U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the transition period from _____________to_______________
Commission file number: 0-26457
MARINA CAPITAL, INCORPORATED
______________________________________________
(Name of small business issuer in its charter)
Utah 87-0554016
_______________________________ __________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2605 Wall Ave., Ogden, Utah 84401
___________________________ _________________
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (801) 394-2400
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date:
Outstanding at September 30, 2000
_________________________________
4,080,427
$.001 par value common stock
<PAGE>
MARINA CAPITAL, INC.
FORM 10-QSB
TABLE OF CONTENTS
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements............................................... 1
ITEM 2. Managemen Discussion and Analysis of Financial Condition
and Results of Operations........................................ 2
PART II--OTHER INFORMATION
ITEM 1. Legal Proceedings.................................................. 3
ITEM 2. Changes in Securities and Use of Proceeds.......................... 3
ITEM 3. Defaults Upon Senior Securities.................................... 3
ITEM 4. Submission of Matters to a Vote of Security Holders................ 4
ITEM 5. Other Information.................................................. 4
ITEM 6. Exhibits and Reports on Form 8-K................................... 4
ii
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements.
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INDEX
Page
Condensed Consolidated Balance Sheets as of March 31, 2000
and December 31, 1999 F-1
Condensed Consolidated Statements of Operations for the
Three-months ended March 31, 2000 and 1999 F-3
Condensed Consolidated Statements of Cash Flows for the
Three-months ended March 31, 2000 and 1999 F-4
Notes to Condensed Consolidated Financial Statements F-6
1
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2000 1999
______ ______
CURRENT ASSETS
Cash $ 42,479 $ 15,714
Escrow deposits 45,100 45,100
Deposits - 220
__________ __________
TOTAL CURRENT ASSETS 87,579 61,034
__________ __________
OTHER ASSETS
Office equipment (net) 4,623 4,897
OlymPeak Estates land 1,367,363 1,354,445
Powder Mountain land 96,000 96,000
Shupe-Williams Plaza 304,270 287,986
__________ __________
TOTAL OTHER ASSETS 1,772,256 1,743,328
__________ __________
TOTAL ASSETS $1,859,835 $1,804,362
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued interest $ 86,514 $ 63,620
Accounts payable 8,290 11,126
Current maturities of notes payable 187,046 74,546
Trust deposits 45,100 45,100
__________ __________
TOTAL CURRENT LIABILITIES $ 326,950 $ 194,392
__________ __________
F-1
The accompanying notes are an integral part of these financial statements.
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED
BALANCE SHEETS (CONTINUED)
March 31, December 31,
2000 1999
______ ______
LONG-TERM LIABILITIES:
Notes payable $ 842,353 $ 729,853
Less current maturities (187,046) (74,546)
__________ __________
NOTES PAYABLE EXCLUDING
CURRENT MATURITIES 655,307 655,307
__________ __________
TOTAL LIABILITIES 982,257 849,699
__________ __________
REDEEMABLE PREFERRED STOCK
Redeemable preferred stock - 5,000,000 shares
no par value authorized,
94,259 shares issued and outstanding 278,278
84,259 shares issued and outstanding 240,778
TOTAL REDEEMABLE PREFERRED STOCK 278,278 240,778
STOCKHOLDERS' EQUITY
Common stock - 30,000,000 shares
$.001 par value authorized
4,058,774 shares issued and outstanding 2,226,481 2,226,481
Contributed capital 1,390,464 1,390,464
Deficit accumulated in the development stage (3,017,645) (2,903,060)
__________ __________
TOTAL STOCKHOLDERS' EQUITY 599,300 713,885
__________ __________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,859,835 $1,804,362
========== ==========
F-2
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-months Three-months March 5, 1996
ended ended (inception) to
March 31, 2000 March 31, 1999 March 31, 2000
______________ ______________ ______________
<S> <C> <C> <C>
REVENUE
Real estate sales commissions $ 3,000 $ 7,975 $ 97,306
Rent-land - - 3,300
Sale of land - - 40,000
__________ __________ ___________
TOTAL REVENUE 3,000 7,975 140,606
__________ __________ ___________
Cost of sales - - 25,000
__________ __________ ___________
GROSS MARGIN 3,000 7,975 115,606
__________ __________ ___________
OPERATING EXPENSES
Abandoned projects - 15,000 27,184
Accounting & legal 6,607 1,182 283,486
Advertising and promotion 459 110 14,171
Commissions 3,130 3,578 80,565
Consulting 2,320 - 186,641
Dues and registrations 2,008 716 10,258
Office expenses 5,455 6,335 102,758
Taxes 6,398 5,993 62,431
Travel & entertainment 12,072 5,462 153,602
Telephone 1,466 2,013 39,753
Salaries 63,450 55,075 666,084
Insurance 4,605 3,588 37,142
Depreciation 275 114 1,832
Other compensation - - 1,390,464
__________ _________ ___________
TOTAL OPERATING EXPENSES 108,245 99,166 3,056,371
__________ _________ ___________
NET LOSS FROM OPERATIONS (105,245) (91,191) (2,940,765)
__________ _________ ___________
OTHER INCOME AND (EXPENSES)
Interest income 636 1,270 12,379
Interest expense (9,974) (6,622) (89,258)
__________ _________ ___________
TOTAL OTHER INCOME AND (EXPENSE) (9,338) (5,352) (76,879)
__________ _________ ___________
NET LOSS $ (114,583) $ (96,543) $(3,017,644)
========== ========= ===========
BASIC AND DILUTED LOSS PER SHARE $(.03) $(.02)
===== =====
WEIGHTED AVERAGE COMMON SHARES --
BASIC AND DILUTED 4,058,774 3,883,464
</TABLE>
F-3
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three-months Three-months March 5, 1996
ended ended (inception) to
March 31, 2000 March 31, 1999 March 31, 2000
______________ ______________ ______________
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (114,583) $ (96,543) $(3,017,644)
Adjustments to reconcile net loss to net cash
used in operating activities:
Changes in operating assets and liabilities
Accounts receivable 220 15,000 -
Accounts payable and accrued expenses 20,056 12,179 94,802
Depreciation 275 114 1,832
Gain on sale of assets - - (16,000)
Stock option compensation - - 1,390,464
Stock issued for services - - 231,578
__________ _________ ___________
Net cash used in operating activities (94,032) (69,250) (1,314,968)
__________ _________ ___________
INVESTING ACTIVITIES
Sale of land - - 40,000
Real estate development (29,203) (95,260) (1,044,738)
Purchase of equipment - - (6,454)
__________ _________ ___________
Net cash used in investing activities (29,203) (95,260) (1,011,192)
__________ _________ ___________
FINANCING ACTIVITIES
Principle payments on notes payable - - (487,147)
Proceeds from notes payable 112,500 - 604,500
Proceeds from sale of redeemable preferred stock 37,500 - 278,278
Proceeds from sale of common stock - 239,969 1,973,008
__________ _________ ___________
Net cash provided in financing activities 150,000 239,969 2,368,639
__________ _________ ___________
Increase in cash 26,765 75,459 42,479
Cash at beginning of period 15,714 166,342 -
__________ _________ ___________
Cash at end of period $ 42,479 $ 241,801 $ 42,479
========== ========= ===========
</TABLE>
F-4
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (CONTINUED)
Three-months Three-months March 5, 1996
ended ended (inception) to
March 31, 2000 March 31, 1999 March 31, 2000
______________ ______________ _____________
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES
Non-cash investing activities - Acquisition of
land with issuance of note payable - - $ 725,000
===========
Cash paid during the
period for Interest $ 0 $ 0 $ 243,470
</TABLE>
F-5
The accompanying notes are an integral part of these financial statements.
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
A. Nature of Business
Marina Capital, Incorporated (the Company) was incorporated in Utah on
March 5, 1996. The purpose of the Company is to invest in and develop
various real estate and other business opportunities. The Company has
two real estate projects in various stages of development in the
Northern Utah area, the OlymPeak Estates project and the Shupe-Williams
building project. The Company has formed two wholly owned Limited
Liability Companies to own and manage the Shupe-Williams building
project. The Shupe-Williams building was purchased by Shupe-Williams
Plaza, LLC for $100 and is it's only asset. Shupe-Williams Plaza, LLC
is 100% owned by Marina Holding, LLC which has no other assets. Marina
Holding, LLC is 100% owned by Marina Capital, Incorporated. All three
companies have been consolidated into these financials and any
intercompany transactions have been eliminated.
B. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared by the Company in accordance with the rules and
regulations of the Securities and Exchange Commission for Form 10-QSB,
and accordingly, do not include all of the information and footnotes
required by generally accepted accounting principles. In the opinion of
management, these unaudited condensed consolidated financial statements
reflect all adjustments, which consist only of normal recurring
adjustments, which are necessary to present fairly the Company's
financial position, results of operations and cash flows as of March 31,
2000 and for the periods presented herein. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements, and notes thereto, included in the
Company's annual report on form 10-KSB, as amended, for the year ended
December 31, 1999 filed with the Securities and Exchange Commission.
The preparation of the condensed consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported amounts of revenue and expense for the
period being reported. Actual results could differ from those
estimates. The results of operations for the three months ended March
31, 2000 are not necessarily indicative of the results that may be
expected for the remainder of the year ending December 31, 2000 or
future annual periods.
F-6
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - REDEEMABLE PREFERRED STOCK
The Company has issued 94,259 shares of redeemable preferred stock at a price of
$2.50 to $3.00 per share. The redeemable preferred stock bears interest at 10 to
12 percent per annum which is payable in cash or additional preferred stock of
the Company, at the option of the holder.
Interest related to preferred stock in the amounts of $6,623, and $6,623 for the
three-month periods ended March 31, 2000, and 1999 respectively has been
recognized as interest expense in the accompanying condensed consolidated
statements of operations.
NOTE 3 - LOSS PER COMMON SHARE
Basic loss per common share is calculated by dividing the net loss by the
weighted average number of common shares outstanding during the period.
Diluted loss per share is the same as basic loss per share since options to
purchase 900,000 and 888,346 potential shares of common stock for the three
month periods ended March 31, 2000, and 1999, respectively, are not included in
the computation of diluted loss per share as their effect would have been anti-
dilutive.
NOTE 4 - CONTINGENT LIABILITIES
Ogden City Corporation and the Ogden City Redevelopment Agency (the City) each
hold a $250,000 trust deed note on the Shupe-Williams Building and adjacent lot.
Said notes will be deemed satisfied upon sufficient completion of the project as
specified in the purchase agreement. The Company is also subject to
restrictions on transfer of the building. Management has not reported this
obligation as either an asset or a liability in the financial statements due to
its contingent nature. Management believes the obligation will never be paid as
it will be satisfied on completion of the project or canceled if the building is
returned to the City.
F-7
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - REAL ESTATE
Total capitalized costs and related changes in the cost of developed property
are as follows:
Shupe- Powder
OlymPeak Williams Mountain
Estates Plaza Land Total
_________ ________ ________ _____
Balance at
December 31, 1999 $1,354,445 $287,986 $ 96,000 $1,738,431
Development
costs capitalized 12,918 16,284 - 29,202
Balance at
March 31, 2000 $1,367,363 $304,270 $ 96,000 $1,767,633
NOTE 6 - STOCK OPTION AGREEMENTS
In October and December, 1998, in exchange for services from an existing stock
holder, the Company issued to such stock holder options to acquire an additional
500,000 shares of common stock at the exercise price of $2.50 per share.
Two of the Company's employees have entered into employment agreements which
grant them the right to purchase shares of common stock (each year within 60
days of their anniversary date, beginning November 1, 1997 and ending November
1, 2003) equal to an aggregate total of five percent of the then issued and
outstanding common stock of the Company at an exercise price equal to 75 percent
of the book value of the common shares as of the date of exercise. The Company
has applied variable-plan accounting with respect to these options, and
accordingly, compensation expense has been recognized in the annual consolidated
statements of operations based on the estimated total intrinsic value of shares
available under option, as measured on each of the anniversary dates for each of
the years ended December 31, 1999, 1998 and 1997.
Effective March 14, 2000, the Company, and the employees described above,
nullified the provision included in the employment agreements which granted such
employees the right to acquire up to five percent of the Company's outstanding
common stock. In connection with the cancellation of the previous stock option
agreement, the Company granted each of the employees an option to acquire
200,000 shares of the Company's common stock at the price of $3.50 per share.
The option to acquire common stock terminates in conjunction with the
termination of the employment agreements on October 31, 2003.
F-8
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - STOCK OPTION AGREEMENTS (CONTINUED)
A summary of the Company's stock option activity and related information for the
three-months ended March 31, 2000 is as follows. All options outstanding as
of March 31, 2000 are exercisable. The weighted-average remaining contractual
life for all options outstancing as of March 31, 2000 is 4.3 years.
Weighted-average
Number of Shares exercise price
________________ ________________
Outstanding at beginning of period 905,877 $ 1.44
Granted 400,000 $ 3.50
Cancelled 405,877 $ 0.13
Outstanding at end of period 900,000 $ 2.94
The exercise price for the options granted during the three-months ended March
31, 2000 exceeded the estimated fair market malue of the stock. Accordingly,
no compensatioin cost has been recognized for the period. Furthermore, due to
the large difference detween the strike price of the options and the estimated
fair valueof the stock, using the "minimum-value" approach prescribed under
Statement of Fiancial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123), no value was attributed to the options granted
during the period, and proforma disclosures of net loss, and net loss per share
are not applicable.
NOTE 8 - NOTE PAYABLE
On February 1, 2000, the Company borrowed $112,500 from a stockholder. The note
payable, bears interest at 12%, is due February 1, 2001, and is unsecured.
F-9
<PAGE>
ITEM 2. Management Discussion and Analysis of Financial Condition
and Results of Operations
This Form 10-Q may contain trend information and forward-looking statements that
involve risks and uncertainties. The actual results of operations of the
Company could differ materially from the Company's historical result of
operations and those discussed in such forward-looking statements as a result of
certain factors set forth in this section and elsewhere in this Form 10-Q,
including information incorporated by reference.
RESULTS OF OPERATIONS
Revenues
The Company is primarily engaged in developing two real estate developments,
OlymPeak Estates and the Shupe-Williams Building. No sales have been realized
from either project as the Company is in the process of obtaining the necessary
permits and funding to develop the projects. As of March 31, 2000, the Company
had expended $392,363 (in addition to the original land purchase for $975,000)
OlymPeak Estates and $304,270 on the Shupe-Williams Building for preliminary
construction costs. All costs have been capitalized. Prospective buyers have
and are continuing to reserve lots and condo units, but no sales can be
finalized until the projects are sufficiently complete. The Company has several
real estate agents engaged in brokering other real estate parcels. This has
generated revenues of $3,000 in the current quarter and $7,975 for the three-
months ended March 31, 1999.
Operating Expenses
For the quarter ending March 31, 2000, operating expenses increased 9% as
compared to the same period from the previous year. Total operating expenses
were $108,245 and $99,166 for the quarters ending March 31, 2000 and 1999.
Salaries increased by $8,375 or 15.2% from $55,075 to $63,450 which is the
result of hiring a full time land planner. Accounting and legal fees increased
$5,425 or 459% due to the Company's efforts to register with the Securities and
Exchange Commission. Travel and entertainment increased $6,610 or 121% as a
result of increased out-of-town fund raising and marketing activity. In
addition, the period ended March 31, 1999, includes $15,000 in costs from an
abandoned project in Costa Rica. Management feels that operating expenses will
remain at this current level.
Operating Loss
The Company reported an operating loss of $105,245 for the first quarter of
2000, compared with an operating loss of $91,191 for the prior year's first
quarter. This was an increase of 15%. The largest expenses are salaries
$63,450 and travel and entertainment $12,072. The Company will more than likely
continue to show an operating loss until sales commence on the OlymPeak and
Shupe-Williams projects.
2
<PAGE>
Other Income (Expenses)
For the quarters ending March 31, 2000 and 1999, the Company reported interest
expense of $9,974 and $6,622 related to redeemable preferred stock and short
term notes. Additionally, the Company has capitalized $14,317 of interest in
each of the quarters ending march 31, 2000 and 1999, on the OlymPeak land
purchase note.
Income Taxes
Although the Company has incurred operating losses during the three-month period
ended March 31, 2000, no income tax benefit has been recognized. The Company
continues to be in the development stage, and although it has certain real
estate projects under various degrees of development, the Company has a limited
operating history. Currently, there is not adequate assurance the Company will
be able to generate sufficient future profits necessary to realize income tax
benefits from losses incurred through March 31, 2000.
Liquidity and Financial Resources
The Company had negative working capital of ($239,371) at March 31, 2000. It
has invested $1,767,633 in real estate projects and has long-term debt of
$655,307. Stockholders have invested $3,895,223 in the Company as of March 31,
2000 with $37,500 being invested during the three months ended March 31, 2000.
The Company is working on obtaining financing to complete construction on the
two projects in progress. Current estimates are that the OlymPeak Estates
project will require $1,000,000 to complete and Shupe-Williams $4,500,00.
Management feels it will be able to obtain the financing needed to complete the
construction and also fund ongoing operations either through additional stock
transactions or loans. However, no loan commitments have been made and there
can be no assurance that such funds will be raised in sufficient amounts to meet
the cash requirements of the Company.
PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings.
The Company has no legal proceedings in effect.
ITEM 2. Changes in Securities and Use of Proceeds.
There have been no changes in securities during this reporting period.
ITEM 3. Defaults Upon Senior Securities.
The Company has incurred no defaults upon senior securities during this
reporting period.
3
<PAGE>
ITEM 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders during
this reporting period.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No. 27 Financial Data Schedule
(b) Form 8-K
There were no reports filed on Form 8-K.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Marina Capital, Inc.
(Registrant)
/s/Larry R. Walker
________________________________
Larry R. Walker
Chief Executive Officer
Date: January 5, 2001
