<PAGE> 1
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
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: Commission File Number:
June 30, 1996 33-47921-A
- --------------------------- ---------------------------
MARINEX MULTIMEDIA CORPORATION
(Exact name of Registrant as specified in its charter)
NEVADA 62-1459870
- ------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
The Soho Building, 110 Green St, Suite 800, New York, NY 10012
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212)-334-6700
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(Registrant's telephone number, including area code)
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that Registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
------- -------
The number of shares of Common Stock outstanding as of August 3, 1996 is
7,842,021 shares.
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MARINEX MULTIMEDIA CORPORATION
INDEX TO FORM 10-QSB
JUNE 30, 1996
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE #
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<S> <C> <C>
ITEM 1. Financial Statements
Balance Sheets -
June 30, 1996 and December 31, 1995 1
Statements of Operations -
Six months ended June 30, 1996 and 1995 2
Statements of Operations -
Three months ended June 30, 1996 and 1995 3
Statements of Cash Flows -
Six months ended June 30, 1996 and 1995 4
Notes to Financial Statements 5 - 6
ITEM 2. Managements' Discussion and Analysis of Results
of Operations and Financial Condition 7 - 10
PART II. OTHER INFORMATION
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ITEM 1. Legal Proceedings 11
ITEM 2. Changes in securities 11
ITEM 3. Defaults upon senior securities 11
ITEM 4. Submission of matters to a vote of security holders 11
ITEM 5. Other Information 11
ITEM 6. Exhibits and Reports on Form 8-K 11
Exhibit 27 13
Signatures 12
</TABLE>
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MARINEX MULTIMEDIA CORPORATION
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,138,695 $ 88,914
Accounts receivable 2,515
Prepaid expenses 55,000
Subsription receivable 100,000
------------ ------------
TOTAL CURRENT ASSETS 2,296,210 88,914
MACHINERY AND EQUIPMENT, NET 70,784 50,250
OTHER 10,605 10,605
------------ ------------
$ 2,377,599 $ 149,769
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 40,045 $ 16,859
Due to officers -- 240,000
Payroll taxes payable 26,244 --
------------ -------------
TOTAL CURRENT LIABILITIES 66,289 256,859
NOTES PAYABLE - SHAREHOLDERS 100,000 100,000
STOCKHOLDERS' EQUITY:
Common shares - $.001 par value,
25,000,000 authorized
7,842,021 and 4,510,115 issued and
outstanding 7,842 4,510
Additional Paid-in-Capital 3,187,684 232,016
Deficit (984,216) (443,616)
------------ -------------
TOTAL STOCKHOLDERS' EQUITY 2,211,310 (207,090)
------------ -------------
$ 2,377,599 $ 49,769
============ =============
</TABLE>
See notes to financial statements.
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MARINEX MULTIMEDIA CORPORATION
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
SALES $ 35,533 $ 128,786
------------ ------------
EXPENSES
Production expenses 143,389 43,374
Advertising and marketing 48,766 840
General and administrative 380,239 373,814
Depreciation and amortization 5,727 2,574
------------ ------------
578,121 420,602
OTHER INCOME
Interest expense (3,500) --
Interest income 5,488 --
------------ ------------
Loss from continuing operations
before taxes (540,600) (291,816)
Provision for income taxes -- --
------------ ------------
NET LOSS $ (540,600) $ (291,816)
============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 6,175,898 4,159,998
============ ============
NET LOSS PER SHARE $ (0.09) $ (0.07)
============ ============
</TABLE>
See notes to financial statements.
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MARINEX MULTIMEDIA CORPORATION
STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
SALES $ 2,675 $ 79,269
EXPENSES
Production expenses 87,194 19,516
Advertising and marketing 47,758 582
General and administrative 236,671 226,649
Depreciation and amortization 3,082 596
------------ ------------
374,705 247,343
OTHER INCOME
Interest expense (1,250)
Interest income 3,522
------------ ------------
Loss from continuing operations before taxes (369,758) (168,074)
Provision for income taxes -- --
------------ ------------
NET LOSS $ (369,758) $ (168,074)
============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,062,931 4,326,498
============ ============
NET LOSS PER SHARE $ (0.05) $ (0.04)
============ ============
</TABLE>
See notes to financial statements.
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MARINEX MULTIMEDIA CORPORATION
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (540,600) $ (291,816)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 3,082 596
------------ ------------
(537,518) (291,220)
Change in assets and liabilities
(Increase) decrease in subscription
receivable (100,000)
(Increase) in accounts receivable (2,515)
(Increase) in prepaid expenses (55,000)
Increase (decrease) in due to officers (240,000) (13,036)
Increase (decrease) in accounts payable
and accrued liabilities 49,430 121,295
------------ -----------
(348,085) 108,259
NET CASH USED BY OPERATING ACTIVITIES (885,603) (182,961)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (23,616) (16,215)
------------ ------------
NET CASH USED BY INVESTING ACTIVITIES (23,616) (16,215)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable 30,000
Sale of common stock 2,959,000 170,000
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,959,000 200,000
------------ ------------
NET DECREASE IN CASH 2,049,781 824
CASH AT BEGINNING OF PERIOD 88,914 46,603
------------ ------------
CASH AT END OF PERIOD $ 2,138,695 $ 47,427
============ ============
</TABLE>
See notes to financial statements.
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NOTES TO FINANCIAL STATEMENTS
MARINEX MULTIMEDIA CORPORATION
(UNAUDITED)
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying unaudited condensed 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 Article 10 of
Regulation S-B. They do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements.
However, except as disclosed herein, there has been no material change in the
information disclosed in the notes to financial statements included in the Form
10-KSB of Marinex Multimedia Corporation (the "Company") for the year ended
December 31, 1995 or Form 8-K dated February 12, 1996 disclosing the merger as
discussed below. Reference is made to the Form 8-K, since the surviving entity
includes a pooled entity not previously discussed. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for the fair presentation have been included. Operating
results for the six month period ended June 30, 1996, is not necessarily
indicative of the results that may be expected for the year ending December 31,
1996.
Note 2 - Merger
On February 12, 1996 Hard funding, Inc. "Hard", pursuant to a letter of intent
acquired Marinex Multimedia Corporation by issuing 4,000,000 shares of its
common stock to the shareholders of Marinex in exchange for all the issued and
outstanding shares of Marinex Multimedia Corporation. Subsequent to the
acquisition Hard changed its name to Marinex Multimedia Corporation. The merger
is being accounted for as a pooling interest, accordingly the December 31, 1995
balance sheet has been restated for the merger.
Note 3 - Sale of Common Stock
In February 1996, the Company entered into a Regulation S agreement to sell
2,525,000 shares of common stock at $1.00 per share in installments through
May 15, 1996. The Company received $2,525,000 for the sale of such common
stock. Such common stock sold pursuant to the Reg S agreement will have a six
month restriction from the date of the final installment sale of common
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stock for purposes of reselling the common stock. The company paid $252,500 in
commissions on the sale of such stock and issued 300,000 shares of common stock
to financial consultants relating to raising of such equity funds.
The Company entered into another Regulation S subscription agreement for the
sale of 507,246 shares of common stock at $1.38 per share or $700,000. The
Company received $600,000 of such funds through June 30, 1996 and received the
remaining $100,000 in July 1996. Such common stock sold has a 12 month
restriction from the date of the final installment sale of the common stock for
purposes of reselling the stock. A $5,000 commission has been accrued on the
aforementioned transaction.
Note 4 - Notes Payable - Shareholders
The notes payable shareholders are non-interest bearing notes due in 1998. An
interest rate of 7% per annum has been imputed and recorded as a contribution
to capital for the quarter ended June 30, 1996 of $3,500.
Note 5 - Stock Option Plan
In July 1996, the Company adopted a Stock Incentive Plan "1996 Plan", whereby,
1,000,000 shares of common stock have been reserved to be issued pursuant to
the stock option plan. The term of each option is five years. The Company has
proposed to issue 447,250 stock options to employees with an exercise price of
$4.00, except for the individuals owning more than 10% of the Company, whose
exercise price of such stock options would be 110% of noted share fair market
value upon issuance. All of the foregoing is subject to and contingent upon the
approval of the 1996 Plan by the Company's stockholders.
Note 6 - Employment Agreements
On June 1, 1996, the Company signed five year employment agreements "the
Agreements" with its President and Chief Financial Officer. The Agreements
provide for a base salary, vacation, annual raises of not less than ten percent
and benefits plus a performance compensation of ten percent of the Company's
profits based on a defined computation of such profits. Additionally the
Agreements provide for severance benefits in the event one of the aforementioned
officers are terminated by reason or by the Company for other than death or
disability.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations:
The Company concluded a merger accounted as a pooling of interests in
February 1996, accordingly such operations presented reflect the operations
of Marinex Multimedia Corporation and Hard Funding, Inc.
Marinex Multimedia Corporation is a digital content provider for the new
electronic media that are transforming today's entertainment and media
industries. Marinex has joined the digital revolution with its episodic
entertainment and on-line properties, developed for global distribution via
the Internet's growing World Wide Web and the expanding base of
CD-ROM-equipped computers. Descriptive information about the Company's core
products are set forth below.
Trouble & Attitude is a CD-ROM-only magazine targeted to the upscale
18-to-44-year-old audience for whom the computer is emerging as a leading
entertainment and information medium. Trouble & Attitude is a randomly
accessible television magazine augmented by music, speech, and text.
Distributors of Trouble & Attitude include International Periodical
Distributors and Warner Publisher Services. Trouble & Attitude is licensed
in the United Kingdom by IDG Communications, Ltd. A quarterly publication,
Trouble & Attitude is also available on the Internet through a promotional
site, Trouble & Attitude On-Line (http://www.trouble.com).
The Biz (http://www.bizmag.com) is a one-stop source for entertainment on the
World Wide Web. The Biz features interviews with entertainment industry
personalities; downloadable movie trailers, celebrity soundbites, and music
videos; press releases from EntertainmentWire; weekly entertainment columns,
features, and reviews; the 24-hour Reuters/Variety On-line Entertainment
Report; and weekly statistics such as box office grosses and television
ratings.
Since its launch in October of 1995, The Biz has distinguished itself among
entertainment resources on the World Wide Web. Featured in newspapers and
magazines across the country, The Biz has been selected as one of the top 100
Web sites by PC Magazine. The
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Biz has also been featured on c/net television's "Best of the Web." Marinex
has signed an agreement with Time Warner to incorporate The Biz into the
digital content on Time Warner's Pathfinder site.
Marinex recently launched a World Wide Web based soap opera termed a
Cybersoap, The East Village (http://www.theeastvillage.com.) Marinex has
signed an agreement with Time Warner to make The East Village
part of the digital content on Time Warner's Pathfinder site. The success of
The East Village is reflected in the high number of people that enter the
site on a daily basis, based upon management's knowledge of the industry, as
well as in the continuing media coverage of Marinex's foray into this domain.
Marinex intends to form strategic partnerships which will allow for an
increase in advertising and licensing revenues.
The global reach of the Internet allows for an unprecedented distribution of
entertainment around the world, instantaneously, 24 hours a day. The
audience for on-line entertainment is increasing exponentially as the world
evolves into a digital age, where computers will be an important part of most
households throughout the industrialized world.
Marinex's primary goal over the next 18 to 24 months is to create compelling
original entertainment properties which can be successfully branded, as The
East Village has been. Having established a significant audience on the
Internet, Marinex intends then bring its brand names to other, more
traditional media such as television, books, and film.
A recent development in pursuing the traditional media market, Marinex has
agreed to produce specific on-line interactive entertainment for
Cablevision's new cablemodem subscriber service, Optimum On-Line, pursuant to
a letter agreement signed by the Company and Cablevision Systems Corporation
on July 29, 1996. This agreement is intended to be step deal with a nominal
base monthly fee and fee increases as the subscriber base increases.
Quarter ended June 30, 1996 compared to the Quarter ended June 30, 1995
Net revenue decreased 97% to $2,675 in the quarter ended June 30, 1996 (the
"1996 Quarter") compared to $79,269 for the quarter ended June 30, 1995 (the
"1995 Quarter"). The decrease in revenues is attributed to the lack of
sufficient funding of their on-line entertainment and media properties and
the CD-ROM magazine to create such products for distribution on a consistent
basis. Consquently, the Company had to focus their efforts to raise capital
to fund their production and operating costs. The 1995 Quarter the Company
they began developing and promoting their two Internet properties.
Predominately most of the $79,269 in revenues in the 1995 Quarter came from
the CD-
8
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ROM magazine. The 1996 Quarter revenues are primarily advertising revenues
from its Internet properties. During July 1996 the Company received over
$50,000 in advances on its June CD-ROM magazine issue, such revenues will be
recognized in the subsequent quarter. The Company has obtained sufficient
capital to fund the production of their on-line entertainment and media
porperties as well as the CD-ROM magazine to produce such products on a
consistent basis in the future.
The expenses increased by 52% to $374,705 for the 1996 Quarter as compared to
$247,343 for the 1995 Quarter. The increase in expenses was can be attributed
to; an increase in advertising and marketing of $47,000, increased production
costs of $67,000 due to the hiring of key personnel to begin creating the
on-line media/entertainment products and the CD-ROM magazine on a consistent
basis and positioning for growth due to pursuing an increased number business
venues and an increase general and administrative costs, which are being
incurred to seek new business venues.
The Company has recorded approximately $55,000 of prepaid expenses attributed
to the June 1996 CD-ROM magazine issue, which was distributed in July 1996.
Six months ended June 30, 1996 compared to the six months ended June 30, 1995
Net revenue decreased 72% to $35,533 for the six months ended June 30, 1996
(the "1996 Period") compared to $128,786 for the six months ended June 30,
1995 (the "1995 Period"). The decrease in revenues is attributed to the lack
of sufficient funding of their on-line entertainment and media properties and
the CD-ROM magazine to create such products for distribution on a consistent
basis. Consquently, the Company had to focus their efforts to raise capital to
fund their production and operating costs. The 1995 Period the Company they
began developing and promoting their two Internet properties. Predominately
most of the $128,786 in revenues in the 1995 Period came from the CD-ROM
magazine. The 1996 Period revenues are primarily revenues from the CD-ROM
magazine and recently a marginal amount from its Internet properties as
advertising. During July 1996 the Company received over $50,000 in advances on
its June 1996 CD-ROM magazine issue, such revenues will be recognized in the
subsequent quarter. The Company has obtained sufficient capital to fund the
production of their on-line entertainment and media porperties as well as the
CD-ROM magazine to produce such products on a consistent basis in the future.
The Company intends to develop future revenues for its CD-ROM magazine by
the development of strategic partnerships which to allow for an increase in
advertising sponsorships and circulation based sales, for its two Internet
properties it will continue its strategic relationship with Time-Warner, and
pursue possible joint-ventures and/or licensing agreements in other mediums
taking advantage of its increasing audience. The Company also plans to
continue to develop other entertainment properties for the Internet using
this same formula.
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The expenses increased by 38% to $578,121 for the 1996 Period as compared to
$420,602 for the 1995 Period. The increase in expenses was can be attributed
to; an increase in advertising and marketing of $47,000, increased
production costs of $100,000 due to the hiring of key personnel to begin
creating the on-line media/entertainment products and the CD-ROM magazine on
a consistent basis and positioning for growth due to pursuing an increased
number business venues and an increase general and administrative costs,
which are being incurred to seek new business venues.
The Company has recorded approximately $55,000 of prepaid expenses attributed
to the June 1996 CD-ROM magazine issue, which was distributed in July 1996.
Liquidity and Capital Resources
The Company generated an increase in cash of $2,050,000 for the 1996 Quarter
as compared to as decrease in cash of $864 for the 1995 Quarter. The primary
reason for the increase in cash for the 1996 Quarter was the proceeds from
sale of common stock.
The working capital position improved for the 1996 Quarter to $2,235,000 from
a working capital deficit for the 1995 Quarter of $93,000. The improvement of
the working capital position is primarily a result of the sale of common
stock as described hereafter.
In February 1996, the Company entered into a Reg S agreement for the sale of
2,525,000 shares of common stock for $2,525,000 in installments through May
1996. In addition, the Company received another $700,000 of funds from the
sale of 507,246 shares of common stock as of July 1996, pursuant to different
Reg S agreement.
The Company intends to utilize such funds to further develop the product
lines being promoted by the Company and to acquire other companies to
increase the Company's net worth and assets to attempt to meet the NASDAQ
(small cap) listing requirement.
The Company deems its present facilities and equipment adequate for its
immediate needs and it has no material commitments for capital expenditures.
The Company believes its present liquidity and cash flow are adequate for its
current needs. There can be no assurance, however, that additional financing,
whether from debt or equity, will be available to the Company when needed on
commercially reasonable terms, or at all.
The Company's management believes that inflation has not had a significant
impact on its business during the past two years.
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OTHER INFORMATION
<TABLE>
<S> <C>
ITEM 1. LEGAL PROCEEDINGS - None
ITEM 2. CHANGES IN SECURITIES - None
ITEM 3. DEFAULT UPON SENIOR SECURITIES - None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
HOLDERS - None
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27
</TABLE>
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SIGNATURES
Pursuant to 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, thereunto duly authorized.
MARINEX MULTIMEDIA
CORPORATION
Registrant
<TABLE>
<S> <C>
Date: August 13, 1996 By: s/Charles S. Platkin
Charles S. Platkin
President and Director
Date: August 13, 1996 By: s/ Jonathan Braun
Jonathan Braun
Chief Financial Officer and
Director
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
OF MARINEX MULTIMEDIA CORPORATION FOR THE QUARTER ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,138,695
<SECURITIES> 0
<RECEIVABLES> 102,515
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,296,210
<PP&E> 70,784
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,377,599
<CURRENT-LIABILITIES> 66,289
<BONDS> 100,000
0
0
<COMMON> 7,842
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,377,599
<SALES> 0
<TOTAL-REVENUES> 35,533
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 578,121
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,988
<INCOME-PRETAX> (540,600)
<INCOME-TAX> 0
<INCOME-CONTINUING> (369,758)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (540,600)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> 0
</TABLE>
