEFICIT
Year Ended December 31
1996 1995
REVENUES
Management Fees $135,346 $148,348
Other income 21,994 2,018
----------------------------
$157,340 $150,366
----------------------------
OPERATING AND GENERAL EXPENSES
Compensation and employee benefits 94,036 68,392
Promotion and trade shows 363,417 26,561
Administrative expenses 162,098 101,283
---------------------------
619,551 196,236
---------------------------
---------------------------
LOSS FROM OPERATIONS (462,211) (45,870)
---------------------------
INCOME TAXES (1,600) (800)
---------------------------
NET LOSS (463,811) (46,670)
DEFICIT-beginning of period (215,967) (169,297)
DEFICIT- end of period ($679,778) ($215,967)
=============================
Loss Per Share ($0.11) ($0.01)
Weighted average number of
common shares outstanding 4,039,912 3,663,193
============================
See accompanying notes to consolidated financial statements.
<PAGE>
IAC, Inc.
STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1995 and 1996
<TABLE>
Preferred Stock Capital Stock
Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1994 1,050,000 $5,000 3,611,043 $3,611 $215,688 ($169,297) $55,002
Recission of
preferred shares (420,000) (2,500) 2,500
Sale of common stock
(net of offering) 69,535 70 63,929 63,999
Other stock issued 13,000 13 1,487 1,500
Net loss for year (46,670) (46,670)
----------------------------------------------------------------------------------------------
Balances at
December 31, 1995 630,000 2,500 3,693,578 3,694 283,604 (215,967) 73,831
Sale of common stock
1,600 1,600
Stock issued for
services
Legal fees 20,000 20 7,980 8,000
Corporate
communications 305,000 305 304,695 305,000
Insurance coverage 200,000 200 47,300 47,500
Consulting 50,000 50 49,950 50,000
Other stock issued 4,000 4 (4)
Net loss for year (463,811) (463,811)
----------------------------------------------------------------------------------------------
Balances at
December 31, 1996 630,000 $2,500 4,272,578 $4,273 $695,125 ($679,778) $22,120
==============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
IAC, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($463,811) ($46,670)
Adjustment to reconcile net loss to net cash (used in)
operating activities:
Decrease (increase) in receivable from related party 22,809 (22,809)
Decrease (increase) in refundable payroll taxes 3,973 (3,973)
Increase in organizational expense (2,589)
Increase in accounts payable and other liabilities 2,435 2,587
Increase in prepaid expenses (14,480)
Common stock issued for services 410,500 1,500
Amortization 720 720
--------------------
Net Cash Used In Operating Activities (37,854) (71,234)
--------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of (investment in) equity securities 10,000 (10,000)
--------------------
Net Cash Provided for (Used In) Investing Activities 10,000 (10,000)
-------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock, net of expenses 1,600 63,999
-------------------
Net Cash Provided By Financing Activities 1,600 63,999
-------------------
Net (Decrease) In Cash (26,254) (17,235)
-------------------
Cash At Beginning Of Period 37,967 55,202
-------------------
Cash At End Of Period $11,713 $37,967
===================
Cash paid during the year for:
Interest $6,741 $ -
===================
Taxes $1,600 $800
===================
See accompanying notes to consolidated financial statements.
<PAGE>
IAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Note 1 - Organization, operations and summary of significant accounting
policies:
Organization:
IAC, Inc. ("IAC") is a Nevada corporation engaged in the business of
managing a malpractice insurance contract between International Associations'
Coalition, Inc. ("Coalitions"), a related party, and an unrelated insurance
company, United International, Inc. ("United"). Effective October 1, 1995, the
insurance contract was assumed by Pacific Rim Insurance Company ("Pacific Rim"),
a minority stockholder of IAC. The members of Coalitions and its successor,
Health Professionals Coalitions, Inc. ("Health") are podiatrists seeking
affordable malpractice insurance. Under the management contract, IAC is
entitled to receive 27.5% of the premiums paid by the podiatrists to United and
Pacific Rim each month.
The term of the insurance contract between the Coalitions and the
insurance carrier is one year and is generally renewable if both parties have
performed satisfactorily. The management contract between IAC and Coalition also
has a term concurrent with the insurance contract.
Coalition is wholly-owned by IAC's Chairman and majority shareholder.
In September, 1996, the business of Coalitions' was transferred to a newly
created company, Health Professionals Coalition, Inc., which is also wholly
owned by IAC's Chairman.
On December 8, 1995, IAC formed a subsidiary, Mt. Tam Re, Inc. in
Nevis (in the West Indies) with initial capital of $25,000 which is on deposit
in the Channel Islands. Mt. Tam Re was formed to provide reinsurance coverage
for other insurance companies (See Note 5).
Basis of Presentation
The consolidated financial statements have been prepared on the going
concern basis. IAC has reported a net loss during the past two years. On March
5, 1997, the Company and Health Professionals, Inc. signed a Consent Cease and
Desist Order (Cease and Desist Order) issued by the Texas Insurance Commissioner
that insurance coverage for podiatrists resident in Texas must be terminated
effective April 21, 1997. In 1996, Health, in the aggregate, collected insurance
premiums of $95,000 from podiatrists residing in Texas. IAC received related
management fees of approximately $26,000 in 1996. The Cease and Desist Order
also requires payment of a $10,000 fine.
The Cease and Desist Order provides that IAC and Health can, in the
future, accept payment of premiums only if first authorized to conduct business
in Texas. Such authorization will be dependent upon formation of a risk
retention group (RRG), or retention of an insurance broker and insurer licensed
in Texas. Pacific Rim is not licensed in Texas. Management is attempting to
retain a broker licensed in Texas, who in turn, could locate an insurer licensed
in Texas. There can be no assurance that these efforts will be successful by
April 21, 1997 or at a later date.
In 1996, the Company received revenues of approximately $19,000 from
Mt. Tam Re reinsurance premiums and a gain from the sale of a security which
will not recur in 1997.
In addition, the Company has been seeking funding for the initial
capitalization of a RRG for podiatrists. The Company entered into a contract in
October, 1996 to provide $600,000 but such funding has not yet been received.
This agreement, as amended, provides that upon funding by the investor, the
Company must pledge 500,000 shares of convertible preferred stock. The agreement
provides for a success fee of $47,500. Without a RRG, IAC is unable to
substantially expand its marketing efforts to podiatrists around the country and
reduce its dependence upon the limited number of members in Health.
Note 2 - Summary of significant accounting policies:
The process of preparing financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions regarding certain types of assets, liabilities, revenues and
expenses. Such estimates primarily relate to unsettled transactions and events
as of the date of the financial statements. Accordingly, upon settlement, actual
results may differ from the estimated amounts.
Revenues are recorded by IAC when insurance premiums are collected by
Coalitions or Health.
Expenses are recorded on the accrual basis of accounting.
The carrying value of cash, marketable equity securities, note
receivable, accounts payable and accrued liabilities is a reasonable estimate of
fair value of these financial instruments.
Note 3 - Receivable from related party:
At December 31, 1995, Coalition was obligated to IAC for $22,809. The
Company accepted a note from Coalition which was payable in full by December 31,
1996. The unsecured note bore interest at the rate of 10%. The note was repaid
in full in 1996 in accordance with its terms.
Note 4 - Issuance and sales of stock:
On November 8, 1994, the Company initiated a private placement of
common stock at a price of $1 per share. During the years ended December 31,
1995 and 1996, proceeds of $66,999 and $1,600, respectively were received from
the sale of stock. The proceeds in 1995 included the sale of 28,500 shares of
common stock at $1 per share to the IAC Risk Retention Group, Inc.
In March, 1995, the issuance of 420,000 preferred shares to a
shareholder in 1994 was rescinded and the balances in the stockholders' equity
have been appropriately adjusted.
Each share of preferred stock is entitled to one vote per share and is
convertible into 10 shares of common stock; the preferred stock has no dividend
rights nor preference in liquidation.
On January 2, 1996, IAC entered into a one year consulting contract
with North American Corporate Consultants (NACC). As consideration, NACC was
issued 250,000 shares of IAC's free trading common stock at a fair market value
of $1 per share. The cost of this contract ($250,000) was recognized ratably
throughout 1996.
Other consultants were also issued an aggregate of 55,000 shares of
free trading stock for their services. These services were valued at $1 per
share and recognized as expense during 1996.
In May, 1996, the Company issued 100,000 restricted shares to Pacific
Rim in exchange for Pacific Rim providing retroactive insurance coverage for
members of Coalitions'. Such restricted shares were valued at $.375 per share
and were recorded as expense during 1996.
In November, 1996, the Company's board of directors authorized the
issuance of an additional 100,000 restricted shares to Pacific Rim as additional
consideration for Pacific Rim providing insurance coverage for certain insurance
claims. Such restricted shares were valued at $.10 per share and were recorded
as expense during 1996.
In addition 20,000 restricted shares were issued to the Company's legal
counsel for services which were valued at $.40 per share and the legal expense
was recorded in 1996.
During 1996, IAC entered into an agreement with an affiliate of RMJ
Associates to provide certain consulting services. This agreement required the
issuance of 50,000 shares of free trading stock. These services were valued at
$1 per share and recognized as expense in 1996.
Note 5 - Mt. Tam Re Trust:
In December, 1995, a shareholder of IAC deposited common stock of an
OTC Bulletin Board company in a trust account which is held by a domestic stock
brokerage firm. These securities are to serve as additional capital, for
reinsurance underwriting purposes, for Mt. Tam Re, Inc. At December 31, 1996,
the value of the securities held by the trust was $73,500.
Under the terms of the trust agreement, the trustee can require this
shareholder to add sufficient securities to the trust to maintain an aggregate
value of $500,000 as of each quarter. In March of 1997, the Company made a
demand upon the stockholder to add additional securities to the trust to bring
its value to $500,000. During 1996, the shareholder received compensation of
$6,250 under this trust agreement. Until the trust account is supplemented with
additional capital, Mt. Tam is not able to underwrite reinsurance contracts.
Effective August 1, 1996, Mt. Tam Re, Inc. entered into a reinsurance
contract with another reinsurance company indirectly owned by IAC's Chairman to
provide insurance coverage to Coalitions' members. This reinsurance contract
was canceled effective December 6, 1996. Mt. Tam received premiums of $11,250.
The insurance coverage was made on a made claims basis and no claims were filed
with the carriers while this reinsurance contract was in force.
Note 6 - Income taxes:
At December 31, 1996, IAC's consolidated net operating loss carry
forwards (NOL's) amounted to approximately $$516,000 for federal tax purposes.
These NOL's will expire from 1999 through 2011. For California franchise tax
purposes, the NOL is approximately $$258,000 and expires in 2001.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
There were no disagreements with accountants.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
Name Age Position, Office Term Served
- ---- --- ---------------- ---- ------
Dr. Michael Wener 53 Director, President Until replaced Inception
Kathryn Turnham 35 Director, Treas Until replaced Inception
Dr. Mark R. Weiss 50 Director Until replaced 1996
Harry Walsh 72 Director Until replaced 1996
Sally A. Geer 51 Director Until replaced 1996
There are no other significant employees. There are no family
relationships between the above listed persons, nor is there any involvement in
certain legal proceedings. None of the above serve as directors in any other
reporting company.
Michael Wener, D.P.M. Chairman, Board of Directors, President
Board Certified in both foot and ankle surgery, Dr. Wener has been involved in
peer review since 1972. He founded the first podiatry insurance captive
(Podiatrist Indemnity Fund, Ltd.) in 1974 which maintained a 28.5% loss ratio.
The present program for podiatrists was started in 1992 on a direct procurement
basis. Dr. Wener has maintained a 10% loss ratio by thorough underwriting
procedures, restrictive policy requirements and strict risk management.
Kathryn Turnham Director, Treasurer
Ms. Turnham is the sole owner of Kay's Bookkeeping Service in San Rafael,
California. For the last thirteen years she has provided bookkeeping and income
tax services, for which she is licensed by the State of California.
Additionally, she has served as the Administrator for International
Associations' Coalition, Inc.
Harry Walsh Director
Mr. Walsh has over 40 years experience in a variety of insurance and reinsurance
activities, including start-ups and claims adjustment and has performed in many
roles including CEO and Chairman of the Board.
Mark R. Weiss, D.P.M. Director
Dr. Weiss took his podiatry degree at the California College of Podiatric
Medicine at San Francisco in 1971. He is certified by the American Board of
Podiatric Orthopedics and the American Board of Podiatric Surgery. He has held
numerous clinical, association and hospital appointments and currently conducts
a private practice of podiatric sports medicine in Los Angeles where he is on
staff at Century City Hospital and Cedars-Sinai Medical Center.
Sally A. Geer Director
Ms. Geer has been a banker for 25 years. She is currently Vice President and
Manager for Redwood Bank in their San Francisco office. Her duties include
oversight of branch operation and personnel as well as development of the
commercial loan portfolio of the Main Business Banking Office.
Item 10. Executive Compensation.
The sole officer who received a salary was the President, Dr. Michael
Wener, who received $85,125 in the year ended December 31, 1996. There are no
other compensation or bonus plans.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth security ownership as known to the
Company as of March 25, 1997.
(1) (2) (3) (4)
Title of Class Name & Address of Amount & Nature of Percent of
(a) (b) (c) Beneficial Owner Beneficial Owner Class
Common Stock Dr. Michael Wener 2,100,450 49.16%
206 Ridgewood
San Rafael, CA 94901
Common Stock Kathryn Turnham 2,000 less than 1%
47 Manor View
Fairfax, CA 94930
Common Stock Sally A. Geer 5,000 less than 1%
15005 B'way Terrace
Oakland, CA 94611
Common Stock Officers & Directors as a 2,107,450 49.32%
group
Common Stock Richard W. Lahey 726,426 17.00%
419 Crown Road
Kentfield, CA 94904
Preferred Stock Dr. Michael Wener 587,500 93.25%
206 Ridgewood
San Rafael, CA 94901
Officers & Directors as a 587,500 93.25%
group
(a) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed above, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities.
(b) Total number of common shares outstanding is 4,272,578 at March 25, 1997.
(c) Total number of preferred shares outstanding is 630,000. Each preferred
share is entitled to one vote and is convertible into ten shares of common
stock.
<PAGE>
Item 12. Certain Relationships and Related Party Transactions.
The Company does not have specific guidelines as to how to deal with
potential conflicts. Rather, the management's guiding principle will always be
the fiduciary responsibility of those concerned. Further, as to an opportunity
that might be attractive to the Company and to another entity or entities with
which officers, directors or key employees have an interest, the opportunity
would be regarded as that of the concern to which it first came. The Company
does not at present have any specific plans, arrangements, commitments or
undertakings as to proposed transactions that would reasonably be thought to
give rise to conflicts of interest with affiliates.
If any of the Company's officers, directors, key employees or their
affiliates generate prospects deemed attractive by the Company and in which the
company ultimately acquired an interest, the Board of Directors may authorize
compensation to such person. No guidelines have been adopted by the Board of
Directors regarding the amount or form of compensation to be paid in connection
with the generation of such prospects.
Dr. Wener assigned his interests in the Consultation Agreement with
International Associations' Coalition, Inc. to IAC, Inc. in exchange for
2,100,000 shares of the Common Stock and 210,000 shares of Convertible
Preferred Stock in IAC, Inc.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibit Table
Articles of Incorporation
By-laws
Material Contracts
Podiatric Consultation Agreement
Addendum to Podiatric Consultation Agreement
Agreement for Issuance of Group Master Insurance Policy
Plan of Acquisition, Reorganization
Additional Exhibits
Nevada Business Code. 78.037
The above documents are hereby incorporated by reference to Amendment #3
of the Company's Form 10-SB filed November 2, 1995.
Exhibit 27. Financial Data Schedule
(b) There were no Form 8-K's filed.
<PAGE>
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.
IAC, Inc.
(Registrant)
By: /s/Dr. Michael Wener
Dr. Michael Wener, President
Date: March 26, 1997
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
By: /s/ Dr. Michael Wener
Dr. Michael Wener, President
Date: March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE DECEMBER 31, 1997
CONSOLIDATED FINANCIAL STATEMENTS OF IAC, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000947431
<NAME> IAC, Inc.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 11,713
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,193
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,342
<CURRENT-LIABILITIES> 6,222
<BONDS> 0
0
630,000
<COMMON> 4,272,578
<OTHER-SE> 695,125
<TOTAL-LIABILITY-AND-EQUITY> 28,342
<SALES> 135,346
<TOTAL-REVENUES> 157,340
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 612,810
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,741
<INCOME-PRETAX> (463,811)
<INCOME-TAX> 1,600
<INCOME-CONTINUING> (463,811)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (463,811)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
