<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:
March 31, 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
(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 May 3, 1996 is 6,284,180
shares.
<PAGE> 2
MARINEX MULTIMEDIA CORPORATION
INDEX TO FORM 10-QSB
MARCH 31, 1996
PART I. FINANCIAL INFORMATION PAGE #
- - -----------------------------------------------------------------------------
ITEM 1. Financial Statements
Balance Sheets -
March 31, 1996 and December 31, 1995 1
Statements of Operations -
Three months ended March 31, 1996 and 1995 2
Statements of Cash Flows -
Three months ended March 31, 1996 and 1995 3
Notes to Financial Statements 4 - 5
ITEM 2. Managements' Discussion and Analysis of Results of
Operations and Financial Condition 6 - 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 9
ITEM 2. Changes in securities 9
ITEM 3. Defaults upon senior securities 9
ITEM 4. Submission of matters to a vote of security holders 9
ITEM 5. Other Information 9
ITEM 6. Exhibits and Reports on Form 8-K 9
Exhibit 27 10
Signatures 11
<PAGE> 3
MARINEX MULTIMEDIA CORPORATION
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
---------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 305,277 $ 88,914
Subsription receivable 900,000
---------- ---------
TOTAL CURRENT ASSETS 1,205,277 88,914
MACHINERY AND EQUIPMENT, NET 65,117 50,250
OTHER 10,605 10,605
---------- ---------
$1,280,999 $ 149,769
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 113,942 $ 16,859
Due to officers - 240,000
Payroll taxes payable 70,239 -
---------- ---------
TOTAL CURRENT LIABILITIES 184,181 256,859
NOTES PAYABLE - SHAREHOLDERS 100,000 100,000
STOCKHOLDERS' EQUITY:
Common shares - $.001 par value , 25,000,000 authorized
6,284,180 and 4,510,115 issued and outstanding 6,284 4,510
Additional Paid-in-Capital 1,604,992 232,016
Deficit (614,458) (443,616)
---------- ---------
TOTAL STOCKHOLDERS' EQUITY 996,818 (207,090)
---------- ---------
$1,280,999 $ 149,769
========== =========
</TABLE>
See notes to financial statements.
- 1 -
<PAGE> 4
MARINEX MULTIMEDIA CORPORATION
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
SALES $ 32,858 $ 49,517
----------- ----------
EXPENSES
General and administrative 200,771 171,281
Depreciation and amortization 2,645 1,978
----------- ----------
203,416 173,259
OTHER INCOME
Interest expense (2,250)
Interest income 1,966
----------- ----------
Loss from continuing operations before taxes (170,842) (123,742)
Provision for income taxes - -
----------- ----------
NET LOSS $ (170,842) $ (123,742)
=========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 4,510,115 2,654,703
=========== ==========
NET LOSS PER SHARE $ (0.04) $ (0.05)
=========== ==========
</TABLE>
See notes to financial statements.
- 2 -
<PAGE> 5
MARINEX MULTIMEDIA CORPORATION
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (170,842) $(123,742)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,645 1,978
----------- ---------
(168,197) (121,764)
Change in assets and liabilities
(Increase) decrease in subscription receivable (900,000)
Increase (decrease) in due to officers (240,000)
Increase (decrease) in accounts payable and accrued liabilities 167,322 5,129
----------- ---------
(972,678) 5,129
NET CASH USED BY OPERATING ACTIVITIES (1,140,875) (116,635)
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (17,512) (4,272)
----------- ---------
NET CASH USED BY INVESTING ACTIVITIES (17,512) (4,272)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable 30,000
Sale of common stock 1,374,750 90,000
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,374,750 120,000
----------- ---------
NET DECREASE IN CASH 216,363 (907)
CASH AT BEGINNING OF PERIOD 88,914 46,603
----------- ---------
CASH AT END OF PERIOD $ 305,277 $ 45,696
=========== =========
</TABLE>
See notes to financial statements.
- 3 -
<PAGE> 6
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 three
month period ended March 31, 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 $625,000 for the sale of 625,000 shares of common
stock as of March 31, 1996 and has received and additional $900,000 for the sale
of an additional 900,000 shares of common stock through
4
<PAGE> 7
May 3, 1996. 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
stock. The company paid $62,500 in commissions on the sale of such stock and
accrued $90,000 for the stock sold through May 3, 1996. The Company will issue
249,065 shares of common stock to financial consultants relating to raising of
such equity funds.
Note 4 - Due to officers
In March 1996, the Company paid $240,000 of accrued payroll due to the officers.
The related payroll taxes have been accrued as of March 31, 1996.
Note 5 - Notes Payable - Shareholders
The notes payable shareholders are non-interest bearing notes due in 1998. An
interest rate of 9% per annum has been imputed and recorded as a contribution to
capital for the quarter ended March 31, 1996 of $2,250.
5
<PAGE> 8
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 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
6
<PAGE> 9
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 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 to then bring its brand names to other, more traditional media
such as television, books, and film.
Quarter ended March 31, 1996 compared to the Quarter ended March 31, 1995
Net revenue decreased 33% to $32,858 in the quarter ended March 31, 1996 (the
"1996 Quarter") compared to $49,517 for the quarter ended March 31, 1995 (the
"1995 Quarter"). The decrease in revenues is attributed to the change in
business, since during the 1995 Quarter the Company was in the business of
public relations, while they began developing and promoting the CD-ROM magazine
and their two internet properties in the 1995 Quarter. The 1996 Quarter revenues
primarily relate to CD-ROM magazine sales. The Company intends to develop future
revenues for its CD-ROM magazine by the development of strategic partnerships
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.
The expenses increased by 17% to $203,416 for the 1996 Quarter as compared to
$173,259 for the 1995 Quarter. The increase in expenses was primarily attributed
to legal and professional fees relating to the merger.
7
<PAGE> 10
Liquidity and Capital Resources
The Company generated an increase in cash of $216,363 for the 1996 Quarter as
compared to as decrease in cash of $907 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 $1,021,096 from a
working capital deficit for the 1995 Quarter of $167,945. 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. The Company received $625,000 of such funds from the sale of common stock
as of March 31, 1996. The Company sold another 900,000 shares of common stock in
April and May 1996 for $810,000 net of commissions. The Company intends to
receive another $900,000 from the sale of 1,000,000 shares of common stock,
culminating the Reg S agreement entered into by the Company, which no assurance
can be given.
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 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.
8
<PAGE> 11
OTHER INFORMATION
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
9
<PAGE> 12
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
Date: May 14, 1996 By:s/Charles S. Platkin
Charles S. Platkin
President and Director
Date: May 14, 1996 By: s/ Jonathan Braun
Jonathan Braun
Chief Financial Officer and
Director
10
<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 MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 305,277
<SECURITIES> 0
<RECEIVABLES> 900,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,205,277
<PP&E> 65,117
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,280,999
<CURRENT-LIABILITIES> 184,181
<BONDS> 100,000
0
0
<COMMON> 6,284
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,280,999
<SALES> 0
<TOTAL-REVENUES> 32,858
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 203,416
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (284)
<INCOME-PRETAX> (170,842)
<INCOME-TAX> 0
<INCOME-CONTINUING> (170,842)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (170,842)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> 0
</TABLE>
