McHenry Metals Golf Corp/CA · 10KSB40/A · For 12/31/98

Filed On 4/29/99   ·   SEC File 333-53737   ·   Accession Number 892569-99-1185

Amendment to Annual Report — Small Business — [X] Reg. S-B Item 405   —   Form 10-KSB
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Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB40/A   Amendment #1 to Form 10-Ksb                           13     91K 

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================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------

 FORM 10-KSB/A
(AMENDED APRIL 29, 1999)

(MARK ONE)                                                                      

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

For the fiscal year ended                   DECEMBER 31, 1998                   
                         -------------------------------------------------------

OR

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

For the transition period from _______________________ to ______________________

 Commission file number: 333-53757

 MCHENRY METALS GOLF CORP.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)

NEVADA                                         87-0429261     
(State of Incorporation)                    (I.R.S. Employer Identification No.)

 1945 CAMINO VIDA ROBLE, SUITE J, CARLSBAD, CA 92008
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code:      (760) 929-0015         
                                                   -----------------------------

Securities Registered Pursuant To Section 12(b) Of The Act:                     

Title of each class                 Name of each exchange on which registered   
-------------------                 -----------------------------------------   
NONE                                           NONE               

Securities Registered Pursuant To Section 12(g) Of The Act:  NONE               

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

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the    
best of registrant's knowledge, in definitive proxy or information statements   
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]                                                                  

        The aggregate market value of the voting stock held by non-affiliates of
the Registrant, as of March 31, 1999 was approximately $12,518,000 (based upon  
the closing price for shares of the Registrant's Common Stock as quoted by the  
OTC Bulletin Board for the last trading date prior to that date). Shares of     
Common Stock held by each officer, director and holder of 5% or more of the     
outstanding Common Stock have been excluded in that such persons may be deemed  
to be affiliates. This determination of affiliate status is not necessarily a   
conclusive determination for other purposes.                                    

On March 31, 1999, 15,270,400 shares of the Registrant's Common Stock, par value
of $0.001, were outstanding.                                                    

Documents Incorporated By Reference.                                            

NONE

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PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;         
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT           

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES                         

The following table sets forth the directors, executive officers and other      
significant employees of the Company, their ages, terms of office and all       
positions. Directors are elected for a term of one year, and serve until the    
next annual meeting or until their successors are duly elected by the           
stockholders and qualify. Officers and other employees serve at the will of the 
Board of Directors. Disclosure relating to compliance with Section 16(a) of the 
Securities Exchange Act of 1934 is not applicable, as the Company does not have 
a class of equity securities registered pursuant to Section 12 of the Exchange  
Act.                                                                            

                                                        [Enlarge/Download Table]

Name of Director, Officer                                                                             
or Significant Employee      Age  Served Since  Positions and Offices Held With The Company           
---------------------------  ---  ------------  -------------------------------------------           
                                                                                                      
Gary V. Adams(1)............  55   Apr. 1997    Chairman of the Board and Chief Executive Officer     
Theodore Aroney(1)(3).......  59   Apr. 1997    Vice Chairman of the Board and Secretary              
Mark Bergendahl(2)(3).......  38   Apr. 1997    Director                                              
Henry J. Fleming, Jr.(2)....  55   Apr. 1997    Director                                              
Sal Lupo....................  66   Apr. 1997    Director                                              
Michael Magerman(2).........  37   Nov. 1998    Director                                              
Phillip A. Ward(3)..........  57   May  1998    Director                                              
Bradley J. Wilhite(1).......  34   May  1997    President, Acting Chief Executive Officer and Director
Brian E. Fortini............  42   July 1998    Vice President - Sales and Marketing                  
Gary L. Moles...............  46   Apr. 1997    Chief Operating Officer                               
Douglas A. Willford.........  43   Jan. 1999    Chief Financial Officer                               
Mario Cesario...............  64   May  1997    Director of Product Research and Development          

(1) Member of the Executive Committee                                           

(2) Member of the Audit Committee                                               

(3) Member of the Compensation/Stock Option Plan Committee                      

Except for Messrs. Adams, Aroney, Bergendahl, Fleming, Magerman and Ward, each  
of these individuals devoted full time to the Company as employees during 1998. 
During 1998, Mr. Adams has been exclusively focused on overcoming his health    
problems. There are no family relationships among executive officers or         
directors of the Company. A brief description of these individuals and their    
background and business experience follows:                                     

GARY V. ADAMS - Mr. Adams established the Company in early 1997. Previously, Mr.
Adams was President and CEO of Founders Club Golf Company (1989-1994) which he  
established in 1989. As chairman of Taylor Made Golf Co. (1979-1989), which he  
founded in 1979, he became known as the "Father of the Metal Wood." During his  
accomplished career over the past three decades, Mr. Adams has received numerous
awards for his industry-leading innovations. Most notably, he has received the  
PGA of America's highest honor, the Ernie Sabayrac Award, for lifetime          
contributions to the industry. The elite class of recipients recognized with    
this award includes                                                             

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Karsten Solheim, founder of Karsten Manufacturing and PING golf clubs, and Ely  
Callaway, founder and chairman of Callaway Golf. Mr. Adams was also elected to  
the Illinois PGA Hall of Fame in 1994, and was named "Man of the Year" by the   
National Golf Association in 1994, and "Golf Innovator of the Decade" by the    
International Network of Golf in 1995.                                          

THEODORE ARONEY - Mr. Aroney is currently owner of Halo Farms Breeding and      
Racing Operation for thoroughbred horses. Mr. Aroney has been associated with   
this operation since 1970. From 1985 to 1990, Mr. Aroney was president of Rancho
Real, Inc., a developer of townhouses in La Costa, California. From 1990 to     
1993, Mr. Aroney was the founding director of Odyssey Sports, Inc., a golf      
company. Mr. Aroney is a private investor and consultant with experience in many
other businesses.                                                               

MARK A. BERGENDAHL - Mr. Bergendahl is the President of Redfield Taylor &       
Associates, Inc., an investment firm which focuses on investing in small cap and
start up companies, President of Jacobson, Larson Management, Inc., and managing
partner of Edie-Wig-BB, a California limited partnership. Since 1986, he has    
held various posts including director of marketing, corporate managing director,
and president of Gloria Marshall Figure Salons of Australia, Pty, Ltd., one of  
Australia's leading weight loss companies. Mr. Bergendahl's experience in the   
golf industry includes being an initial investor in Odyssey Golf, and serving on
the board of directors from 1992 to 1995. Mr. Bergendahl is a graduate of the   
Entrepreneurship Program at the University of Southern California.              

HENRY J. FLEMING, JR. - Mr. Fleming is currently president of Fleming and       
Company, Certified Public Accountants. Practicing as a certified public         
accountant since 1973, Mr. Fleming has had extensive experience working with    
private industry. He served as treasurer of the Taylor Made Golf Company through
the mid-1980s. He has also been involved with Allison America, a manufacturer of
tanning beds, Ex-Tec Plastics and Advantage Rental, Inc. Mr. Fleming serves on  
the board of directors of Amcore Bank Northwest and with various closely held   
corporations. Mr. Fleming graduated with a Bachelor of Arts degree in accounting
from Lewis College in Lockport, Illinois.                                       

SAL LUPO - Mr. Lupo served as Senior Vice President-Marketing from April 1997   
through June 1998, and as Executive Vice President through March 1999. Mr. Lupo 
continues to serve as a Director of the Company as he has since April 1997.     
Beginning in the early 1980s, Mr. Lupo provided marketing planning and execution
support for the introduction and development of the Taylor Made Golf Company. In
addition to the work with Taylor Made, Lupo and Associates provided strategic   
planning and marketing development for other golf equipment companies such as   
Aldila, United Sports Technologies, Wilson, Cleveland Golf, and Tiger Shark. Mr.
Lupo previously held marketing and management posts at Helene Curtis Industries,
including new products manager, corporate director of marketing, and president  
of the Hair Fashions Division.                                                  

MICHAEL MAGERMAN - Mr. Magerman co-founded the Odyssey Golf Company and launched
the Odyssey Stronomic Putter Line in 1990, which became the #1 putter in the    
world under his leadership. The innovative and technically advanced putter      
quickly gained prominence on the PGA, Senior PGA and LPGA Tours, as well as in  
the marketplace. In 1995, Mr. Magerman sold Odyssey to U.S. Industries. He      
continued as President and CEO of Odyssey and was also named President and CEO  
of Tommy Armour Golf (a division of U.S. Industries). Under his leadership,     
combined sales of Odyssey and Tommy Armour rose to approximately $100 million.  
In 1997, Mr. Magerman sold Odyssey, for U.S. Industries, to Callaway Golf for   
$130 million and Tommy Armour was sold to TearDrop Golf for $24 million.        

PHILLIP A. WARD - Mr. Ward is currently President and CEO of                    
Bignell-Ward-Bignell, Inc., a commercial real estate brokerage company and Hawk 
Financial Services, a premium finance company. He is also Executive Vice        
President and CEO of Big Bear Supermarkets. He is former Chairman of the Century
Club of San Diego, the organization that runs the PGA Tour's Buick Invitational 
annually in San Diego.                                                          

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BRADLEY J. WILHITE - Mr. Wilhite's business background includes over ten years  
in the financial service industry with two of the nation's top six banking      
organizations NationsBank (now BankAmerica) and First Union Corporation. During 
his career, he served as a corporate banker working with emerging growth        
companies, managed several lines of business, directed successful product       
launches and brand development programs and led merger and acquisition teams.   
Mr. Wilhite is the son of a PGA golf professional, and he played college golf at
Oklahoma State University and Texas Christian University where his teammates    
included several current PGA Tour players. Mr. Wilhite received a bachelor's    
degree in business administration and finance from Texas Christian University   
and a master's degree in business administration and marketing from Wichita     
State University.                                                               

BRIAN E. FORTINI - Mr. Fortini was formerly Senior Marketing Manager of Taylor  
Made Golf Company (1996-1998), where he was a leading executive involved with   
the company's explosive market share gains in metal woods and irons in the mid  
1990's. Prior to joining Taylor Made, he spent six years at PowerBilt Golf as   
National Sales Manager and Director of Marketing and eleven years with Savin    
Corporation in a variety of sales, marketing, and general management positions. 
He is a graduate of Ohio Wesleyan University and has a Masters of Business      
Administration degree from New York University.                                 

GARY L. MOLES - During 1973 to 1990 Mr. Moles was an employee of Wilson Sporting
Goods involved as a director of raw material purchases. During 1991-1992, Mr.   
Moles served as director of purchasing of Sunbeam-Oster Household Products.     
During 1993-1995, Mr. Moles served as vice president of operations of Founders  
Club Golf Company in Vista, California. Mr. Moles received a Bachelor of Science
Degree in business administration from Tennessee Technological University, in   
Cookeville, Tennessee in 1978.                                                  

DOUGLAS A. WILLFORD - Prior to joining the Company, Mr. Willford was            
self-employed as a CPA and consultant from 1996 through 1998. During this time, 
his responsibilities included serving as an Interim CFO and external reporting  
manager for a publicly held San Diego based assembler of electronic components. 
During 1995, Mr. Willford was Chief Financial Officer for a publicly owned      
software development company located in Spokane, Washington. From 1987 through  
1995, he served as Chief Financial Officer for a facilities management company  
and a software development company that provided services to the health care    
industry. Mr. Willford began his career in 1977 with Arthur Andersen & Co. after
receiving his bachelor's degree in business administration and accounting from  
California State University, Fullerton.                                         

MARIO CESARIO - Mr. Cesario brings to the Company over 40 years of experience in
the design of high-performance, quality golf clubs. Since 1962, he has provided 
assistance to tour professionals and top amateurs from his custom club design   
and fitting operation in Redlands, California. His clients have included top PGA
and Senior PGA Tour professionals such as Tom Watson, Craig Stadler, Dave       
Stockton, and Bob Rosburg, to name a few. Mr. Cesario has also been a club      
design consultant to several golf equipment companies. In addition to his       
credentials as a golf club designer, Mr. Cesario is an Honorary Life Member of  
the Southern California PGA.                                                    

ITEM 10.   EXECUTIVE COMPENSATION                                               

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION                                  

The following table provides certain summary information concerning compensation
earned, for services rendered in all capacities to the Company and its          
subsidiaries, for the fiscal year ended December 31, 1998 and for the period    
from January 13, 1997 (inception) through December 31, 1997, by all persons who 
served as the Company's Chief Executive Officer during 1998. There was only one 
(1) other executive officer of the Company who earned more than $100,000 in     
compensation during 1998. These persons are collectively referred to as "Named  
Executive Officers."                                                            

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                                                                                              LONG TERM                           
                                                              ANNUAL COMPENSATION        COMPENSATION AWARDS                      
                                                           -----------------------    -------------------------                   
                                                                          OTHER       RESTRICTED                                  
                                                                          ANNUAL        STOCK        SECURITIES      ALL OTHER    
                                                            SALARY       COMPEN-       AWARD(S)      UNDERLYING       COMPEN-     
NAME AND PRINCIPAL POSITION                      YEAR         ($)       SATION ($)      ($)(5)       OPTIONS(#)      SATION ($)   
---------------------------------------------------------------------------------     -----------------------------------------   
                                                                                                                                  
Gary V. Adams, Chairman of the Board             1998      $134,600          --             --            --               --     
  and Chief Executive Officer .............      1997        95,000          --             --         600,000             --     

Bradley J. Wilhite, President, Acting Chief      1998      $ 83,700          --             --         325,000(3)          --     
  Executive Officer and Director ..........      1997        57,000      $  1,200(2)    $ 50,000       100,000         $  9,800(4)

Sal Lupo,(1) Director .....................      1998      $105,400          --             --            --               --     
                                                 1997        64,200          --             --            --               --     

----------                                                                      

(1)  Mr. Lupo was a Director of the Company and served as Senior Vice           
President-Marketing from April 1997 through June 30, 1998 and then as 
Executive Vice President until March 31, 1999. Subsequent to March 31,
1999, Mr. Lupo continues to serve as a Director of the Company.       

(2)  Other Annual Compensation for Mr. Wilhite is comprised of an auto allowance
provided by the Company.                                              

(3)  Includes 100,000 shares originally granted on September 29, 1997 with a    
 five (5) year term and an exercise price of $4.125 per share which were
cancelled and regranted pursuant to the November 20, 1998             
cancellation/regrant program.                                         

(4)  All Other Compensation for Mr. Wilhite is comprised of a moving allowance. 

(5)  As of December 31, 1998, Mr. Wilhite owns 100,000 shares of restricted     
common stock of the Company which has a value of $153,200 based on the
average of the highest bid and lowest ask price as quoted on the OTC  
    Bulletin Board for the Company's unrestricted common stock on December 31,
   1998. These shares were fully vested as of December 31, 1998. Mr. Wilhite
    is eligible to receive dividends on these shares; however, the Company has
not, and does not plan to, pay dividends to any stockholders.         

OPTION GRANTS IN LAST FISCAL YEAR                                               

The following table contains information concerning stock option grants made to 
the Company's Chief Executive Officer and each of the other Named Executive     
Officers during the fiscal year ended December 31, 1998. No stock appreciation  
rights were granted or exercised during such fiscal year.                       

                                                        [Enlarge/Download Table]

                                                          INDIVIDUAL GRANTS                           
                                 ---------------------------------------------------------------------
                                      NUMBER OF        % OF TOTAL                                     
                                     SECURITIES     OPTIONS GRANTED    EXERCISE OR                    
NAME                             UNDERLYING OPTIONS  IN FISCAL YEAR     BASE PRICE   EXPIRATION DATE  
                                     GRANTED (#)                          ($/SH)                      
------------------------------------------------------------------------------------------------------
                                                                                                      
Bradley J. Wilhite..............      325,000(1)         20.4%            $ 1.00        11/19/2003    

-----------                                                                     

(1)  Includes shares originally granted in 1997, which were cancelled and       
  regranted pursuant to the November 20, 1998 cancellation/regrant program
(see "Option Regrant Program" below).                                 

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AGGREGATED OPTION EXERCISES AND FISCAL YEAR END VALUES                          

No options were exercised by the Company's Chief Executive Officer or the other 
Named Executive Officers during the fiscal year ended December 31, 1998. The    
following table sets forth information concerning option holdings for such      
fiscal year with respect to the Company's Chief Executive Officer and each of   
the other Named Executive Officers. The fair market value of the Common Stock at
fiscal year-end was $1.532 per share, based on the average of the highest bid   
and lowest ask price as quoted on the OTC Bulletin Board. No stock appreciation 
rights were exercised or outstanding during such fiscal year.                   

                                                        [Enlarge/Download Table]

                                             NUMBER OF SECURITIES           VALUE OF UNEXERCISED      
                                            UNDERLYING UNEXERCISED          IN-THE-MONEY OPTIONS      
                                         OPTIONS AT FISCAL YEAR END(#)     AT FISCAL YEAR END($)      
                                         -------------------------------------------------------------
 NAME                                     EXERCISABLE   UNEXERCISABLE   EXERCISABLE    UNEXERCISABLE  
 -----------------------------------------------------------------------------------------------------
                                                                                                      
Gary V. Adams .........................     600,000              --      $ 619,200            --      

Bradley J. Wilhite.....................     100,000         225,000      $  53,200     $ 119,700      

OPTION REGRANT PROGRAM                                                          

As discussed in the Compensation Committee Report on Executive Compensation     
below, on November 20, 1998, the Company implemented an option                  
cancellation/regrant program for virtually all officers and directors holding   
stock options on such date. Pursuant to the cancellation/regrant program, each  
such option was eligible to be canceled and a new option for the same aggregate 
number of shares was granted with an exercise price of $1.00, the fair market   
value per share of Common Stock on November 20, 1998. The replacement options   
have a new five (5) year life measured from November 20, 1998. Mr. Adams elected
not to participate in this program, thus retaining his original exercise price  
of $0.50 per share, which expires on March 31, 2000.                            

The following table sets forth information with respect to each of the Named    
Executive officers and Directors concerning his participation in the option     
cancellation/regrant program, which was effected on November 20, 1998:          

                                                        [Enlarge/Download Table]

                                                    NUMBER OF                                                  LENGTH OF    
                                                    SECURITIES         MARKET                                  ORIGINAL     
                                                    UNDERLYING        PRICE OF       EXERCISE                 OPTION TERM   
                                                     OPTIONS          STOCK AT         PRICE          NEW     REMAINING AT  
                                         DATE       CANCELLED         TIME OF        AT TIME OF     EXERCISE    DATE OF     
                                          OF        /REGRANTED      CANCELLATION    CANCELLATION     PRICE    CANCELLATION  
NAME AND POSITION                       REGRANT         (#)              ($)            ($)           ($)    /REGRANT(YRS.) 
----------------------------------------------------------------------------------------------------------------------------
                                                                                                                            
Theodore Aroney ,                                                                                                           
    Vice Chairman of the                                                                                                    
    Board and Secretary ..........      11/20/98      150,000         $   1.00      $    1.750     $   1.00        3.5      

Bradley J. Wilhite, President,                                                                                              
    Acting Chief Executive Officer                                                                                          
    and Director .................      11/20/98      100,000         $   1.00      $    4.125     $   1.00        4.0      

Henry J. Fleming, Jr., Director ..      11/20/98      250,000(1)      $   1.00      $    0.500     $   1.00        3.5      

Mark Bergendahl, Director ........      11/20/98      150,000         $   1.00      $    1.750     $   1.00        3.5      

-----------                                                                     

(1)  Mr. Fleming was re-issued an option for a total of 295,000 shares on       
     November 20, 1998 pursuant to the cancellation/regrant program (see "Option
Regrant Program" below).                                              

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For further information regarding the November 20, 1998 stock option            
cancellation/regrant program, see "Compensation Committee Report - Special      
Option Regrant Program."                                                        

COMPENSATION OF DIRECTORS                                                       

Fees and Expenses                                                               

Directors are reimbursed for expenses incurred in connection with attending     
Board and Committee meetings. Directors receive no additional remuneration for  
serving as Directors.                                                           

During 1998, the Company paid fees to the following Directors in their capacity 
as a Director and in connection with consulting services provided to the        
Company: Mr. Magerman received a warrant to purchase 200,000 shares of the      
Company's restricted common stock at $1.00 per share for a term of five (5)     
years beginning November 20, 1998; Mr. Aroney accrued, but was not paid,        
$75,000. (For further information regarding consulting services provided to the 
Company by such Directors, See "Certain Relationships and Related               
Transactions.")                                                                 

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL        
ARRANGEMENTS                                                                    

Employment Agreement with Gary V. Adams                                         

The Company has entered into an employment agreement with Mr. Gary V. Adams,    
Chairman and CEO, for a period of three years commencing in April 1997. Mr.     
Adams is required to devote his full-time business efforts to the Company for   
which he is paid an annual salary, initially at a rate of $120,000 per year,    
which was later increased to $150,000 per year. In addition, Mr. Adams is to be 
paid a royalty upon the sale or license of "metal woods" designed by him at the 
rate of $1.00 per club for the first 500,000 clubs; at $.50 per club for the    
next 500,000 clubs; and $.25 per club for all sales in excess of 1,000,000      
clubs. During 1998, the Company paid a royalty advance to Mr. Adams in the      
amount of $59,900. Of this amount, $23,400 had been earned as of December 31,   
1998 and is included in cost of goods sold for the year ended December 31, 1998.
The balance of $36,400 is included in other current assets in the consolidated  
balance sheet as of December 31, 1998.                                          

Employment Agreement with Bradley J. Wilhite                                    

The Company has entered into an employment agreement with Mr. Bradley J. Wilhite
for a period of one year commencing in April 1997. This agreement automatically 
renews for succeeding terms of one year unless either party gives notice to the 
other at least sixty (60) days prior to the expiration of any term of his or its
intention not to renew. Mr. Wilhite is required to devote his full-time business
efforts to the Company for which he is paid an annual salary, initially at a    
rate of $5,000 per month for the months of May and June 1997 and thereafter at  
the rate of $94,800 per year. Mr. Wilhite's salary was later increased to       
$135,000 per year. This agreement also provided Mr. Wilhite with 100,000 shares 
of the Company's restricted common stock.                                       

Change in Control Arrangements                                                  

The Company currently has no compensatory plan or arrangement for the benefit of
any officer, director or employee resulting from the resignation, retirement or 
any other termination of such officer, director or employee or from a           
change-in-control of the Company.                                               

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Compensation Committee Report - Special Option Regrant Program                  

On November 20, 1998, the Board of Directors and Stock Option Committee approved
a plan to cancel and regrant substantially all outstanding options. Based upon  
the general down-turn in the golf industry in 1998, the financial condition of  
the Company, the stock price and the necessity of retaining its employees and   
restoring value to their options, the Board of Directors and the Stock Option   
Committee believed that this program was in the best interests of the           
shareholders. Pursuant to this program, each such outstanding option was        
eligible to be cancelled and a new replacement option was granted for the same  
number of shares, with an exercise price of $1.00 per share and with a new      
vesting schedule measured from such date. The replacement options have a life of
five (5) years from the date of regrant.                                        

The lower exercise prices and extended lives in effect under the new options    
make those options valuable once again to the executive officers and Directors  
who are critical to the Company's financial performance and success. However,   
those individuals will enjoy the benefits of the new options only if they remain
in the Company's service and the market price of the Company's Common Stock     
increases.                                                                      

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        

The following table sets forth information known to the Company regarding the   
ownership of the Company's Common Stock as of March 31, 1999 for (i) each       
Director and nominee who owns Common Stock, (ii) all persons or entities who    
were known by the Company to be beneficial owners of five percent (5%) or more  
of the Company's Common Stock, (iii) the Chief Executive Officer and the other  
executive officers whose compensation for 1998 were each in excess of $100,000  
and (iv) all executive officers and Directors of the Company as a group.        

                                                        [Enlarge/Download Table]

                                             Number of Shares         Percent of Total Shares   
Name and Address of Beneficial Owner       Beneficially Owned(1)  Outstanding Beneficially Owned
------------------------------------       ------------------     ------------------------------
                                                                                                
Gary V. Adams(2)                                                                                
2532 La Costa Avenue                                                                            
Carlsbad, California 92008................      2,565,500                     16.2%             

Theodore Aroney(3)(6)                                                                           
7220 Arenal Lane                                                                                
Carlsbad, California 92009 ...............      1,930,000                     12.4%             

Mark Bergendahl(3)                                                                              
2796 Harbor Blvd. #375                                                                          
Costa Mesa, California 92626..............        595,500                      3.9%             

Henry J. Fleming, Jr.(4)                                                                        
1322 Surrey Court                                                                               
Alonquin, Illinois 60102 .................        295,000                      1.9%             

Sal Lupo                                                                                        
41 Antigua                                                                                      
Dana Point, California 92629..............        358,333                      2.3%             

Michael Magerman(7)                                                                             
3531 Avenida Pantera                                                                            
Carlsbad, California 92009 ...............        100,000                      0.6%             

Phillip A. Ward(8)                                                                              
3604 Curtis Street                                                                              
San Diego, California 92106 ..............        200,000                      1.3%             

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                                             Number of Shares         Percent of Total Shares   
Name and Address of Beneficial Owner       Beneficially Owned(1)  Outstanding Beneficially Owned
------------------------------------       ------------------     ------------------------------
                                                                                                
Bradley J. Wilhite(5)                                                                           
1736 Woodbine Place                                                                             
Oceanside, California 92054 ..............         205,000                      1.3%            

ALL DIRECTORS AND EXECUTIVE OFFICERS                                                            
AS A GROUP (8 PERSONS)....................       6,249,333                     36.8%            

Sidney Craig                                                                                    
11355 N. Torrey Pines                                                                           
La Jolla, California 92037  ..............       1,300,000                      8.5%            

-----------                                                                     

(1)  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. Percentage beneficially owned
is based on a total of 15,270,370 shares of Common Stock issued and   
     outstanding as of March 31, 1999. Shares of Common Stock subject to options
or warrants currently exercisable or convertible, or exercisable or   
 convertible within 60 days of March 31, 1999 are deemed outstanding for
     computing the percentage of the person holding such options or warrants but
are not outstanding for computing the percentage of any other person. 
Except as indicated in the footnotes to this table and pursuant to    
 applicable community property laws, the persons named in the table have
     sole voting and investment power with respect to all shares of Common Stock
beneficially owned.                                                   

(2)  Includes 600,000 shares not presently outstanding, which Mr. Gary V. Adams 
     (Chairman of the Board and Chief Executive Officer) presently has the right
    to acquire through the exercise of outstanding options and are exercisable
at $.50 per share for 3 years from April 1, 1997.                     

(3)  Includes 150,000 shares not presently outstanding, which Mr. Theodore      
  Aroney (Vice Chairman) and Mr. Mark Bergendahl (Director) each presently
  has the right to acquire through the exercise of outstanding options and
are exercisable at $1.00 per share for 5 years from November 20, 1998.

(4)  Includes 295,000 shares not presently outstanding, which Henry J. Fleming, 
   Jr. (Director) presently has the right to acquire through the exercise of
     outstanding options and are exercisable at $1.00 per share for 5 years from
November 20, 1998.                                                    

(5)  Includes 100,000 shares not presently outstanding, which Mr. Bradley J.    
    Wilhite (President, Acting Chief Executive Officer and Director) presently
  has the right to acquire through the exercise of outstanding options and
are exercisable at $1.00 per share for 5 years from November 20, 1998.

(6)  Includes 200,000 shares not presently outstanding, which Mr. Theodore      
Aroney (Vice Chairman) presently has the right to acquire through the 
     exercise of outstanding warrants and are exercisable at $1.00 per share for
3 years from November 20, 1998.                                       

(7)  Includes 100,000 shares not presently outstanding, which Mr. Michael       
     Magerman (Director) presently has the right to acquire through the exercise
     of outstanding warrants and are exercisable at $1.00 per share for 5 years,
from November 20, 1998.                                               

(8)  Includes 100,000 shares not presently outstanding which Mr. Phillip A. Ward
(Director) presently has the right to acquire through the exercise of 
 outstanding warrants and are exercisable at $1.00 per share for 5 years
from November 20, 1998.                                               

To the Company's knowledge, based solely upon representations from such         
shareholders, each beneficial owner of more than ten percent of the Company's   
capital stock and all officers and directors filed all reports and reported all 
transactions on a timely basis with the Securities and Exchange Commission (the 
"Commission"), the NASD and the Company.                                        

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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

In November 1998, the Company was advised by its principal supplier of club     
heads that, due to changes in the golf industry, the supplier had decided to    
cease production of golf club heads. As of December 9, 1998, the Company owed   
this supplier $556,300 for golf club heads which had been received and had open 
purchase orders for golf club heads with a value of approximately $2,350,000.   
The Company was able to negotiate a one-time buy-out of the balance owing to the
supplier plus the open purchase orders for $1,175,000 as of December 11, 1998.  

As the Company did not have the financial resources to complete the buy-out     
discussed above, the Company entered into an agreement with                     
Bignell-Ward-Bignell, whose President is Phillip A. Ward, a Director of the     
Company, to purchase the golf club heads that the Company purchased, but had not
yet paid for, from the supplier, plus the remaining golf club heads on open     
purchase orders as they are completed by the supplier. Pursuant to the          
agreement, the Company purchases golf club heads on a COD basis, as-needed from 
Bignell-Ward-Bignell. In exchange for financing the purchase of these golf club 
heads, the Company pays a 20% mark-up over cost. The total purchase price of    
these golf club heads is approximately $1,410,000 and must be paid no later than
June 30, 1999. Additionally, the agreement with Bignell-Ward-Bignell requires   
the Company to purchase a certain minimum number of golf club heads each month  
from January through June 1999. If the Company fails to make these purchases,   
Bignell-Ward-Bignell is under no obligation to sell the remaining golf club     
heads to the Company and the Company would lose any value-added costs previously
paid for by the Company. The Company has approximately $518,800 of such         
value-added costs capitalized as work in process inventory as of December 31,   
1998.                                                                           

Sal Lupo, former Senior Vice President of Marketing and Director of the Company 
was the owner of the media (print & television) agency used by the Company in   
1998. The suppliers of this media discounted their billings to the agency by    
15%, as is standard in the industry. The Company then paid the agency the net   
amount plus 3%. The total amount paid to the agency in 1998 was approximately   
$391,300.                                                                       

During 1997, the Company issued common stock and/or granted stock options to    
various persons as consideration for services or to acquire certain assets.     
Those transactions involving management are summarized below. See also "Item 10.
Executive Compensation - Option Regrant Program."                               

o   Gary V. Adams (Chairman of the Board and Chief Executive Officer) was       
    granted an option to acquire 600,000 shares of the Company's common stock at
   $.50 per share for 5 years from April 1, 1997, to acquire Mr. Adams' design
work.                                                                   

o   Theodore Aroney (Vice Chairman) was granted an option to acquire 150,000    
shares of the Company's common stock at $1.75 per share for 5 years from
April 2, 1997, for services rendered to the Company.                    

o   Mark Bergendahl (Director) was issued 50,000 shares of the Company's        
  restricted common stock to purchase office furnishings, and was granted an
   option to acquire 150,000 shares of the Company's common stock at $1.75 per
   share for 5 years from April 2, 1997, for services rendered to the Company.

o   Henry J. Fleming, Jr. (Director) was granted an option to acquire 250,000   
shares of the Company's common stock at $.50 per share for 5 years from 
April 1, 1997, for consulting services rendered to the Company.         

o   Bradley J. Wilhite (President, Acting Chief Executive Officer and Director) 
  was issued 100,000 shares of the Company's restricted common stock and was
    granted an option to acquire 100,000 shares of the Company's common stock at
   $4.125 per share for 5 years from September 29, 1997, for services rendered
to the Company.                                                         

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ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K.                                    

(a)     Exhibits                                                                

The following exhibits are referenced or included in this report:               

                                                                [Download Table]

EXHIBIT      DESCRIPTION                                        
                                                                
  2.1*       Agreement & Plan of Reorganization                 
  3.1*       Articles of Incorporation                          
  3.2*       Articles of Amendment                              
  3.3*       Articles of Amendment                              
  3.4*       By-Laws                                            
  4.1*       Common Stock Specimen Certificate                  
  4.2*       Form of Warrant Agreement                          
  4.3*       Form of Warrant Certificate                        
  5.1*       Opinion of Counsel                                 
 10.1*       Lease Agreement - Carlsbad, CA                     
 10.2*       Lease Agreement - McHenry, IL                      
 10.3*       Stock Option Plan                                  
 10.4*       Employment Agreement - Gary Adams                  
 10.5*       Employment Agreement - Bradley Wilhite             
 10.6*       Employment Agreement - Mario Cesario               
 10.7*       Employment Agreement - Thomas Grimley              
 10.8*       Employment Agreement - Eddie Langert               
 16.1*       Letter from Clumeck, Stern, Phillips & Schenkelberg
                on change in certifying accountant              
 24.1*       Power of Attorney (see page 45)                    
 27.1*       Financial Data Schedule - 1998                     
 27.2*       Financial Data Schedule - 1997                     

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

*    Exhibits previously filed.                                                 

(b)  Reports on Form 8-K                                                        

The following reports on Form 8-K were filed during the fourth quarter of 1998  
and the first quarter of 1999:                                                  

o    On December 30, 1998, the Company filed a Current Report on Form 8-K       
     reporting that, effective December 23, 1998, the Company dismissed Clumeck,
  Stern, Phillips & Schenkelberg as the Company's independent accountants.

o    On January 15, 1999, the Company filed a Current Report on Form 8-K to     
submit a copy of the letter of agreement with Form 8-K filed with the 
Commission on December 30, 1998 from Clumeck, Stern, Phillips &       
     Schenkelberg and received by McHenry Metals Golf Corp. on January 13, 1999.

o    On February 4, 1999, the Company filed a Current Report on Form 8-K        
reporting that, effective February 2, 1999, the Company appointed BDO 
Seidman LLP as the Company's independent accounting firm.             

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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.                                                                     

               MCHENRY METALS GOLF CORP.

Date:   April 29, 1999           By:     /s/ Bradley J. Wilhite                 
                                     -------------------------------------------
            Bradley J. Wilhite
                                    President, Acting Chief Executive Officer,
  Director

Date:   April 29, 1999           By:     /s/ Douglas A. Willford                
                                     -------------------------------------------
             Douglas A. Willford
                 Chief Financial Officer

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 POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears    
below constitutes and appoints Bradley J. Wilhite and Douglas A. Willford, and  
each of them, as his true and lawful attorneys-in-fact and agents, with full    
power of substitution and resubstitution, for him and in his name, place and    
stead, in any and all capacities, to sign any and all amendments (including     
post-effective amendments) to this Report on Form 10-KSB, and to file the same, 
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and    
agents, and each of them, full power and authority to do and perform each and   
every act and thing requisite and necessary to be done in connection therewith, 
as fully to all intents and purposes as he might or could do in person, hereby  
ratifying and confirming all that said attorneys-in-fact and agents, or any of  
them, or their or his substitute or substitutes, may lawfully do or cause to be 
done by virtue hereof.                                                          

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 and on the dates indicated.                                   

Date:                             By:                                           
     -------------------                ----------------------------------------
             Gary V. Adams
                                  Chairman, Chief Executive Officer,
        Director

Date:   April 14, 1999            By:      /s/ Theodore Aroney                  
                                        ----------------------------------------
                         Theodore Aroney, Director

Date:   April 15, 1999            By:      /s/Mark Bergendahl                   
                                        ----------------------------------------
                         Mark Bergendahl, Director

Date:   April 14, 1999            By:      /s/ Henry J. Fleming, Jr.            
                                        ----------------------------------------
                               Henry J. Fleming, Jr., Director

Date:   April 14, 1999            By:      /s/ Bradley J. Wilhite               
                                        ----------------------------------------
                  Bradley J. Wilhite
                                 President, Acting Chief Executive
                 Officer, Director

Date:   April 14, 1999            By:      /s/ Sal Lupo                         
                                        ----------------------------------------
                  Sal Lupo, Director

Date:   April 15, 1999             By:     /s/Phillip A. Ward                   
                                        ----------------------------------------
                         Phillip A. Ward, Director

Date:   April 14, 1999             By:     /s/ Michael Magerman                 
                                        ----------------------------------------
                          Michael Magerman, Director

12

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10KSB40/A Filing		Date		First		Last			Other Filings
		1/13/97		4
		4/1/97		9		10
		4/2/97		10
		9/29/97		5		10
		12/31/97		4
		6/30/98		5
		11/20/98		5		9
		12/9/98		10
		12/11/98		10
		12/23/98		11					8-K, 8-K/A
		12/30/98		11					8-K
For The Period Ended		12/31/98		1		10			10KSB40, NT 10-K
		1/13/99		11
		1/15/99		11					8-K/A
		2/2/99		11					8-K
		2/4/99		11
		3/31/99		1		9			10QSB, NT 10-Q
		4/14/99		13
		4/15/99		13					10KSB40
Filed On / Filed As Of		4/29/99		1		12
		6/30/99		10					10QSB, NT 10-Q
		3/31/00		6					10QSB, 10QSB/A, NT 10-K, NT 10-Q
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