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 September 30, 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. Management 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 F-1
Condensed Consolidated Statements of Operations for the
three-months ended September 30, 2000 and 1999 F-3
Condensed Consolidated Statements of Operations for the
Nine-months ended September 30, 2000 and 1999 F-4
Condensed Consolidated Statements of Cash Flows for the
Nine-months ended September 30, 2000 F-5
Notes to Condensed Consolidated Financial Statements F-7
1
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
2000 1999
_____________ ____________
CURRENT ASSETS
Cash $ 20,148 $ 15,714
Escrow deposits 45,100 48,100
Deposits - 220
__________ ___________
TOTAL CURRENT ASSETS 65,248 61,034
OTHER ASSETS
Office equipment (net) 4,071 4,897
OlymPeak Estates land 1,404,171 1,354,445
Powder Mountain land 96,000 96,000
Shupe-Williams Plaza 325,436 287,986
Loan fees 8,500 -
__________ ___________
TOTAL OTHER ASSETS 1,838,178 1,743,328
TOTAL ASSETS $1,903,426 $1,804,362
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued interest $ 134,985 $ 63,620
Accounts payable 13,892 11,126
Current maturities of notes payable 201,546 74,546
Trust deposits 45,100 45,100
TOTAL CURRENT LIABILITIES 395,523 194,392
F-1
The accompanying notes are an intergral part of these financial statements.
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
September 30, December 31,
2000 1999
_____________ _____________
LONG-TERM LIABILITIES:
Notes payable $ 856,853 $ 729,853
Less current maturities 201,546 74,546
__________ __________
NOTES PAYABLE EXCLUDING
CURRENT MATURITIES 655,307 655,307
__________ __________
TOTAL LIABILITIES 1,050,830 849,699
__________ __________
REDEEMABLE PREFERRED STOCK
Redeemable preferred stock - 5,000,000
shares no par value authorized,
124,259 shares issued and outstanding 390,778 -
84,259 shares issued and outstanding - 240,778
__________ __________
STOCKHOLDERS' EQUITY
Common stock - 30,000,000 shares $.001
par value authorized
4,080,427 shares issued and outstanding 2,307,781 -
4,058,774 shares issued and outstanding - 2,226,481
Contributed capital 1,390,464 1,390,464
Deficit accumulated in the development stage (3,236,427) (2,903,060)
___________ ___________
TOTAL STOCKHOLDERS' EQUITY 461,818 713,885
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,903,426 $1,804,362
========== ===========
F-2
The accompanying notes are an intergral 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
Sept 30, 2000 Sept 30, 1999 Sept 30, 2000
______________ _____________ _____________
<S> <C> <C> <C>
REVENUE
Real estate sales commissions $ 10,540 $ 16,500 $ 107,846
Rent-land - - 3,300
Sale of land - - 40,000
__________ _________ ___________
TOTAL REVENUE 10,540 16,500 151,146
__________ _________ ___________
Cost of sales - - 25,000
__________ _________ ___________
GROSS MARGIN 10,540 16,500 126,146
__________ _________ ___________
OPERATING EXPENSES
Abandoned projects - 10,402 27,184
Accounting & legal 5,913 3,801 298,227
Advertising and promotion 1,282 13 15,453
Commissions 6,324 14,850 86,889
Consulting - 5,826 186,641
Dues and registrations 657 277 11,035
Office expenses 4,233 5,799 111,242
Taxes 5,178 4,820 72,517
Travel & entertainment 11,405 12,927 178,675
Telephone 2,099 1,870 43,678
Salaries 66,346 63,606 796,428
Insurance 3,266 7,213 44,927
Depreciation 275 76 2,382
Other compensation - - 1,390,464
__________ _________ ___________
TOTAL OPERATING
EXPENSES 106,978 131,480 3,265,742
__________ _________ ___________
NET LOSS FROM
OPERATIONS (96,438) (114,980) (3,139,596)
__________ _________ ___________
OTHER INCOME AND (EXPENSE)
Interest income 160 - 12,776
Interest expense (9,250) (6,723) (109,606)
__________ _________ ___________
TOTAL OTHER INCOME
AND (EXPENSE) (9,090) (6,723) (96,830)
__________ _________ ___________
NET LOSS $ (105,528) $(121,703) $(3,236,426)
========== ========= ===========
BASIC AND DILUTED LOSS PER SHARE $(.03) $(.03)
===== =====
WEIGHTED AVERAGE
COMMON SHARES-BASIC AND DILUTED 4,080,427 3,971,119
</TABLE>
F-3
The accompanying notes are an intergral part of these financial statements.
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months Nine months
ended ended
Sept 30, 2000 Sept 30, 1999
_____________ _____________
REVENUE - Real estate sales commissions $ 13,540 $ 30,175
OPERATING EXPENSES
Abandoned projects - 25,402
Accounting & legal 21,348 22,478
Advertising and promotion 1,741 123
Commissions 9,454 19,773
Consulting 2,320 7,514
Dues and registrations 1,611 1,944
Office expenses 15,113 17,652
Taxes 16,484 16,272
Travel & entertainment 37,145 33,166
Telephone 5,391 6,180
Salaries 193,794 185,032
Insurance 12,390 15,378
Depreciation 826 228
__________ __________
TOTAL OPERATING
EXPENSES 317,617 351,142
__________ __________
NET LOSS FROM
OPERATIONS (304,077) (320,967)
__________ __________
OTHER INCOME AND (EXPENSES)
Interest income 1,034 1,270
Interest expense (30,322) (25,893)
__________ __________
TOTAL OTHER INCOME
AND (EXPENSE) (29,288) (24,623)
__________ __________
NET LOSS $ (333,365) $ (345,590)
========== ==========
BASIC AND DILUTED LOSS PER SHARE $(.08) $(.09)
===== =====
WEIGHTED AVERAGE
COMMON SHARES-BASIC AND DILUTED 4,069,601 3,971,119
F-4
The accompanying notes are an intergral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
March 5, 1996
September 30, September 30, (inception) to
2000 1999 September 30, 2000
_____________ _____________ __________________
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(333,365) $(345,590) $(3,236,427)
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 74,129 56,378 148,876
Depreciation 826 228 2,383
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 (258,190) (273,984) (1,479,126)
_________ _________ ____________
INVESTING ACTIVITIES
Sale of land - - 40,000
Equipment purchase - (1,898) (6,454)
Real estate development (87,136) (117,785) (1,102,711)
Loan fees (8,500) - (8,500)
_________ ________ ___________
Net cash used in investing activities (95,676) (119,683) (1,077,665)
_________ ________ ___________
FINANCING ACTIVITIES
Principle payments on notes payable - - (487,147)
Proceeds from notes payable 127,000 30,000 619,000
Proceeds from sale of common stock 81,300 405,573 2,054,308
Proceeds from sale of redeemable preferred stock 150,000 - 390,778
_________ ________ ___________
Net cash provided in financing activities 358,300 435,573 2,576,939
_________ ________ ___________
Increase in cash 4,434 41,906 20,148
Cash at beginning of period 15,714 166,342 -
_________ ________ ___________
Cash at end of period $ 20,148 $208,248 $ 20,148
========= ======== ===========
</TABLE>
F-5
The accompanying notes are an intergral part of these financial statements.
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
September 30, September 30,
2000 1999
_____________ _____________
SUPPLEMENTAL DISCLOSURES
________________________
Cash paid during the period
for interest $ 10,288 $ 3,600
F-6
The accompanying notes are an intergral 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 September 30, 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 and nine months ended September 30, 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-7
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - REDEEMABLE PREFERRED STOCK
The Company has issued 124,259 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 $19,869, and $19,869 for
the nine month periods ended September 30, 2000, and 1999, respectively has been
recognized as interest expense in the accompanying condensed consolidated
statements of operations. Such interest totaled $6,623 for the three-month
periods ended September 30, 2000 and 1999.
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 and
nine month periods ended September 30, 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-8
<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 during
the nine-months ended
September 30, 2000 49,726 37,450 - 87,176
__________ ________ _________ __________
Balance at
September 30, 2000 $1,404,171 $325,436 $ 96,000 $1,825,607
========== ======== ========= ==========
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.
F-9
<PAGE>
MARINA CAPITAL, INCORPORATED
(A Development Stage Enterprise)
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - STOCK OPTION AGREEMENTS (CONTINUED)
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. No options were
granted during the three-months ended September 30, 2000. Ass options
outstanding as of September 30, 2000 are exercisable. The weighted-average
remaining contractual life for all options outstanding as of September 30, 2000
is 3.75 years.
F-10
<PAGE>
ITEM 2. Management Discussion and Analysis of Financial Condition
and Results of Operations
This Form 10-QSB 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 September 30, 2000, the
Company had expended $429,171 (in adition to the original land purchase for
$975,000) on OlymPeak Estates and $325,436 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 real
estate agents engaged in brokering other real estate parcels. This has
generated commissions of $10,540 in the current quarter, $16,500 for the quarter
ended September 30, 1999, and $13,540 and $30,175 for the nine months ended
September 30, 2000 and 1999.
Operating Expenses
For the quarter ending September 30, 2000, operating expenses decreased 19% as
compared to the same period from the previous year. Total operating expenses
were $106,978 and $131,480 for the quarters ending September 30, 2000 and 1999.
The largest decrease was in commissions, from $14,850 to $6,324 which was a
direct result of the decrease in sales commissions earned. Consulting fees
decreased by $5,826 and abandoned projects decreased by $10,402. Management
feels that most operating expenses will remain near the current level.
For the nine months ended September 30, 2000, operating expenses decreased 10%
or $33,525. Salaries increased $8,762 as a result of hiring a full time land
planner. Items of decrease were abandoned projects $25,402, commissions paid
out on real estate sales $10,319, and consulting $5,194.
Operating Loss
The Company reported an operating loss of $96,438 for the third quarter of 2000,
compared with an operating loss of $114,980 for the prior year's third quarter.
This was a decrease of 16%. On a year to date basis, the Company reported an
operating loss decrease of 5% or $304,077 in 2000, compared with an operating
loss of $320,967 for the first nine months of 1999. The largest expenses are
salaries $193,794 and travel and entertainment $37,145. 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 quarter ending September 30, 2000 and 1999 the Company reported interest
expense of $9,250 and $6,723 related to redeemable preferred stock and short-
term notes. Additionally, the Company has capitalized $14,317 interest per
quarter on the OlymPeak land purchase note. Year-to-date interest expense for
the nine months ended September 30, 2000 and 1999 was $30,322 and $25,893.
Income taxes
Although the Company has incurred operating losses during the nine-month and
three-month periods ended September 30, 2000 and 1999, 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
September 30, 2000.
Liquidity and Financial Resources
The Company had negative working capital of ($330,275) at September 30, 2000.
It has invested $1,834,107 in real estate projects and has long-term debt of
$655,307. Stockholders have invested $4,089,023 in the Company as of September
30, 2000 with $50,100 being invested during the three months ended September 30,
2000. As of the date of this filing, the Company is current on all loans. 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 $4,500,000. 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
4
