SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/C
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
each class is to be registered
None 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
The Divestiture
Background
Mar Ventures Inc., a Delaware corporation ("Mar Ventures") 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
("Assignment 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 (the "Mar Ventures Stock") (representing 100
percent of the issued and outstanding shares of Mar Ventures 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 Mar Ventures in connection with the Assignment Agreement. The
Assignment Agreement provides for Mar Ventures to indemnify Bexy for any
liabilities relating to the assets transferred by Bexy to Mar Ventures or the
conduct of the business of Bexy prior to the Closing Date.
At a Special Meeting held on July 2, 1996, the stockholders of Bexy
approved 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 and CEO and principal stockholder of Bexy and the
sole officer and director of Mar Ventures ("Young"). Pursuant to the
Reorganization, and following all regulatory approval, the outstanding capital
stock of Mar Ventures (the "Mar Ventures 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
issued to the Cheniere Stockholders shares of Common Stock of Bexy equal to
approximately 93% (the "Exchange"), causing the former Bexy stockholders'
interest in Bexy to be diluted to approximately 7%. As a result, Cheniere became
a wholly-owned subsidiary of Bexy and the principal business of Bexy became the
oil and gas exploration and exploi-
tation business conducted by Cheniere, and Mar Ventures will continue television
programming library business historically carried on by Bexy.
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, Mar Ventures 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 Mar Ventures in a position to seek
additional capital for its activities independently.
Manner of Divestiture
Bexy will distribute to its stockholders of record as of the
Record Date (the "Divestiture Record Date"), one (1) share of Mar Ventures Stock
for each four (4) shares of Common Stock held at the Record Date
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(pre-reverse split). The Divestiture will be deemed to be effective as of July
3, 1996, the Closing Date of the Reorganization.
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 Mar Ventures 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 Mar Ventures 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 Mar Ventures Stock held by Bexy which are not
distributed shall be canceled.
No holder of shares of Bexy Common Stock receiving shares of
Mar Ventures Stock will be required to pay any cash or consideration for the
shares of Mar Ventures Stock that he will receive in the Divestiture or to
surrender or exchange Bexy Shares in order to receive shares of Mar Ventures
Stock. The Divestiture will not affect the number of outstanding Bexy Shares.
Listing and Trading of Mar Ventures Stock
There currently is no public market for Mar Ventures 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 Mar Ventures
Stock may
trade cannot be predicted. Until Mar Ventures Stock is fully distributed
and an
orderly market develops, the prices at which such stock trades may fluctuate
significantly. The prices at which Mar Ventures 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 Mar Ventures Stock, investor
perceptions of Mar Ventures, Mar Ventures'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, Mar Ventures 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, Mar Ventures intends to
apply to the NASD to have its stock listed on the Electronic Bulletin Board
under the symbol "MARV". However, Mar Ventures Common Stock is not currently
eligible for inclusion on the Electronic Bulletin Board, and no assurance can be
given that Mar Ventures 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, Mar Ventures initially will have approximately 936
holders of record of its Common Stock.
Shares of Mar Ventures 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 Mar Ventures
under the Securities Act. Persons who may be deemed to be affiliates of Mar
Ventures after the Divestiture generally include individuals or entities that
control, are
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controlled by, or are under common control with, Mar Ventures and may include
certain officers and directors of Mar Ventures as well as principal stockholders
of Mar Ventures. Persons who are affiliates of Mar Ventures will be permitted to
sell their shares of Mar Ventures 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
Mar Ventures 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 Mar Ventures.
Current Activities
The current core business of Mar Ventures, which is a
continuation of the business of Bexy, 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.
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(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.
(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 Mar Ventures will continues to market the film
library acquired from Bexy, management does not anticipate generating
significant revenues as a result of this activity.
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."
Mar Ventures 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
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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. Mar Ventures plans to initially develop and market products
to this segment of the market. In the future, as Mar Ventures 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 Mar Ventures 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 also established themselves as providers of health-themed
information to the general public. Mar Ventures 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. Mar Ventures's
programming competes with other first-run programming, network re-runs and
programs produced by local television stations. In addition, Mar Ventures
competes for the creative services of producers, technical personnel, writers
and performing artists. In both areas of competition, Mar Ventures 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 Mar Ventures. 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.
Mar Ventures's success is highly dependent on various
unpredictable factors such as the viewing preferences of television audiences.
Mar Ventures'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
Mar Ventures was formed on March 27, 1996 to hold and operate
the
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operating assets and liabilities of Bexy as they existed as of that time and
before the acquisition of the Cheniere oil and gas business. The following
discussion of the financial condition and results of operations of Mar Ventures
should be read in conjunction with the financial statements of Bexy, including
the notes thereto, which appear elsewhere herein. Prior to April 16, 1996 Mar
Ventures had no operations or assets or significant business activity. Since Mar
Ventures was not incorporated until March 27, 1996, a proforma balance sheet is
provided for Mar Ventures to reflect the contribution of assets as if it had
occurred on May 31, 1996. However, the financial information of Bexy is directly
relevant to the future business of Mar Ventures since Mar Ventures will be
continuing the business of Bexy.
In their report on the financial statements of Mar Ventures as of May
31, 1996, Mar Ventures's independent auditor's stated that Mar Ventures minimal
revenue from operations and insufficient working capital raised substantial
doubt about Mar Ventures ability to continue as a going concern. Management of
Mar Ventures believes that forecasted revenues and potential private placements
of its securities will be sufficient to finance Mar Ventures cash requirements
during the balance of fiscal 1997. However, no arrangements have been made with
any person with respect to any offering of securities and there can be no
assurance that Mar Ventures will be able to raise such funds.
Results of Operations (Bexy)
Nine Months Ended May 31, 1996 compared to nine months ended May 31,
1995
Revenues from the licensing of Mar Ventures's program library for the
nine-month period ended May 31, 1996 were $49,758 compared to $101,867 during
the comparable period in 1995. This substantial decrease resulted from the
expiration of licensing agreements for Mar Ventures's program library and
management's focus on the negotiation and consummation of the Reorganization.
Mar Ventures believes that revenues have now stabilized and that expenses will
be reduced since the Reorganization.
The cost of programs and distribution fees during the nine-month period
ended May 31, 1996 decreased $96,446 or 77% from the comparable period in 1995
primarily because of the significant amortization costs incurred in such period
in 1995.
Expenses during the nine-month period ended May 31, 1996 increased
$125,937 or 137% from the comparable period in 1995 primarily as a result of an
increase of $56,971 in General and Administrative expense, additional expense of
consulting fees incurred of $59,500 paid to Mar Ventures's majority stockholder
during such period which was not incurred during such period in 1995, the
increase in advertising expense to $10,101 during the nine-month period ended
May 31, 1996 from $225 during the comparable period in 1995 and the increase in
professional fees incurred to $35,144 from $6,066 during the comparable period
in 1995. These increased expenses were partly offset by a reduction in rent
incurred to $11,443 in the nine-month period ended May 31, 1996 compared to
$26,381 incurred in the comparable period in 1995 and the elimination of expense
attributable to interest and salaries of $6,328 and $8,216, respectively.
Mar Ventures's net loss of the nine-month period ending May 31, 1996
increased by $83,946 or 76% from the comparable period in 1995. The increase in
net loss was primarily the result of the substantial decrease in revenues and
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increase expenses described above, offset in part by lower cost of programs and
distribution fees.
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. Mar
Ventures continually evaluates the carrying value of its program inventory to
ensure its valuation at the lower of cost or market. Based on the lower than
forecasted revenues of its film library, experienced in 1995 and current
projections indicating a continued decline in film revenues, Mar Ventures
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.
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 May 31, 1996, Bexy had cash of $63,541 and shareholders'
equity of $95,261.
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 Bexy 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
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versus 42% in 1993.
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.
At May 31, 1996, Bexy's working capital decreased to $37,288.
The cash and accounts receivable were insufficient to insure the Mar Ventures's
continued existence as a going concern and to pay Bexy's shares of the costs of
the Reorganization and the Divestiture, estimated at $20,000. During the period
ending May 31, 1996, Bexy had a negative cash flow from operating activities of
$196,447. Management expects to meet its current cash requirements through
license revenues, borrowings from a related party, Mr. Buddy Young as necessary
and the sale of common stock. In the past, Mr. Young has advanced Mar Ventures's
former parent, Bexy Communications, Inc., sums totalling $566,301 before
repayments and Mr. Young has committed to loan additional amounts if deemed
required by management and to suspend payments to accrued interest on consulting
fees, if required.
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. Mar Ventures has assumed this
lease.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning
the beneficial ownership of Mar Ventures's outstanding Common Stock as of May
15, 1996, by each person known by Mar Ventures to own beneficially more than 5%
of the outstanding Common Stock, by each of Mar Ventures's directors and by all
directors and officers of Mar Ventures 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 Mar Ventures Stock
distributed could be greater due to rounding of fractional shares. Unless
otherwise indicated below, to the knowledge of Mar Ventures, 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%
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*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.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Buddy Young, age 60, has been Chief Executive Officer,
Treasurer, Secretary and Director of Mar Ventures since inception.
Item 6. Executive Compensation
No compensation has been paid or accrued to any person since
organization of Mar Ventures. No options were issued to the
CEO of Mar Ventures during 1995.
Item 7. Certain Relationships and Related Transactions
Through April 19, 1996, Young, an officer, director and
principal stockholder of Mar Ventures 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 Mar Ventures. 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
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accrued and unpaid interest.This liability has been assumed by Mar Ventures 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 Mar Ventures
intends to execute this option and does not intend to have any future
relationship with IQL.
Pursuant to the Reorganization Agreement, at the Closing,
Young and Bexy entered 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 entered into agreements pursuant to which Young agreed not to
sell more than 10,000 Mar Ventures Shares per month for a nine-month period
after the Closing Date and Bexy agreed 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 also agreed
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
Mar Ventures'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 Mar Ventures, are entitled to share
ratably in all assets remaining after payment of liabilities. Mar Ventures 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
This Registration Statement has been prepared in connection with the
distribution (the "Divestiture") by Bexy to its stockholders of up to 452,000
shares of Common Stock, $.001 par value, of Mar Ventures owned by Bexy. Prior to
the Divestiture, Mar Ventures was owned by Bexy. Accordingly, no public market
for the Registrant's Common Stock has existed. The Registrant intends to
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apply for listing on the Electronic Bulletin Board sponsored by Nasdaq under the
symbol "MARV." However, Mar Ventures 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 Mar Ventures 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 Mar Ventures under
the Securities Act of 1933 (the "Securities Act"). Persons who may be deemed to
be affiliates of Mar Ventures after the Divestiture generally include
individuals or entities that control, are controlled by, or are under common
control with, Mar Ventures and may include certain officers and directors of Mar
Ventures as well as principal stockholders of Mar Ventures. Persons who are
affiliates of the Mar Ventures will be permitted to sell their shares of Mar
Ventures 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, Mar Ventures initially will have approximately 936 holders of
record of its Common Stock as of the Divestiture Date.
(c) Dividends
Mar Ventures 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
Mar Ventures's Bylaws and the Delaware General Corporation Law
provide for indemnification of directors and officers against certain
liabilities.
12
<PAGE>
Mar Ventures's Bylaws and the Delaware General Corporation Law
provide for indemnification of directors and officers against certain
liabilities. Officers and directors of Mar Ventures 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.
PART F/S
The Financial Statements of the Registrant, required by
Regulation S-X, are set forth on pages 15 through 34.
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
April 16, 1996, by and between Bexy
Communications, Inc. and Mar Ventures Inc.(2)
(1) Filed with original Form 10-SB
(2) Revised version filed with Form 10-SB/A
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: July 29, 1996 MAR VENTURES INC.
By:/s/Buddy Young
Buddy Young
President
13
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS INDEX
BEXY COMMUNICATIONS, INC.
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 16
FINANCIAL STATEMENTS:
Balance Sheet,
August 31, 1995 17
Statements of Operations
for the Two Years Ended August 31, 1995 18
Statements of Shareholders' Equity
for the Two Years Ended August 31, 1995 19-20
Statements of Cash Flows
for the Two Years Ended August 31, 1995 21-22
Notes to Financial Statements 23
Balance Sheet,
February 29, 1996 27
Statements of Operations
for the Nine Months Ended
May 31, 1996 and May 31, 1995 28
Statements of Cash Flows
for the Nine Months Ended
May 31, 1996 and May 31, 1995 29
Notes to Interim Financial Statements 30
MAR VENTURES, INC.
INDEPENDENT AUDITORS' REPORT 32
Balance Sheet, April 22, 1996 33
Notes to Financial Statement 34
Pro Forma Condensed Balance Sheet,
May 31, 1996 35
</TABLE>
- -----------------------------------------------------------------
14
<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.
FARBER & HASS
Oxnard, California
November 9, 1995
15
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
BALANCE SHEET
AUGUST 31, 1995
ASSETS
<S> <C>
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)
========= =========
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
17
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE TWO YEARS ENDED AUGUST 31, 1995
NOTES TOTAL
COMMON STOCK RECEIVABLE SHARE-
------------------
SHARES CONTRIBUTED ACCUMULATED FROM HOLDER'S
OUTSTANDING AMOUNT CAPITAL DEFICIT SHAREHOLDERS EQUITY
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
SEPTEMBER 1, 1993 7,164,333 $126,970 $502,575 $(335,108) $ 294,437
ONE-FOR-SIX REVERSE
STOCK SPLIT (5,970,277 )
SALE OF SHARES 120,833 1,208 181,767 $(153,000) 29,975
ISSUANCE OF SHARES
FOR SERVICES 45,062 451 12,179 12,630
CONSTRUCTIVE ISSUANCE
OF SHARES RELATING
TO THE PURCHASE OF
PROGRAM INVENTORY 50,000 500 89,500 90,000
REPAYMENT ON NOTES
RECEIVABLE 20,000 20,000
NET LOSS (213,620) (213,620)
---------- -------- -------- --------- -------- ---------
BALANCE,
AUGUST 31, 1994 1,409,951 129,129 786,021 (548,728) (133,000) 233,422
CANCELLATION OF
CONSTRUCTIVE
ISSUANCE (50,000 ) (500) (89,500) (90,000)
SALE OF SHARES 151,000 4,573 231,393 235,966
ISSUANCE OF SHARES
FOR SERVICES 45,168 452 64,917 65,369
REPAYMENT ON NOTES
RECEIVABLE 86,326 86,326
ISSUANCE OF SHARES
FOR ROUNDING 2,828
NET LOSS (394,633) (394,633)
---------- -------- -------- -------- --------- ---------
BALANCE,
AUGUST 31, 1995 1,558,947 $133,654 $992,831 $(943,361) $ (46,674) $ 136,450
========== ======== ======== ========= ========= =========
</TABLE>
See notes to financial statements.
19
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE TWO YEARS ENDED AUGUST 31, 1995
1995 1994
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C>
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
========= =========
</TABLE>
(Continued)
20
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS - Continued
FOR THE TWO YEARS ENDED AUGUST 31, 1995
1995 1994
---- ----
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
<S> <C> <C>
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.
- ------------------------------------------------------------------------
21
<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
22
<PAGE>
licensing agreement, provided certain conditions have been met,
including availability of the film for broadcast.
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. 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.
The Company continually evaluates the carrying value of its program
inventory. Based on the lower than forecasted revenues of its film
library experienced in 1995 and current projections indicating a
continued decline in film revenues, the Company re-evaluated the future
market value of its program inventory in the fourth quarter and
recorded a write-down to reflect its value at the lower of cost or
market. The adjustment totalled $235,500 and was recorded in
amortization of film costs.
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.
23
<PAGE>
2. PROGRAM INVENTORY
At August 31, 1995, the program inventory consisted of
the following:
<TABLE>
<CAPTION>
<S> <C> <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 (508,966)
Program Inventory, Net $ 55,456
=========
</TABLE>
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.
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
24
<PAGE>
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.
- -----------------------------------------------------------------------
25
<PAGE>
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEET
MAY 31, 1996 (Unaudited)
ASSETS
<S> <C>
CASH $ 63,541
ACCOUNTS RECEIVABLE 68,800
PROGRAM INVENTORY, Net 52,756
FURNITURE AND FIXTURES - Net of
accumulated depreciation of $3,464 622
OTHER ASSETS 4,600
TOTAL ASSETS $ 190,319
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses $ 39,849
Accrued interest expense to related party 37,209
Deposits 2,000
Deferred income 16,000
-----------
Total liabilities 95,058
-----------
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 (1,138,489)
Notes receivable from shareholders (30,235)
-----------
Total shareholders' equity 95,261
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 190,319
===========
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
26
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
FOR THE NINE MONTHS ENDED
MAY 31, MAY 31,
1996 1995
<S> <C> <C>
REVENUES $ 49,758 $ 101,867
--------- ----------
COST OF PROGRAMS AND DISTRIBUTION FEES 29,071 125,514
--------- ----------
EXPENSES:
Advertising 10,101 225
Salaries 8,216
Consulting fees to majority shareholder 59,500
General and administrative 100,545 43,574
Depreciation 900 906
Interest 6,328
Professional fees 35,144 6,066
Rent 11,443 26,381
---------- ----------
Total expenses 217,633 91,696
---------- ----------
OTHER INCOME 1,819 4,162
----------- ----------
NET LOSS $ (195,127) $ (111,181)
========== ==========
NET LOSS PER SHARE $ (.16) $ (.08)
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,681,203 1,450,450
========= =========
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
27
<PAGE>
<TABLE>
<CAPTION>
BEXY COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE NINE MONTHS ENDED
MAY 31, MAY 31,
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(195,127) $(111,181)
Adjustments to reconcile net loss to
net cash provided (used) by
operating activities:
Amortization of film costs 2,700 58,255
Depreciation 900 906
Changes in operating assets and
liabilities:
Accounts receivable (5,600) (28,420)
Other Assets 2,122
Accounts payable and accrued expenses 3,539 19,962
Accrued interest expense (4,981) 6,328
--------- --------
Net cash used by operating activities (196,447) (54,150)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and fixtures (566)
Net change in notes receivable 16,439 51,788
---------- --------
Net cash provided by investing activities 15,873 51,788
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 137,500 130,967
Repayment on note payable (5,000)
Repayment to related party (7,519) (51,781)
--------- --------
Net cash provided (used) by financing
activities 129,981 74,186
--------- --------
NET (DECREASE) INCREASE IN CASH (50,593) 71,824
CASH, BEGINNING OF PERIOD 114,134 6,573
--------- --------
CASH, END OF PERIOD $ 63,541 $ 78,397
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 4,983 $ 0
Cash paid for income taxes $ $ 1,221
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
28
<PAGE>
BEXY COMMUNICATIONS, INC.
NOTES TO THE CONSOLIDATED 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.
The financial statements include the Company's wholly-owned subsidiary.
Mar Ventures, Inc., a Delaware Corporation, which acquired
substantially all of the assets and assumed substantially all of the
liabilities of the Company on April 16, 1996.
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. REORGANIZATION AGREEMENT - The Company entered into an Agreement
and Plan of Reorganization dated as of April 16, 1996 with Cheniere
Energy Operating Co., Inc. ("Operating"), the stockholders of
Operating and Buddy Young. Pursuant to the Reorganization
Agreement, subject to approval of the Reorganization by the
stockholders of the Company, the Company will, among other things
issue shares of its Common Stock equal to approximately 93% of its
then issued and outstanding Common Stock and distribute the shares
of common stock of Mar Ventures to the Company's stockholders of
record as of May 15, 1996.
29
<PAGE>
3. GENERAL AND ADMINISTRATIVE EXPENSES - The Company has expended
approximately $46,000 through May 31, 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,
which was terminated by the Company on April 16, 1996.
4. SUBSEQUENT EVENTS - On July 3, 1996, a date subsequent to the
balance sheet date, the stockholders approved a plan of
reorganization to change the Company's business from the television
production and health information business to the business of oil
and gas exploration and exploitation, as well as related changes in
the capitalization and management of the Company. A one-for-three
reverse split of the Common Stock previously declared by the Board
of Directors of the Company became effective immediately after the
approval of the Reorganization by the Company's stockholders.
As part of the Reorganization, the Company issued new shares of its
stock in exchange for all of the stock of Operating resulting in a
change in control of the Company and distributed the shares of Mar
Ventures to the Company's stockholders of record as of May 15, 1996.
Mar Ventures remains responsible for the liabilities of the Company
prior to the date of the Reorganization, including the Company's
obligations under the Reorganization Agreement.
30
<PAGE>
INDEPENDENT AUDITORS' REPORT
To Mar Ventures, Inc.:
We have audited the accompanying balance sheet of Mar Ventures, Inc. (the
"Company") as of May 31, 1996. This financial statement is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
financial statement 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 statement referred to above presents fairly, in
all material respects, the financial position of the Company as of May 31, 1996
in conformity with generally accepted accounting principles.
The accompanying financial statement has been prepared assuming the Company will
continue as a going concern. As discussed in Note 1 to the financial statement,
the Company has minimal revenues and insufficient working capital to meet its
current obligations which raises 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 3. The financial statement does not include any
adjustments that might result from the outcome of this uncertainty.
FARBER & HASS
Oxnard, California
August 19, 1996
31
<PAGE>
<TABLE>
<CAPTION>
MAR VENTURES, INC.
BALANCE SHEET
MAY 31, 1996
<S> <C>
ASSETS
AMOUNT DUE FROM PARENT $4,520
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
30,000,000 shares authorized;
452,000 shares issued and
outstanding $4,520
</TABLE>
See accompanying note to financial statement.
- ------------------------------------------------------------------------
32
<PAGE>
MAR VENTURES, INC.
NOTES TO FINANCIAL STATEMENT
1. Business Corporate Status - Mar Ventures, Inc. (the "Company") was
incorporated in the state of Delaware on March 27, 1996. The
Company is a wholly-owned subsidiary of Bexy Communications, Inc.
("Bexy"). There were no operations from March 27, 1996 to May 31,
1996.
Going Concern - The financial statement has 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 3, management has
developed an operating plan which they believe will generate sufficient
cash to meet its obligations in the normal course of business.
2. MERGER (Unaudited)
On July 2, 1996, the shareholders of Bexy approved a Plan of
Reorganization whereby Cheniere Energy Operating Company ("Cheniere")
would acquire control of Bexy in an exchange of common stock. In
conjunction with the above transaction, the shareholders approved the
formation of Mar Ventures, Inc., a wholly-owned subsidiary, and the
transfer of all assets and liabilities of Bexy to Mar Ventures, Inc.
3. MANAGEMENT PLANS
During the fiscal year ended August 31, 1995, Bexy generated net
negative cash flows from operating activities amounting to $94,250.
Management expects that forecasted sales and additional equity and debt
financing will be adequate to finance the cash flow requirements for
the next twelve months. If the Company is unable to meet its forecasted
sales and/or obtain additional equity or debt financing, the Company
may have difficulty in continuing as a going concern. Management has
developed alternative plans which include, but are not limited to, (1)
suspension of payments to the Company's President and majority
shareholder for consulting fees and accrued interest, and (2) the
commitment by the Company's President and majority shareholder to
personally fund any cash shortfalls for the next twelve months.
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MAR VENTURES, INC.
PROFORMA BALANCE SHEET
MAY 31, 1996 (Unaudited)
MAR CONTRIBUTION
VENTURES, OF BEXY ELIMINATION
INC. ASSETS ENTRIES TOTAL
ASSETS
CASH $ 63,541 63,541
ACCOUNTS RECEIVABLE 68,800 68,800
AMOUNT DUE FROM BEXY $4,520 $(4,520)
PROGRAM INVENTORY, Net 52,756 52,756
FURNITURE AND FIXTURES 622 622
OTHER ASSETS 4,600 4,600
------ ------- ------- --------
TOTAL ASSETS $4,520 $190,319 $(4,520) $190,319
====== ======== ======= ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable
and accrued expenses $ 39,849 $ 39,849
Accrued interest expense
to related party 37,209 37,209
Deposits 2,000 2,000
Deferred income 16,000 16,000
Amount due to
Mar Ventures, Inc. 4,520 $(4,520)
------ -------- -------
Total liabilities 99,578 (4,520) 95,058
------ -------- ------- --------
SHAREHOLDERS' EQUITY:
Common stock (par value
- $.01, 30,000,000
shares authorized,
452,000 issued and
outstanding) $4,520 4,520
Contributed capital 120,976 120,976
Notes receivable from
shareholders (30,235) (30,235)
------ -------- --------- --------
Total shareholders' equity 4,520 90,741 95,261
------ -------- ------- -------
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $4,520 $190,319 $(4,520) $190,319
====== ======== ======= ========
- ------------------------------------------------------------------------
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