<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(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 August 31, 1996.
/ / 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: 0-20879
MAR VENTURES, INC.
(Name of small business issuer in its charter)
Delaware 95-4580642
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16661 Ventura Boulevard Suite 224
Encino, California 91436
Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (818) 784-0040
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act: Common Stock,
Par Value $0.01 Per Share.
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or 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. ___
State issuer's revenues for its most recent fiscal year: $14,882
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of August 31, 1996, was $-0-, based upon the lack of any
public market for such shares as of such date.
The number of shares outstanding of the issuer's common stock, par value
$.01 per share, as of August 31, 1996, was 480,000.
Documents incorporated by reference: None.
<PAGE>
INDEX TO ANNUAL REPORT
ON FORM 10-KSB
PART I
PAGE
Item 1. Description of Business. 3
Item 2. Description of Property. 7
Item 3. Legal Proceedings. 8
Item 4. Submission of Matters to a Vote of Security Holders. 8
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters. 8
Item 6. Management's Discussion and Analysis of Financial
Condition or Plan of Operation. 8
Item 7. Financial Statements. 10
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. 20
PART III
Item 9. Directors and Executive Officers, Promoters and Control
Persons: Compliance with Section 16(a) of the Exchange Act. 20
Item 10. Executive Compensation. 21
Item 11. Security Ownership of Certain Beneficial Owners. 21
Item 12. Certain Relationships and Related Transactions. 22
Item 13. Exhibits and Reports on Form 8-K 22
Item 14 Signatures 23
2
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND
Mar Ventures Inc., a Delaware corporation, was incorporated under the
laws of the State of Delaware on March 27, 1996, as a wholly owned
subsidiary of Bexy Communications, Inc., a Delaware corporation ("Bexy").
On April 16, 1996, Bexy contributed all of Bexy's operating assets to Mar
Ventures pursuant to an Asset Transfer Assignment and Assumption Agreement,
(including the assets and liabilities associated with the health
information activities of Bexy) in exchange for 452,000 shares of Mar
Ventures Common Stock. These assets included: furniture and fixtures,
accounts receivable, program inventory, cash and other assets, for a total
of approximately $110,000. Liabilities of approximately $84,000 were
assumed by Mar Ventures in connection with the Assignment Agreement.
At a special meeting held on July 2, 1996, the stockholders of Bexy
approved a Plan of Reorganization as set forth in an Agreement and Plan of
Reorganization dated as of April 16, 1996. Pursuant to the Reorganization,
and following all regulatory approval, the outstanding capital stock of Mar
Ventures was distributed to the stockholders of record of Bexy as of July
2, 1996. Each Bexy stockholder received one share of Mar Ventures for
every four shares of Bexy, held on the record date.
As of August 31, 1996, there was no public market for the Company's
stock. Following the distribution of its shares to the Bexy stockholders,
the Company applied for listing on the NASD's Bulletin Board system.
CURRENT ACTIVITIES AND PROPOSED BUSINESS ACTIVITIES
The current core business of Mar Ventures, which is a continuation of
the business of Bexy, is the production and marketing of traditional
television programming, exploiting its current film library, as well as
creating and distributing health-themed information for the general public
through print and electronic media.
Film Library
The film library currently being marketed by the Company includes:
(1) "FEELIN' GREAT," distribution rights to a weekly half hour
television series hosted by former "Dynasty" star John James. This twenty
six episode magazine style series helps viewers make personal lifestyle
choices with timely up-to-date information.
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(2) "HEARTSTOPPERS -- HORROR AT THE MOVIES," a two hour made for
television tribute to the horror film genre hosted by George Hamilton.
"Heartstoppers" was produced in 1993 and showcases the best horror films
from Hollywood and around the world, from the early days of motion pictures
to the special effects of today's graphic and thrilling horror motion
pictures. "Heartstoppers" is currently being distributed in the United
States by MG Perin, Inc. and internationally by International Entertainment
Incorporated ("IEI"). It is a seasonal program aimed at the October/Halloween
season, and marketing efforts for "Heartstoppers" focus primarily on Japan,
Australia, parts of Europe and Latin America. "Heartstoppers" aired in the
United States and several foreign countries in October 1993, and was recently
licensed to the Sci-Fi cable network.
(3) "IT'S A WONDERFUL LIFE -- A PERSONAL REMEMBRANCE," a tribute by
Frank Capra Jr. to his father. Mr. Capra's tribute is in color and is
approximately 15 minutes in length. The black-and-white version of "It's A
Wonderful Life" follows the tribute. In 1992 the program was licensed for
a period of ten years to The Walt Disney Company's Disney Channel. The
program is now being distributed throughout the world by IEI. IEI has
licensed the program in approximately 17 countries, including Mexico,
Spain, Sweden, England, Germany and Greece. Again, the film and tribute
are also seasonal programming and are marketed accordingly. The home
video rights for "It's A Wonderful Life -- A Personal Remembrance" have
been licensed to Republic Pictures.
(4) "CHRISTMAS AT THE MOVIES," a one hour special/tribute to classic
Christmas films co-owned and co-produced by Bexy in 1990 hosted by Gene
Kelly. All American Communications, Inc. ("AAC") is the co-producer and
distributor for this program. This special incorporates clips from such
classic Christmas motion pictures such as "It's A Wonderful Life," "Santa
Claus, The Movie," "When Harry Met Sally," "The Bells of Saint Mary's,"
"Meet John Doe," and "A Christmas Carol," to name but a few. As with
Heartstoppers and It's A Wonderful Life, this special is focused upon a
particular season of the year and is marketed accordingly. In addition to
distributing the special in the United States, AAC has also licensed the
special in 18 foreign countries, including Canada, the United Kingdom, New
Zealand and the Philippines, as well as parts of Europe and South East
Asia.
Although Mar Ventures will continue to market the film library
acquired from Bexy, management does not anticipate generating significant
revenues as a result of this activity.
Management intends to continue the above activities while seeking
additional opportunities in the entertainment industry, and to attempt to
expand its existing film library through the acquisition of additional
television programing.
4
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The Television Market
GENERAL. The United States television production/distribution
industry serves the largest television programming market in the world,
consisting of the major broadcast networks and their affiliated stations,
the independent commercial television stations, and cable television.
Expanding foreign broadcasting and cable television markets increases the
range of opportunities for the distribution of U.S.-produced television
programming and the licensing of U.S. program format rights.
DOMESTIC MARKET STRUCTURE. There are three principal modes of
distribution serving the United States television market:
(1) the traditional commercial broadcast networks (ABC, CBS and NBC)
and Fox Broadcasting;
(2) independent commercial television stations; and
(3) cable, both advertiser-supported and subscriber-supported.
The long-established broadcast networks dominate the market,
distributing their programs through stations that are either network-owned
and operated or simply affiliated with the network, the latter numbering
roughly 600 in the aggregate. By contrast, stations affiliated with the
more recently formed Fox network number about 130. Network affiliates
"clear" (i.e. accept for broadcast) network-supplied programming and
national commercials, in return for which they receive payments from the
networks. By providing the affiliates with about two-thirds of their
program schedule, thereby lowering the cost of station operation, network
affiliation can be a lucrative arrangement for such stations. In turn, the
network receives the benefit of being able to reach, via its affiliates,
virtually all of the significant television markets in the U.S.
The approximately 215 independent commercial television stations
acquire programming for their broadcast schedules through syndicated
distribution; i.e., the process of placing programs directly with the
stations, an alternative to network distribution. Syndicators attempt to
sell a program to a television station (which may be either an independent
or a network affiliate) in every major television market, seeking to
achieve as large a network audience as possible. Programming acquired by
stations on a syndicated basis is typically acquired for a cash license fee
or, in the instance of a "barter" sale, for a negotiated amount of
commercial advertising time during the program. This advertising time is
retained by the syndicator in lieu of a cash license fee and is generally
sold to advertisers. If the syndicator succeeds in placing its program
with a geographically diverse group of stations covering a sufficiently
large proportion of U.S. households, the syndicator may be able to sell the
commercial time it has retained to national sponsors, a more lucrative and
cost-effective process than relying on local sponsorship in each market.
5
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Cable, the third mode of distribution, is more diverse in its
composition than the network or independent station modes. In addition to
basic (advertiser-supported) and pay (subscriber-supported) networks, cable
embraces so-called "Super Stations," commercial independent stations (e.g.,
WTBS in Atlanta, WGN in Chicago, WOR in New York) whose signals are
distributed by satellite to cable systems throughout the U.S.
INTERNATIONAL MARKET STRUCTURE. Despite their geographical and
cultural diversity, the territorial blocs that make up the international
television market all are being shaped in varying degrees by two distinct
and concurrent processes: the movement away from government control of
national television industries in favor of free-market, private-sector
models; and the introduction and proliferation of alternative modes of
distribution, such as satellite and cable. Together these processes are
fueling dynamic growth, particularly in Europe and Australia.
In Europe, the last ten years have witnessed the privatization of
television systems in Italy, France, Norway and Spain. For Europe's
broadcast sector, industry analysts are projecting substantial increases in
advertising revenues. In Europe's cable sector, pay television has grown
to over three million subscribers in the last three years. The
proliferation of pay television systems has had the effect of raising
programming prices by enhancing competition in the European television
market.
Pay television is establishing a foothold in non-European territories
with similar effect, particularly in Australia, possibly the most dynamic
television market in the world. Expansion of television services has been
dramatic in the faster growing economies of South Korea, Hong Kong and
Japan. Political and economic change coupled with new technology, notable
satellite program delivery, have combined to transform the historically
fragmented and closed markets of this region into a cohesive and viable
market for U.S. programs.
Inevitably, with privatization and technological innovation has come a
measure of foreign government regulation affecting the international
distribution of programming. Certain foreign territories have established
quota systems in varying degrees, legal requirements that a certain
percentage of television programming available in those territories be
produced using local elements (e.g. in the European Economic Community,
"local" content programming can originate from any member country), or
restricting the quantity of foreign (read "U.S.-originated") programming
that may be broadcast as a percentage of a station's total program
schedule.
Notwithstanding these regulatory initiatives, however, television
industry analysts interpret the effects of ongoing privatization and the
proliferation of new modes of program delivery as net positives, auguring
continued strong foreign demand for U.S. programming.
6
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The Company's current activity in the domestic and international
television market place is the continued exploitation of its non-health
related programming, and the marketing of the 26 episode television series,
entitled FEELIN' GREAT.
In the future, management anticipates marketing additional health-
related television series and specials, to both the domestic and
international markets.
The Company is continuing its efforts to expand its health-related
library, through the acquisition of appropriate programming.
Competition
Competition in the financing, development, production and distribution
of television programming is highly intense. The Company's programming
competes with other first-run programming, network reruns and programs
produced by local television stations; and the Company competes for the
creative services of producers, technical personnel, writers and performing
artists. In both areas of competition, the Company competes with companies
that have been acquiring, developing, producing and distributing programs
for many years, many of which have greater financial resources than those
of the Company. These competitors include large television and film
studios such as Paramount, MCA, and 20th Century Fox, as well as other
television distribution companies such as Republic Pictures and King World
Entertainment.
The Company's success is highly dependent on such various
unpredictable factors as the viewing preferences of television audiences.
The Company's programming competes not only with other television
programming, including satellite and cable programming, but also with movie
theaters, pre-recorded videocassette rentals, live performances, and other
forms of entertainment and leisure time activities.
Employees
The Company presently has no employees. Its President and majority
shareholder, Buddy Young, provides services under a consulting agreement
with the Company. The Company anticipates hiring up to five individuals,
(of whom it is anticipated that two would be clerical and three would be
professional) during the Company's next fiscal year. The Company regularly
utilizes the services of independent consultants for its business affairs
and marketing activities.
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases office space from an unaffiliated third-party under
a month-to-month lease, for $500 per month at 16661 Ventura Blvd. Suite 224
Encino, CA 91436. Although the Company believes that such space will be
7
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adequate for its needs for the next four months, the Company plans to
relocate its executive office thereafter in order to accommodate such
larger staff.
ITEM 3. LEGAL PROCEEDINGS
The Company is not party to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended August 31, 1996.
PART 11
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of August 31, 1996, there was no public trading market for the
Company's stock. On November 1, 1996, the Company's common stock was
cleared for trading on the NASD's Bulletin Board system (stock symbol
MRVI). There are approximately 700 holders of record of the Company's
common stock.
ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
The Company was incorporated under the laws of the State of Delaware
on March 27, 1996, as a wholly owned subsidiary of Bexy Communications, Inc.
On April 16, 1996, the Company, pursuant to the terms of an Asset Transfer
and Assumption Agreement, acquired the assets of Bexy totaling
approximately $110,000, in exchange for 452,000 shares of its common stock.
The Company, also under the terms of the agreement, assumed liabilities of
approximately $84,000.
As part of a Plan of Reorganization adopted by the Bexy shareholders
at a special meeting on July 2, 1996, the 452,000 Mar Venture shares were
distributed to the stockholders of record of Bexy as of July 2, 1996. Each
Bexy stockholder received one share of mar Ventures for every four shares
of Bexy, held on the record date.
LIQUIDITY AND CAPITAL RESOURCES
At August 31, 1996, the Company had a working capital deficit of
approximately $19,000. Cash used by operating activities during the period
July 2, 1996 (date of inception) to August 31, 1996 totaled approximately
8
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$24,000. The Company expects to meet its current cash requirements through
license revenues, deferral of consulting fees to and borrowings from its
President.
RESULTS OF OPERATIONS
Revenues during the period totaled approximately $15,000. Cost
of programs and distribution fees included approximately $30,000 in
accelerated amortization of the Company's film library due to lower then
expected current and projected revenues.
The Company wrote-off approximately $32,000 in uncollectible accounts
receivable at August 31, 1996. Professional fees of approximately $13,000
were incurred during the period in connection with the organization of Mar
Ventures, and the registration statement filed under Form 10SB.
The Company experienced significant operating losses for the period
ended August 31, 1996. The financial statements have been prepared
assuming the Company will continue to operate as a going concern which
contemplates the realization of assets and the settlement of liabilities in
the normal course of business. No adjustment has been made to the recorded
amount of assets or the recorded amount or classification of liabilities
which would be required if the Company were unable to continue its
operations. As discussed in Note 4 to the financial statements, management
has developed an operating plan which they believe will generate sufficient
cash to meet its obligations in the normal course of business.
9
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ITEM 7. FINANCIAL STATEMENTS
MAR VENTURES, INC.
Financial Statements
For the Period July 2, 1996
(Date of Inception) to
August 31, 1996
and Independent Auditors' Report
10
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MAR VENTURES, INC.
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 12
FINANCIAL STATEMENTS:
Balance Sheet,
August 31, 1996 13
Statement of Operations
for the Period July 2, 1996 (Date of
Inception) to August 31, 1996 14
Statement of Shareholders' Equity
for the Period July 2, 1996 (Date of
Inception) to August 31, 1996 15
Statement of Cash Flows
for the Period July 2, 1996 (Date of
Inception) to August 31, 1996 16
Notes to Financial Statements 17-19
___________________________________________________________________
11
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INDEPENDENT AUDITORS' REPORT
To Mar Ventures, Inc.:
We have audited the accompanying balance sheet of Mar Ventures, Inc.
(the "Company") as of August 31, 1996. We have also audited the
statements of operations, shareholders' equity and of cash flows for
the period July 2, 1996 (date of inception) to August 31, 1996. 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 audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement
is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the
Company as of August 31, 1996, and the results of its operations and
its cash flows for the period ended August 31, 1996, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1
to the financial statements, the Company has suffered recurring losses
from operations that raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 4. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
FARBER & HASS
Oxnard, California
November 6, 1996
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MAR VENTURES, INC.
<TABLE>
BALANCE SHEET
AUGUST 31, 1996
________________________________________________________________________
<S> <C>
ASSETS
CASH $ 27,018
ACCOUNTS RECEIVABLE 26,000
PROGRAM INVENTORY, Net 20,000
FURNITURE AND FIXTURES - Net of accumulated
depreciation of $3,764 322
OTHER ASSETS 4,200
_________
TOTAL ASSETS $ 77,540
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accrued professional fees $ 24,040
Other accrued expenses 6,500
Accrued interest to related party 36,125
Other liabilities 5,000
_________
Total liabilities 71,665
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock (par value - $.001, 30,000,000 shares
authorized, 480,000 issued and outstanding) 480
Contributed capital 99,398
Accumulated deficit (94,003)
_________
Total shareholders' equity 5,875
_________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 77,540
</TABLE>
See accompanying notes to financial statements.
________________________________________________________________________
13
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MAR VENTURES, INC.
<TABLE>
STATEMENT OF OPERATIONS
FOR THE PERIOD JULY 2, 1996
(DATE OF INCEPTION) TO AUGUST 31, 1996
________________________________________________________________________
<S> <C>
REVENUES $ 14,882
_________
EXPENSES:
Cost of programs and distribution fees 37,159
Advertising 762
Bad debt 31,869
General and administrative 10,555
Consulting fees to majority shareholder 14,000
Professional fees 13,390
Rent 850
Depreciation 300
_________
Total expenses 108,885
_________
NET LOSS $(94,003)
Net loss per share $ (.20)
</TABLE>
See accompanying notes to financial statements.
________________________________________________________________________
14
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MAR VENTURES, INC.
<TABLE>
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD JULY 2, 1996
(DATE OF INCEPTION) TO AUGUST 31, 1996
________________________________________________________________________
<CAPTION>
COMMON STOCK
____________________
SHARES CONTRIBUTED ACCUMULATED
OUTSTANDING AMOUNT CAPITAL DEFICIT
________________________________________________________________________
<S> <C> <C> <C> <C>
BALANCE, JULY 2, 1996 452,000 $452 $96,626
SHARES ISSUED
FOR SERVICES 28,000 28 2,772
NET LOSS $(94,003)
________________________________________________________________________
BALANCE, AUGUST 31, 1996 480,000 $480 $99,398 $(94,003)
</TABLE>
See notes to financial statements.
________________________________________________________________________
15
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MAR VENTURES, INC.
<TABLE>
STATEMENT OF CASH FLOWS
FOR THE PERIOD JULY 2, 1996
(DATE OF INCEPTION) TO AUGUST 31, 1996
________________________________________________________________________
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(94,003)
Adjustments to reconcile net loss to
net cash used by operating activities:
Bad debt expense 31,869
Depreciation 300
Amortization of film costs 32,756
Issuance of stock for services 2,800
Changes in operating assets and liabilities:
Accounts receivable 10,931
Other assets 400
Accrued expenses and other liabilities (8,666)
__________
Net cash used by operating activities (23,613)
CASH, BEGINNING OF PERIOD 50,631
__________
CASH, END OF PERIOD $ 27,018
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ -0-
Cash paid for income taxes $ -0-
</TABLE>
See accompanying notes to financial statements.
________________________________________________________________________
16
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MAR VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
________________________________________________________________________
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL INFORMATION - Mar Ventures, Inc. ("Mar Ventures"), a
Delaware corporation, was incorporated under the laws of the State
of Delaware on March 27, 1996, as a wholly-owned subsidiary of Bexy
Communications, Inc., a Delaware corporation ("Bexy"). On
April 16, 1996, Bexy contributed all of Bexy's operating assets to
Mar Ventures pursuant to an Asset Transfer Assignment and
Assumption Agreement, (including the assets and liabilities
associated with the health information activities of Bexy) in
exchange for 452,000 shares of Mar Ventures Common Stock.
At a special meeting held on July 2, 1996, the shareholders of Bexy
approved a plan of reorganization as set forth in an Agreement and
Plan of Reorganization dated as of April 16, 1996. Pursuant to the
Reorganization, and following all regulatory approval, the
outstanding capital stock of Mar Ventures was distributed to the
shareholders of record of Bexy as of July 2, 1996. Each Bexy
shareholder received one share of Mar Ventures for every four
shares of Bexy held on the record date.
The current core business of Mar Ventures, Inc., which is a
continuation of the business of Bexy, is the production and
marketing of traditional television programming, exploiting its
current film library, as well as distributing health-oriented
information for the general public through print and electronic
media.
GOING CONCERN - The Company experienced significant operating
losses for the period ended August 31, 1996. The financial
statements have been prepared assuming the Company will continue to
operate as a going concern which contemplates the realization of
assets and the settlement of liabilities in the normal course of
business. No adjustment has been made to the recorded amount of
assets or the recorded amount or classification of liabilities
which would be required if the Company were unable to continue its
operations. As discussed in Note 4, management has developed an
operating plan which they believe will generate sufficient cash to
meet its obligations in the normal course of business.
UNCLASSIFIED BALANCE SHEET - In accordance with the provisions of
SFAS No. 53, the Company has elected to present an unclassified
balance sheet.
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PERVASIVENESS OF ESTIMATES - The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
CONCENTRATION OF CREDIT RISK - Financial instruments which
potentially subject the Company to concentrations of credit risk
consist principally of trade receivables. The Company routinely
assesses the financial strength of its customers. The Company
normally does not require collateral to support customer
receivables. At August 31, 1996, the Company had two customers
which accounted for approximately 71% and 29% of trade accounts
receivables.
FURNITURE AND FIXTURES - Furniture and fixtures are recorded at
cost and depreciated over an estimated useful life of 3 years using
the straight-line method.
LICENSE AGREEMENTS - Revenue from television licensing agreements
and the related film costs are recognized upon the execution of a
licensing agreement, provided certain conditions have been met,
including availability of the film for broadcast.
INCOME TAXES - The Company accounts for income taxes under
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Income taxes are provided based on earnings
reported for financial statement purposes. Deferred taxes are
provided on the temporary differences between income for
financial statement and tax purposes. Deferred taxes are
considered immaterial at August 31, 1996.
The Company has net operating loss carryforwards of approximately
$90,000 and $45,000 available to offset future Federal and
California taxable income, respectively. Such loss carryforwards
expire in 2011.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value of all
financial instruments potentially subject to valuation risk
(principally consisting of cash and cash equivalents, accounts
receivable and accounts payable) approximates fair value due to
the short term maturities of such instruments.
PER SHARE INFORMATION - Net loss per share for the period
presented is computed on the basis of the weighted average common
shares outstanding. The number of shares used in the computation
was 480,000.
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2. PROGRAM INVENTORY
Program inventory is stated at the lower of cost or estimated net
realizable value, determined on a film-by-film basis. Film costs
include production, print and pre-release costs. The
amortization for the period was accelerated to reflect
management's estimate of remaining gross revenues from all
sources on an individual film basis.
<TABLE>
At August 31, 1996, the program inventory consisted of the
following:
<S> <C>
"Heartstoppers...Horror At The Movies"
A two-hour television program hosted by
George Hamilton $ 416,636
"Christmas at the Movies" - A one-hour
television program hosted by Gene Kelly 106,000
"It's A Wonderful Life - A Personal
Remembrance" hosted by Frank Capra, Jr. 41,786
_________
Total 564,422
Less: accumulated amortization (544,422)
_________
Program Inventory, Net $ 20,000
</TABLE>
3. COMMITMENTS AND CONTINGENCIES
The Company leases its primary office space on a month-to-month
basis at a rate of $350 per month. Total rent expense for the
period ended August 31, 1996 was $850.
4. MANAGEMENT PLANS
During the period ended August 31, 1996, the Company generated net
negative cash flows from operating activities of $23,613.
Management expects that the forecasted higher sales and cash flow
from operations will be adequate to finance the 1997 cash flow
requirements. If the Company does not achieve the forecasted
higher sales, the Company may have difficulty in continuing as a
going concern. Management has developed alternative plans which
include, but are not limited to, merging with another company and
obtaining additional financing sources.
________________________________________________________________________
19
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no disagreements between the Company and their
accountants since it was incorporated under the laws of the State of
Delaware on March 27, 1996. In March 1996, Farber & Hass were engaged
as the accountants for the Company.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
<TABLE>
The directors and executive officers of the Company as of August
31, 1996, were as follows:
<CAPTION>
Name Age Title
<S> <C> <S>
Buddy Young 61 Chairman of the Board,
President, Chief Executive
Officer, Chief Financial
Officer, and Secretary
</TABLE>
Buddy Young, Chairman of the Board and President, Chief Executive
Officer and Chief Financial Officer of the Company, has been involved in
the entertainment industry in various executive capacities for more than
25 years. From June 1983 until December 1991, Mr. Young was President,
Chief Executive Officer and a Director of Color Systems Technology, Inc.
("Color Systems"), a publicly held company whose stock is traded on The
American Stock Exchange. Color Systems' major line of business is the
use of its patented computer process for the conversion of black and
white motion pictures to color. Following his departure from Color
Systems, Mr. Young established Bexy Communications, Inc., whose core
business was the production, financing and distribution of television
programming. During Mr. Young's tenure as President and C.E.O., Bexy
produced a number of television programs including the recently aired
two-hour special "HEARTSTOPPERS -- HORROR AT THE MOVIES," hosted by
George Hamilton.
Prior to joining Color Systems, Mr. Young served from 1965 to 1975
as Director of West Coast Advertising and Publicity for United Artists
Corporation, from 1975 to 1976 as Director of Worldwide Advertising and
Publicity for Columbia Pictures Corp., from 1976 to 1979 as Vice
President of Worldwide Advertising and Publicity for MCA/Universal
Pictures, Inc., and from 1981 to 1982 as a principal in the motion
picture consulting firm of Powell & Young, which represented some of the
industry's leading film makers.
20
<PAGE>
For the past thirty years, Mr. Young has been an active member of
The Academy of Motion Picture Arts and Sciences and has served on a
number of industry-wide committees.
Mr. Young assumed his position on March 27, 1996. Officers serve
at the pleasure of the Board of Directors. Directors serve until the
next annual meeting of shareholders and until their successors are
elected and qualify.
The Company has not been furnished by any person with Forms 3 and 4
during the fiscal year ended August 31, 1996 or with Form 5 with respect
to such fiscal year.
ITEM 10. EXECUTIVE COMPENSATION
The Company paid to Mr. Young, an officer, director and
principal stockholder of the Company, a consultancy fee amounting to
$14,000 during the period ended August 31, 1996. Mr. Young assumed his
offices on March 27, 1996. The Company has contracted with Mr. Young
to provide consulting services at $7,000 per month.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information concerning
the beneficial ownership of the Company's outstanding common stock as of
August 31, 1996, by each person known by the Company to own beneficially
more than 5% of the outstanding common stock, by each of the Company's
directors and by all directors and officers of the Company as a group.
Unless otherwise indicated below, to the knowledge of the Company, all
persons listed below have sole voting and investment power with respect
to their shares of common stock except to the extent that authority is
shared by spouses under applicable law.
<CAPTION>
Name and Address Number of Shares Percentage of Class
<S> <C> <C>
Buddy Young and Rebecca
Young as Trustees of the
Young Family Trust 16661
Ventura Blvd., Suite 224
Encino, California 91436 258,334 (1) 53.8%
All Officers and Directors
as a Group (1 person) 258,334 53.8%
___________________________
<FN>
(1) An aggregate of 20,833 additional shares are held by the son
and daughter of Mr. and Mrs. Young and their spouses for
themselves and as custodians for their children. Mr. and Mrs.
Young disclaim any beneficial ownership in such shares.
</FN>
</TABLE>
21
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Through April 19, 1996, Young, an officer, director and
principal stockholder of Mar Ventures, advanced funds to Bexy for
operating expenses and film productions totaling $566,301 (before
repayments), represented by promissory note(s) which were assumed by Mar
Ventures. The advanced funds accrue interest on outstanding amounts at
a rate of 8% per annum. A portion of the funds raised by Bexy through
equity financing, were used to reduce the debt owed to Young. As of
August 31, 1996, the Company owed Young $36,125 in accrued and unpaid
interest. This liability has been assumed by Mar Ventures and will be
paid out of available funds.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
During the last quarter of fiscal year 1996 no
report on Form 8-K was filed
22
<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.
Mar Ventures, Inc.
Dated: November 18, 1996 By: /s/ Buddy Young
_____________________________
Buddy Young
President (principal executive
officer) and Treasurer
(principal financial and
accounting officer)
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.
Dated: November 18, 1996 /s/ Buddy Young
_____________________________
Buddy Young, Director
23
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<CASH> 27,018
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 77,540
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 71,665
<LONG-TERM> 0
0
0
<COMMON> 480
<OTHER-SE> 99,398
<TOTAL-LIABILITIES-AND-EQUITY> 77,540
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 0
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 108,885
<INCOME-PRETAX> (94,003)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (94,003)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
