SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
MAR VENTURES INC.
(Name of Small Business Issuer in its charter)
Delaware 95-4580642
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
16661 Ventura Boulevard, Suite 214, Encino, California 91436
(Address of principal executive offices) (Zip Code)
(818) 784-0040
(Issuer's telephone number)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
(Title of Class)
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PART I
Item 1. Description of Business
Background; The Reorganization
In 1983, in connection with a reorganization plan under the
Bankruptcy Code, the Company's parent, Bexy Communications, Inc. ("Bexy"), then
called All American Burger, Inc. ("AAB"), was incorporated and acquired all of
the assets, franchise agreements and leasehold estate of 986 South Vermont
Corporation, a California corporation ("South Vermont"). For a time, AAB engaged
in franchising "fast-food" restaurants and food outlets in California, Nevada
and New York under the "All American Burger", "Wee Donuts" and "Pedro's" trade
names. In 1988, AAB discontinued its franchising operations.
In May 1987, AAB acquired all of the capital stock of Group S
Films, Inc., a California corporation ("Group S") engaged in the production and
distribution of theatrical motion pictures and other programming material, in
exchange for the issuance to the shareholders of Group S shares of the Company's
Common Stock. As a consequence of such transaction, the former shareholders of
Group S became the beneficial owners of in excess of fifty percent of the Common
Stock of the Company. AAB and Group S ceased all significant business activities
in the latter part of 1989.
In June 1993, Bexy entered into an Agreement and Plan of
Reorganization pursuant to which Bexy acquired all of the capital stock of BEXY
Communications, Inc., a California corporation ("Bexy California"), in exchange
for the issuance to the sole shareholder of Bexy California and its designees of
1,116,666 shares of Common Stock. As a consequence of such transaction, the sole
shareholder of Bexy California became the beneficial owner of in excess of fifty
percent of the Common Stock of Bexy, and Bexy California became a wholly-owned
subsidiary of Bexy. Bexy is selling this inactive subsidiary to a director and
officer for nominal consideration.
Because of the significant operating losses experienced by
Bexy, management of Bexy has been exploring various alternatives, including
merging with another company and obtaining additional financing from third
parties. In March 1996, Bexy and its principal officer, Buddy Young, entered
into discussions with the principals of Cheniere Energy Operating Co., Inc.
("Cheniere") concerning a possible transaction whereby the stockholders of
Cheniere (the "Cheniere Stockholders") would acquire control of Bexy in
consideration for the outstanding stock of Cheniere. As part of these
discussions, the parties discussed either liquidating the existing business of
Bexy or distributing it to the stockholders of Bexy. In contemplation of such
transaction Bexy formed the Company as a wholly owned subsidiary on March 27,
1996 and on April 16, 1996 contributed all of Bexy's operating assets to the
Company pursuant to an Asset Transfer Assignment and Assumption Agreement
("Assignment Agreement"), (including the assets and liabilities associated
with the health information
activities of Bexy) in exchange for 452,000 shares of Company Common Stock (the
"Company Stock") (representing 100 percent of the issued and outstanding shares
of Company Stock). These assets include: furniture and fixtures of $1,222,
accounts receivable of $43,920, program inventory of $54,566, cash of $2,500 and
other assets of $6,722, or a total of approximately $108,920. Liabilities of
$84,144 were assumed by the Company in connection with the Assignment Agreement.
The Assignment Agreement provides for the Company to indemnify Bexy for any
liabilities relating to the assets transferred by Bexy to Company or the conduct
of the business of Bexy prior to the Closing Date.
Bexy has called a Special Meeting to be held on July 2, 1996
to solicit approval of stockholders of a Plan of Reorganization (the
"Reorganization") as set forth in a certain Agreement and Plan of Reorganization
dated as of April 16, 1996 (the "Reorganization Agreement") among Cheniere, the
Cheniere Stockholders, Bexy and Buddy Young, the President & CEO and principal
stockholder of Bexy ("Young"). Pursuant to the Reorganization, the outstanding
capital stock of the Company (the "Company Stock") will be distributed to the
stockholders of record of Bexy as of May 15, 1996 (the "Record Date") (the
"Divestiture"). In consideration for the exchange of all of the issued and
outstanding shares of common stock of Cheniere (the "Cheniere Shares"),
Bexy will issue to the Cheniere Stockholders shares of Common Stock of Bexy
(after giving effect to the amendment of the capitalization of Bexy and the
Reverse Split described herein, the "New Shares") equal to approximately 93% of
the then issued and outstanding New Shares (the "Exchange"), causing the
current Bexy stockholders' interest in Bexy to be diluted to approximately 7%.
Thereupon, Cheniere will become the wholly-owned subsidiary of Bexy and the
principal business of Bexy will become the oil and gas exploration and exploi-
tation business conducted by Cheniere, and the Company will continue the health
information business historically carried on by Bexy.
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Cheniere is a Houston-based independent oil and gas
exploration company formed in February 1996 to participate in a joint venture
with Zydeco Exploration, Inc. ("Exploration"), a wholly-owned subsidiary of
Zydeco Energy, Inc. ("Zydeco"), a publicly traded company, the common stock of
which is listed on the Nasdaq SmallCap Market system.
In order to facilitate the Reorganization, the directors of
Bexy will ask Bexy's stockholders to approve certain amendments to the
certificate of incorporation of Bexy to change the authorized capital stock of
Bexy to permit the issuance of shares of Common Stock of Bexy to the Cheniere
Stockholders in exchange for Cheniere Shares. The Board of Directors of Bexy
will also ask the stockholders to approve certain other amendments to the
certificate of incorporation of Bexy to authorize a new class of preferred
stock, to change the name of Bexy to "Cheniere Energy, Inc." and to add
provisions to limit the liability of Bexy's directors and to provide for the
indemnification of Bexy's officers and directors to the fullest extent permitted
by Delaware law.
In addition, in connection with the Reorganization, the
stockholders are being asked to vote for the election of three nominees as
directors designated by Cheniere.
Young, the President & CEO of Bexy and the holder of shares
totalling approximately 57% of the issued and outstanding shares of Common Stock
of Bexy, has agreed with Cheniere to vote his shares of Common Stock in favor of
each of the proposals set forth in this Proxy Statement. Following the closing
of the Exchange and the Divestiture, Young will own approximately 4% of the then
issued and outstanding New Shares and approximately 57% of the issued and
outstanding shares of Company Stock. At the closing of the Reorganization (the
"Closing"), Young will resign as President & CEO and a member of the Board of
Directors of Bexy and will enter into a consulting agreement (the "Consulting
Agreement") with Bexy having a two-year term and providing for payments of
$75,000 per annum. In addition, at the Closing, pursuant to the Reorganization
Agreement, Young and Bexy will enter into agreements providing that Young will
not sell more than 10,000 shares per month for a nine-month period after the
Closing and that Bexy will not engage in a reverse stock split, other than as
contemplated by the Reorganization Agreement, for an eighteen-month period after
the Closing.
In connection with the Divestiture, pursuant to the
Reorganization Agreement, at the Closing, Young and Bexy will enter into an
indemnification agreement (the "Indemnification Agreement") pursuant to which
Young will agree to indemnify Bexy, Cheniere and the Cheniere Stockholders
against any cost, expense or other liability that any of them may suffer arising
as a result of or in connection with (i) the operation of the business of Bexy
prior to the Closing, (ii) any untrue statement or omission of material fact
made by or with respect to Bexy or Young in the Proxy Statement and other proxy
materials or the registration statement under the Securities Exchange Act of
1934 (the "Exchange Act") registering the Company Stock and (iii) any tax
liability arising out of or in connection with the consummation of the
transactions contemplated by the Divestiture. See Part 1, Item 7, "Certain
Relationships and Related Transactions."
At a telephonic meeting of the Board of Directors of Bexy held
on April 16, 1996, the Board of Directors unanimously approved the
Reorganization, on the terms and subject to the conditions contained in the
Reorganization Agreement.At the meeting, the Bexy Board of Directors determined
that the Reorganization and the Divestiture was in the best interests of the
Bexy stockholders and recommended that the Bexy stockholders approve the Reorga-
nization,the Divestiture,and each of the other proposals to be considered at the
Meeting. In reaching this determination, the Bexy Board considered (i) Bexy's
chronic losses from its existing line of business and the potential earnings
that my be obtained in the oil and gas business and (ii) the benefits that may
be obtained from sepatating two different businesses with with different manage-
ment and operating requirements. The Board weighed these benefits against (i)
the possibility that, as a result of the distribution of Company Stock, stock-
holders may be deemed to receive taxable income without receiving any cash to
pay such taxes, (ii) the loss of Bexy's net loss carryforwards to sheild future
income, (iii) the possible inability to list the Company Stock on the Electronic
Bulletin Board adn (iv) the potential issuance of additional shares of Bexy
Common Stock and preferred stock that would further dilute the Bexy stockholders
interest in Bexy.
It should be noted that, notwithstanding the approval of the
Reorganization and the Divestiture the stockholders of Bexy, the Board of
Directors may determine, in light of the circumstances then existing, that to
consummate the Divestiture would not be in the best interests of Bexy and the
stockholders.
All information in this Registration Statement relating to
Cheniere, Exploration, Zydeco and the Joint Venture has been supplied by
Cheniere, and the management of Company and Bexy is relying upon the
management of Cheniere for such information.
The Divestiture
Prior to the Reorganization, the most significant activities
of Bexy have consisted of marketing health information through print and
electronic media, principally television.
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The Board of Directors has recently determined that it would
be in the best interests of Bexy and its stockholders to separate the oil and
gas exploration activities to be acquired upon consummation of the Exchange from
Bexy's health information business. In particular, the Board of Directors
believes that the separation will give stockholders the flexibility to analyze
and deal with their investments in those respective activities separately in
accordance with their investment objectives and their views of the business
prospects of those respective activities. In addition, the Board of Directors
believes that the separation will enable Bexy and Company to separately pursue
the strategies best suited to their individual markets, goals and needs, thereby
maximizing their respective business opportunities and stockholder values. The
Divestiture will be submitted to Bexy stockholders for approval on July 2,
1996.
It should be noted that notwithstanding approval of the Divestiture by the
the Company stockholders, Bexy's Board of Directors may determine, at any time
prior to the consummation of the Divestiture, to terminate the Divestiture and
not distribute the Company Stock to the stockholders of Bexy, if in their
judgment, the distribution of the Company Stock would not be in the best
interest of Bexy and its stockholders.
The Divestiture may be abandoned at any time prior to its consummation. If
abandoned prior to the date of the Meeting, the decision to abandon will be made
by the pre-exchange the Company Board of Directors.
To effectuate the separation, the health information activities of the
Company (including the assets and liabilities associated therewith) have been
contributed to the Company pursuant to an Asset Transfer Assignment and
Assumption Agreement ("Assignment Agreement") in exchange for 100 percent of
the issued and outstanding shares of the Company Stock. These
assets include: furniture and fixtures of $1,222, accounts receivable of
$43,920, program inventory of $54,566, cash of $2,500 and other assets of
$6,722, or a total of approximately $108,920. Liabilities of $84,144 were
assumed by the Company in connection with the Assignment Agreement. The
Assignment Agreement provides for the Company to indemnify the
Company for any liabilities relating to the assets transferred by the Company
to the Company or the conduct of the business of the Company prior to the
Closing Date.
In addition, pursuant to the Reorganization Agreement, Young has agreed to
indemnify the Company, Cheniere and the Cheniere Stockholders from, among other
things, tax liabilities arising from or in connection with the Divestiture.
It is expected that following the Divestiture the Company will
become an independent, publicly-traded company that will operate on a stand
alone and self-financing basis. The senior management of the Company following
the Divestiture will consist solely of Young, who is currently the sole
executive officer and a director of Bexy. Young will resign from all positions
with Bexy on closing of the Exchange. See Part I, Item 7, "Certain Relationships
and Related Transactions."
A principal purpose of the Divestiture is to position the
separate entities so that they will be able to pursue the strategies best suited
to their individual markets, goals and needs. In addition, the Company will
become an independent, publicly-traded company by means of the Divestiture, and
the effectuation of the Divestiture will enable it to raise capital on its own.
The Divestiture is intended to place the Company in a position to seek
additional capital for its activities independently.
Manner of Divestiture
The Divestiture was approved by the Board of Directors of Bexy
on April 16, 1996. If the Divestiture is approved by the Bexy stockholders
at the Special Meeting, Bexy will distribute to its stockholders of record as
of the Record Date (the "Divestiture Record Date"), one (1) share of Company
Stock for each four (4) shares of Common Stock held at the Record Date
(pre-reverse split). The Divestiture will be deemed to be effective as of the
Closing Date.
To effect the Divestiture, Bexy will transfer to U.S. Stock
Transfer Corporation (the "Divestiture Agent") for distribution to holders of
record of shares of Common Stock on the Record Date, in proportion to their
ownership of shares of Common Stock on the Record Date. No certificates or scrip
representing fractional shares of Company Stock will be issued to such
stockholders of Bexy. In lieu of receiving fractional shares, each holder of
Shares of Common Stock who would otherwise be entitled to receive a fractional
share of Company Stock will receive one whole share if the fraction is equal to
or greater than one-half, otherwise the fractional shares shall be canceled. Any
shares of Company Stock held by Bexy which are not distributed shall be
canceled.
No holder of shares of Bexy Common Stock receiving shares of
Company Stock will be required to pay any cash or consideration for the shares
of Company Stock that he will receive in the Divestiture or to surrender or
exchange Bexy Shares in order to receive shares of Company Stock. The
Divestiture will not affect the number of outstanding Bexy Shares.
Certain Federal Income Tax Aspects of the Divestiture
The following summary is a general discussion of certain of
the expected federal income tax consequences of the Divestiture. The summary
does not discuss all aspects of federal income taxation that may be relevant to
a particular stockholder of Bexy in light of his personal investment
circumstances or to certain types of stockholders subject to special treatment
under the federal income tax laws (for example, S corporations, banks, dealers
in securities, life insurance companies, tax-exempt organizations and foreign
taxpayers) applies solely to investors who hold their shares of the New Shares
as capital assets within the meaning of Section 1221 of the Code, and does not
discuss any aspects of state, local, or foreign tax laws. This discussion is
provided for general information purposes only, and is not intended as tax
advice.
Each stockholder of Bexy is advised to consult his own advisor
as to the specific tax consequences to such stockholder of the proposed
transaction, including the application and effect of state, local, and foreign
income and other tax laws.
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Bexy has received no written opinion on any of the following
matters. No ruling has been or will be requested from the Service on any matters
relating to the formation of Company or the Divestiture. The following
discussion is based upon existing law, decisions, regulations, and rulings, all
of which are subject to change, perhaps with retroactive effect. There can be no
assurance that the Service will agree with the following discussion.
Effects on Bexy
Under Section 351 of the Code, the contribution of assets to
and the assumption by Company will not result in the recognition of gain or loss
by Bexy or to Company.
Under Section 311(b) of the Code, the Divestiture of Company
Stock by Bexy will result in the recognition by Bexy of taxable gain as if the
Company Stock had been sold to the stockholders of Bexy at its fair market
value. Accordingly, Bexy will recognize taxable gain on the Divestiture equal to
the excess of the fair market value of such common stock over its adjusted basis
in such stock. For federal income tax purposes, fair market value generally
means the price at which the property would change hands between a willing buyer
and a willing seller, neither being under any compulsion to buy or sell and both
having reasonable knowledge of all relevant facts. It is not possible to
predict, with any certainty, the fair market value of the Company Stock to be
distributed by Bexy on the date it is distributed. In analogous situations,
where there has been a market for stock on an over-the-counter market, as is
expected here, the Service has considered the quoted selling prices on the date
of the Divestiture (or, on the date over-the-counter sales first occurred if
such date is within a reasonable period of the date of Divestiture) as important
evidence in determining the fair market value per share.
Bexy's basis in the shares of Company Stock to be distributed
equals approximately $25,000. Assuming a range of $.25 to $.50 per share for the
quoted selling price of the shares of Company Stock immediately after the
Divestiture and that fair market value equals the quoted selling price, the
amount of taxable gain recognized by Bexy (after adjustment of such basis for
such contribution as reduced by estimated taxes, fees, costs and expenses
estimated to be deducted therefrom as described above) is estimated to range
from $75,000 to $175,000 resulting in an imposition of federal income taxes
estimated to range from $13,750 to $51,500. Bexy has a net operating loss
carryforward of approximately $740,000 available to offset any tax liability
arising out of the Divestiture. Accordingly, based on the above-estimated range
of taxable gain to be recognized by Bexy on the Divestiture, no tax liability
will be incurred by Bexy as a result of the Divestiture. Bexy believes that the
net operating loss carry forwards will be sufficient to offset any tax liability
arising out of the Divestiture.
Effect on Stockholders of the Company
The distribution to Bexy stockholders of the Company Stock will constitute
a taxable distribution for federal income tax purposes. Under Section 301(b)(1)
of the Code, the amount of the distribution to each stockholder of Bexy will
equal the fair market value of the Company Stock received. Under Section
301(c)(1) of the Code, the Divestiture will be taxable as a dividend to the
extent of Bexy's current and/or accumulated earnings and profits. Under Sections
301(c)(2) and 301(c)(3) of the Code, to the extent that the amount of the
Divestiture exceeds Bexy's current and accumulated earnings and profits, the
Divestiture will first be treated as a tax-free return of capital, causing a
reduction (but not below zero) in the adjusted basis of the Common Stock
held by a distributee (thereby increasing the amount of gain, or decreasing
the amount of loss, to be recognized by such distributee on a subsequent
disposition of the Common Stock), and the balance in excess of such adjusted
basis will be taxed as if it were capital gain recognized on a sale or exchange
of such stock. For this purpose, the Company's current earnings and profits will
be computed as of the close of the taxable year without diminution by reason of
any distributions made during the taxable year, and without regard to the amount
of the earnings and profits at the time the Divestiture was made. Since Bexy's
current taxable year ends on August 31, 1996, the amount of earnings and
profits, if any, of Bexy will not be ascertainable until after the
Divestiture. Accordingly, there can be no assurance that earnings and profits
will not be substantial and that stockholders of Bexy who receive Company Stock
will not be deemed to have received dividend income.
The portion of the Divestiture taxable as dividend income to a
corporate stockholder of Bexy may be eligible for the 70% (or, in certain cases
80%) dividends-received deduction available under Section 243 of the Code,
subject to certain taxable-income and holding-period requirements. However, to
the extent that the corporate shareholder incurs indebtedness that is directly
attributable to an investment in the stock on which the dividend is
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paid, all or a portion of the dividends-received deduction may be disallowed. In
addition, dividend income that is not subject to the regular federal income tax
as a consequence of the dividends-received deduction may be subject to the
federal alternative minimum tax.
Corporate stockholders of Bexy should consult their tax
advisors to determine how the DividendsReceived Deduction and its limitations
might apply to them.
Corporate stockholders of Bexy should also consult their tax
advisors to determine whether Section 1059 of the Code, which requires corporate
stockholders to reduce the basis of the stock in the case of certain
extraordinary dividends, is applicable to their receipt of the Company Stock.
Under Section 1059, if a corporate holder of shares of Bexy receives an
"extraordinary dividend" (as defined in Section 1059) from Bexy with respect to
any share of such stock and has not held the underlying stock for more than two
years before the dividend announcement date (i.e., the date on which Bexy
declared, announced, or agreed to, the payment of such dividend, whichever is
earliest), the basis of the underlying stock must be reduced (but not below
zero) by the "nontaxed portion" of such dividends. The "nontaxed portion"
generally is the excess of the amount of the dividend over the taxable portion
(i.e., the taxable dividend less the applicable Section 243 deduction). Such a
reduction in basis, generally will occur immediately before any disposition of
the shares of Bexy, thereby increasing any gain realized by the holder on a sale
redemption or other disposition of such stock. If the reduction exceeds such
stock basis, the amount of such excess also will be taxable as gain from the
sale or exchange of the shares of Bexy.
On March 19, 1996, President Clinton released a set of legislative
proposals as a part of his plan to balance the federal budget. These proposals
include, among other things, proposals to (i) reduce the 70-percent dividends-
received deduction to 50 percent, (ii) modify the holding period requirements
for corporations claiming the dividends-received deduction, and (iii) require
immediate gain recognition under Section 1059 of the Code for the non-taxed
portion of certain extraordinary dividends (to the extent such non-taxed portion
exceeds the shareholder's basis in the underlying stock. As currently proposed,
the changes to the dividends-received deduction provisions would be effective
for dividends paid or accrued more than 30 days after the enactment of final
legislation, and the proposed changes to Section 1059 would generally apply
to distribution occurring after September 13, 1995. The Company cannot predict
which, if any, of the President's proposals will ultimately become law, or, if
enacted into law, what the effective date of such provisions would be.
Shareholders should consider the potential effect of the President's proposals
in making their investment decision.
Back-Up Withholding
A holder of Common Stock may be subject to "back-up
withholding" at a rate of 31% with respect to certain "reportable payments,"
which generally include dividend payments. These back-up withholding rules apply
if such holder, among other things, (i) fails to furnish a social security
number or other taxpayer identification number ("TIN") certified under penalties
of perjury within a reasonable time after the request therefor, (ii) furnishes
an incorrect TIN, (iii) fails to report properly interest or dividends, or (iv)
under certain circumstances, fails to provide a certified statement, signed
under penalties of perjury, that the TIN furnished is the correct number and
that such holder is not subject to back-up withholding. Any amount withheld from
a payment to such a holder under the back-up withholding rules is creditable
against such holder's federal income tax liability, provided the required
information is furnished to the Service. Back-up withholding will not apply,
however, with respect to payments made to certain persons, including
corporations, tax-exempt organizations and certain foreign persons, provided
their exemption from back-up withholding is properly established. If Bexy does
not have a Form W-9 for the back-up withholding rules apply to a stockholder,
the Company stock distribution for such stockholder will be deferred until its
value can be determined and 31% thereof withheld.
Listing and Trading of Company Stock
There currently is no public market for the Company Stock. A
"when-issued" trading market may develop prior to the Divestiture Date and
continue until the certificates have been mailed by the Divestiture Agent. The
term "when-issued" means that shares can be traded prior to the time
certificates actually are available or issued. Prices at which Company Stock may
trade cannot be predicted. Until Company Stock is fully distributed and an
orderly market develops, the prices at which such stock trades may fluctuate
significantly. The prices at which Company Stock trades will be determined by
the marketplace and may be influenced by a number of factors, including, among
others, the depth and liquidity of the market for the Company Stock, investor
perceptions of Company, Company's dividend policy and general economic and
market conditions.
This Registration Statement will become effective by operation
of law 60 days after the filing thereof, unless accelerated. After such
effectiveness, Company will be required to file annual, quarterly and other
reports under the Exchange Act and comply with the SEC's proxy rules thereunder.
Assuming it can fulfill and complete any prerequisites, Company intends to apply
to the NASD to have its stock listed on the Electronic Bulletin Board under the
symbol "MARV". However, the Company Common Stock is not currently eligible
for inclusion on the Electronic Bulletin Board, and no assurance can be given
that Company Stock will ever meet the requirements for inclusion on the
Electronic Bulletin Board.
Based on the stockholders of record of Bexy as of the
Divestiture Record Date, Company initially will have approximately 936 holders
of record of its Common Stock.
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Shares of Company Stock distributed to the stockholders of
Bexy in the Divestiture, generally, will be freely transferable, except for
shares received by persons who may be deemed to be "affiliates" of Company under
the Securities Act. Persons who may be deemed to be affiliates of Company after
the Divestiture generally include individuals or entities that control, are
controlled by, or are under common control with, Company and may include certain
officers and directors of Company as well as principal stockholders of Company.
Persons who are affiliates of Company will be permitted to sell their shares of
Company Stock only pursuant to an effective registration statement under the
Securities Act or an exemption from registration thereunder, such as the
exemption afforded by Section 4(1) of the Securities Act and Rule 144
thereunder.
Divestiture Costs
Bexy estimates that the printing, legal, accounting, Divestiture Agent
and other fees and expenses incurred in connection with the Divestiture will be
approximately $20,000. Such fees and expenses are being paid by the Company.
Current Activities
The current core business of Bexy, which will be continued by
the Company, is the production of traditional television programming. In 1993,
Bexy's management determined to enter the business of creating, publishing and
distributing health-themed information for the general public through print and
electronic media. However, to date, no significant revenues have been generated
by this business.
Television Programming
The television programming currently being marketed include:
(1) "FEELIN' GREAT," 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.
(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. Bexy recently licensed the home video rights for "It's A
Wonderful Life -- A Personal Remembrance" to Republic Pictures.
(4) "CHRISTMAS AT THE MOVIES," a one hour special/tribute to
class 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.
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(5) "VICTIMS," a half hour television pilot for a first run
strip series. The pilot show re-creates survivors' personal accounts of tragic,
catastrophic and unexpected events that emotionally or physically altered their
lives. Such events include being the victim or target of the "system," a
criminal "scam," a natural disaster, a crime or some other life changing event.
Bexy co-financed the pilot with First Media Entertainment, Inc. ("FME"). As a
result of its investment in the pilot, Bexy acquired a one-half interest in the
program, and the distribution rights to "Victims." Bexy has been unsuccessful in
its efforts to license the program.
Although the Company will continues to market the film
library acquired from Bexy, management does not anticipate generating
significant revenues as a result of this activity.
Recent Business Developments
In August 1994, Bexy and Hammond Productions ("Hammond")
entered into an agreement for the purchase by Bexy from Hammond of all rights
and title to "Feelin' Great." Under the terms of the agreement, Bexy acquired
the twenty six half-hour episodes produced in 1994. The "Feelin' Great"
television series was licensed to cable television in Canada and started airing
in January 1995 on the Life Network, a new Canadian cable network.
In August 1995, Bexy and Hammond amended the agreement to
reassign the series to Hammond in consideration for the cancellation of amounts
owed to Hammond by Bexy for the purchase of the series. Under the terms of the
amendment, Bexy will continue to distribute the series throughout the world.
During 1995, Bexy reduced the carrying value of its program
library by $235,500 in order to reflect a lower of cost or market valuation on
certain program inventory. In addition, Bexy wrote off its $10,000 investment in
the "Victims" television series.
Bexy'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."
The Company intends to continue the above activities of Bexy
to seek additional opportunities in the film industry, and to expand its film
library.
The Health Information Market
The health media marketplace is divided into three main
segments:
(1) "Wellness," which relates to everyone who is and seeks to
remain in good health;
(2) "Acute care," which includes people with a short-term
illness possibly requiring a short hospital stay; and
(3) "Chronically ill," which are people suffering from a
disease from which there is no recovery.
The largest part of the health information market is the
"wellness" market. The Company plans to initially develop and market products to
this segment of the market. In the future, as the Company gains recognition in
the health information market, it plans to expand its efforts to include the
marketing of products to other market segments.
Competition
In the development and marketing of its diversified health
media services the Company expects to compete with larger and better financed
companies seeking to enter an emerging industry. Companies such as Krames
Publishing, Hope Publishing, Crisp Publications and Great Performance, produce,
publish and distribute health-themed videos, newsletters, magazines, books,
CD-ROMs and other related products. Universities and hospitals, such as the
Harvard Medical School, Cornell University, the Mayo Clinic and John Hopkins
Hospital, have
8
<PAGE>
also established themselves as providers of health-themed information to the
general public. The Company anticipates being able to compete in the health
information market by delivering products that are entertaining as well as
informative and by marketing these products to the general public in an
innovative manner.
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 re-runs and
programs produced by local television stations. In addition, 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 various
unpredictable factors such 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.
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion of the financial condition and
results of operations of the Company should be read in conjunction with the
financial statements of Bexy, including the notes thereto, which appear
elsewhere herein. Since the Company was not incorporated until March 27, 1996, a
proforma balance sheet is provided for the Company to reflect the contribution
of assets as if it had occureed on February 29, 1996. However, the financial
information of Bexy is directly relevant to the future business of the Company
since the Company will be continuing the business of Bexy.
Results of Operations (Bexy)
Six Months Ended February 29, 1996 compared to six months ended
February 28, 1995
License revenues from Bexy's film library for the six months
ended February 29, 1996 decreased $13,920 or 25%, from $56,178 in the
corresponding period ended February 28, 1995. This is due to a significant
decrease in first quarter revenues from recurring customers and management's
focus on other revenue-producing opportunities for Bexy.
The costs of programs and distribution fees during the six
months ended February 29, 1996 decreased $59,417 or 70%, from $84,662 in the
corresponding period ended February 28, 1995. This was due to the significant
amortization costs incurred in 1995. At August 31, 1995, Bexy accelerated the
amortization ($122,630) of its film library to reflect its estimated reduced
value.
Expenses during the six months ended February 29, 1996
increased $104,162, or 165%, from $63,210 in the corresponding period ended
February 28, 1995. This was due to consulting fees paid to Bexy's President to
supervise operations, raise equity capital and pursue other business
opportunities for Bexy. Bexy is paying $3,500 per month in consulting fees to
its President. In addition, Bexy incurred significant expenses in funding the
start-up costs of IQL, a company owned by Bexy's President and majority
shareholder. In exchange for funding the start-up costs, Bexy was granted an
option to purchase IQL for $50,000.
Fiscal 1995 Compared to 1994
Revenues from the distribution of Bexy's film library showed a
slight decrease of $4,574 from $130,228 in 1994 to $125,654 in 1995. Based on
the continued lower than forecasted revenues of its film library, the Company
re-evaluated the future market value of its program library in the fourth
quarter and recorded a write-down to reflect its value at the lower of cost or
market. The adjustment totaled $235,500 and was recorded in "Amortization of
Film Costs" in the statements of operations.
9
<PAGE>
Expenses increased $33,933 from $169,182 in 1994 to $203,156
in 1995 as a result of increased consulting fees incurred in connection with
Bexy's entry into the healthcare film industry and funding of certain start-up
costs of a company owned by Bexy's majority shareholder.
The net loss of $394,633 for the year ended August 31, 1995
includes non-cash expenses of amortization of program inventories of $249,044.
Distribution and advertising costs related to programs amounted to $63,087.
As of February 29, 1996, the Company had cash f $101,446 and
shareholders' equity of $131,588.
In their report on Bexy's financial statements for the fiscal
year ended August 31, 1995, Bexy's independent auditors stated that Bexy's
recurring losses from operation raised substantial doubt about Bexy's ability to
continue as a going concern. Management of Bexy believes forecasted revenues and
additional equity and debt financing will be adequate to finance Bexy's cash
flow requirements during the balance of fiscal 1996. Management has also
formulated additional plans to address the cash flow requirements of Bexy,
including the sale or merger of Bexy and obtaining additional financing sources.
Fiscal 1994 Compared to 1993
In 1993, Bexy determined to change its core business from the
production of traditional television programming to the production, distribution
and publishing of health-themed information for the general public, through
print and electronic media.
In fiscal 1993, Bexy's revenues were $317,946. In fiscal 1994
Bexy's revenues were $130,228, a decrease of $187,718. The primary reason for
the decrease in revenues was that the Company did not produce and market any new
programming during fiscal 1994. The revenues generated during fiscal 1994 were a
result of the continued licensing of Bexy's existing film library. No revenues
were generated by its health-themed information business.
The film amortization expense reported during the 1994 period
relates to Bexy's film library. The amortization of the film library is
calculated based upon the estimated revenues to be received on the film library.
Distribution costs remained relatively comparable at 40% of revenues in 1994
versus 42% in 1993.
Rider 6
Total expenses decreased $96,691, or 36% from $265,873 in 1993 to $169,182
in 1994. The primary reason for the decrease relates to a reserve on advances to
former employees recognized in 1993.
Bexy completed production of "Heartstoppers -- Horror at the
Movies" during the year ended August 31, 1993.
License revenues earned during fiscal 1994 from its film
library amounted to $130,228.
The net loss of $213,620 for the year ended August 31, 1994
includes non-cash expenses of $122,630 from the amortization of program
inventories. Distribution and advertising costs related to programs amounted to
$52,036.
Liquidity and Capital Resources
At August 31, 1995, Bexy had working capital of $128,772.
Development costs and operating expenses were financed through borrowings from
Bexy's majority stockholder and the sale of Common Stock totalling $235,966 in
net proceeds. Cash flows from operations for the year ended August 31, 1995 were
negative in the amount of $94,250, primarily because of lower than anticipated
license revenues from Bexy's film library, cost incurred in connection with
Bexy's entry into the healthcare film business and certain other start-up costs.
During 1995, Bexy borrowed approximately $35,000 from its
majority stockholder to fund current operations. In addition, Bexy repaid
approximately $155,000 in borrowings from its majority stockholder. During
September 1995, Bexy sold through a private placement 85,000 shares of Common
Stock for total gross proceeds of $93,500.
10
<PAGE>
At February 29, 1996, Bexy's working capital decreased to
$70,287. The cash and accounts receivable were insufficient to insure the
Company's continued existence as a going concern. During the period ending
February 29, 1996, Bexy had a negative cash flow from operating activities of
$148,822. Management expects to meet its current cash requirements through
license revenues, borrowings from a related party as necessary and the sale of
equity.
In the event that the Reorganization is not consummated and
the Company has additional cash requirements, there can be no assurances that
the related party will advance funds in order to meet the Company's
requirements, or that the Company will be successful in selling further equity.
Item 3. Description of Property
In August 1995, Bexy leased office space from an unaffiliated
third-party under a one year lease, for $1,150 per month, located at 16661
Ventura Boulevard, Suite 214, Encino, CA 91436. The Company has assumed this
lease.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning
the beneficial ownership of the Company's outstanding Common Stock as of April
30, 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. The table assumes the
completion of the Divestiture and is based upon a distribution of 450,715 shares
in the Divestiture. The actual number of shares of Company Stock distributed
could be greater due to rounding of fractional shares. 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.
Percentage of
Name and Address Number of Shares Class
Buddy Young and
Rebecca Young as Trustees
of the Young Family Trust
16830 Ventura Blvd.,
Suite 206, Encino,
California 91436 258,334(1) 57.3%
All Officers and Directors
as a Group (1 person) 258,334 57.3%
- --------------------
*Less than 1%
(1) Does not include an aggregate of 20,833 additional shares which are
held by the son and daughter of Young and their spouses for themselves
and as custodians for their children. Young disclaims any beneficial
ownership in such shares.
11
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Buddy Young, age 60, has been Chief Executive Officer,
Treasurer, Secretary and Director of the Company since inception.
Item 6. Executive Compensation
No compensation has been paid or accrued to any person since
organization of the Company. No options were issued to the CEO
of the Company during 1995.
Item 7. Certain Relationships and Related Transactions
Through April 19, 1996, Young, an officer, director and
principal stockholder of the Company and/or Bexy, advanced funds to Bexy for
operating expenses and film productions totaling $566,301 (before repayments),
represented by promissory note(s) of Bexy assumed by the Company. The advanced
funds accrue interest on outstanding amounts at a rate of 8% per annum. A
portion of the funds raised through equity financing have been used to reduce
the debt owed to Young. As of February 29, 1996, Bexy owed Young $37,208 in
accrued and unpaid interest. This liability has been assumed by the Company and
will be paid out of available funds.
As of August 31, 1995 Bexy had expended $9,000 to help develop
the business of International Quote Link, ("IQL"), a corporation that provides
investor relations services to publicly held companies utilizing the worldwide
Internet, and owned and controlled by Young, in return for an option to purchase
IQL for $50,000 that expires on August 31, 1996. Neither Bexy nor the Company
intends to execute this option and does not intend to have any future relation-
ship with IQL.
Pursuant to the Reorganization Agreement, at the Closing,
Young and Bexy will enter into a Consulting Agreement providing for the payment
to Young of $75,000 per annum for a two-year period. In addition, at the
Closing, Young and Bexy will enter into agreements pursuant to which Young will
agree not to sell more than 10,000 Company Shares per month for a nine-month
period after the Closing Date and Bexy will agree not to engage in a reverse
stock split, other than as contemplated by the Reorganization Agreement,
for an eighteen-month period after the Closing Date. At the Closing, Young
will also agree to indemnify Bexy, Cheniere and the Cheniere Stockholders
against certain liabilities, in connection with the Reorganization
including liabilities relating to taxes arising in connection with the
Divestiture.
Item 8. Description of Securities
The Company's authorized capital stock consists of 30,000,000 shares of
Common Stock, par value $.001 per share, of which 452,000 shares are
outstanding. The holders of Common Stock are entitled to one vote for each share
held of record on each matter submitted to a vote of stockholders and to vote on
all matters on which a vote of stockholders is taken, except as otherwise
provided by statute. The shares of Common Stock do not have cumulative voting
rights. Therefore, the holders of a majority of shares voting for the election
of directors can elect all of the directors then standing for election, if they
choose to do so, and in such event the holders of the remaining shares voting
for the election of directors will not be able to elect any directors. Holders
of Common Stock are entitled to receive such dividends as may be declared by the
Board of Directors out of funds legally available therefor and, in the event of
liquidation, dissolution or winding up of the Company, are entitled to share
ratably in all assets remaining after payment of liabilities. The Company has no
plan at present to pay any cash dividends on the Common Stock in the foreseeable
future
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
(a) Market Information
12
<PAGE>
This Registration Statement has been prepared in connection with the
distribution (the "Divestiture") by Bexy to its stockholders of 450,000 shares
of Common Stock, $.001 par value, of the Company owned by Bexy. Prior to the
Divestiture, the Company was owned by Bexy. Accordingly, no public market for
the Registrant's Common Stock has existed. The Registrant intends to
apply for listing on the Electronic Bulletin Board sponsored by Nasdaq under the
symbol "MARV." However, the Company Common Stock is not currently eligible for
inclusion on the Electronic Bulletin Board and no assurance can be given that
the Registrant's Common Stock will ever meet the requirements for inclusion on
the Electronic Bulletin Board.
Shares of the Company Common Stock distributed to Bexy stockholders in
the Divestiture, generally, will be freely transferable, except for shares
received by persons who may be deemed to be "affiliates" of the Company under
the Securities Act of 1933 (the "Securities Act"). Persons who may be deemed to
be affiliates of the Company after the Divestiture generally include individuals
or entities that control, are controlled by, or are under common control with,
the Company and may include certain officers and directors of the Company as
well as principal stockholders of the Company. Persons who are affiliates of the
Company will be permitted to sell their shares of the Company Common Stock only
pursuant to an effective registration statement under the Securities Act or an
exemption from registration thereunder, such as the exemption afforded by
Section 4(1) of the Securities Act and Rule 144 thereunder.
(b) Holders
Based on the stockholders of record of Bexy, as of the Divestiture
Record Date, the Company initially will have approximately 936 holders of
record of its Common Stock as of the Divestiture Date.
(c) Dividends
The Company had not paid cash dividends on its Common Stock and does
not intend to pay cash dividends on its Common Stock in the foreseeable future.
Item 2. Legal Proceedings
Not Applicable.
Item 3. Changes in and Disagreements with Accountants
Not Applicable.
Item 4. Recent Sales of Unregistered Securities
Upon incorporation of the Registrant on March 27, 1996 and in
connection with the contribution of the assets relating to the health
information business, the Registrant issued 452,000 shares of its Common Stock
to Bexy.
This transaction is exempt from the registration requirement of the
Securities Act of 1933, as amended, by virtue of Section 4(2) thereof covering
transactions not involving any public offering.
Item 5. Indemnification of Directors and Officers
The Company's Bylaws and the Delaware General Corporation Law
provide for indemnification of directors and officers against certain
liabilities.
The Company's Bylaws and the Delaware General Corporation Law
provide for indemnification of directors and officers against certain
liabilities. Officers and directors of the Company are indemnified generally
against expenses, actually and reasonably, incurred in connection with
proceedings, whether civil or criminal, provided that it is determined that they
acted in good faith, were not found guilty and, in any criminal matter, had
reasonable cause to believe that their conduct was not unlawful.
13
<PAGE>
PART F/S
The Financial Statements of the Registrant, required by
Regulation S-X, are set forth on pages 15 through 30.
PART III
Item 1 and Item 2, Index to Exhibits and Description of Exhibits
The following exhibits required by Item 601 of Regulation S-B
are filed herewith:
Sequential
Exhibit No. Document Description Page No.
3. Certificate of Incorporation and Bylaws
3.1. Certificate of Incorporation(P)(1)
3.2 Bylaws(P)(1)
10. Material Contracts
10.1. Asset Transfer, Assignment and
Assumption Agreement ("Agreement") dated
March 22, 1996, by and between Bexy
Communications, Inc. and Mar Ventures Inc.(2)
(1) Filed with original Form 10-SB
(2) Revised version filed herewith
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration Statement to be
signed on its behalf by the undersigned duly authorized.
Date: June 17, 1996 MAR VENTURES INC.
By:/s/Buddy Young
Buddy Young
President
14
<PAGE>
FINANCIAL STATEMENTS INDEX
BEXY COMMUNICATIONS, INC.
PAGE
INDEPENDENT AUDITORS' REPORT 15
FINANCIAL STATEMENTS:
Balance Sheet,
August 31, 1995 16
Statements of Operations
for the Two Years Ended August 31, 1995 17
Statements of Shareholders' Equity
for the Two Years Ended August 31, 1995 18
Statements of Cash Flows
for the Two Years Ended August 31, 1995 19-20
Notes to Financial Statements 21-24
Balance Sheet,
February 29, 1996 25
Statements of Operations
for the Three Months Ended
February 29, 1996 and February 28, 1995 26
Statements of Cash Flows
for the Six Months Ended
February 29, 1996 and February 28, 1995 27
Notes to Interim Financial Statements 28
MAR VENTURES, INC.
Pro Forma Condensed Balance Sheet, February
29, 1996 29
- -----------------------------------------------------------------
15
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Bexy Communications, Inc.:
We have audited the accompanying balance sheet of Bexy Communications, Inc. (the
"Company") as of August 31, 1995. We have also audited the statements of
operations, shareholders' equity and of cash flows for the two years ended
August 31, 1995. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at August 31, 1995, and the
results of its operations and its cash flows for each of the two years ended
August 31, 1995 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 6. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
November 9, 1995
15
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
BALANCE SHEET
AUGUST 31, 1995
<S> <C>
ASSETS
CASH $ 114,134
ACCOUNTS RECEIVABLE 63,200
PROGRAM INVENTORY, Net 55,456
FURNITURE AND FIXTURES - Net of accumulated
depreciation of $2,564 956
OTHER ASSETS 6,722
TOTAL ASSETS $ 240,468
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses $ 36,310
Accrued interest to related party 42,189
Note payable to related party 7,519
Deposits 2,000
Deferred income 16,000
---------
Total liabilities 104,018
---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, par value - $.01, 25,000,000 shares
authorized, 1,558,947 issued and outstanding 133,654
Contributed capital 992,831
Accumulated deficit (943,361)
Notes receivable from shareholders (46,674)
---------
Total shareholders' equity 136,450
---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 240,468
=========
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS
FOR THE TWO YEARS ENDED AUGUST 31, 1995
1995 1994
---- ----
<S> <C> <C>
REVENUES $ 125,654 $ 130,228
--------- ---------
COST OF PROGRAMS AND DISTRIBUTION FEES:
Amortization of film costs 254,044 122,630
Distribution fees 63,087 52,036
--------- ---------
Total cost of programs
and distribution fees 317,131 174,666
--------- ---------
EXPENSES:
Advertising 2,300 22,552
General and administrative 65,227 54,227
Depreciation 1,208 850
Interest 9,593 10,167
Professional fees 108,315 60,105
Rent 16,513 21,281
--------- ---------
Total expenses 203,156 169,182
--------- ---------
NET LOSS $(394,633) $(213,620)
========= =========
NET LOSS PER SHARE $ (.27) $ (.17)
========= =========
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE TWO YEARS ENDED AUGUST 31, 1995
COMMON STOCK
<S> <C> <C> <C> <C>
SHARES CONTRIBUTED ACCUMULATED
OUTSTANDING AMOUNT CAPITAL DEFICIT
BALANCES, SEPTEMBER 1, 1993 7,164,333 $126,970 $502,575 $(335,108)
ONE-FOR-SIX REVERSE STOCK SPLIT (5,970,277)
SALE OF SHARES 120,833 1,208 181,767
ISSUANCE OF SHARES FOR SERVICES 45,062 451 12,179
CONSTRUCTIVE ISSUANCE OF SHARES
RELATING TO THE PURCHASE OF
PROGRAM INVENTORY 50,000 500 89,500
NET LOSS (213,620)
BALANCE, AUGUST 31, 1994 1,409,951 129,129 786,021 (548,728)
CANCELLATION OF CONSTRUCTIVE ISSUANCE (50,000 ) (500) (89,500)
SALE OF SHARES 151,000 4,573 231,393
ISSUANCE OF SHARES FOR SERVICES 45,168 452 64,917
ISSUANCE OF SHARES FOR ROUNDING 2,828
NET LOSS (394,633)
BALANCE, AUGUST 31, 1995 1,558,947 $133,654 $992,831 $(943,361)
========== ======== ======== =========
See notes to financial statements.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE TWO YEARS ENDED AUGUST 31, 1995
1995 1994
<S> <C> <C>
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(394,633) $(213,620)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 1,208 850
Amortization of film costs 239,044 122,630
Issuance of stock for services 65,369 12,630
Write-off of investment 10,000
Changes in operating assets and
liabilities:
Increase in accounts receivable (28,000) (22,151)
Decrease in program inventory 3,083
Increase in other assets (4,601) (2,121)
Decrease in accounts payable
and accrued expenses (8,230) (24,149)
Increase in deferred income 16,000
Increase in accrued interest expense 9,593 10,030
Increase in deposits 2,000
--------- ---------
Net cash used by operating activities (94,250) (110,818)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES -
Capital expenditures (2,577)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment on note payable (2,038)
Borrowings from related party 34,519 38,000
Repayments to related party (155,000)
Sale of common stock 189,292 49,975
Collections on note receivable 133,000
---------
Net cash provided by financing activities 201,811 85,937
--------- ---------
NET INCREASE (DECREASE) IN CASH 107,561 (27,458)
CASH, BEGINNING OF PERIOD 6,573 34,031
--------- ---------
CASH, END OF PERIOD $ 114,134 $ 6,573
========= =========
(Continued)
19
<PAGE>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS - Continued
FOR THE TWO YEARS ENDED AUGUST 31, 1995
1995 1994
---- ----
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ -0- $ -0-
Cash paid for income taxes $1,566 $ 800
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:
During 1995, the Company reduced the carrying value of its program inventory by
$235,500 in order to reflect a lower of cost or market valuation on certain
program inventory. In addition, the Company wrote-off its investment ($10,000)
in the "Victims" television series.
During 1994, the Company issued a note payable amounting to $185,000 and common
stock amounting to $90,000 for the acquisition of a program series entitled
"Feelin' Great". During 1995, the Company negotiated with the sellor to cancel
the acquisition and the related debt and common stock. The program was returned
to the sellor.
During 1995, the Company issued shares of common stock in exchange for notes
receivable totalling $46,674. In addition, the Company issued 45,168 shares of
common stock in exchange for services.
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
20
<PAGE>
BEXY COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Information - Bexy Communications, Inc. (the "Company") was
incorporated under the laws of the State of Delaware. The Company is
engaged in the production and distribution of television programming,
focusing on health information for the general public through print and
electronic media that entertains as well as informs.
Effective July 18, 1994, the Company approved a one-for-six reverse
split of its outstanding common stock.
Going Concern - The Company experienced significant operating losses
for the fiscal years ended August 31, 1995 and 1994. 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 6, 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.
Concentration of Credit Risk - Financial instruments which potentially
subject the Company to concentrations of credit risk consist
principally of cash and trade receivables. The Company has
substantially all of its cash on deposit in one financial institution.
The Company routinely assesses the financial strength of its customers
and normally does not require collateral to support customer
receivables. At August 31, 1995, the Company had four customers which
accounted for approximately 81% of trade accounts receivable.
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
21
<PAGE>
licensing agreement, provided certain conditions have been met,
including availability of the film for broadcast.
General and Administrative Expenses - The Company has expended
approximately $12,000 through August 31, 1995 and an additional $24,000
through November 9, 1995 to fund certain start-up costs of a company
owned by the Company's majority shareholder. In exchange for funding
the start-up costs, the majority shareholder has granted the Company an
option to purchase the company for $50,000.
Income Taxes - The Company accounts for its income taxes in accordance
with the provisions of Statement of Financial Accounting Standards 109
("SFAS 109"). The asset and liability method requires the recognition
of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between tax bases and financial
reporting bases of other assets and liabilities.
The Company has net operating loss carryforwards of approximately
$740,000 and $269,000 available to offset future Federal and California
taxable income, respectively. Such loss carryforwards expire starting
in 2006 through 2008.
Per Share Information - Net loss per share for the years presented is
computed on the basis of the weighted average common shares
outstanding. The number of shares used in the computation was 1,459,365
for the year ended August 31, 1995 and 1,256,444 for the year ended
August 31, 1994.
22
<PAGE>
2. PROGRAM INVENTORY
Program inventory is stated at the lower of cost or estimated net
realizable value, determined on a film-by-film basis. During 1995, the
Company reduced the carrying value of its inventory by $235,500. Film
costs include production, print and pre-release costs. These costs are
amortized in the ratio of the current year's gross revenue to
management's estimate of remaining gross revenues from all sources on
an individual film basis.
At August 31, 1995, the program inventory consisted of the following:
"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 (508,966)
Program Inventory, Net $ 55,456
=========
3. NOTE PAYABLE TO RELATED PARTY
Through August 31, 1995, a Trust controlled by Buddy Young, an officer,
director and majority shareholder of the Company, advanced funds to the
Company for operating expenses and film productions. The advanced funds
accrue interest at a rate of 8% per annum. The balance of the note
totalling $7,519 and accrued interest of $42,189 are currently due and
are collateralized by the program inventory.
4. STOCK OPTION PLANS
In November 1993, the Company adopted a nonqualified stock option plan
that covers certain key employees, consultants and directors as
determined by the Board. The aggregate number of shares of common stock
that may be issued pursuant to options under the plan will not exceed
416,666. Price and terms are determined at the discretion of the Board.
On November 11, 1993, the Board of Directors granted options to the
President and principal shareholder. Options to acquire 58,333 shares
of the Company's common stock were granted at an exercise price of $.60
per share. All of the shares are currently exercisable and expire on
November 11, 2003.
23
<PAGE>
5. COMMITMENTS AND CONTINGENCIES
The Company leases its primary office space under a one-year lease
agreement expiring July 1996. Monthly rent on such lease is $1,150. The
Company has an option to extend the lease for one year. Total rent
expense for all operating leases for the years ended August 31, 1995
and 1994 was $16,513 and $22,945, respectively.
6. MANAGEMENT PLANS
In fiscal 1995 and 1994, the Company generated net negative cash flows
from operating activities of $94,250 and $110,818, respectively.
Management expects that the forecasted sales and additional equity and
debt financing will be adequate to finance the 1996 cash flow
requirements. If the Company does not achieve the forecasted 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.
7. SUBSEQUENT EVENT (UNAUDITED)
In September 1995, the Company sold 85,000 shares of its common stock
for a total of $93,500.
- -----------------------------------------------------------------------
<TABLE>
BEXY COMMUNICATIONS, INC.
BALANCE SHEET
FEBRUARY 29, 1996 (Unaudited)
ASSETS
<S> <C>
CASH $ 101,446
ACCOUNTS RECEIVABLE 61,300
PROGRAM INVENTORY, Net 53,657
FURNITURE AND FIXTURES - Net of
accumulated depreciation of $3,164 922
OTHER ASSETS 6,722
TOTAL ASSETS $ 224,047
===========
24
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses $ 37,251
Accrued interest expense to related party 37,208
Deposits 2,000
Deferred income 16,000
-----------
Total liabilities 92,459
-----------
SHAREHOLDERS' EQUITY:
Common stock (par value - $.01,
25,000,000 shares authorized,
1,803,459 issued and outstanding) 147,404
Contributed capital 1,116,581
Accumulated deficit (1,092,442)
Notes receivable from shareholders (39,955)
-----------
Total shareholders' equity 131,588
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 224,047
===========
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS (Unaudited)
FOR THE THREE MONTHS ENDED
FEBRUARY 29, FEBRUARY 28,
<S> <C> <C>
1996 1995
REVENUES $ 39,736 $ 30,680
--------- ---------
COST OF PROGRAMS AND DISTRIBUTION FEES 20,949 60,243
--------- ---------
EXPENSES:
Advertising 6,502 185
Consulting fees to majority shareholder 25,000
General and administrative 34,866 13,811
Depreciation 300 302
Interest 2,143
Professional fees 18,501 4,255
Rent 3,885 8,598
--------- ---------
Total expenses 89,054 29,294
--------- ---------
OTHER INCOME 673
NET LOSS $ (69,594) $ (58,857)
========= =========
NET LOSS PER SHARE $ (.04) $ (.04)
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,781,500 1,415,450
========= =========
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
26
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE SIX MONTHS ENDED
FEBRUARY 29, FEBRUARY 28,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(149,080) $(87,532)
Adjustments to reconcile net loss to
net cash provided (used) by
operating activities:
Amortization of film costs 1,800 38,837
Depreciation 600 604
Changes in operating assets and
liabilities:
Accounts receivable 1,900 (3,690)
Accounts payable and accrued expenses 939 20,567
Accrued interest expense (4,982) 4,610
--------- --------
Net cash used by operating activities (148,823) (26,604)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and fixtures (566)
Net change in notes receivable 6,720 46,375
--------- --------
Net cash provided by investing activities 6,154 46,375
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 137,500 15,000
Repayment on note payable (5,000)
Repayment to related party (7,519) (32,400)
--------- --------
Net cash provided (used) by financing
activities 129,981 (22,400)
--------- --------
NET DECREASE IN CASH (12,688) (2,629)
CASH, BEGINNING OF PERIOD 114,134 6,573
--------- --------
CASH, END OF PERIOD $ 101,446 $ 3,944
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 4,981 $ 0
Cash paid for income taxes $ 800 $ 0
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
27
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1.
BEXY COMMUNICATIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. The accompanying Financial Statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-
QSB and Regulation S-B. Accordingly, they do not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normal
recurring adjustments) considered necessary for a fair presentation
have been included. Certain reclassifications have been made to
the prior period to conform to the current periods presentation.
For further information refer to the Financial Statements and footnotes
included in the Registrant's Annual Report on Form 10-KSB for the year
ended August 31, 1995.
The Results of Operations for any interim period are not necessarily
indicative of the results to be expected for the full fiscal year ended
August 31, 1996.
Unclassified Balance Sheet - In accordance with the provisions of SFAS
No. 53, the Company has elected to present an unclassified balance
sheet.
Per share information - Net loss per share for the periods presented is
computed on the basis of the weighted average common shares
outstanding.
2. GENERAL AND ADMINISTRATIVE EXPENSES - The Company has expended
approximately $46,000 through February 29, 1996 to fund certain
start-up costs of a company owned by the Company's majority
shareholder. In exchange for funding the start-up costs, the majority
shareholder has granted the Company an option to purchase the company
for $50,000.
28
<PAGE>
MAR VENTURES, INC.
PRO FORMA CONDENSED BALANCE SHEET
The following proforma condensed balance sheet presents the combined financial
position of Mar Ventures, Inc. (the "Company") as if the contribution of assets
occurred on February 29, 1996. This combined balance sheet should be read in
conjunction with the other unaudited financial information included in this
registration statement, and the audited financial statements of Bexy
Communications, Inc. for the year ended August 31, 1995 and related notes
thereto included in its Form 10- KSB as incorporated herein by reference.
29
<PAGE>
<TABLE>
<CAPTION>
MAR VENTURES, INC.
PROFORMA BALANCE SHEET
FEBRUARY 29, 1996 (Unaudited)
<S> <C> <C> <C>
MAR CONRIBUTION
VENTURES, OF BEXY ELIMINATION
INC. ASSETS ENTRIES TOTAL
ASSETS
CASH $101,446 $101,446
ACCOUNTS RECEIVABLE 61,300 61,300
AMOUNT DUE FROM BEXY $4,520 $(4,520)
PROGRAM INVENTORY, Net 53,657 53,657
FURNITURE AND FIXTURES 922 922
OTHER ASSETS 6,722 6,722
------ -------- ------- --------
TOTAL ASSETS $4,520 $224,047 $(4,520) $224,047
====== ======== ======= ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable
and accrued expenses $ 37,251 $ 37,251
Accrued interest expense
to related party 37,208 37,208
Deposits 2,000 2,000
Deferred income 16,000 16,000
Amount due to
Mar Ventures, Inc. 4,520 $(4,520)
------ -------- -------
Total liabilities 96,979 (4,520) 92,459
------ -------- ------- --------
SHAREHOLDERS' EQUITY:
Common stock (par value
- $.01, 30,000,000
shares authorized,
452,000 issued and
outstanding) $4,520 4,520
Contributed capital 167,023 167,023
Notes receivable from
shareholders (39,955) (39,955)
------ -------- ----------------- --------
Total shareholders' equity 4,520 127,068 131,588
------ -------- ------- --------
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $4,520 $224,047 $(4,520) $224,047
====== ======== ======= ========
</TABLE>
EXHIBIT 10.1
ASSET TRANSFER, ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSET TRANSFER, ASSIGNMENT AND ASSUMPTION AGREEMENT
("Agreement") is made and entered into the 16th day of April, 1996,
by and between Bexy Communications, Inc. a Delaware corporation
("Assignor"), and Mar Ventures Inc., a Delaware corporation
("Assignee").
RECITALS
WHEREAS, Assignor is a company engaged in the media business
(the "Business");
WHEREAS, Assignor has entered into a certain Agreement and
Plan of Reorganization dated as of April 16, 1996 (the
"Reorganization Agreement") by and among Assignor, Cheniere Energy
Operation Co., Inc. ("Cheniere"), the stockholders of Cheniere and
Buddy Young, pursuant to which Assignor will effect a
reorganization (the "Reorganization") of the management, business,
capital structure and operations of Assignor;
WHEREAS, in connection with the Reorganization, Assignor
contemplates acquiring the business of a company engaged in the oil
and gas exploration business;
WHEREAS, it is contemplated by the Reorganization Agreement,
that Assignor transfer all of its assets to Assignee and that
Assignee assume all of the liabilities of Assignor, including but
not limited to, its obligations under the Reorganization Agreement;
WHEREAS, Assignor has formed Assignee to receive the transfer
of and hold Assignor's assets (the "Assets") and operate the
Business; and
WHEREAS, the parties desire to set forth the terms of the
transfer and assumption herein.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1. Transfer, Assignment and Assumption.
1.1 Transfer and Assignment of Assets. Assignor hereby
grants, conveys, assigns and transfers to Assignee all of its
right, title and interest in and to all of the Assets, including,
but not limited to, the following:
1.1.1 Intellectual Property. All of those
trademarks, trade names, copyrights, service marks, licenses or
patents listed in the Schedule of Patents, Copyrights and
Trademarks attached hereto as Exhibit A and incorporated herein by
referenced (the "Intellectual Property");
1.1.2 Personal Property. All of those items of
furniture, fixtures, all associated production equipment and other
equipment, computer equipment, hardware and other tangible personal
property listed on the Schedule of Personal Property attached
hereto as Exhibit B and incorporated herein by reference (the
"Personal Property");
1.1.3 Program Agreements. All of the Assignor's
right, title and interest in and to those certain production and
distribution agreements and contracts (the "Agreements") related to
the attached hereto as Exhibit C and incorporated herein by
reference;
1.1.4 Equipment Leases. All of Assignor's
right, title and interest as lessee in and to those certain
equipment leases for leased equipment owned by Assignor listed on
the Schedule of Equipment Leases attached hereto as Exhibit D and
incorporated herein by reference (the "Equipment Leases");
1.1.5 Contracts, Accounts Receivable and
Inventory. Any contracts, accounts receivable and inventory of
Assignor relating exclusively to the Business attached hereto as
Exhibit E (the "Contracts");
1.1.6 All Other Assets. All of the other assets
of Assignor described in Exhibit F and incorporated herein by
reference whether or not specifically referred to in any of the
preceding paragraphs of this Section 1.
1.2 Assumption of Liabilities. Assignee accepts the
grant, conveyance, assignment and transfer of the Assets as
provided in Section 1.1 and in exchange for Assignor's transfer of
Assets, the Assignee agrees to irrevocably and unconditionally
assume all of the liabilities (including taxes) of Assignor with
respect to the Business or any of the Assets, including, but not
limited to, each of those liabilities described on the list
attached as Exhibit G and incorporated herein by reference (the
"Assumed Liabilities"). The Assignor does not have in effect:
1.2.1 any collective bargaining agreements; or
1.2.2 any employee benefit plan as defined in
ERISA.
2. Consideration. In consideration for the transfer of the
Assets and the assumption of Assumed Liabilities of the Business,
Assignee shall issue 452,000 of its shares of common stock to
Assignor.
3. No Further Conveyance Necessary. This Agreement shall
effectively assign, transfer and convey all of the interest in the
Assets from Assignor to Assignee without any further documents of
conveyance. Likewise, this Agreement shall fully evidence the
assumption of all of the Assumed Liabilities by Assignee without
any further instrument of conveyance or assumption.
4. Representations of Assignor. Assignor represents and
warrants as follows as of the date hereof:
4.1. Organization, etc. Assignor is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware and has the corporate powers necessary to own
its property and to carry on its business as now conducted and as
proposed to be conducted.
4.2 Authorization. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action on the part of Assignor. This Agreement
constitutes the valid and binding obligation of Assignor,
enforceable against it in accordance with its terms.
4.3 No Breach. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby will not violate, result in any breach of, or constitute a
default under (i) Assignor's Certificate of Incorporation or
Bylaws, (ii) any material agreement to which Assignor is a party or
by which Assignor is bound, (iii) any order, judgment, injunction
or decree of any court, arbitrator or governmental agency binding
upon Assignor or by which any of its material assets are bound or
(iv) any law, rule or regulation applicable to Assignor.
4.4 Tax and Other Returns and Reports. Except as set
forth in Schedule of Assumed Liabilities in Exhibit G, delivered
concurrently herewith, (i) all tax returns and tax reports required
to be filed by Assignor have been filed with the appropriate
governmental agencies in all jurisdictions in which such returns
and reports are required to be filed and where failure to file
would materially and adversely effect Assignor, (ii) all government
income, franchise, property and other taxes paid or chargeable to
the operation of Assignor in accordance with its normal initial
accounting and operational procedure (including interest and
penalties) (x) have been fully paid or (y) are being contested in
good faith by appropriate proceedings and are not material to
Assignor and (iii) no issues have been raised or are currently
pending by the IRS or any other governmental taxing authority in
connection with any of the returns and reports referred to in the
foregoing clause (i) which, individually or in the aggregate, might
have a material adverse effect on Assignor and (iv) no waivers of
the applicable statue of limitations have been executed.
4.5 Title to Property. Assignor will transfer to
Assignee on the date hereof good and marketable title to the
Assets, free and clear of mortgages, pledges, charges,
encumbrances, equities, claims, covenants, conditions or reclaims,
except for matters that, in the aggregate are not substantial in
amount and do not materially detract from or interfere with the
present or intended use of any of the Assets, or materially impair
the Business (other than the Assumed Liabilities).
4.6 Effect of Representations. The representations and
warranties of Assignor set forth in Section 3 are made solely for
the purpose of this Agreement and shall not (i) survive the
consummation of the transactions contemplated by this Agreement,
(ii) inure to the benefit of, or be enforceable by or against,
either the successors or permitted assigns of the parties hereto or
any other person, or (iii) give rise to any action or claim against
Assignor, including, without limitation, any action for negligent
misrepresentation.
5. Indemnification. The Assignor and Assignee agree to
indemnify and hold harmless each other as follows:
5.1 Assignor shall indemnify, defend and hold harmless
Assignee from any and all loss, cost, expense and liability
(including attorneys' fees) incurred in connection with any claim
or asserted claim which may be made against Assignee and which
arises directly or indirectly from any breach of this Agreement by
Assignor.
5.2 Assignee shall indemnify, defend and hold harmless
Assignor from any and all loss, cost, expense and liability
(including attorneys' fees) incurred in connection with any claim
or asserted claim which may be made against Assignor and which
arises directly or indirectly from any breach of this Agreement by
Assignee.
5.3 Promptly after receipt of notice of the commencement
of any action in respect of which indemnity may be sought against
either party hereunder, the indemnified party will notify the other
party in writing of the commencement thereof and the other party
shall, subject to the provisions stated below, assume the defense
of such action (including the employment of counsel, who shall be
counsel reasonably satisfactory to the indemnified party and shall
not be counsel to the other party), and the payment of expenses
insofar as such action shall relate to any alleged liability in
respect of which indemnity as available. The indemnified party
shall have the right to employ separate counsel in any action and
to participate in the defense thereof, but the fees and expenses of
its counsel shall not be at the expense of the other party unless
the employment of that counsel has been specifically authorized by
the other party.
6. Access to Information. Assignor and Assignee and each of
their counsel, accountants and other representatives shall have
full access during normal business hours to all properties, books,
accounts, records, contracts and documents of or relating to the
business of each other, and each of Assignor and Assignee shall
furnish to each other and his representatives all information
concerning the business, finances and properties of the other, that
may reasonably be requested in connection with the transactions
contemplated hereby. Assignor and Assignee will treat all
information so obtained as confidential and preparation to this
Agreement.
7. Distribution of Assignee Shares. It is contemplated that
such shares shall be distributed by Assignor to its stockholders or
record as of May 15, 1996, subject to approval of such distribution
by the stockholders of Assignor at a special meeting of
stockholders to be called to approve the Reorganization and the
Closing as described in the Reorganization Agreement.
8. Representations of Assignee. Assignee represents and
warrants as follows:
8.1 Organization, etc. Assignee is a corporation duly
organized and validly existing under the laws of the State of
Delaware and has the corporate powers necessary to own its property
and carry on its business as proposed to be conducted.
8.2 Authorization. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action on the part of Assignee. This Agreement
constitutes the valid and binding obligation of Assignee,
enforceable against it in accordance with its terms.
8.3 No Breach. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby will not violate (i) the Certificate of Incorporation or
Bylaws of Assignee, (ii) any material agreement to which Assignee
is a party or by which Assignee is bound, (iii) any order,
judgment, injunction or decree of any court, arbitrator or
governmental agency binding upon Assignee or by which any of its
material assets are bound or (iv) any law, rule or regulation
applicable to Assignee.
8.4 Effect of Representations. The representations and
warranties of Assignee set forth in paragraphs 8.1, 8.2 and 8.3 are
made solely for the purpose of this Agreement and shall survive the
consummation of the transactions contemplated by this Agreement,
and inure to the benefit of, or be enforceable by, either the
successors or permitted assigns of Assignor.
9. Miscellaneous.
9.1 Assignment. No assignment or transfer of any
interest, right or obligation of any party hereunder shall be
allowed without the prior written consent of all parties to this
Agreement.
9.2 Amendments. This Agreement may not be amended,
supplemented or otherwise modified except in writing signed by or
on behalf of each party hereto.
9.3 Severability. In the event that any provision of
this Agreement shall be held to be invalid, illegal or
unenforceable, in whole or in part, such invalidity, illegality or
unenforceability shall not in any way whatsoever affect the
validity of the other provisions of this Agreement and such other
provisions shall remain in full force and effect.
9.4 Further Assurances. Each of the parties hereto
agrees that, from and after the date hereof upon the reasonable
request of the other party hereto and without further
consideration, such party shall execute and deliver to such other
party such documents and shall take such other actions as such
other party may reasonably request in order to carry out the
purposes and intentions of this Agreement, including, without
limitation, the vesting in Assignee of the title to the Assets in
accordance with such terms of this Agreement and the correction of
related errors and defects.
9.5 Governing Law. This Agreement shall be governed by
the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ASSIGNOR:
BEXY COMMUNICATIONS, INC.,
a Delaware corporation
By:
Its: President
ASSIGNEE:
MAR VENTURES, INC.,
a Delaware corporation
By:
Its: President
