19-Dec-2003

Quarterly Report

Item 2. Management's Discussion and Analysis or Plan of Operation
Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Audited Consolidated Financial Statements and related notes, which are contained elsewhere in this report.

Results of operations for Marx Toys and Entertainment Corp. and subsidiaries are being presented on a consolidated basis.

Quarter Ended September 30, 2003 compared to Quarter ended September 30, 2002

Net sales for the quarter ended September 30, 2003 decreased 51.1% to $22,566 from $46,118 for the quarter ended September 30, 2002. The decrease was the result of reduction in consumer spending caused by a restructuring of the product line.

Gross profit for the quarter ended September 30, 2003 increased to $6,410 from a negative ($120,747) for the quarter ended September 30, 2002. As a percentage of net sales, gross profit increased to 28.4% in the second quarter of 2003 compared to a negative gross profit in the prior year's same period. The increase in gross profit was in part the result of lower distribution costs and the higher selling prices for current products.

Selling, general and administrative expenses for quarter ended September 30, 2003 increased 1,080% to $2,262,287 from $225,641 for the quarter ended September 30, 2002. The increase in selling, general and administrative expense was the result of increased consulting fees.

Net loss from operations for the quarter ended September 30, 2003 increased to $2,664,177 compared to a net loss of $505,947 for the quarter ended September 30, 2002. The increase in net loss was due mainly to the increased consulting fees described above.

MARX TOYS AND ENTERTAINMENT CORP. AND SUBSIDIARIES
(Formerly stereoscape.com inc.)

Item 2. Management's Discussion and Analysis or Plan of Operation (continued)

Nine months ended September 30, 2003 compared to nine months ended September 30, 2002

Net sales for the nine months ended September 30, 2003 decreased 57.0% to $85,972 from $199,771 for the nine months ended September 30, 2002. The decrease was the result of a restructuring of the product line.

Gross profit for the nine months ended September 30, 2003 increased to $24,891 from a negative ($184,921) for the nine months ended September 30, 2002. As a percentage of net sales, gross profit increased to 29.0% in the nine months of 2003 compared to a negative in the prior years same period. The increase in gross profit was in part the result of lower distribution costs and the higher selling prices of current products.

Selling, general and administrative expenses for the nine months ended September 30, 2003 increased to $4,270,627 from $649,266 for the nine months ended September 30, 2002. The increase in selling, general and administrative expense was the result of increased consulting fees.

Net loss from continuing operations for the nine months ended September 30, 2003 increased to $4,270,636 compared to a net loss of $993,746 for the nine months ended September 30, 2002. The increase in net losses was due in part to the increased consulting fees described above.

The Company expects to require additional capital and at the present time has no definitive plans but it is exploring various opportunities. There can be no assurance of the ability of the Company to raise such capital. The Company has no agreements or commitments with any person to raise such capital.

Liquidity and Capital Resources -

At September 30, 2003 the Company had an equity deficiency of $1,518,468, which represents a decrease of $262,486 in the net equity of ($1,255,982) at December 31, 2002.

The Company has historically financed its business through cash flow from operations the issuance of common stock for services and borrowings from executives and third parties, any of which may be utilized from time to time.

MARX TOYS AND ENTERTAINMENT CORP. AND SUBSIDIARIES
(Formerly stereoscape.com inc.)

Item 2. Management's Discussion and Analysis or Plan of Operation (continued)

Anticipated Future Growth -

Management believes that the future growth of the Company will be the result of restructuring of its core businesses. In this effort the Company intends to consider these efforts; (1) expand the toy sales to major national and regional retailers, (2) pursue promotional deals for the sale of vintage Marx products on a large scale, (3) expand the toy line to include products licensed and sold under the Marx name.

Forward Looking Statements

Management's Discussion and Analysis of Financial Condition and Results of Operations contain information regarding management's planned growth, financing and prospective business opportunities. These statements are forward looking statements that involve risks and uncertainties. The following is a list of factors, among others, that could cause actual results to differ materially from the forward looking statements: business conditions and growth in the Company's market and industry and in the general economy; competitive factors including increased competition and price pressures; availability of purchased products at competitive prices; and inadequate or unsatisfactory financing sources.