UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                    FORM 10-K
    (Mark One)


         |X|  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
              ACT OF 1934 [Fee Required]

         For the fiscal year ended December 31, 1996 or

         |_|  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934 [No Fee Required]



              For the transition period from ________ to _______



Commission file number           33-47921-A
                              ---------------------------


                              Texas Equipment Corp.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



                 Nevada                                       62-1459870
------------------------------------------------       -------------------------
   (State or other jurisdiction of incorporation       (I.R.S. Employer 
        or organization)                                   Identification No.)




110 Greene St, Ste 800, New York, New York                10012
------------------------------------------       -------------------------------
 (Address of principal executive offices)               (Zip Code)


Issuer's telephone number: (212) 334-6700

Securities registered under Section 12(b) of the Exchange Act:


      Title of each class              Name of each exchange on which registered


---------------------------------     ------------------------------------------



---------------------------------     ------------------------------------------


    Securities registered under Section 12(g) of the Exchange Act;


                                (Title of class)
--------------------------------------------------------------------------------








--------------------------------------------------------------------------------




<PAGE>



         Indicate by check and mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Exchange Act during the past
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes   |X|

         Indicate by check mark if there is no disclosure  of delinquent  filers
in pursuant to Item 405 of  Regulation  S-K is not  contained in this form,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of Form
10-K or any amendment to this Form 10-K. Yes |_| No |X|

         State issuer's revenues for its most recent fiscal year. $ 28,094,196

         State  the  aggregate   market  value  of  the  voting  stock  held  by
non-affiliates  of the registrant.  The aggregate market value shall be computed
by  reference  to the price at which the stock was sold,  or the average bid and
asked price,  as of a specified  date within 60 days prior to the date of filing
$4,196,803: As of April 11, 1997.

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 24,704,886






<PAGE>



                                     PART I



Item 1. Business.

         The registrant is a Nevada corporation that was originally named Hard
Funding, Inc. and has 25,000,000 shares of Common Stock, par value $0.001, (the
"Common Stock") authorized. Hard Funding, Inc. was incorporated in August of
1990. On November 8, 1993, Hard Funding, Inc. completed a public offering of
9,775 shares of Common Stock. The registrant was formed for the purpose of
acquiring through the issuance of Common Stock operating assets. From the
registrant's formation until February, 1996, the registrant did not conduct
operations.

         In February,  1996, the registrant  exchanged  4,000,000  shares of its
Common  Stock for all of the issued  and  outstanding  equity  shares of Marinex
Multimedia Corporation,  a New York corporation ("Marinex").  In connection with
the  acquisition  of  Marinex,  the  registrant  changed  its  name  to  Marinex
Multimedia Corporation.  Marinex produces a CD-ROM magazine, Trouble & Attitude,
and   produces   two   internet    sites,    www.bizmag.com    ("BIZMAG")    and
www.theeastvillage.com. ("VILLAGE"). BIZMAG is a website magazine related to the
entertainment industry, providing interviews of celebrities,  downloadable movie
trailers,  celebrity sound bites and music videos, weekly entertainment columns,
lectures,  and reviews, as well as reports of box office revenues and television
ratings.
VILLAGE is a "Cybersoap" whose story is updated daily.

         In the Spring and Summer of 1996, the registrant  raised  approximately
$3,225,000 in two Regulation S offerings.  The first raised  $2,525,000  through
the  issuance  of  2,525,000  shares of Common  Stock and the  second  raised an
additional $700,000 by issuing 507,246 shares of Common Stock.

         In September of 1996, the registrant issued 16,850,000 shares of Common
Stock in exchange for all of the capital stock of Texas  Equipment  Co., Inc., a
Texas corporation  ("TEC").  Upon the acquisition of TEC, the registrant changed
its name to Texas Equipment  Corporation.  At the time of the  acquisition,  TEC
operated three John Deere  dealerships in Southwest  Texas.  (Unless the context
otherwise  indicates,  the "Company"  shall refer to the  registrant and its two
wholly owned subsidiaries, TEC and Marinex.)

         As of March 25, 1997, TEC employed 96 people: 11 in sales; 40 in
service; 19 in parts; 10 in set-up; and two in administration. Management of the
Company believes that Marinex employed two people at March 31, 1997. See Item 3.
Legal Proceedings

Texas Equipment Co., Inc.

         TEC was incorporated in 1987 to operate John Deere dealerships at three
locations in Southwest Texas, namely, Seminole,  Plains, and Pecos. Although the
dealership is franchised by John Deere for  Commercial  and Consumer  Equipment,
more than 90% of TEC's revenues are derived from selling, servicing, and leasing
new and used agricultural equipment and parts with new equipment primarily being
manufactured by John Deere.  In January 1997, TEC acquired three  dealerships in
the Texas Panhandle, namely, Hereford, Dimmitt, and Friona, dealerships that are
also oriented toward agricultural sales.

         John Deere, which has manufactured  agricultural  equipment since 1837,
believes its worldwide sales of agricultural  equipment during recent years have
been  greater  than any  other  business  enterprises's  sales  of  agricultural
equipment. This full line of agricultural equipment includes tractors;  tillage,
soil preparation,  seeding, and harvesting machinery;  sprayers;  hay and mowing
equipment;   and  integrated  farming  technology.   In  particular  John  Deere
manufactures large-size  agricultural equipment,  particularly tractors over 100
horsepower,  self propelled  combines and  self-propelled  cotton pickers.  John
Deere  has  products  that  utilize  satellite   technology  which  evaluates  a
customer's field and alters John Deere equipment's operational  characteristics,
such  as  speed  of  harvesting  equipment,  that  increase  the  efficiency  of
harvesting.

Store Operations and Marketing

         The three stores in Southwest Texas sell to farmers principally engaged
in  peanut  and  cotton  farming  while the three  stores  located  in the Texas
Panhandle sell to farmers  principally engaged in wheat, corn, other grain, and,
to a lesser  extent,  cotton  farming.  Management  of TEC believes that farmers
purchasing new equipment in the Southwest

                                        3

<PAGE>



Texas stores  typically farm about 2,000 acres, and those in the Texas panhandle
farm somewhat larger acreage.  Those farming  significantly smaller acreages are
the primary market for TEC's used equipment.

         In  addition  to being a John  Deere  dealer,  TEC is also a dealer for
other manufacturers of agricultural equipment. TEC's other principal dealerships
are Amadas, which manufactures large threshing equipment used in peanut farming,
and KMC, also a provider of equipment used in peanut farming.  TEC's  management
believes  that it is the largest  dealer of Amadas  equipment in the world.  TEC
does lease or rent some  equipment,  leases being for a term of one year or more
with rentals occurring during planting and harvesting  seasons.  Presently,  TEC
does not maintain a separate rental or lease fleet.  TEC  prearranges  financing
for virtually all of the purchases of equipment.

         Each of TEC's six stores  supports the sale of new equipment  with part
sales,  equipment service and the sale of used equipment,  principally  acquired
through  trade ins.  Each store has a sales area,  parts area and service  bays.
These  buildings are surrounded by several acres where new and used equipment is
displayed  and  stored.   Each  store  is  staffed  by  highly  trained  service
technicians. Although the technicians may make repairs at a customer's farm, the
farming  equipment's size requires  specialized bays and hoists, and the farming
equipment's  technology,  particularly  onboard computers,  requires specialized
diagnostics that can often only be performed at the dealership's location

         TEC's  sales are subject to  seasonal  fluctuations.  Sales are slowest
after  planting  is  completed  in mid May and before  harvesting  commences  in
mid-August.  There is some  decrease in sales after  harvesting  is complete but
this decrease is mitigated by those engaging in soil maintenance activities. The
acquisition  of the Texas  Panhandle  stores  operates to lengthen TEC's selling
season.

         TEC markets principally by arranging equipment financing. The equipment
used on  large  farms  commonly  costs  in  excess  of  $100,000.  By  providing
financing,  TEC  facilitates  the  equipment's  sale.  The financing is provided
principally  through John Deere Credit and Agricredit  Acceptance.  TEC's credit
risk is limited to the finance company's receivable,  and TEC typically requires
a 20% down payment.  The finance  company  withholds from TEC one percent of the
amount  financed,  but when the total amount withheld  exceeds between three and
four  percent of the  receivables  outstanding,  the excess is  remitted  to the
Company.

Floor Plan Financing

         John Deere and Deere  Credit  Services  offer floor plan  financing  to
Deere dealers for extended  periods,  to enable dealers to carry  representative
inventories  of equipment  and to encourage  the purchase of goods by dealers in
advance of seasonal  retail  demand.  Deere  charges  variable  market  rates of
interest  at  or  over  the  prime  rate  on  balances   outstanding  after  any
interest-free periods and retains a security interest in the inventories,  which
it inspects periodically. The interest-free periods, which Deere Credit Services
changes  periodically,  are currently six to eight months. Deere Credit Services
also  provides  financing  for used  equipment  accepted  in trade,  repossessed
equipment,  and approved equipment from other suppliers, and receives a security
interest  in  such  equipment.  After  the  interest-free  period,  the  Company
generally  shifts  its  financing  to Deere  Credit  Services  to obtain a lower
interest rate.

         For equipment from suppliers  other than Deere,  the Company  primarily
finances  its  inventory  through its line of credit at  Agricredit  Acceptance.
Financing also may be available  through floor plan financing  programs provided
by the suppliers,  which may be financed by such suppliers themselves or through
third party  lenders,  depending on which  option  provides the Company with the
most favorable terms.

Competition

         Management of TEC believes that its  principal  competition  comes from
other  John  Deere  dealers.  While  there  are Case  International  dealerships
competing  in the  markets  in which TEC  operates,  management  of the  Company
believes that the quality of John Deere equipment and the equipment's ability to
hold its resale value gives the John Deere equipment a competitive advantage.

         John Deere is, however,  encouraging  consolidation  of dealerships and
permitting  the public  financing of those  entities.  Accordingly,  the Company
anticipates  that the  markets in which TEC  operates  to be  changing,  perhaps
radically,  and TEC anticipates  additional  competition from large dealerships,
including John Deere dealerships, that may have significantly greater financial,
information system and personnel resources than those of TEC and that are intent
on increasing market share.

                                        4

<PAGE>



Product Warranties

         Product  warranties  for new  equipment  and parts are  provided by the
supplier. The term and scope of these warranties vary greatly by supplier and by
product. The Company does not provide additional warranties to retail purchasers
of new  equipment.  John  Deere and other  vendors  pay the  Company  for each's
equipment under warranty. The Company generally sells used equipment "as is" and
without  manufacturer's  warranty,   although  manufacturers  sometimes  provide
limited warranties if the manufacturer's  original warranty is transferrable and
has  not yet  expired.  Typically,  the  Company  does  not  provide  additional
warranties on used equipment.

Environmental Standards and Government Regulations

         The Company's  operations are subject to numerous  federal,  state, and
local rules and regulations,  including laws and regulations designed to protect
the environment and to regulate the discharge of materials into the environment,
primarily  relating  to its  service  operations.  Based  on  current  laws  and
regulations,  the Company  believes that it is  incompliance  with such laws and
regulations  and that its policies,  practices,  and  procedures are designed to
prevent  unreasonable risk of environmental damage or violation of environmental
laws and  regulations and any resulting  financial  liability to the Company and
the Company is not aware of any  federal,  state,  or local laws or  regulations
that have been  enacted or  adopted,  the  compliance  with  which  would have a
material adverse effect on the Company's  results of operations or would require
the Company to make any material capital expenditures. No assurance can be given
that future  changes in such laws or regulations or changes in the nature of the
Company's  operations  or the  effects  of  activities  of  prior  occupants  or
activities  at  neighboring  facilities  will not have an adverse  impact on the
Company's operations.

Marinex Multimedia

         Marinex Multimedia was formed to sell  entertainment  media to users of
personal computers. Personal computers can be equipped to play CD-ROMS or access
material  on the  Internet.  In addition  to text and  photographs,  CD-ROMs and
Internet material can make available to personal  computers videos and sound and
interactive games.

         Marinex's efforts are oriented toward magazines  delivered on CD-ROM or
via the Internet. In addition to text and photographs, the media could deliver a
variety of sound, music and videos. The CD-ROM, Trouble & Attitude, was marketed
toward 18-44 years old as was the Internet magazine. In addition,  developed and
produced a cybersoap on the Internet whose story line was updated daily.

         The CD-ROM has been produced  sporadically.  It was originally produced
in 1995 and  successfully  produced  revenues.  After the  filing of  litigation
against  the  Company,  the  Company  became  aware  that an issue of  Trouble &
Attitude had been distributed to several  bookstores,  including national chains
such as Barnes &Noble. The copyright is for 1997 by Trouble & Attitude, Inc., an
entity that management is unaware is affiliated  with the Company.  Although the
address on the cover is the Company's address, there is a reference to an e-mail
address  of  info@marinex.com.  The inside  front  cover  prominently  refers to
www.theeastvillage.com.  Management  of the Company  anticipates  that the legal
issues raised by the publication,  among others,  will become part of the issues
involved  in the  litigation  filed by a director  of the  Company  against  the
Company.  See Item 3. Legal  Proceedings;  Item 7.  Management's  Discussion and
Analysis of Financial Condition and Results of Operation - Liquidity and Capital
Resources.

         Producers  of  sites  on the  internet  can  derive  revenues  from two
sources,   subscriptions   and   advertising,   and  management   believes  that
subscriptions  on the  Internet  are not likely  since so much  material  on the
internet can be obtained without cost.

         Marinex has received  minimal  advertising  revenues from the Internet.
Recent reports indicate that total revenues from advertising on the internet for
1996 were $300,000,000,  a five fold increase from 1995. The firm generating the
largest  amount  of  advertising   on  the  Internet,   received   approximately
$24,000,000 in 1996 from advertising revenues.

         Management  of the Company is reviewing  whether is a business that can
be conducted profitably or whether it should be sold or closed.



                                        5

<PAGE>



Item 2. Properties.

         The Company is headquartered in New York City where the Company rents a
loft from the Soho Building, located at 110 Greene Street, New York, NY. Rent is
$3,750 per month.  The lease  expires in  September  of 1997 and the Company has
renewal options.

         The following table sets forth the size of TEC's locations: 1

<TABLE>
<CAPTION>

                                         Total Building       Office and                           Service and
     Location            Acreage             Space*           Showroom*        Parts Storage*         Setup*
------------------       -------         --------------       ----------       --------------      -----------
<S>                       <C>                <C>              <C>               <C>                <C>   
Seminole                  13.94              50,000           9,875             14,000             26,125
Plains                     6.025             21,000           2,200              8,600             10,800
Pecos                      1.32              12,800           1,000              5,500              5,500
Hereford                  10.97              26,700           3,900             12,000             10,800
Dimmitt                   10.02              35,500           5,400             11,200             18,900
Friona                     5.0               18,000           4,100              5,600              8,300
</TABLE>


* In square feet

The Friona store is rented for $2,500 per month.  The remaining stores are owned
by TEC.

Item 3. Legal Proceedings.

         On March 17, 1997, the registrant was served with a complaint  filed on
March 8, 1997,  by  Jonathan  Braun,  Charles  Platkin  and  Marinex  Multimedia
Corporation  ("Marinex")  in the United States  District  Court for the Southern
District Court of New York against the registrant, TEC, Paul Condit, Paul Condit
II, John Condit, Jeffrey Condit, Michael Killman and Charles Barkley. Marinex is
a wholly owned subsidiary of the registrant, and Jonathan Braun is a director of
the registrant as well as an officer and director of Marinex. Charles Platkin is
a former  director of the  registrant  and is a director and officer of Marinex.
Michael  Killman is a principal in the accounting firm of Killman Murrell & Co.,
the  registrant's  independent  auditor.  Charles  Barkley  was  counsel  to the
registrant.  The civil  action  relates to the  exchange  of shares  between the
registrant  and  TEC  whereby  TEC  became  a  wholly  owned  subsidiary  of the
registrant.  Paul Condit is the registrant's president, and Paul Condit II, John
Condit,  and Jeffrey  Condit  were  owners of all of the issued and  outstanding
equity of TEC, each now owning  approximately  22.7% of the registrant's  Common
Stock.  The action  alleges  that:  (I) TEC,  Paul Condit,  Paul Condit II, John
Condit,  Jeffrey Condit,  Michael Killman,  and Charles  committed fraud against
Marinex; (ii) Texas Equipment, Paul Condit, Paul Condit II, John Condit, Jeffrey
Condit, and Michael Killman  negligently made false  representations to Marinex;
(iii) Paul  Condit II,  John  Condit and  Jeffery  Condit  committed a breach of
contract against the plaintiffs;  and (iv) Charles Barkley committed a breach of
fiduciary  duty,  breach of duty of loyalty,  negligence  and legal  malpractice
against  the  plaintiffs.  The action  seeks  unspecified  damages not less than
$930,000,  including fees and expenses.  The registrant  believes this action is
without merit and intends to vigorously  defend against these claims.  While the
registrant believes these claims are without merit and are, in addition, subject
to numerous procedural defenses, the final outcome of this action is unknown.

Item 4. Submission of matters to a Vote of Security Holders.

         Not applicable



                                        6

<PAGE>



                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

         Prior to the date hereof, there has been a limited and sporadic trading
market  for the  Company's  Common  Stock,  which  presently  trades on the NASD
Bulletin  Board under the symbol  "TEXQ." After its initial  public  offering in
1993,  there was very little trading until the first quarter of 1996.  According
to information  furnished by the National Quotation Bureau, the high and low bid
and high and low ask quotations for each quarter of the 1996 is as follows:



1995                          Closing Bid                Closing Ask

                              high     low              high      low

Marrch31                      7.00     6.00            10.00     9.00

June 28                       7.00     7.00             9.00     9.00

September 29                  7.00     7.00             9.00     9.00

December 29                   7.00     7.00             9.00     9.00



1996                          Closing Bid               Closing Ask

                              high      low             high      low

March 29                      8.00     7.00             9.00     9.00

June 28                      10.00     5.25            11.00     6.25

September 30                  6.75     1.00             8.25     3.00

December 31                   3.625    2.125            3.625    2.625

         These market quotations represent  inter-dealer prices,  without retail
markup,  mark  down  or  commission  and do  not  necessarily  represent  actual
transactions.  As of March 15,  1997,  there were  approximately  300 holders of
record of the Company's  common stock.  The Company has not paid any  dividends,
redeemed, repurchased or otherwise retired any of its capital stock.

Item 6. Selected Financial Data.

                                      Year Ended December 31,
                              1996              1995            1994

Net Sales                 $28,094,196       $25,031,608      $20,964,570
Gross Profit                4,092,807         3,383,351        2,917,714
Net Income                    736,351           253,399           58,631
Net Income per share           $0.00             $0.02             $0.04
Total Assets               11,612,258         9,624,708
Long-term Debt              1,005,762         1,195,378
Dividends                       0.00              0.00              0.00

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operation.

Fiscal 1996 Compared to Fiscal 1995

         The  acquisition  by the  Company  of TEC is  accounted  as though  TEC
acquired the Company through a purchase.  Accordingly,  the consolidated balance
sheet reflects the net expenses  incurred by Marinex through  September of 1996.
The  Company's  Consolidated  Statement of  Operations  reflects the expenses of
Marinex incurred

                                        7

<PAGE>



in the fourth quarter of 1996.

         The net  expenses  of Marinex for 1996 were  approximately  $1,063,000.
Revenues  for  Marinex  were  less  than  $100,000  for the  1996  fiscal  year,
principally  reflecting  sales of Trouble & Attitude  as well as a fee paid by a
distributor  upon termination of a distribution  arrangement.  Revenues from the
internet locations were less than $10,000 for the fiscal year ended December 31,
1996. Production and advertising expenses together with salaries paid to Messrs.
Braun and Platkin constituted the majority of expenses incurred by Marinex.

         Revenues for TEC increased to  approximately  $28,000,000  in 1996 from
approximately  $25,000,000 in 1995, an increase of more than 12%. These revenues
reflect sales solely from three Southwest Texas stores and the increase  derives
from improved economic conditions in the area,  maturation of the Plains,  Texas
store, and increased sales of equipment related to peanut farming.  The slightly
improved  margins in 1996,  reflecting a different  product mix,  resulted in an
almost 21% increase in gross  profit,  from  $3,383,351 in 1995 to $4,092,807 in
1996.

         TEC's  selling   general  and   administrative   costs  decreased  from
$2,935,899  in 1995 to  $2,645,231  in 1996,  principally  as a result  of lower
commission compensation to Mr. Paul Condit, the Company's president.  Because of
increased gross profit and decreased selling,  general and administrative costs,
gross profit before income tax for TEC increased  almost 270%,  from $416,693 in
1995 to $1,534,646,  earnings per share for the Company increasing from $0.02 to
$0.04 per share.

Fiscal 1995 Compares to Fiscal 1994

         Net income for TEC and the Company  increased in 1995 to $253,399  from
$58,631 in 1994.  Gross profit  increased  almost 16% in 1995 from 1994 although
revenues  increased more than 19%. In 1995, the Company's results were favorably
affected by a decline in  commission  expense as a  percentage  of revenue and a
decline in office administrative expense.

Liquidity and Capital Resources

         The Company's  agricultural  operations have sufficiently  funded those
operations. Proceeds from the Company's sale of stock enabled TEC to acquire the
stores in the Panhandle of Texas. Throughout the year, those financing equipment
purchased  from TEC  typically  hold back  three to four  percent  of the amount
financed,  thus decreasing  cash flow during the year. A significant  portion of
this  holdback  is  usually  recaptured  after  the end of each  calendar  year,
however.

         The  effect of  litigation  filed by Messrs.  Braun and  Platkin on the
Company's liquidity cannot yet be determined, although the Company believes that
the claims are spurious. In addition, on January 24, 1997, at the instruction of
Charles Platkin, $625,000 of the Company's money was wired to a checking account
of a Mr. Paul F. Condzal, believed by the Company to be an attorney. The Company
anticipates  that this act,  among similar acts,  will be the subject of part of
its response to the litigation filed by Messrs. Braun and Platkin.

Item 8. Financial Statements and Supplementary Data.

         The  Company's  consolidated  balance sheet as of December 31, 1996 and
1995,  and the related  consolidates  statements  of  operations,  stockholders'
equity and cash flows for each of the three years in the period  ended  December
31, 1996 are included under Item 14 hereof.

Item 9. Changes in and Disagreements With Accountants on Accounting and
        Financial Disclosure.

         Not applicable



                                        8

<PAGE>



                                    PART III



Item 10. Directors and Executive Officers of the Registrant.

     The  following  persons are the  directors  and  executive  officers of the
Company and have served in such capacities since the formation of the Company.

Name                       Age                 Position

Paul Condit                63                  President, Director, 
                                               Chief Financial Officer


John T. Condit             32                  Secretary/Treasurer, Director



Jonathan Braun             45                  Director, 
                                               President of Marinex Multimedia



         All directors and officers of the Company are elected annually to serve
for one year or until their successors are duly elected and qualified.

         Paul Condit, 63, is President, Chief Executive Officer and a director.
He has a B.S. degree from Oklahoma State University and has been in the farm
equipment business for 23 years. Mr. Condit owned and operated a predecessor
company and has managed Texas Equipment since its inception in 1987.

         John Condit,  32, serves as a Director and Chief  Financial  Officer of
Texas  Equipment  and will serve as Secretary of the Company.  He obtained a BBA
degree from Texas Tech  University in 1986. For the past five years, he has been
President of Domicile Property  Management,  Inc., a real estate acquisition and
management firm, in San Antonio, Texas.

         Jonathan Braun, 45, a former  journalist,  has over 20 years experience
in public  relations and  consulting and has served as his Chairman of the Board
since its  inception  in  January  1995.  From 1992 until  establishing  Marinex
Multimedia  Corporation  in 1995,  Mr.  Braun  has been  engaged  in the  public
relations and  consulting  business  through a company called  Marinex,  Inc., a
Delaware corporation.  That company has been dissolved. In March 1997, Mr. Braun
filed a lawsuit against the Company that is adverse to the Company.  See Item 3.
Legal Proceedings.

Item 11. Executive Compensation.

<TABLE>
<CAPTION>

                                      Fiscal       Annual Compensation              Other


Name/Position                           Year   Salary($)         Bonus($)        Compensation($)
<S>                                    <C>     <C>              <C>     
Paul Condit, President                 1996    $26,000
                                       1995    $29,630          $180,260

John Condit                            1995          0                 0


Jonathan Braun(1),  Director           1996   $240,000
                                       1995    $26,667
</TABLE>



(1) Mr Braun also 100,000 stock options exercisable at $4.00 per share subject
    to shareholder approval



                                                        9

<PAGE>



Item 12. Security Ownership of Certain Beneficial Owners and Management.

         The  following  table  sets forth  certain  information  regarding  the
beneficial  ownership  of the  Company's  common  stock as of October 1, 1996 by
(I)each  person who is known by the Company to own  beneficially  more than five
percent  (5%)  of the  Company'  outstanding  common  stock;  (ii)  each  of the
Company's  officers and  directors;  and (iii) all directors and officers of the
Company as a group.

Name of                               Shares of Common              Approximate
Beneficial                           Stock Beneficially             Percentage
Owner                                       Owned                      Owned

John T. Condit                            5,616,666                    22.7%
c/o Domicile Property Management
 601 Howard Streets
 San Antonio, TX 78212

 Paul J. Condit II                        5,616,666                    22.7%
c/o Domicile Property Management
 601 Howard Streets
San Antonio, TX 78212

 Jeffrey E. Condit                        5,616,666                    22.7%
c/o Domicile Property Management
601 Howard Streets
San Antonio, TX 78212

Jonathan Braun                            1,140,000                     4.6%
70 Huntsville Road
Katonah, NY 105361.



         John T. Condit, Paul J. Condit II and Jeffrey E. Condit are brothers
and are the sons of Mr. Paul Condit, the Company's President, Chief Executive
Officer and a Director. Mr. Braun has an Option to Acquire up to 25% of the
issued and outstanding shares of one of the Company's subsidiaries, Marinex
Multimedia Corporation, a New York corporation, upon the happening on certain
events asset forth in the Acquisition Agreement which is included as an exhibit
to this filing.

Item 13. Certain Relationships and Related Transactions.

         The Company was  incorporated  in the State of Nevada as "Hard Funding,
Inc."  on  August  14,  1990  as a  Nevada  Corporation  to be a  "blank  check"
corporation  whose  sole  business  was to  purchase,  merge  with or  acquire a
business or assets from another company. Hard Funding, Inc. filed a Registration
Statement with the Atlanta  Regional office of the United States  Securities and
Exchange Commission (the"Commission") on Form SB-2, which registration statement
was declared  effective as of October 26, 1993.  Pursuant thereto,  Hard Funding
published a prospectus dated October 26, 1993 (the "Prospectus") with respect to
certain of its  securities.  On November  8, 1993,  the  Company  completed  its
initial public offering by selling to its  underwriter,  Westminster  Securities
Corporation,  all 8,500 shares plus the over  allotment  shares,  for a total of
9,775 shares.  As a result of the initial public offering,  the Company received
net offering  proceeds,  after  deducting  offering  expenses,  in the amount of
$34,327. An additional 340 shares were issued to the underwriter as a portion of
the  underwriting  compensation.  On February  12, 1996,  Hard Funding  acquired
Marinex  through a process  generally  referred to as a "reverse  merger."  Hard
Funding,  with its 510,115 shares  outstanding,  caused  4,000,000 shares of its
authorized but unissued  shares to Be issued to the  shareholders  of Marinex in
exchange  for all of the  outstanding  shares  of  Marinex.  As a result  of the
acquisition,  the  officers  and  directors  of Hard  Funding  resigned and were
replaced  by the  officers  and  directors  of Marinex  Multimedia  Corporation;
namely,  Mr. Jonathan Braun and Mr. Charles Platkin.  Messrs.  Braun and Platkin
remain as officers and  directors  of the  multimedia  subsidiary  and Mr. Braun
remains a director of the Company.  Both Messrs. Braun and Platkin own shares in
the Company. As of September 17, 1996, the Company acquired a second subsidiary,
Texas Equipment Co., Inc., by

                                       10

<PAGE>



issuing 16,850,000 shares of its authorized but unissued stock to Messrs. John
Condit, Paul Condit, II and Jeffrey Condit in exchange for all of the
outstanding shares of that Company. As a result of the transaction, Mr. Platkin
resigned as an officer and director of the Company although he remains as an
officer and director of the multimedia subsidiary. Mr. Paul Condit and Mr. John
Condit were elected members of the Board of Directors and as officers. Messrs.
John Condit, Paul Condit, II and Jeffrey Condit are the sons of the Company's
President and CEO, Mr. Paul Condit. The Condit family now controls 68.2% of the
outstanding common stock of the Company.

         Messrs. Braun & Platkin had employment agreements with the Company that
were dated June 1, 1996.  The term of each agreement is for five years and calls
for an annual salary of $240,000.  The annual base salary for each  increases at
not less than 10% per year, such increase to take effect on the anniversary date
of the agreement.  The agreement  permits the Company to terminate  agreement if
the employee is convicted of a felony related to the Company's business.

         These  agreements were canceled upon the Company's  acquisition by TEC,
and,  management  believes  Messrs.  Braun and Platkin  entered into  employment
agreements with Marinex.  Management believes these agreements to be essentially
the same as those entered into with the Company.  The Company paid Messrs. Braun
and Platkin $240,000 in 1996 as salary.

         In  addition,  the Company  paid at the closing of the TEC  acquisition
$100,000 in  preexisting  debt believed by management to be loans to the Company
by Messrs. Braun and Platkin or both.

         In consideration of cancellation of the existing employment  agreement,
Messrs.   Braun  and  Platkin   received  the  right  to  acquire,   in  certain
circumstances,  25%  each  or a total  of 50% of  Marinex.  These  circumstances
include any sale of a 10% interest in Marinex,  any sale or spin out of TEC, and
others.

         John  Condit,  or his  brothers,  who  are 5%  stockholders,  or  their
affiliates guarantee approximately $535,000 of TEC's debt at December 31, 1996.

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a) Financial Statements

         The following financial statements are included herewith:

                                                                        Page
                                                                        ----
    Report of Independent Certified Public Accountants                  F-2
    Consolidated Balance Sheets                                         F-3
    Consolidated Statements of Operations                               F-5
    Consolidated Statements of Stockholders' Equity                     F-6
    Consolidated Statements of Cash Flows                               F-7
    Notes to Consolidated Financial Statements                          F-8

(b) Reports on Form 8-K

         Form 8-K filed on March 31, 1997

(c) Exhibits

3(a)    Articles of Incorporation
3(b)    By-Laws
10(a)   Acquisition Agreement for Texas Equipment Co., Inc.
10(b)   Subscription Agreement with Varna Management
10(c)   Subscription Agreement with Alstro Holdings
10(d)   Subscription Agreement with Varna Management
10(e)   Option Agreement with Jonathan Braun
10(f)   Option Agreement with Charles Platkin

                                       11

<PAGE>



10(g)   Option Agreement with Charles Barkley
10(h)   Employment Agreement with Jonathan Braun
10(i)   Employment Agreement with Charles Platkin
10(j)   Contract with John Deere Company
21(a)   List of Subsidiaries

23       Consent of Accountants(filed herewith)
27       financial Data Schedule(filed herewith)

                                       12

<PAGE>
                                TABLE OF CONTENTS





                                                                     Page
                                                                     ----
Report of Independent Certified Public Accountants                   F-2

Consolidated Balance Sheets                                          F-3

Consolidated Statements of Operations                                F-5

Consolidated Statements of Stockholders' Equity                      F-6

Consolidated Statements of Cash Flow                                 F-7

Notes to Consolidated Financial Statements                           F-9


























                                       F-1


<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors and Stockholders
Texas Equipment Corporation
1305 Hobbs Highway
Seminole, Texas  79360


We have audited the accompanying  consolidated balance sheets of Texas Equipment
Corporation  and  Subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
each  of  the  three  years  in  the  period  ended  December  31,  1996.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit 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, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Texas  Equipment
Corporation  and  Subsidiaries as of December 31, 1996 and 1995, and the results
of its  operations  and its cash flows for each of the three years in the period
ended  December 31, 1996,  in  conformity  with  generally  accepted  accounting
principles.



KILLMAN, MURRELL AND COMPANY, P.C.

Odessa, Texas
February 12, 1997












                                       F-2



<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1995 AND 1996


                                     ASSETS
<TABLE>
<CAPTION>

                                                                                  1995                1996
                                                                              ------------      ---------------

CURRENT ASSETS
<S>                                                                            <C>                <C>         
   Cash and Temporary Cash Investments                                         $   250,031        $  2,661,058
   Accounts Receivable -
       Trade                                                                       213,777             872,815
       Employees and Other                                                          14,051             204,649
   Inventories, at the lower of cost (principally specific
       identification and average cost) or market value - Note 2                 6,439,238           5,380,188
   Prepaid Expenses                                                                      -              12,500
                                                                            --------------       -------------

              TOTAL CURRENT ASSETS                                               6,917,097           9,131,210
                                                                               -----------        ------------

LAND, BUILDINGS AND EQUIPMENT, at cost - Note 3                                  2,182,355           2,111,369
   Less Accumulated Depreciation                                                  (737,475)           (866,927)
                                                                               -----------        ------------

              NET LAND, BUILDINGS AND EQUIPMENT                                  1,444,880           1,244,442
                                                                               -----------        ------------


OTHER ASSETS
   Finance Receivables - Note 4                                                    693,674             731,028

   Cash Surrender Value of Insurance                                               228,550             129,156
   Other Assets                                                                     73,585              23,945
   Goodwill, net of accumulated amortization of $41,318
       and $54,031, respectively                                                   149,380             136,667
   Stockholders' Receivables - Note 11                                             117,542             215,810
                                                                               -----------        ------------

              TOTAL OTHER ASSETS                                                 1,262,731           1,236,606
                                                                                ----------        ------------

TOTAL ASSETS                                                                    $9,624,708         $11,612,258
                                                                                ==========         ===========
</TABLE>














                     The accompanying notes are an integral
                part of these consolidated financial statements.
                                   (Continued)
                                       F-3


<PAGE>




                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)

                           DECEMBER 31, 1995 AND 1996


                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                                  1995                1996
                                                                              ------------        -------------

CURRENT LIABILITIES
<S>                                                                             <C>               <C>         
   Notes Payable - Note 8                                                       $  300,000        $    300,000
   Current Maturities of Long-Term Debt - Note 9                                   271,447             396,022
   Accounts Payable Trade -
       John Deere Company                                                        3,096,801           2,190,355
       Other                                                                       436,952             437,564
   Accrued Expenses - Note 10                                                      308,226             753,271
   Customer Deposits                                                                     -              79,500
   Deferred Tax Liability - Note 7                                                 377,300             159,800
                                                                                ----------        ------------

              TOTAL CURRENT LIABILITIES                                          4,790,726           4,316,512
                                                                                ----------        ------------

LONG-TERM DEBT, net of current maturities - Note 9                               1,195,378           1,005,762

DEFERRED TAX LIABILITY - Note 7                                                    152,000             107,200

COMMITMENTS AND CONTINGENCIES -
   Notes 4, 6, 12 and 13                                                                 -                   -
                                                                             -------------     ---------------

              TOTAL LIABILITIES                                                  6,138,104           5,429,474
                                                                                ----------        ------------

STOCKHOLDERS' EQUITY
   Preferred Stock, No Par Value. Authorized 3,000,000; Issued
       and Outstanding 596,305 in 1995                                             596,305                   -
   Common Stock, No Par Value.  Authorized 1,000,000; Issued
       and Outstanding 100,000                                                     100,000                   -
   Common Stock, $.001 Par Value.  Authorized 25,000,000;
       Issued and Outstanding 24,704,886                                                 -              24,705
   Paid in Capital                                                                       -           2,534,952
   Retained Earnings                                                             2,886,776           3,623,127
                                                                                ----------        ------------

                                                                                 3,583,081           6,182,784

           Less Treasury Shares - 40,000 Shares of Common
              Stock, at cost                                                       (96,477)                  -
                                                                               -----------     ---------------

              TOTAL STOCKHOLDERS' EQUITY                                         3,486,604           6,182,784
                                                                                ----------        ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $9,624,708         $11,612,258
                                                                                ==========         ===========
</TABLE>


                     The accompanying notes are an integral
                part of these consolidated financial statements.
                                       F-4


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>

                                                     1994                    1995                     1996
                                                --------------          --------------          ----------------

<S>                                                <C>                     <C>                      <C>        
REVENUES                                           $20,964,570             $25,031,608              $28,094,196

COST OF REVENUES                                    18,046,846              21,648,257               24,001,389
                                                   -----------             -----------              -----------

           GROSS PROFIT                              2,917,724               3,383,351                4,092,807
                                                  ------------            ------------             ------------

SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES
       Commissions, Salaries, and
           Employee Benefits                         1,647,859               1,821,616                1,460,247
       Amortization and Depreciation                   173,418                 181,080                  152,942
       Collection and Bad Debt Expense                  84,998                 139,505                  111,394
       Marinex Operating Expenses                            -                       -                  217,400
       Other Operating Expenses                        873,578                 793,698                1,147,146
                                                  ------------            ------------             ------------
           Total Selling, General and
              Administrative Expenses                2,779,853               2,935,899                3,089,129
                                                  ------------            ------------             ------------

OTHER INCOME (EXPENSE)
   Interest Income                                     187,720                 181,008                  175,465
   Interest Expense                                   (237,212)               (243,122)                (127,151)
   Other Income                                         14,680                  31,355                   38,756
                                                 -------------           -------------            -------------

INCOME BEFORE INCOME TAXES                             103,059                 416,693                1,090,748

INCOME TAXES - Note 7                                   44,428                 163,294                  354,397
                                                 -------------            ------------             ------------

NET INCOME                                       $      58,631            $    253,399              $   736,351
                                                 =============            ============              ===========

WEIGHTED AVERAGE
   COMMON SHARES
   OUTSTANDING                                      16,850,000              16,850,000               18,662,666
                                                  ============             ===========               ==========

EARNINGS PER SHARE                             $.          .00          $          .02            $         .04
                                               ===============          ==============            =============
</TABLE>












                     The accompanying notes are an integral
                part of these consolidated financial statements.
                                       F-5


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996


<TABLE>
<CAPTION>

                                                                                                                           TOTAL
                                                                                                                           STOCK-
                                    PREFERRED STOCK          COMMON STOCK        PAID IN     RETAINED        TREASURY     HOLDERS'
                                   SHARES      AMOUNT      SHARES    AMOUNT      CAPITAL     EARNINGS        SHARES        EQUITY
                                   ------      ------      ------    ------     ----------   --------      ----------    -----------

<S>                               <C>         <C>       <C>          <C>        <C>          <C>           <C>           <C>       
Balance, December 31, 1993         224,910    $224,910     100,000   $100,000   $        -   $2,574,746    $(96,477)     $2,803,179

   Stock Bonus Plan Issuance       200,089     200,089           -          -            -            -           -         200,089

   Net Income                            -           -           -          -            -       58,631           -          58,631
                                  --------    --------     -------   -------- ------------   ----------    ----------    -----------


Balance, December 31, 1994         424,999     424,999     100,000    100,000            -    2,633,377    (96,477)       3,061,899

   Stock Bonus Plan Issuance       171,306     171,306           -          -            -            -          -
                                                                                                                            171,306

   Net Income                            -           -           -          -            -      253,399          -          253,399
                                  --------     --------    -------   -------- ------------  -----------    ---------     -----------


Balance, December 31, 1995         596,305     596,305     100,000    100,000            -    2,886,776    (96,477)       3,486,604

   Acquisition of Parent - Note 12
        September 17, 1996        (596,305)   (596,305) 26,604,886    (75,295)   2,534,952            -     96,477        1,959,829

   Net Income                            -           -           -          -            -      736,351          -          736,351
                                  --------    --------- ----------   -------- ------------  -----------     --------     -----------


Balance, December 31, 1996        $      - $         -  24,704,886   $ 24,705   $2,534,952   $3,623,127    $     -       $6,182,784
                                  ==========  ========= ==========   ========    ========== ===========     ==========    ==========
</TABLE>


























                     The accompanying notes are an integral
                 part of these consolidated financial statements
                                       F-6


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>

                                                                        1994               1995             1996
                                                                    ------------        ----------      ------------

CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                 <C>                  <C>             <C>       
   Net Income                                                       $    58,631          $  253,399      $  736,351
   Adjustments to Reconcile Net Income
       to Net Cash from Operating Activities
           Amortization and Depreciation                                173,418             181,080         163,553
           Loss on Disposal of Assets                                    11,728                   -           3,502
           Deferred Taxes                                               (92,800)              1,200        (262,300)
           Increase in Finance Receivable                               (97,073)           (200,850)        (37,354)
           Increase in Preferred Stock                                  200,089             171,306               -
   Changes in Current Assets and Liabilities
           (Increase) Decrease in Accounts Receivable                   445,455              57,331        (849,636)
           (Increase) Decrease in Inventories                         1,002,860            (436,056)        1,059,050
           Increase (Decrease) in Accounts Payable                   (2,179,130)            696,425        (905,834)
           Increase (Decrease) in Accrued Liabilities                   (14,835)            (44,839)        445,045
           Increase (Decrease) in Customer Deposits                      52,368             (54,966)         79,500
           (Increase) in Prepaid Expenses                                     -                   -         (12,500)
   (Increase) Decrease in Other Assets                                  (80,540)             10,300          49,640
                                                                    -----------         -----------       ---------

                 NET CASH FLOW PROVIDED
                   (USED) BY OPERATING
                   ACTIVITIES                                          (519,829)            634,330         469,017
                                                                     ----------          ----------       ---------

CASH FLOW FROM INVESTING ACTIVITIE4S
   Purchases of Land, Buildings and Equipment                          (152,895)           (421,224)       (126,126)
   Proceeds from Sale of Equipment                                       47,214                   -          46,500
   (Increase) Decrease in Cash Surrender Value
       of Life Insurance                                                (28,579)            (27,564)         99,394
   (Increase) Decrease in Stockholders' Receivables                     (66,999)                983          27,454
                                                                    -----------        ------------       ---------


              NET CASH FLOWS (USED) BY
                INVESTING ACTIVITIES                                 $ (201,259)         $ (447,805)      $  47,222
                                                                     ----------          ----------       ---------
</TABLE>













                     The accompanying notes are an integral
                part of these consolidated financial statements.
                                   (Continued)
                                       F-7


<PAGE>




                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)

              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>

                                                                     1994                  1995            1996
                                                                --------------         ------------    ------------

CASH FLOW FROM FINANCING ACTIVITIES
<S>                                                                <C>                  <C>              <C>       
       Proceeds from Note Borrowings                               $  2,048,243         $ 1,203,569      $  775,149
       Repayments of Note Borrowings                                 (1,150,704)         (1,648,526)       (840,190)
       Capital Contribution and Issuance
           of Common Stock                                                    -                   -       1,959,829
                                                                ---------------     ---------------      ----------

           NET CASH FLOW PROVIDED (USED) BY
              FINANCING ACTIVITIES                                      897,539            (444,957)      1,894,788
                                                                   ------------        ------------      ----------

NET INCREASE (DECREASE) IN CASH                                         176,451            (258,432)      2,411,027

CASH AT THE BEGINNING OF THE PERIOD                                     332,012             508,463         250,031
                                                                   ------------        ------------      ----------

CASH AT THE END OF THE PERIOD                                      $    508,463         $   250,031      $2,661,058
                                                                   ============         ===========      ==========

SUPPLEMENTAL DISCLOSURES OF
   CASH FLOW INFORMATION
       Cash Paid During the Period For:
           Interest Expense                                        $    238,576         $   199,549      $  135,260
                                                                   ============         ===========      ==========

           Income Taxes                                            $    225,533         $    33,240      $  143,918
                                                                   ============         ===========      ==========

SUPPLEMENTAL SCHEDULE OF
   NONCASH ACTIVITIES
           Transfer of Assets to Officer
              Prior to Merger                                   $             -      $            -      $ (125,722)
           Change in Officer Payable                                          -                   -         125,722
                                                                ---------------      --------------      ----------

                                                                $             -      $            -   $           -
                                                                ===============      ==============   =============
</TABLE>















                     The accompanying notes are an integral
                part of these consolidated financial statements.
                                       F-8


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996

NOTE 1:  NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

These consolidated  financial statements include the accounts of Texas Equipment
Corporation (a Nevada Corporation,  formerly Marinex Multimedia  Corporation and
Hard Funding, Inc.) and its wholly-owned  subsidiaries ("TEXQ"), Texas Equipment
Co., Inc., ("TEC")and Marinex Multimedia Corporation ("Marinex").

TEC, a Texas  corporation,  is a retailer  of John Deere and other  agricultural
equipment  with its  headquarters  in  Seminole,  Texas.  TEC's  market  area is
approximately  one thousand (1,000) square miles  surrounding  Seminole,  Texas,
which includes large tracts of lands in the South Plains of Texas and in Eastern
New Mexico.  In excess of ninety  percent  (90%) of equipment  sales are made to
customers  participating in agriculture;  therefore,  TEC has a concentration of
customers  in a geographic  area and in a single  industry and is tied to a sole
supplier (John Deere) for a significant portion of its new equipment purchases.

Marinex,  a New York Corporation,  is a multimedia  organization  engaged in the
business of the  creation of digital  content  including a CD-ROM  magazine  and
entertainment sites on the world wide web.

The summary of significant accounting policies of TEXQ is presented to assist in
understanding  TEXQ's  consolidated   financial  statements.   The  consolidated
financial statements and notes are representations of TEXQ's management,  who is
responsible  for their  integrity and  objectivity.  These  accounting  policies
conform to generally accepted  accounting  principles and have been consistently
applied in the preparation of the financial statements.

Subsidiary and Principles of Consolidation

The consolidated  financial  statements  include the accounts of Texas Equipment
Corporation  and its wholly owned  subsidiaries,  Texas  Equipment Co., Inc. and
Marinex  Multimedia  Corporation.  All  significant  intercompany  balances  and
transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Inventories

Inventories are stated at the lower of cost or market value.  Cost is determined
using the specific identification method for new and used agricultural equipment
and average cost for parts.

Buildings and Equipment

Depreciation  of  buildings  and  equipment  is  provided   principally  on  the
straight-line  method using  estimated  useful lives  ranging from five to forty
years.

Major renewals and betterments are added to the property accounts while the cost
of  repairs  and  maintenance  is charged to  operating  expenses  in the period
incurred.  Cost of assets  retired or otherwise  disposed of and the  applicable
accumulated  depreciation are removed from the accounts,  and the resultant gain
or loss, if any, is reflected in operations.

                                   (Continued)
                                       F-9


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 1:  NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED):

Cash Surrender Value of Insurance

The insurance  policies  carried on the lives of current and former  officers of
TEC had a face value of  $1,800,000  at December  31, 1995 and 1996.  Borrowings
against the cash  surrender  values as of these dates were $170,104 and $89,371,
respectively.

Goodwill Amortization

TEC's  goodwill is being  amortized  on a  straight-line  basis over a period of
fifteen (15) years.

Finance Receivables

TEC has entered  into retail  finance  agreements  with two credit  corporations
whereby  TEC's  customers  can  finance  selected  purchases  from TEC,  and TEC
guarantees a portion of the financed balance.  A portion of the financed balance
is not  remitted  to TEC but is held by the  finance  companies  to  insure  the
payment  of  amounts  financed.  At such time as the  amounts  are repaid to the
credit  corporation,  the  withheld  amounts may be remitted to TEC. The finance
receivables  are  recognized  as income  when the loans are funded by the credit
corporations.  TEC has traditionally experienced less than a one percent loss on
credit  sales;  therefore,  TEC has  elected  not to provide a reserve  for loss
associated with the finance receivables.

John Deere Payable

John Deere Company provides  various  inventory  financing  arrangements for its
dealers,  and, at times the payment terms extended beyond a twelve month period;
however,  all  amounts  due the John  Deere  Company  are  reflected  as current
liabilities since the debt was incurred to acquire inventory.

Income Taxes

TEXQ records  income tax expense  using the liability  method of accounting  for
deferred  income  taxes.  Under the  liability  method,  deferred tax assets and
liabilities are recognized for the expected future tax consequences of temporary
differences  between  the  financial  statement  and  income tax bases of TEXQ's
assets and liabilities. An allowance is recorded when it is more likely than not
that any or all of a deferred tax asset will not be realized.  The provision for
income taxes  includes  taxes  currently  payable plus the net change during the
year in deferred tax assets and liabilities recorded by TEXQ.

Concentration of Credit Risk and Contingencies

TEC places its cash and  temporary  cash  investments  with high credit  quality
financial  institutions.  At times  such  investments  may be in  excess of FDIC
insurance  limits.  At December 31, 1995 and 1996,  the deposits  exceeding FDIC
insurance limits were $758,000 and $2,184,000, respectively.





                                   (Continued)
                                      F-10


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996

NOTE 1:  NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED):

Concentration of Credit Risk and Contingencies (Continued)

TEC grants  credit,  generally  with  collateral,  to its  customers,  which are
located in TEC's market area which is approximately  one thousand (1,000) square
miles  surrounding  Seminole,  Texas,  including  the South  Plains of Texas and
Eastern New Mexico. Management believes that its billing and collection policies
are adequate to minimize potential credit risks.

TEXQ and TEC are defendants in various legal  proceedings  arising in connection
with its business.  In management's  opinion the financial  position of TEC will
not be materially affected by the final outcome of these legal proceedings.

Fair Value of Financial Instruments

Unless  otherwise  indicated,  the  fair  values  of  all  reported  assets  and
liabilities  which represent  financial  instruments (none of which are held for
trading purposes)  approximate the carrying values of such amounts. The accounts
receivable  and accounts  payable are due within thirty days, the interest rates
on notes payable and long-term debt  approximate  market interest rates, and TEC
is paid a current rate of interest on the finance receivables.

Earnings Per Share

The  computation  of net  earnings  per share is based on the  weighted  average
number of shares outstanding for each period, after giving retroactive effect to
equity  transactions  related to the merger.  The per share  computation did not
consider  the  outstanding  stock  options  due to the  anti-dilutive  effect of
assuming the exercise of the stock options.

Cash Flow Statement

TEXQ  considers  cash and temporary cash  investments  as cash  equivalents  for
purposes  of the  statement  of  cash  flows.  Temporary  cash  investments  are
certificates of deposit with original maturities of three months or less.

NOTE 2:  INVENTORIES

At December 31, 1995 and 1996, inventories consisted of:

                                            1995                 1996
                                        -------------        ------------

       New Equipment                      $3,301,682          $2,243,220
       Used Equipment                      1,426,894           1,390,872
       Parts                               1,710,662           1,746,096
                                          ----------          ----------

                                          $6,439,238          $5,380,188
                                          ==========          ==========

Substantially  all of the  inventories  are  pledged as  security  for  accounts
payable to John Deere or various notes payable.



                                      F-11
<PAGE>


                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 3:  LAND, BUILDINGS AND EQUIPMENT

At December 31, 1995, and 1996, land, buildings and equipment consisted of:

                                                  1995                 1996
                                              -------------        ------------

       Land and Buildings                      $1,146,818           $1,143,227
       Vehicles                                   435,548              348,272
       Furniture and Fixtures                     383,032              397,009
       Equipment and Tools                        216,957              222,861
                                               -----------          -----------
                                                2,182,355            2,111,369
       Less Accumulated Depreciation             (737,475)            (869,927)
                                               -----------          -----------

                                               $1,444,880           $1,241,442
                                                ==========           ==========

       Depreciation Expense                    $  168,366           $  150,840
                                                ==========           ==========


NOTE 4:  FINANCE RECEIVABLES

At December 31, 1995 and 1996, TEC's finance receivables were as follows:

                                                   1995                1996
                                                ----------           ---------

       John Deere Credit                         $462,817             $491,022
       Agricredit Acceptance                      230,857              240,006
                                                 --------             --------

                                                 $693,674             $731,028
                                                 ========             ========

The applicable outstanding financed balances for each program were as follows:

                                                  1995                 1996
                                             ------------          -----------

       John Deere Credit                      $24,459,979          $28,039,216
       Agricredit Acceptance                    5,144,230            4,410,478
                                             ------------          -----------

                                              $29,604,209          $32,449,694
                                              ===========          ===========

In  accordance  with credit  agreements,  these finance  companies  withhold one
percent  (1%) of each  financed  contract  accepted  from TEC.  When the finance
company  experiences  a loss on a contract,  the loss is charged  against  TEC's
finance  receivable.  TEC's  credit risk is limited to the finance  receivables;
however,  on an annual  basis,  the finance  receivable is compared to the total
outstanding  credit  balances and if the finance  receivable is greater than the
required  amount (3% to 4% of outstanding  credit  balance),  the overage may be
remitted to TEC.






                                      F-12



<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 5:  EMPLOYEE BENEFIT PLANS

Effective  January 1, 1993,  TEC  adopted its "Stock  Bonus Plan" (the  "Plan").
Contributions  to the Plan are at the  discretion  of the  employer  subject  to
certain   limitations   imposed  by  the  federal  tax  code.  The  Plan  covers
substantially  all full time employees,  and the covered employees become vested
in the  employer's  contribution  at the rate of twenty  percent  (20%) per year
after three years of service.  TEC's  shareholders  authorized  the  issuance of
preferred stock in 1993 for the exclusive use in funding the Plan. Contributions
to the Plan aggregated $200,089,  $171,306,  and $4,549 in 1994, 1995, and 1996,
respectively.

In March,  1994, TEC adopted a flexible  health benefit plan (a cafeteria  plan)
which covers  substantially  all full time  employees on the 90th day  following
commencement  of  employment.  The health  benefit plan is a minimum funded plan
with  specific  and  aggregate  stop loss  insurance  provided  for to limit the
overall  exposure to TEC.  The  specific  stop loss is $20,000  per  employee at
December 31, 1995 and 1996. The expense  associated with the health benefit plan
aggregated $18,142, $120,341 and $86,663 for 1994, 1995, and 1996, respectively.

On September 20, 1994, TEC adopted the "TEXAS  EQUIPMENT  COMPANY,  INC.  401(K)
PLAN" (the "401(k)  Plan") which covers all employees that have attained the age
of twenty-one (21) years and have one year of service.  Contributions by TEC are
discretionary,  and TEC has  made  no  contributions  to the  401(k)  Plan  from
inception to December 31, 1996.

NOTE 6:  DEALER AGREEMENTS

TEC has  entered  into the  following  dealer  agreements  with  the John  Deere
Company:

       o   John Deere Agricultural Dealer Agreement

       o   John Deere Commercial Products Dealer Agreement

       o   John Deere Lawn and Garden Dealer Agreement

       o   John Deere Lawn and Grounds Care Sales Center Agreement

       o   John Deere Agricultural Dealer Leasing Agreement

       o   John Deere Agricultural Dealer Finance Agreement

These dealer agreements can be, in general, terminated by the death of the major
shareholder of TEC, a change in contolling shareholder of TEC, close out or sale
of a  substantial  portion of TEC's  business,  default by TEC under any chattel
mortgage or other security agreement with the John Deere Company,  TEC receiving
a written termination notice from John Deere Company at least one hundred eighty
(180) days prior to the effective date of notification, or mutual consent of TEC
and John Deere Company.

For the years ended  December 31, 1994,  1995 and 1996,  sales of John Deere new
equipment,  parts and  warranty  services  aggregated  46%, 55% and 46% of total
revenue, respectively.



                                   (Continued)
                                      F-13



<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1994, 1995 AND 1996


NOTE 6:  DEALER AGREEMENTS (CONTINUED)

In addition, TEC has the following dealer agreements in effect:

       o   Farm Plan - FPC Financial
       o   K-Imports, Inc.
       o   Wil-Rich, a division of TIC United Corp.
       o   Yetter Manufacturing Company
       o   Hardi Inc.
       o   NEDA Financial, Ltd., L.P.
       o   West Texas Lee Co., Inc.
       o   AGCO Marketing Group

These agreements include various  provisions,  including the guaranty of payment
by TEC and  termination  clauses.  The agreement  with FPC Financial  (the "Farm
Plan") provides TEC a method to collect accounts  receivables for parts, service
and small  whole good  sales in three  days;  however,  TEC has  guaranteed  the
repayment  to  FPC  Finance  for  its  customers  included  under  the  merchant
authorized  and special  guaranty farm plan  programs.  At December 31, 1995 and
1996, TEC was contingently liable under these programs in the amount of $109,752
and $93,940, respectively.


NOTE 7:  INCOME TAXES

At December 31, 1994, 1995 and 1996, the income tax expense  (benefit)  consists
of the following components:

<TABLE>
<CAPTION>

                                                       1994                 1995                 1996
                                                    ----------          -----------           ----------

<S>                                                  <C>                  <C>                  <C>     
       Current                                       $137,228             $162,094             $616,697
       Deferred                                       (92,800)               1,200             (262,300)
                                                     --------            ---------             --------

           Total Income Expense                      $ 44,428             $163,294             $354,397
                                                     ========             ========             ========
</TABLE>

The  following  reconciles  income tax  expense  reported in the  statements  of
operations  to income taxes that would be obtained by applying the statutory tax
rate (34%) to income before income taxes:

<TABLE>
<CAPTION>

                                                       1994                1995                  1996
                                                   ----------           ----------            ---------
<S>                                                   <C>                 <C>                  <C>     
       Expected Income Tax Expense
           at 34%                                     $35,040             $141,676             $370,854

       Officers' Insurance                              4,597                8,677                4,301
       Penalties and Other                              4,791               12,941              (20,758)
                                                      -------            ---------            ---------

                                                      $44,428             $163,294             $354,397
                                                      =======             ========             ========
</TABLE>





                                   (Continued)
                                      F-14


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 7:  INCOME TAXES (CONTINUED)

The deferred tax liability in the accompanying balance sheets consists of the 
following components:
<TABLE>
<CAPTION>

                                                                                     1995              1996
                                                                                   ---------       ----------
<S>                                                                                 <C>              <C>     
       Current
           Inventories                                                              $430,300         $159,800
           Other Deferred Liabilities                                                 32,600                -
           Other Deferred Assets                                                     (85,600)               -
                                                                                   ---------      -----------

              Total Current                                                          377,300          159,800
                                                                                    --------         --------

       Long-Term
           Accumulated Depreciation                                                   55,600           42,500
           Goodwill Amortization                                                      50,800           46,500
           Other                                                                      45,600           18,200
                                                                                   ---------         --------
              Total Long-Term                                                        152,000          107,200
                                                                                    --------         --------

                  Total                                                             $529,300         $267,000
                                                                                    ========         ========
</TABLE>

NOTE 8:  NOTES PAYABLE

A summary of notes payable at December 31, 1995, and 1996 is as follows:
<TABLE>
<CAPTION>

                                                                                       1995            1996
                                                                                     --------        ------


<C>                                                                                  <C>             <C>     
11.25% note payable to a bank, payable on demand                                     $300,000        $300,000
or if no demand is made then $100,000 principal                                      ========        ========
reduction at March 26, 1997, secured by equipment,
vehicles, and company stock
</TABLE>



















                                   (Continued)
                                      F-15


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 9:  LONG-TERM DEBT

A summary of long-term debt at December 31, 1995, and 1996 is as follows:
<TABLE>
<CAPTION>

                                                                                      1995            1996
                                                                                   ----------      ----------


<C>                                                                                  <C>             <C>     
9.9% note payable to a credit corporation,                                           $  6,427        $      -
payable in two installments of $5,700 before
November 1, 1993 and monthly installments of
$1,102 including interest due June 1, 1996, secured
by equipment

9.9% note payable to a credit corporation,                                              5,876               -
payable in monthly installments of $4,439 including
interest due January 1, 1996, secured by
equipment

10.9% note payable to a credit corporation,                                                 -          72,519
payable in annual installments of $18,477, including
interest, due March 1, 2001, secured by equipment

8.4% note payable to a credit corporation, payable in                                  26,044          13,634
monthly installments of $619, including interest, due
December 1, 1998, secured by equipment

10.9% note payable to a credit corporation,                                                 -           40,605
payable in annual installments of $24,067,
including interest, due March 1, 1999, secured by
equipment

12% note payable to an individual, payable in monthly                                  30,397          26,643
installments of $600, including interest due on March 1,
2002, secured by company stock

12% note payable to an individual, payable in monthly                                  33,466          29,802
installments of $600, including interest, due on
January 1, 2003, secured by company stock
</TABLE>










                                   (Continued)
                                      F-16


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 9:  LONG-TERM DEBT (Continued)
<TABLE>
<CAPTION>

                                                                                         1995          1996
                                                                                      ----------    ----------

<C>                                                                                     <C>         <C>      
10.5% note payable to individuals, payable in five annual                               $  5,000    $       -
installments of $5,000, plus interest, due December 1,
1997, secured by real estate

3.0% note payable to a credit corporation, payable in                                      5,790            -
monthly installments of $490, including interest,
due January 14, 1997, secured by vehicle

8.5% note payable to a credit corporation, payable in                                      1,232            -
monthly installments of $417, due on April 15, 1996,
secured by vehicle

8.9% note payable to a credit corporation, payable in                                      7,111            -
monthly installments of $622, including interest,
due on January 15, 1997, secured by vehicle

8.9% note payable to a credit corporation, payable in                                          -      159,085
annual installments of $90,312, including interest,
due March 1, 1999, secured by equipment

9.2% note payable to a credit corporation, payable in                                     13,027        9,472
annual installments of $147,127, including interest,
due March 20, 1999, secured by equipment

10% note payable to a bank, payable in monthly                                            23,089        9,257
installments of $1,450, including interest, due
August 1, 1999, secured by real estate

Base rate (11.00% in 1996) note payable to a bank,                                       275,135      180,282
payable in monthly installments of $10,000, including
interest, due June 16, 1998, secured by real estate,
inventory, and accounts receivable

10.9% note payable to a credit corporation,                                                    -       74,180
payable in semi-annual installments of $21,139, including
interest, due June 15, 1998, secured by equipment
</TABLE>







                                   (Continued)

                                      F-17


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 9:  LONG-TERM DEBT (Continued)
<TABLE>
<CAPTION>

                                                                                         1995          1996
                                                                                      ----------    ----------

<C>                                                                                    <C>          <C>      
8.0% note payable to a credit corporation, payable in                                  $  53,010    $       -
monthly installments of $1,394, including interest,
due September 1, 1999, secured by equipment

8.4% variable rate note payable to a credit corporation,                                   5,001        2,369
payable in monthly installments of $246, including
interest, due October 1, 1999, secured by equipment

1% over Prime (7.95% at 1996) variable interest                                          425,245      397,521
rate note payable to an individual, payable in monthly
installments of $5,000, including interest, due
September 28, 2012, secured by real estate

10.4% note payable to a credit corporation, payable in                                     2,905            -
monthly installments of $742, including interest,
due August 20, 1999, secured by equipment

8.4% note payable to a credit corporation, payable in                                      8,365        4,692
monthly installments of $353, including interest, due
March 1, 1998, secured by equipment

10% note payable to an individual, payable in annual                                       4,000        2,000
installments of $2,000, including interest, due
October 19, 1998, secured by real estate

10% note payable to an individual, payable in annual                                      10,000            -
payments of $11,200, including interest, due
December 15, 1996, secured by real estate

11.4% note payable to a credit corporation,                                               60,000            -
payable in monthly payments of $1,563, including
interest, due January 1, 2008, secured by equipment

10% note payable to a credit corporation,                                                 94,000       90,000
payable in annual installments of $13,400, including
interest, due February 1, 2002, secured by real
estate
</TABLE>







                                   (Continued)
                                      F-18



<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 9:  LONG-TERM DEBT (Continued)
<TABLE>
<CAPTION>

                                                                                         1995          1996
                                                                                      ----------    ----------


<C>                                                                                     <C>          <C>     
9.9% note payable to a credit corporation,                                              $  7,579     $  3,976
payable in monthly installments of $5,812, including
interest, due June 1, 1999, secured by equipment

9.9% note payable to a credit corporation, payable in                                     79,890       66,778
annual installments of $21,020, including interest,
due September 20, 2002, secured by equipment

11.4% note payable to a credit corporation,                                                7,048            -
payable in monthly installments of $540, including
interest, due October 1, 1997, secured by equipment

11.4% note payable to a credit corporation,                                                7,775            -
payable in monthly installments of $393, including
interest, due October 1, 1997, secured by equipment

11.9% note payable to a credit corporation,                                               31,494            -
payable in monthly installments of $920, including
interest, due June 15, 1999, secured by equipment

11.9% note payable to a credit corporation,                                               20,719        4,981
payable in monthly installments of $802, including
interest, due June 1, 1998, secured by equipment

10.15% note payable to a credit corporation, payable in                                   26,385       21,399
monthly installments of $620, including interest, due
June 1, 2000, secured by equipment

11.4% note payable to a credit corporation,                                                8,662        6,320
payable in monthly installments of $286, including
interest, due December 15, 1998, secured by equipment

11.4% note payable to a credit corporation,                                               12,049        4,673
payable in monthly installments of $397, including
interest, due December 15, 1998, secured by equipment
</TABLE>








                                   (Continued)
                                      F-19


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 9:  LONG-TERM DEBT (Continued)
<TABLE>
<CAPTION>

                                                                                         1995          1996
                                                                                      ----------    ----------


<C>                                                                                <C>              <C>      
9.9% note payable to a credit corporation, payable in                              $          -     $  31,649
annual installments of $9,663, including interest,
due April 20, 2000, secured by equipment

10.9% note payable to a credit corporation,                                                   -        35,200
payable in annual installments of $10,858, including
interest, due April 1, 2001, secured by equipment

10.4% note payable to a credit corporation,                                                   -        25,376
payable in monthly installments of $1,736, including
interest, due April 1, 2001, secured by equipment

Borrowings against the cash surrender value                                             170,104        89,371
   of life insurance policies

                                                                                      1,466,825     1,401,784
Less Current Maturities                                                                (271,447)     (396,022)
                                                                                      ---------     ---------

                                                                                     $1,195,378    $1,005,762
</TABLE>

Aggregate  maturities  of  long-term  debt for the five years ending in the year
2001 are as follows:

           Years Ending
           December 31,
              1997                                                    $  396,022
              1998                                                       312,367
              1999                                                       209,475
              2000                                                       108,832
              2001                                                        73,480
           Thereafter                                                    301,608
                                                                      ----------

                                                                      $1,401,784
                                                                      ==========











                                      F-20


<PAGE>



                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996


NOTE 10:  ACCRUED EXPENSES

Accrued expenses were comprised of the following:

                                                  1995               1996
                                              ------------       -----------

   Salaries and Commissions                      $ 48,852          $ 41,998
   Interest                                        53,131            48,522
   Income Taxes                                   166,082           615,000
   State Taxes                                     24,687            36,000
   Payroll Taxes                                    9,026             3,694
   Other                                            6,448             8,057
                                                ---------         ---------

                                                 $308,226          $753,271
                                                 ========          ========


NOTE 11:  STOCKHOLDERS' RECEIVABLE

At times the stockholders purchase equipment, parts and repair services from TEC
at TEC's normal  profit  margins.  In  addition,  prior to the merger of TEC and
TEXQ, formerly Marinex Multimedia  Corporation,  certain assets were transferred
to the stockholders.


NOTE 12:  MERGER

Hard Funding, Inc. was organized on August 14, 1990, as a Nevada corporation
whose sole purpose was to purchase, merge with or acquire other businesses or
assets of other businesses. On February 12, 1996, Hard Funding, Inc. acquired
Marinex Multimedia Corporation and changed its name to Marinex Multimedia
Corporation.

Then, on September 17, 1996, all of the outstanding stock of TEC was acquired by
Marinex  Multimedia  Corporation.  Marinex Multimedia  Corporation  subsequently
changed its name to Texas Equipment Corporation.

NOTE 13:  STOCK OPTION AGREEMENT

In  accordance  with  "Statement  of  Financial  Accounting  Standards  No. 123,
Accounting for Stock-Based  Compensation",  and pursuant to the merger agreement
on September  17, 1996,  TEXQ issued a stock  option for 250,000  common  voting
shares at an option price of one dollar ($1) in  consideration  of  professional
fees in connection with the merger valued at $150,000. The option is valid for a
period of five years.  Upon  payment of the  exercise  price of one dollar ($1),
TEXQ shall cause 250,000  shares to be issued from the  authorized  but unissued
capital  stock of TEXQ.  TEXQ agreed to reserve  sufficient  shares at all times
during the life of the option.  The effect on the 1996  Statement of  Operations
would have been a decrease in net income of $99,000  and an  earnings  per share
amount of $0.03.







                                      F-21


<PAGE>


                  TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1996

NOTE 14:  BUSINESS SEGMENT REPORTING

The Company has two (2) primary business segments which are:

       -   Agricultural Equipment Sales

       -   Multimedia Content Provider

The following summarizes the operations by business segment:

<TABLE>
<CAPTION>

                                                                    Year Ended
                                                                December 31, 1996
                                                  --------------------------------------------
                                                        1995                         1996
                                                  ---------------              ---------------
<S>                                                  <C>                         <C>        
   REVENUE
       Agricultural Equipment Sales                  $25,031,608                 $28,094,196
       Multimedia Content Provider                             -                           -

   OPERATING PROFIT (LOSS)
       Agricultural Equipment Sales                   $3,383,351                  $4,092,807
       Multimedia Content Provider                             -                   $(217,400)

   CAPITAL EXPENDITURES
       Agriculture Equipment Sales                      $421,224                     $37,117
       Multimedia Content Provider                             -                    $115,625

   DEPRECIATION
       Agriculture Equipment Sales                      $168,367                    $140,229
       Multimedia Content Provider                             -                     $10,611

   IDENTIFIABLE ASSETS
       Agriculture Equipment Sales                    $9,624,708                 $10,793,233
       Multimedia Content Provider                             -                    $819,025
</TABLE>



NOTE 15:      QUARTERLY FINANCIAL DATA (UNAUDITED) FOR 1996
<TABLE>
<CAPTION>

   For the Period                                      Income (Loss) Before           Net Income        Net Income
       Ended                      Revenues                  Income Taxes               (Loss)         (Loss) Per Share
   --------------               -----------            --------------------           ----------      ----------------
<S>                             <C>                              <C>                   <C>                      <C> 
   December
     (3 Months)                  $8,586,482                       $427,865             $304,565                  $.02
   September
     (3 Months)                  $5,754,814                      $(136,477)            $(92,877)                $(.01)
   June
     (6 Months)                 $13,752,900                       $799,360             $524,663                  $.03
</TABLE>




                                      F-22


<PAGE>




                                   SIGNATURES



         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.



                                                  Texas Equipment Corporation.
                                                  -----------------------------



                                         By:      /s/ Paul J. Condit
                                                  -----------------------------
                                                  Paul J. Condit, President



                                         Date:    April 14, 1997
                                                  -----------------------------

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.



Signature                       Title                           Date





/s/ Paul J. Condit              Director                        April 14, 1997
------------------
Paul J. Condit



/s/ John T. Condit              Director                        April 14, 1997
------------------
John T. Condit



                                Director                        April 14, 1997
Jonathan Braun

                                       13

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