-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B8pugHzRcB7mV0U6+Uk/5ddZm9G3V7gWnZtWnO0jnEA9c5rCDgxDUJJmH7DByeCH MrtuNARgrCer3i+cn7SlQw== 0001016289-96-000004.txt : 19960705 0001016289-96-000004.hdr.sgml : 19960705 ACCESSION NUMBER: 0001016289-96-000004 CONFORMED SUBMISSION TYPE: 10SB12G/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19960703 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAR VENTURES INC CENTRAL INDEX KEY: 0001016289 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 954580642 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10SB12G/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-20879 FILM NUMBER: 96590707 BUSINESS ADDRESS: STREET 1: 16661 VENTURA BLVD STREET 2: STE 214 CITY: ENCINO STATE: CA ZIP: 91436 BUSINESS PHONE: 8187840040 MAIL ADDRESS: STREET 1: 16661 VENTURA BLVD STREET 2: STE 214 CITY: ENCINO STATE: CA ZIP: 91436 10SB12G/A 1 FORM 10SB/A OF MAR VENTURES INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-SB 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 to be so registered each class is to be registered None Securities to be registered pursuant to Section 12(g) of the Act: Common Stock, par value $.001 (Title of Class) PART I Item 1. Description of Business Background; The Reorganization In 1983, in connection with a reorganization plan under the Bankruptcy Code, the Company's parent, Bexy Communications, Inc. ("Bexy"), then called All American Burger, Inc. ("AAB"), was incorporated and acquired all of the assets, franchise agreements and leasehold estate of 986 South Vermont Corporation, a California corporation ("South Vermont"). For a time, AAB engaged in franchising "fast-food" restaurants and food outlets in California, Nevada and New York under the "All American Burger", "Wee Donuts" and "Pedro's" trade names. In 1988, AAB discontinued its franchising operations. In May 1987, AAB acquired all of the capital stock of Group S Films, Inc., a California corporation ("Group S") engaged in the production and distribution of theatrical motion pictures and other programming material, in exchange for the issuance to the shareholders of Group S shares of the Company's Common Stock. As a consequence of such transaction, the former shareholders of Group S became the beneficial owners of in excess of fifty percent of the Common Stock of the Company. AAB and Group S ceased all significant business activities in the latter part of 1989. In June 1993, Bexy entered into an Agreement and Plan of Reorganization pursuant to which Bexy acquired all of the capital stock of BEXY Communications, Inc., a California corporation ("Bexy California"), in exchange for the issuance to the sole shareholder of Bexy California and its designees of 1,116,666 shares of Common Stock. As a consequence of such transaction, the sole shareholder of Bexy California became the beneficial owner of in excess of fifty percent of the Common Stock of Bexy, and Bexy California became a wholly-owned subsidiary of Bexy. Bexy is selling this inactive subsidiary to a director and officer for nominal consideration. Because of the significant operating losses experienced by Bexy, management of Bexy has been exploring various alternatives, including merging with another company and obtaining additional financing from third parties. In March 1996, Bexy and its principal officer, Buddy Young, entered into discussions with the principals of Cheniere Energy Operating Co., Inc. ("Cheniere") concerning a possible transaction whereby the stockholders of Cheniere (the "Cheniere Stockholders") would acquire control of Bexy in consideration for the outstanding stock of Cheniere. As part of these discussions, the parties discussed either liquidating the existing business of Bexy or distributing it to the stockholders of Bexy. In contemplation of such transaction Bexy formed the Company as a wholly owned subsidiary on March 27, 1996 and on April 16, 1996 contributed all of Bexy's operating assets to the Company 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 Company Common Stock (the "Company Stock") (representing 100 percent of the issued and outstanding shares of Company 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 the Company in connection with the Assignment Agreement. The Assignment Agreement provides for the Company to indemnify Bexy for any liabilities relating to the assets transferred by Bexy to Company or the conduct of the business of Bexy prior to the Closing Date. Bexy has called a Special Meeting to be held on July 2, 1996 to solicit approval of stockholders of 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 & CEO and principal stockholder of Bexy ("Young"). Pursuant to the Reorganization, the outstanding capital stock of the Company (the "Company 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 will issue to the Cheniere Stockholders shares of Common Stock of Bexy (after giving effect to the amendment of the capitalization of Bexy and the Reverse Split described herein, the "New Shares") equal to approximately 93% of the then issued and outstanding New Shares (the "Exchange"), causing the current Bexy stockholders' interest in Bexy to be diluted to approximately 7%. Thereupon, Cheniere will become the wholly-owned subsidiary of Bexy and the principal business of Bexy will become the oil and gas exploration and exploi- tation business conducted by Cheniere, and the Company will continue the health information business historically carried on by Bexy. 2 Cheniere is a Houston-based independent oil and gas exploration company formed in February 1996 to participate in a joint venture with Zydeco Exploration, Inc. ("Exploration"), a wholly-owned subsidiary of Zydeco Energy, Inc. ("Zydeco"), a publicly traded company, the common stock of which is listed on the Nasdaq SmallCap Market system. In order to facilitate the Reorganization, the directors of Bexy will ask Bexy's stockholders to approve certain amendments to the certificate of incorporation of Bexy to change the authorized capital stock of Bexy to permit the issuance of shares of Common Stock of Bexy to the Cheniere Stockholders in exchange for Cheniere Shares. The Board of Directors of Bexy will also ask the stockholders to approve certain other amendments to the certificate of incorporation of Bexy to authorize a new class of preferred stock, to change the name of Bexy to "Cheniere Energy, Inc." and to add provisions to limit the liability of Bexy's directors and to provide for the indemnification of Bexy's officers and directors to the fullest extent permitted by Delaware law. In addition, in connection with the Reorganization, the stockholders are being asked to vote for the election of three nominees as directors designated by Cheniere. Young, the President & CEO of Bexy and the holder of shares totalling approximately 57% of the issued and outstanding shares of Common Stock of Bexy, has agreed with Cheniere to vote his shares of Common Stock in favor of each of the proposals set forth in this Proxy Statement. Following the closing of the Exchange and the Divestiture, Young will own approximately 4% of the then issued and outstanding New Shares and approximately 57% of the issued and outstanding shares of Company Stock. At the closing of the Reorganization (the "Closing"), Young will resign as President & CEO and a member of the Board of Directors of Bexy and will enter into a consulting agreement (the "Consulting Agreement") with Bexy having a two-year term and providing for payments of $75,000 per annum. In addition, at the Closing, pursuant to the Reorganization Agreement, Young and Bexy will enter into agreements providing that Young will not sell more than 10,000 shares per month for a nine-month period after the Closing and that Bexy will not engage in a reverse stock split, other than as contemplated by the Reorganization Agreement, for an eighteen-month period after the Closing. In connection with the Divestiture, pursuant to the Reorganization Agreement, at the Closing, Young and Bexy will enter into an indemnification agreement (the "Indemnification Agreement") pursuant to which Young will agree to indemnify Bexy, Cheniere and the Cheniere Stockholders against any cost, expense or other liability that any of them may suffer arising as a result of or in connection with (i) the operation of the business of Bexy prior to the Closing, (ii) any untrue statement or omission of material fact made by or with respect to Bexy or Young in the Proxy Statement and other proxy materials or the registration statement under the Securities Exchange Act of 1934 (the "Exchange Act") registering the Company Stock and (iii) any tax liability arising out of or in connection with the consummation of the transactions contemplated by the Divestiture. See Part 1, Item 7, "Certain Relationships and Related Transactions." At a telephonic meeting of the Board of Directors of Bexy held on April 16, 1996, the Board of Directors unanimously approved the Reorganization, on the terms and subject to the conditions contained in the Reorganization Agreement.At the meeting, the Bexy Board of Directors determined that the Reorganization and the Divestiture was in the best interests of the Bexy stockholders and recommended that the Bexy stockholders approve the Reorga- nization,the Divestiture,and each of the other proposals to be considered at the Meeting. In reaching this determination, the Bexy Board considered (i) Bexy's chronic losses from its existing line of business and the potential earnings that my be obtained in the oil and gas business and (ii) the benefits that may be obtained from sepatating two different businesses with with different manage- ment and operating requirements. The Board weighed these benefits against (i) the possibility that, as a result of the distribution of Company Stock, stock- holders may be deemed to receive taxable income without receiving any cash to pay such taxes, (ii) the loss of Bexy's net loss carryforwards to sheild future income, (iii) the possible inability to list the Company Stock on the Electronic Bulletin Board adn (iv) the potential issuance of additional shares of Bexy Common Stock and preferred stock that would further dilute the Bexy stockholders interest in Bexy. It should be noted that, notwithstanding the approval of the Reorganization and the Divestiture the stockholders of Bexy, the Board of Directors may determine, in light of the circumstances then existing, that to consummate the Divestiture would not be in the best interests of Bexy and the stockholders. All information in this Registration Statement relating to Cheniere, Exploration, Zydeco and the Joint Venture has been supplied by Cheniere, and the management of Company and Bexy is relying upon the management of Cheniere for such information. The Divestiture Prior to the Reorganization, the most significant activities of Bexy have consisted of marketing health information through print and electronic media, principally television. 3 The Board of Directors has recently determined that it would be in the best interests of Bexy and its stockholders to separate the oil and gas exploration activities to be acquired upon consummation of the Exchange from Bexy's health information business. In particular, the Board of Directors believes that the separation will give stockholders the flexibility to analyze and deal with their investments in those respective activities separately in accordance with their investment objectives and their views of the business prospects of those respective activities. In addition, the Board of Directors believes that the separation will enable Bexy and Company to separately pursue the strategies best suited to their individual markets, goals and needs, thereby maximizing their respective business opportunities and stockholder values. The Divestiture will be submitted to Bexy stockholders for approval on July 2, 1996. It should be noted that notwithstanding approval of the Divestiture by the the Company stockholders, Bexy's Board of Directors may determine, at any time prior to the consummation of the Divestiture, to terminate the Divestiture and not distribute the Company Stock to the stockholders of Bexy, if in their judgment, the distribution of the Company Stock would not be in the best interest of Bexy and its stockholders. The Divestiture may be abandoned at any time prior to its consummation. If abandoned prior to the date of the Meeting, the decision to abandon will be made by the pre-exchange the Company Board of Directors. To effectuate the separation, the health information activities of the Company (including the assets and liabilities associated therewith) have been contributed to the Company pursuant to an Asset Transfer Assignment and Assumption Agreement ("Assignment Agreement") in exchange for 100 percent of the issued and outstanding shares of the Company 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 the Company in connection with the Assignment Agreement. The Assignment Agreement provides for the Company to indemnify the Company for any liabilities relating to the assets transferred by the Company to the Company or the conduct of the business of the Company prior to the Closing Date. In addition, pursuant to the Reorganization Agreement, Young has agreed to indemnify the Company, Cheniere and the Cheniere Stockholders from, among other things, tax liabilities arising from or in connection with the Divestiture. It is expected that following the Divestiture the Company will become an independent, publicly-traded company that will operate on a stand alone and self-financing basis. The senior management of the Company following the Divestiture will consist solely of Young, who is currently the sole executive officer and a director of Bexy. Young will resign from all positions with Bexy on closing of the Exchange. See Part I, Item 7, "Certain Relationships and Related Transactions." 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, the Company 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 Company in a position to seek additional capital for its activities independently. Manner of Divestiture The Divestiture was approved by the Board of Directors of Bexy on April 16, 1996. If the Divestiture is approved by the Bexy stockholders at the Special Meeting, Bexy will distribute to its stockholders of record as of the Record Date (the "Divestiture Record Date"), one (1) share of Company Stock for each four (4) shares of Common Stock held at the Record Date (pre-reverse split). The Divestiture will be deemed to be effective as of the Closing Date. 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 Company 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 Company 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 Company Stock held by Bexy which are not distributed shall be canceled. No holder of shares of Bexy Common Stock receiving shares of Company Stock will be required to pay any cash or consideration for the shares of Company Stock that he will receive in the Divestiture or to surrender or exchange Bexy Shares in order to receive shares of Company Stock. The Divestiture will not affect the number of outstanding Bexy Shares. Certain Federal Income Tax Aspects of the Divestiture The following summary is a general discussion of certain of the expected federal income tax consequences of the Divestiture. The summary does not discuss all aspects of federal income taxation that may be relevant to a particular stockholder of Bexy in light of his personal investment circumstances or to certain types of stockholders subject to special treatment under the federal income tax laws (for example, S corporations, banks, dealers in securities, life insurance companies, tax-exempt organizations and foreign taxpayers) applies solely to investors who hold their shares of the New Shares as capital assets within the meaning of Section 1221 of the Code, and does not discuss any aspects of state, local, or foreign tax laws. This discussion is provided for general information purposes only, and is not intended as tax advice. Each stockholder of Bexy is advised to consult his own advisor as to the specific tax consequences to such stockholder of the proposed transaction, including the application and effect of state, local, and foreign income and other tax laws. 4 Bexy has received no written opinion on any of the following matters. No ruling has been or will be requested from the Service on any matters relating to the formation of Company or the Divestiture. The following discussion is based upon existing law, decisions, regulations, and rulings, all of which are subject to change, perhaps with retroactive effect. There can be no assurance that the Service will agree with the following discussion. Effects on Bexy Under Section 351 of the Code, the contribution of assets to and the assumption by Company will not result in the recognition of gain or loss by Bexy or to Company. Under Section 311(b) of the Code, the Divestiture of Company Stock by Bexy will result in the recognition by Bexy of taxable gain as if the Company Stock had been sold to the stockholders of Bexy at its fair market value. Accordingly, Bexy will recognize taxable gain on the Divestiture equal to the excess of the fair market value of such common stock over its adjusted basis in such stock. For federal income tax purposes, fair market value generally means the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of all relevant facts. It is not possible to predict, with any certainty, the fair market value of the Company Stock to be distributed by Bexy on the date it is distributed. In analogous situations, where there has been a market for stock on an over-the-counter market, as is expected here, the Service has considered the quoted selling prices on the date of the Divestiture (or, on the date over-the-counter sales first occurred if such date is within a reasonable period of the date of Divestiture) as important evidence in determining the fair market value per share. Bexy's basis in the shares of Company Stock to be distributed equals approximately $25,000. Assuming a range of $.25 to $.50 per share for the quoted selling price of the shares of Company Stock immediately after the Divestiture and that fair market value equals the quoted selling price, the amount of taxable gain recognized by Bexy (after adjustment of such basis for such contribution as reduced by estimated taxes, fees, costs and expenses estimated to be deducted therefrom as described above) is estimated to range from $75,000 to $175,000 resulting in an imposition of federal income taxes estimated to range from $13,750 to $51,500. Bexy has a net operating loss carryforward of approximately $740,000 available to offset any tax liability arising out of the Divestiture. Accordingly, based on the above-estimated range of taxable gain to be recognized by Bexy on the Divestiture, no tax liability will be incurred by Bexy as a result of the Divestiture. Bexy believes that the net operating loss carry forwards will be sufficient to offset any tax liability arising out of the Divestiture. Effect on Stockholders of the Company The distribution to Bexy stockholders of the Company Stock will constitute a taxable distribution for federal income tax purposes. Under Section 301(b)(1) of the Code, the amount of the distribution to each stockholder of Bexy will equal the fair market value of the Company Stock received. Under Section 301(c)(1) of the Code, the Divestiture will be taxable as a dividend to the extent of Bexy's current and/or accumulated earnings and profits. Under Sections 301(c)(2) and 301(c)(3) of the Code, to the extent that the amount of the Divestiture exceeds Bexy's current and accumulated earnings and profits, the Divestiture will first be treated as a tax-free return of capital, causing a reduction (but not below zero) in the adjusted basis of the Common Stock held by a distributee (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by such distributee on a subsequent disposition of the Common Stock), and the balance in excess of such adjusted basis will be taxed as if it were capital gain recognized on a sale or exchange of such stock. For this purpose, the Company's current earnings and profits will be computed as of the close of the taxable year without diminution by reason of any distributions made during the taxable year, and without regard to the amount of the earnings and profits at the time the Divestiture was made. Since Bexy's current taxable year ends on August 31, 1996, the amount of earnings and profits, if any, of Bexy will not be ascertainable until after the Divestiture. Accordingly, there can be no assurance that earnings and profits will not be substantial and that stockholders of Bexy who receive Company Stock will not be deemed to have received dividend income. The portion of the Divestiture taxable as dividend income to a corporate stockholder of Bexy may be eligible for the 70% (or, in certain cases 80%) dividends-received deduction available under Section 243 of the Code, subject to certain taxable-income and holding-period requirements. However, to the extent that the corporate shareholder incurs indebtedness that is directly attributable to an investment in the stock on which the dividend is 5 paid, all or a portion of the dividends-received deduction may be disallowed. In addition, dividend income that is not subject to the regular federal income tax as a consequence of the dividends-received deduction may be subject to the federal alternative minimum tax. Corporate stockholders of Bexy should consult their tax advisors to determine how the DividendsReceived Deduction and its limitations might apply to them. Corporate stockholders of Bexy should also consult their tax advisors to determine whether Section 1059 of the Code, which requires corporate stockholders to reduce the basis of the stock in the case of certain extraordinary dividends, is applicable to their receipt of the Company Stock. Under Section 1059, if a corporate holder of shares of Bexy receives an "extraordinary dividend" (as defined in Section 1059) from Bexy with respect to any share of such stock and has not held the underlying stock for more than two years before the dividend announcement date (i.e., the date on which Bexy declared, announced, or agreed to, the payment of such dividend, whichever is earliest), the basis of the underlying stock must be reduced (but not below zero) by the "nontaxed portion" of such dividends. The "nontaxed portion" generally is the excess of the amount of the dividend over the taxable portion (i.e., the taxable dividend less the applicable Section 243 deduction). Such a reduction in basis, generally will occur immediately before any disposition of the shares of Bexy, thereby increasing any gain realized by the holder on a sale redemption or other disposition of such stock. If the reduction exceeds such stock basis, the amount of such excess also will be taxable as gain from the sale or exchange of the shares of Bexy. On March 19, 1996, President Clinton released a set of legislative proposals as a part of his plan to balance the federal budget. These proposals include, among other things, proposals to (i) reduce the 70-percent dividends- received deduction to 50 percent, (ii) modify the holding period requirements for corporations claiming the dividends-received deduction, and (iii) require immediate gain recognition under Section 1059 of the Code for the non-taxed portion of certain extraordinary dividends (to the extent such non-taxed portion exceeds the shareholder's basis in the underlying stock. As currently proposed, the changes to the dividends-received deduction provisions would be effective for dividends paid or accrued more than 30 days after the enactment of final legislation, and the proposed changes to Section 1059 would generally apply to distribution occurring after September 13, 1995. The Company cannot predict which, if any, of the President's proposals will ultimately become law, or, if enacted into law, what the effective date of such provisions would be. Shareholders should consider the potential effect of the President's proposals in making their investment decision. Back-Up Withholding A holder of Common Stock may be subject to "back-up withholding" at a rate of 31% with respect to certain "reportable payments," which generally include dividend payments. These back-up withholding rules apply if such holder, among other things, (i) fails to furnish a social security number or other taxpayer identification number ("TIN") certified under penalties of perjury within a reasonable time after the request therefor, (ii) furnishes an incorrect TIN, (iii) fails to report properly interest or dividends, or (iv) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN furnished is the correct number and that such holder is not subject to back-up withholding. Any amount withheld from a payment to such a holder under the back-up withholding rules is creditable against such holder's federal income tax liability, provided the required information is furnished to the Service. Back-up withholding will not apply, however, with respect to payments made to certain persons, including corporations, tax-exempt organizations and certain foreign persons, provided their exemption from back-up withholding is properly established. If Bexy does not have a Form W-9 for the back-up withholding rules apply to a stockholder, the Company stock distribution for such stockholder will be deferred until its value can be determined and 31% thereof withheld. Listing and Trading of Company Stock There currently is no public market for the Company 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 Company Stock may trade cannot be predicted. Until Company Stock is fully distributed and an orderly market develops, the prices at which such stock trades may fluctuate significantly. The prices at which Company 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 the Company Stock, investor perceptions of Company, Company'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, Company 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, Company intends to apply to the NASD to have its stock listed on the Electronic Bulletin Board under the symbol "MARV". However, the Company Common Stock is not currently eligible for inclusion on the Electronic Bulletin Board, and no assurance can be given that Company 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, Company initially will have approximately 936 holders of record of its Common Stock. 6 Shares of Company 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 Company under the Securities Act. Persons who may be deemed to be affiliates of Company after the Divestiture generally include individuals or entities that control, are controlled by, or are under common control with, Company and may include certain officers and directors of Company as well as principal stockholders of Company. Persons who are affiliates of Company will be permitted to sell their shares of Company 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 Bexy 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 the Company. Current Activities The current core business of Bexy, which will be continued by the Company, 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. (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. 7 (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 the Company will continues to market the film library acquired from Bexy, management does not anticipate generating significant revenues as a result of this activity. Recent Business Developments 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." The Company 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 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. The Company plans to initially develop and market products to this segment of the market. In the future, as the Company 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 the Company 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 8 also established themselves as providers of health-themed information to the general public. The Company 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. The Company's programming competes with other first-run programming, network re-runs and programs produced by local television stations. In addition, the Company competes for the creative services of producers, technical personnel, writers and performing artists. In both areas of competition, the Company 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 the Company. 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. The Company's success is highly dependent on various unpredictable factors such as the viewing preferences of television audiences. The Company'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 The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements of Bexy, including the notes thereto, which appear elsewhere herein. Since the Company was not incorporated until March 27, 1996, a proforma balance sheet is provided for the Company to reflect the contribution of assets as if it had occureed on February 29, 1996. However, the financial information of Bexy is directly relevant to the future business of the Company since the Company will be continuing the business of Bexy. Results of Operations (Bexy) Six Months Ended February 29, 1996 compared to six months ended February 28, 1995 License revenues from Bexy's film library for the six months ended February 29, 1996 decreased $13,920 or 25%, from $56,178 in the corresponding period ended February 28, 1995. This is due to a significant decrease in first quarter revenues from recurring customers and management's focus on other revenue-producing opportunities for Bexy. The costs of programs and distribution fees during the six months ended February 29, 1996 decreased $59,417 or 70%, from $84,662 in the corresponding period ended February 28, 1995. This was due to the significant amortization costs incurred in 1995. At August 31, 1995, Bexy accelerated the amortization ($122,630) of its film library to reflect its estimated reduced value. Expenses during the six months ended February 29, 1996 increased $104,162, or 165%, from $63,210 in the corresponding period ended February 28, 1995. This was due to consulting fees paid to Bexy's President to supervise operations, raise equity capital and pursue other business opportunities for Bexy. Bexy is paying $3,500 per month in consulting fees to its President. In addition, Bexy incurred significant expenses in funding the start-up costs of IQL, a company owned by Bexy's President and majority shareholder. In exchange for funding the start-up costs, Bexy was granted an option to purchase IQL for $50,000. 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. Based on the continued lower than forecasted revenues of its film library, the Company 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. 9 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 February 29, 1996, the Company had cash f $101,446 and shareholders' equity of $131,588. 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 the Company 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 versus 42% in 1993. Rider 6 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. 10 At February 29, 1996, Bexy's working capital decreased to $70,287. The cash and accounts receivable were insufficient to insure the Company's continued existence as a going concern. During the period ending February 29, 1996, Bexy had a negative cash flow from operating activities of $148,822. Management expects to meet its current cash requirements through license revenues, borrowings from a related party as necessary and the sale of equity. In the event that the Reorganization is not consummated and the Company has additional cash requirements, there can be no assurances that the related party will advance funds in order to meet the Company's requirements, or that the Company will be successful in selling further equity. 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. The Company has assumed this lease. Item 4. Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information concerning the beneficial ownership of the Company's outstanding Common Stock as of April 30, 1996, by each person known by the Company to own beneficially more than 5% of the outstanding Common Stock, by each of the Company's directors and by all directors and officers of the Company 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 Company Stock distributed could be greater due to rounding of fractional shares. Unless otherwise indicated below, to the knowledge of the Company, 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% - -------------------- *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. 11 Item 5. Directors, Executive Officers, Promoters and Control Persons. Buddy Young, age 60, has been Chief Executive Officer, Treasurer, Secretary and Director of the Company since inception. Item 6. Executive Compensation No compensation has been paid or accrued to any person since organization of the Company. No options were issued to the CEO of the Company during 1995. Item 7. Certain Relationships and Related Transactions Through April 19, 1996, Young, an officer, director and principal stockholder of the Company 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 the Company. 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 accrued and unpaid interest. This liability has been assumed by the Company 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 the Company intends to execute this option and does not intend to have any future relation- ship with IQL. Pursuant to the Reorganization Agreement, at the Closing, Young and Bexy will enter 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 will enter into agreements pursuant to which Young will agree not to sell more than 10,000 Company Shares per month for a nine-month period after the Closing Date and Bexy will agree 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 will also agree 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 The Company'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 the Company, are entitled to share ratably in all assets remaining after payment of liabilities. The Company 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 12 This Registration Statement has been prepared in connection with the distribution (the "Divestiture") by Bexy to its stockholders of 450,000 shares of Common Stock, $.001 par value, of the Company owned by Bexy. Prior to the Divestiture, the Company was owned by Bexy. Accordingly, no public market for the Registrant's Common Stock has existed. The Registrant intends to apply for listing on the Electronic Bulletin Board sponsored by Nasdaq under the symbol "MARV." However, the Company 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 the Company 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 the Company under the Securities Act of 1933 (the "Securities Act"). Persons who may be deemed to be affiliates of the Company after the Divestiture generally include individuals or entities that control, are controlled by, or are under common control with, the Company and may include certain officers and directors of the Company as well as principal stockholders of the Company. Persons who are affiliates of the Company will be permitted to sell their shares of the Company 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, the Company initially will have approximately 936 holders of record of its Common Stock as of the Divestiture Date. (c) Dividends The Company 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 The Company's Bylaws and the Delaware General Corporation Law provide for indemnification of directors and officers against certain liabilities. The Company's Bylaws and the Delaware General Corporation Law provide for indemnification of directors and officers against certain liabilities. Officers and directors of the Company 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. 13 PART F/S The Financial Statements of the Registrant, required by Regulation S-X, are set forth on pages 15 through 30. 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 March 22, 1996, by and between Bexy Communications, Inc. and Mar Ventures Inc.(2) (1) Filed with original Form 10-SB (2) Revised version filed herewith 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: June 17, 1996 MAR VENTURES INC. By:/s/Buddy Young Buddy Young President 14 FINANCIAL STATEMENTS INDEX BEXY COMMUNICATIONS, INC. PAGE INDEPENDENT AUDITORS' REPORT 15 FINANCIAL STATEMENTS: Balance Sheet, August 31, 1995 16 Statements of Operations for the Two Years Ended August 31, 1995 17 Statements of Shareholders' Equity for the Two Years Ended August 31, 1995 18 Statements of Cash Flows for the Two Years Ended August 31, 1995 19-20 Notes to Financial Statements 21-24 Balance Sheet, February 29, 1996 25 Statements of Operations for the Three Months Ended February 29, 1996 and February 28, 1995 26 Statements of Cash Flows for the Six Months Ended February 29, 1996 and February 28, 1995 27 Notes to Interim Financial Statements 28 MAR VENTURES, INC. Pro Forma Condensed Balance Sheet, February 29, 1996 29 - ----------------------------------------------------------------- 15 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. November 9, 1995 15
BEXY COMMUNICATIONS, INC. BALANCE SHEET AUGUST 31, 1995 ASSETS 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 =========
See accompanying notes to financial statements. 16
BEXY COMMUNICATIONS, INC. STATEMENTS OF OPERATIONS FOR THE TWO YEARS ENDED AUGUST 31, 1995 1995 1994 ---- ---- 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) ========= ========= See accompanying notes to financial statements. - ------------------------------------------------------------------------
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BEXY COMMUNICATIONS, INC. STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE TWO YEARS ENDED AUGUST 31, 1995 COMMON STOCK SHARES CONTRIBUTED ACCUMULATED OUTSTANDING AMOUNT CAPITAL DEFICIT BALANCES, SEPTEMBER 1, 1993 7,164,333 $126,970 $502,575 $(335,108) ONE-FOR-SIX REVERSE STOCK SPLIT (5,970,277) SALE OF SHARES 120,833 1,208 181,767 ISSUANCE OF SHARES FOR SERVICES 45,062 451 12,179 CONSTRUCTIVE ISSUANCE OF SHARES RELATING TO THE PURCHASE OF PROGRAM INVENTORY 50,000 500 89,500 NET LOSS (213,620) BALANCE, AUGUST 31, 1994 1,409,951 129,129 786,021 (548,728) CANCELLATION OF CONSTRUCTIVE ISSUANCE (50,000 ) (500) (89,500) SALE OF SHARES 151,000 4,573 231,393 ISSUANCE OF SHARES FOR SERVICES 45,168 452 64,917 ISSUANCE OF SHARES FOR ROUNDING 2,828 NET LOSS (394,633) BALANCE, AUGUST 31, 1995 1,558,947 $133,654 $992,831 $(943,361) ========== ======== ======== ========= See notes to financial statements.
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BEXY COMMUNICATIONS, INC. STATEMENTS OF CASH FLOWS FOR THE TWO YEARS ENDED AUGUST 31, 1995 1995 1994 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: 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 ========= ========= (Continued) 19 BEXY COMMUNICATIONS, INC. STATEMENTS OF CASH FLOWS - Continued FOR THE TWO YEARS ENDED AUGUST 31, 1995 1995 1994 ---- ---- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ -0- $ -0- Cash paid for income taxes $1,566 $ 800
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. - ------------------------------------------------------------------------ 20 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 21 licensing agreement, provided certain conditions have been met, including availability of the film for broadcast. 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. 22 2. PROGRAM INVENTORY Program inventory is stated at the lower of cost or estimated net realizable value, determined on a film-by-film basis. During 1995, the Company reduced the carrying value of its inventory by $235,500. 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. At August 31, 1995, the program inventory consisted of the following: "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 ========= 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. 23 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 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. - ----------------------------------------------------------------------- BEXY COMMUNICATIONS, INC. BALANCE SHEET FEBRUARY 29, 1996 (Unaudited) ASSETS CASH $ 101,446 ACCOUNTS RECEIVABLE 61,300 PROGRAM INVENTORY, Net 53,657 FURNITURE AND FIXTURES - Net of accumulated depreciation of $3,164 922 OTHER ASSETS 6,722 TOTAL ASSETS $ 224,047 =========== 24 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Accounts payable and accrued expenses $ 37,251 Accrued interest expense to related party 37,208 Deposits 2,000 Deferred income 16,000 ----------- Total liabilities 92,459 ----------- 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 (1,092,442) Notes receivable from shareholders (39,955) ----------- Total shareholders' equity 131,588 ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 224,047 =========== See accompanying notes to financial statements. - ------------------------------------------------------------------------
25
BEXY COMMUNICATIONS, INC. STATEMENTS OF OPERATIONS (Unaudited) FOR THE THREE MONTHS ENDED FEBRUARY 29, FEBRUARY 28, 1996 1995 REVENUES $ 39,736 $ 30,680 --------- --------- COST OF PROGRAMS AND DISTRIBUTION FEES 20,949 60,243 --------- --------- EXPENSES: Advertising 6,502 185 Consulting fees to majority shareholder 25,000 General and administrative 34,866 13,811 Depreciation 300 302 Interest 2,143 Professional fees 18,501 4,255 Rent 3,885 8,598 --------- --------- Total expenses 89,054 29,294 --------- --------- OTHER INCOME 673 NET LOSS $ (69,594) $ (58,857) ========= ========= NET LOSS PER SHARE $ (.04) $ (.04) ========= ========= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,781,500 1,415,450 ========= =========
See accompanying notes to financial statements. - ------------------------------------------------------------------------ 26
BEXY COMMUNICATIONS, INC. STATEMENTS OF CASH FLOWS (Unaudited) FOR THE SIX MONTHS ENDED FEBRUARY 29, FEBRUARY 28, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(149,080) $(87,532) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Amortization of film costs 1,800 38,837 Depreciation 600 604 Changes in operating assets and liabilities: Accounts receivable 1,900 (3,690) Accounts payable and accrued expenses 939 20,567 Accrued interest expense (4,982) 4,610 --------- -------- Net cash used by operating activities (148,823) (26,604) --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of furniture and fixtures (566) Net change in notes receivable 6,720 46,375 --------- -------- Net cash provided by investing activities 6,154 46,375 --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Sale of common stock 137,500 15,000 Repayment on note payable (5,000) Repayment to related party (7,519) (32,400) --------- -------- Net cash provided (used) by financing activities 129,981 (22,400) --------- -------- NET DECREASE IN CASH (12,688) (2,629) CASH, BEGINNING OF PERIOD 114,134 6,573 --------- -------- CASH, END OF PERIOD $ 101,446 $ 3,944 ========= ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 4,981 $ 0 Cash paid for income taxes $ 800 $ 0
See accompanying notes to financial statements. - ------------------------------------------------------------------------ 27 PART I - FINANCIAL INFORMATION Item 1. BEXY COMMUNICATIONS, INC. NOTES TO THE 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. 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. GENERAL AND ADMINISTRATIVE EXPENSES - The Company has expended approximately $46,000 through February 29, 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. 28 MAR VENTURES, INC. PRO FORMA CONDENSED BALANCE SHEET The following proforma condensed balance sheet presents the combined financial position of Mar Ventures, Inc. (the "Company") as if the contribution of assets occurred on February 29, 1996. This combined balance sheet should be read in conjunction with the other unaudited financial information included in this registration statement, and the audited financial statements of Bexy Communications, Inc. for the year ended August 31, 1995 and related notes thereto included in its Form 10- KSB as incorporated herein by reference. 29
MAR VENTURES, INC. PROFORMA BALANCE SHEET FEBRUARY 29, 1996 (Unaudited) MAR CONRIBUTION VENTURES, OF BEXY ELIMINATION INC. ASSETS ENTRIES TOTAL ASSETS CASH $101,446 $101,446 ACCOUNTS RECEIVABLE 61,300 61,300 AMOUNT DUE FROM BEXY $4,520 $(4,520) PROGRAM INVENTORY, Net 53,657 53,657 FURNITURE AND FIXTURES 922 922 OTHER ASSETS 6,722 6,722 ------ -------- ------- -------- TOTAL ASSETS $4,520 $224,047 $(4,520) $224,047 ====== ======== ======= ======== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Accounts payable and accrued expenses $ 37,251 $ 37,251 Accrued interest expense to related party 37,208 37,208 Deposits 2,000 2,000 Deferred income 16,000 16,000 Amount due to Mar Ventures, Inc. 4,520 $(4,520) ------ -------- ------- Total liabilities 96,979 (4,520) 92,459 ------ -------- ------- -------- SHAREHOLDERS' EQUITY: Common stock (par value - $.01, 30,000,000 shares authorized, 452,000 issued and outstanding) $4,520 4,520 Contributed capital 167,023 167,023 Notes receivable from shareholders (39,955) (39,955) ------ -------- ----------------- -------- Total shareholders' equity 4,520 127,068 131,588 ------ -------- ------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,520 $224,047 $(4,520) $224,047 ====== ======== ======= ========
EX-10 2 EXHIBIT 10.1 EXHIBIT 10.1 ASSET TRANSFER, ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSET TRANSFER, ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") is made and entered into the 16th day of April, 1996, by and between Bexy Communications, Inc. a Delaware corporation ("Assignor"), and Mar Ventures Inc., a Delaware corporation ("Assignee"). RECITALS WHEREAS, Assignor is a company engaged in the media business (the "Business"); WHEREAS, Assignor has entered into a certain Agreement and Plan of Reorganization dated as of April 16, 1996 (the "Reorganization Agreement") by and among Assignor, Cheniere Energy Operation Co., Inc. ("Cheniere"), the stockholders of Cheniere and Buddy Young, pursuant to which Assignor will effect a reorganization (the "Reorganization") of the management, business, capital structure and operations of Assignor; WHEREAS, in connection with the Reorganization, Assignor contemplates acquiring the business of a company engaged in the oil and gas exploration business; WHEREAS, it is contemplated by the Reorganization Agreement, that Assignor transfer all of its assets to Assignee and that Assignee assume all of the liabilities of Assignor, including but not limited to, its obligations under the Reorganization Agreement; WHEREAS, Assignor has formed Assignee to receive the transfer of and hold Assignor's assets (the "Assets") and operate the Business; and WHEREAS, the parties desire to set forth the terms of the transfer and assumption herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: 1. Transfer, Assignment and Assumption. 1.1 Transfer and Assignment of Assets. Assignor hereby grants, conveys, assigns and transfers to Assignee all of its right, title and interest in and to all of the Assets, including, but not limited to, the following: 1.1.1 Intellectual Property. All of those trademarks, trade names, copyrights, service marks, licenses or patents listed in the Schedule of Patents, Copyrights and Trademarks attached hereto as Exhibit A and incorporated herein by referenced (the "Intellectual Property"); 1.1.2 Personal Property. All of those items of furniture, fixtures, all associated production equipment and other equipment, computer equipment, hardware and other tangible personal property listed on the Schedule of Personal Property attached hereto as Exhibit B and incorporated herein by reference (the "Personal Property"); 1.1.3 Program Agreements. All of the Assignor's right, title and interest in and to those certain production and distribution agreements and contracts (the "Agreements") related to the attached hereto as Exhibit C and incorporated herein by reference; 1.1.4 Equipment Leases. All of Assignor's right, title and interest as lessee in and to those certain equipment leases for leased equipment owned by Assignor listed on the Schedule of Equipment Leases attached hereto as Exhibit D and incorporated herein by reference (the "Equipment Leases"); 1.1.5 Contracts, Accounts Receivable and Inventory. Any contracts, accounts receivable and inventory of Assignor relating exclusively to the Business attached hereto as Exhibit E (the "Contracts"); 1.1.6 All Other Assets. All of the other assets of Assignor described in Exhibit F and incorporated herein by reference whether or not specifically referred to in any of the preceding paragraphs of this Section 1. 1.2 Assumption of Liabilities. Assignee accepts the grant, conveyance, assignment and transfer of the Assets as provided in Section 1.1 and in exchange for Assignor's transfer of Assets, the Assignee agrees to irrevocably and unconditionally assume all of the liabilities (including taxes) of Assignor with respect to the Business or any of the Assets, including, but not limited to, each of those liabilities described on the list attached as Exhibit G and incorporated herein by reference (the "Assumed Liabilities"). The Assignor does not have in effect: 1.2.1 any collective bargaining agreements; or 1.2.2 any employee benefit plan as defined in ERISA. 2. Consideration. In consideration for the transfer of the Assets and the assumption of Assumed Liabilities of the Business, Assignee shall issue 452,000 of its shares of common stock to Assignor. 3. No Further Conveyance Necessary. This Agreement shall effectively assign, transfer and convey all of the interest in the Assets from Assignor to Assignee without any further documents of conveyance. Likewise, this Agreement shall fully evidence the assumption of all of the Assumed Liabilities by Assignee without any further instrument of conveyance or assumption. 4. Representations of Assignor. Assignor represents and warrants as follows as of the date hereof: 4.1. Organization, etc. Assignor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate powers necessary to own its property and to carry on its business as now conducted and as proposed to be conducted. 4.2 Authorization. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Assignor. This Agreement constitutes the valid and binding obligation of Assignor, enforceable against it in accordance with its terms. 4.3 No Breach. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate, result in any breach of, or constitute a default under (i) Assignor's Certificate of Incorporation or Bylaws, (ii) any material agreement to which Assignor is a party or by which Assignor is bound, (iii) any order, judgment, injunction or decree of any court, arbitrator or governmental agency binding upon Assignor or by which any of its material assets are bound or (iv) any law, rule or regulation applicable to Assignor. 4.4 Tax and Other Returns and Reports. Except as set forth in Schedule of Assumed Liabilities in Exhibit G, delivered concurrently herewith, (i) all tax returns and tax reports required to be filed by Assignor have been filed with the appropriate governmental agencies in all jurisdictions in which such returns and reports are required to be filed and where failure to file would materially and adversely effect Assignor, (ii) all government income, franchise, property and other taxes paid or chargeable to the operation of Assignor in accordance with its normal initial accounting and operational procedure (including interest and penalties) (x) have been fully paid or (y) are being contested in good faith by appropriate proceedings and are not material to Assignor and (iii) no issues have been raised or are currently pending by the IRS or any other governmental taxing authority in connection with any of the returns and reports referred to in the foregoing clause (i) which, individually or in the aggregate, might have a material adverse effect on Assignor and (iv) no waivers of the applicable statue of limitations have been executed. 4.5 Title to Property. Assignor will transfer to Assignee on the date hereof good and marketable title to the Assets, free and clear of mortgages, pledges, charges, encumbrances, equities, claims, covenants, conditions or reclaims, except for matters that, in the aggregate are not substantial in amount and do not materially detract from or interfere with the present or intended use of any of the Assets, or materially impair the Business (other than the Assumed Liabilities). 4.6 Effect of Representations. The representations and warranties of Assignor set forth in Section 3 are made solely for the purpose of this Agreement and shall not (i) survive the consummation of the transactions contemplated by this Agreement, (ii) inure to the benefit of, or be enforceable by or against, either the successors or permitted assigns of the parties hereto or any other person, or (iii) give rise to any action or claim against Assignor, including, without limitation, any action for negligent misrepresentation. 5. Indemnification. The Assignor and Assignee agree to indemnify and hold harmless each other as follows: 5.1 Assignor shall indemnify, defend and hold harmless Assignee from any and all loss, cost, expense and liability (including attorneys' fees) incurred in connection with any claim or asserted claim which may be made against Assignee and which arises directly or indirectly from any breach of this Agreement by Assignor. 5.2 Assignee shall indemnify, defend and hold harmless Assignor from any and all loss, cost, expense and liability (including attorneys' fees) incurred in connection with any claim or asserted claim which may be made against Assignor and which arises directly or indirectly from any breach of this Agreement by Assignee. 5.3 Promptly after receipt of notice of the commencement of any action in respect of which indemnity may be sought against either party hereunder, the indemnified party will notify the other party in writing of the commencement thereof and the other party shall, subject to the provisions stated below, assume the defense of such action (including the employment of counsel, who shall be counsel reasonably satisfactory to the indemnified party and shall not be counsel to the other party), and the payment of expenses insofar as such action shall relate to any alleged liability in respect of which indemnity as available. The indemnified party shall have the right to employ separate counsel in any action and to participate in the defense thereof, but the fees and expenses of its counsel shall not be at the expense of the other party unless the employment of that counsel has been specifically authorized by the other party. 6. Access to Information. Assignor and Assignee and each of their counsel, accountants and other representatives shall have full access during normal business hours to all properties, books, accounts, records, contracts and documents of or relating to the business of each other, and each of Assignor and Assignee shall furnish to each other and his representatives all information concerning the business, finances and properties of the other, that may reasonably be requested in connection with the transactions contemplated hereby. Assignor and Assignee will treat all information so obtained as confidential and preparation to this Agreement. 7. Distribution of Assignee Shares. It is contemplated that such shares shall be distributed by Assignor to its stockholders or record as of May 15, 1996, subject to approval of such distribution by the stockholders of Assignor at a special meeting of stockholders to be called to approve the Reorganization and the Closing as described in the Reorganization Agreement. 8. Representations of Assignee. Assignee represents and warrants as follows: 8.1 Organization, etc. Assignee is a corporation duly organized and validly existing under the laws of the State of Delaware and has the corporate powers necessary to own its property and carry on its business as proposed to be conducted. 8.2 Authorization. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Assignee. This Agreement constitutes the valid and binding obligation of Assignee, enforceable against it in accordance with its terms. 8.3 No Breach. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate (i) the Certificate of Incorporation or Bylaws of Assignee, (ii) any material agreement to which Assignee is a party or by which Assignee is bound, (iii) any order, judgment, injunction or decree of any court, arbitrator or governmental agency binding upon Assignee or by which any of its material assets are bound or (iv) any law, rule or regulation applicable to Assignee. 8.4 Effect of Representations. The representations and warranties of Assignee set forth in paragraphs 8.1, 8.2 and 8.3 are made solely for the purpose of this Agreement and shall survive the consummation of the transactions contemplated by this Agreement, and inure to the benefit of, or be enforceable by, either the successors or permitted assigns of Assignor. 9. Miscellaneous. 9.1 Assignment. No assignment or transfer of any interest, right or obligation of any party hereunder shall be allowed without the prior written consent of all parties to this Agreement. 9.2 Amendments. This Agreement may not be amended, supplemented or otherwise modified except in writing signed by or on behalf of each party hereto. 9.3 Severability. In the event that any provision of this Agreement shall be held to be invalid, illegal or unenforceable, in whole or in part, such invalidity, illegality or unenforceability shall not in any way whatsoever affect the validity of the other provisions of this Agreement and such other provisions shall remain in full force and effect. 9.4 Further Assurances. Each of the parties hereto agrees that, from and after the date hereof upon the reasonable request of the other party hereto and without further consideration, such party shall execute and deliver to such other party such documents and shall take such other actions as such other party may reasonably request in order to carry out the purposes and intentions of this Agreement, including, without limitation, the vesting in Assignee of the title to the Assets in accordance with such terms of this Agreement and the correction of related errors and defects. 9.5 Governing Law. This Agreement shall be governed by the laws of the State of Delaware. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. ASSIGNOR: BEXY COMMUNICATIONS, INC., a Delaware corporation By: Its: President ASSIGNEE: MAR VENTURES, INC., a Delaware corporation By: Its: President -----END PRIVACY-ENHANCED MESSAGE-----