U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 27, 1996
------------------------------------------------
Date of Report (date of earliest event reported)
MEDIAX, INC.
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Exact Name of Registrant as Specified in its Charter
Nevada 0-23780 84-1107138
- --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
8522 National Boulevard, Suite 110, Culver City, California 90232
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Address of Principal Executive Offices, Including Zip Code
(310) 815-8002
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Registrant's Telephone Number, Including Area Code
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The following financial statements for MediaX, Inc. are filed
herewith:
Report of Independent Certified Public Accountants F-1
Balance Sheets as of June 27, 1996 and
December 31, 1995 F-2
Statement of Changes in Stockholders' Equity
for the period from January 1, 1994 to
June 27, 1996 F-3
Statements of Operations for the period from
January 1, 1996 to June 27, 1996, and for the
years ended December 31, 1995 and
December 31, 1994 F-4
Statements of Cash Flows for the period from
January 1, 1996 to June 27, 1996, and for the
years ended December 31, 1995 and
December 31, 1994 F-5 and F-6
Notes to Financial Statements F-7 to F-9
(b) PROFORMA FINANCIAL INFORMATION. The following pro forma financial
information for MediaX, Inc. are filed herewith:
Unaudited Pro Forma Combined Financial
Information S-1
Pro Forma Combined Balance Sheet S-1
Pro Forma Combined Statements of Operations S-2
(c) EXHIBITS.
Exhibit 10 Agreement and Plan of Reorganization Among Zeitgeist
Werks, Inc., Zeitgeist, Inc., MediaX, Matthew
MacLaurin, Gaben Chancellor and Assisi Limited
Partnership*
Exhibit 10.1 Addendum to Agreement and Plan of Reorganization
Dated June 13, 1996*
_______________
* Previously filed
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
MediaX, Inc.
We have audited the accompanying balance sheets of MediaX, Inc. at June 27,
1996 and December 31, 1995, and the related statements of changes in
stockholders' equity, operations and cash flows for the period from January 1,
1996 to June 27, 1996 and the years ended December 31, 1995 and 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 financial statements referred to above present fairly, in
all material respects, the financial position of MediaX, Inc. at June 27, 1996
and December 31, 1995, and the results of its operations and cash flows for
the period from January 1, 1996 to June 27, 1996 and the years ended December
31, 1995 and 1994 in conformity with generally accepted accounting principles.
/s/ Davis & Co., CPAs, P.C.
------------------------------------
Davis & Co., CPAs, P.C.
Certified Public Accountants
Englewood, Colorado
February 20, 1997
F-1
MEDIAX, INC.
Balance Sheets
June 27, Dec. 31,
1996 1995
ASSETS -------- --------
Current assets
Cash and cash equivalents $ 41,991 $ 8,611
Accounts receivable 450 27,350
Prepaid expenses 1,298 1,298
43,739 37,259
Property, plant and equipment
Computer equipment 164,255 124,539
Software 61,344 32,216
Furniture and fixtures 2,998 2,998
228,597 159,753
Less accumulated depreciation (76,080) (48,990)
152,517 110,763
Other assets
Deposits 436 436
Organization costs 4,725 4,725
Accumulated amortization - organization
costs (1,024) (551)
4,137 4,610
-------- --------
$200,393 $152,632
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable - Zeitgeist, Inc. $ 5,150 $ --
Accounts payable - trade 57,413 18,761
Advances from officers 28,975 13,075
Accrued payroll 18,430 --
Capital lease - current portion 15,190 15,074
125,158 46,910
Capital lease - net of current portion 8,249 13,690
Commitment, contingency and subsequent
event (Notes 3 and 5)
Stockholders' equity
Preferred stock, no par value per share;
4,000,000 shares authorized and no
shares issued
Common stock, no par value per share;
10,000,000 shares authorized; 100,000
shares issued and outstanding 75,086 75,086
Retained earnings (8,100) 16,946
66,986 92,032
-------- --------
$200,393 $152,632
The accompanying notes are an integral part of this statement.
F-2
MEDIAX, INC.
Statement of Changes in Stockholders' Equity
For the period from January 1, 1994 to June 27, 1996
Partners' Common Stock Retained
Capital Shares Amount Earnings Total
-------- ------- ------- -------- -------
Balance, January 1, 1994 $ (6,492) $ $ $ 6,492)
Net income for the year
ended December 31, 1994 212,590 212,590
Partner distributions for
the year ended December
31, 1994 (95,236) (95,236)
Capital contributed
during the year ended
December 31, 1994 4,000 4,000
-------- ------- ------- -------- -------
Balance December 31, 1994 114,862 114,862
Net income for the period
from January 1, 1995
to May 31, 1995 16,648 16,648
Partner distributions for
the period January 1,
1995 to May 31, 1995 (61,424) (61,424)
Tax-free incorporation
of partnership effective
June 1, 1995 (70,086) 100,000 70,086 --
Additional capital contri-
buted in September 1995
by stockholders for
no consideration 5,000 5,000
Net income for the period
from June 1, 1995
to December 31, 1995 16,946 16,946
-------- ------- ------- -------- -------
Balance December 31, 1995 100,000 75,086 16,946 92,032
Net (loss) for the
period from January 1,
1996 to June 27, 1996 (25,046) (25,046)
-------- ------- ------- -------- -------
Balance June 27, 1996 $ -- 100,000 $75,086 $(8,100) $66,986
The accompanying notes are an integral part of this statement.
F-3
MEDIAX, INC.
Statements of Operations
For Jan. 1, Year Year
1996 to Ended Ended
June 27, Dec. 31, Dec. 31,
1996 1995 1994
-------- -------- --------
SALES/COST OF SALES
Sales $389,289 $897,602 $556,866
Cost of sales 268,346 500,879 213,096
-------- -------- --------
Gross profit 120,943 396,723 343,770
GENERAL AND ADMINISTRATIVE EXPENSES
Amortization 9,776 5,848 2,989
Bad debt expense -- 513 5,098
Depreciation 27,108 26,602 14,056
Dues and subscriptions 1,255 2,157 98
Equipment rent 1,448 7,368 11,215
Insurance 3,359 2,451 1,446
Legal and accounting 29,964 29,693 10,225
Maintenance and repairs 699 1,197 6,172
Miscellaneous 1,520 1,174 4,376
Office expense 3,225 7,052 3,162
Postage and shipping 1,709 3,346 1,961
Promotions 4,161 165 --
Rent 8,224 15,250 12,505
Salaries 26,750 194,364 21,045
Supplies 13,556 32,015 22,150
Taxes - payroll 2,538 13,080 2,163
Taxes - other 800 2,355 392
Telephone 2,489 5,490 6,011
Travel 1,903 7,812 4,710
-------- -------- --------
140,484 357,932 129,774
OTHER INCOME (EXPENSES)
Interest income 1,165 618 398
Interest expense (5,816) (1,597)
Gain on sale of equipment (383)
Other income 48
Other expenses (519) (4,218) (1,804)
(5,505) (5,197) (1,406)
-------- -------- --------
Net income $(25,046) $33,594 $212,590
The accompanying notes are an integral part of this statement.
F-4
MEDIAX, INC.
Statements of Cash Flows
For Jan. 1, Year Year
1996 to Ended Ended
June 27, Dec. 31, Dec. 31,
1996 1995 1994
-------- -------- --------
Cash Flows from Operating Activities
Net income $(25,046) $ 33,594 $212,590
Adjustment to reconcile net cash
provided by operating activities
Gain on sale of fixed assets 383 -- --
Amortization 9,776 5,848 2,989
Depreciation 27,108 26,602 14,056
Changes in assets and liabilities
(Increase) decrease in accounts
receivable 26,900 11,654 (39,004)
(Increase) decrease in prepaid
expenses -- (1,298) --
(Increase) decrease in other
assets -- (4,725) (436)
Increase (decrease) in accounts
payable 38,652 9,741 9,020
Increase (decrease) in accrued
payroll 18,430 -- --
Increase in advances from officers 15,900 13,075 --
Net cash provided by operating
activities 112,103 94,491 199,215
Cash Flows from Investing Activities
Purchase of fixed assets (83,148) (46,182) (78,107)
Proceeds from sale of fixed assets 4,600 -- --
Net cash (used) by investing
activities (78,548) (46,182) (78,107)
Cash Flow from Financing Activities
Distributions to partners (61,423) (95,236)
Principal payments on short term loans (9,560)
Principal payments on capital lease (5,325) (6,003) --
Additional capital contributed
by stockholders 5,000
Capital contributions from partners -- -- 4,000
Proceeds from note payable -
Zeitgeist, Inc. 5,150 -- --
Net cash (used) by financing
activities (175) (62,426) (100,796)
The accompanying notes are an integral part of this statement.
F-5
MEDIAX, INC.
Statements of Cash Flows
(Page 2)
For Jan. 1, Year Year
1996 to Ended Ended
June 27, Dec. 31, Dec. 31,
1996 1995 1994
-------- -------- --------
Increase (decrease) in cash and
cash equivalents 33,380 (14,117) 20,312
Cash and cash equivalents, beginning
of period 8,611 22,728 2,416
Cash and cash equivalents, end
of period $41,991 $ 8,611 $22,728
Supplemental Disclosures of Cash Flow
Information
Cash paid during the year for:
Interest $ 5,816 $ 1,597 $ --
Non-cash Investing and Financing
Activities:
Capitalized lease obligations
incurred for the lease of
new equipment $ -- $34,767 $ --
Tax-free incorporation of
partnership effective
June 1, 1995, $70,086 of
net assets contributed in
exchange for common stock $ -- $70,086 $ --
The accompanying notes are an integral part of this statement.
F-6
MEDIAX, INC.
Notes to Financial Statements
June 27, 1996
Note 1: SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies are as follows:
a. ORGANIZATION
The Company was incorporated as Dog Star, Inc. under the laws of the
State of California on June 1, 1995. On September 1, 1996 the Company's
Articles of Incorporation were amended to change its name to MediaX, Inc. (the
"Company"). From inception (June 1993) to May 31, 1995, the Company's
activities were conducted in partnership form under the name Mediatrix, a
California partnership. Effective June 1, 1995 the predecessor partnership
underwent a tax-free incorporation pursuant to Sec. 351 of the Internal
Revenue Code. The financial statements, herein, reflect the predecessor
partnership's activity for the period January 1, 1994 to May 31, 1995.
The Company is an interactive multimedia on-line entertainment,
development and publishing company which produces interactive
graphics-oriented master cd-roms to specific customer requirements. The
Company's customers are typically large computer software producers who sell
to retailers.
b. CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, cash and cash equivalents
consist of demand deposits in banks. Cash equivalents are carried at cost
which approximates market.
c. PROPERTY AND EQUIPMENT
Expenditures for property and equipment are capitalized at cost.
Expenditures for maintenance, repairs and other renewals of items are charged
to expense. The provision for depreciation is calculated using straight-line
and accelerated methods based upon estimated useful lives as follows:
Computer equipment - 5 years
Software - 3 years
Furniture and fixtures - 7 years
d. INCOME TAXES
The Company is currently in the form of a sub-chapter S corporation and
all income tax liabilities flow through to the shareholders. The predecessor
entity was a partnership which was also a "flow-through" entity whereby all
tax liabilities flowed through to the individual partners. Therefore, the
Company has not made any provisions for income tax.
e. ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
F-7
MEDIAX, INC.
Notes to Financial Statements
June 27, 1996
Note 2: PREFERRED STOCK
The Company is authorized to issue 4,000,000 shares of preferred stock
with no par value. The preferred stock may be issued by the Board of
Directors in one or more series. The Board shall determine the distinguishing
features of each, including preferences and rights and restrictions, by
resolution upon the establishment of such series. No preferred shares have
been issued as of the present date.
Note 3: COMMITMENT AND CONTINGENCIES
a. Capital Lease Commitment
The Company leases equipment under two capital lease agreements.
Required minimum lease payments under these agreements by year equipment
reconciled to the present value of net minimum capital lease payments as of
June 27, 1996 are as follows:
YEAR CAPITAL
1997 $19,144
1998 6,583
1999 2,743
2000 --
2001 --
Total minimum lease payments 28,470
Less: estimated amount representing
interest (5,031)
Present value of net minimum capital
lease payments 23,439
Less: current portion (15,190)
Long-term obligations under capital
lease at June 27, 1996 $ 8,249
b. Sales Tax Contingency
The Company does not pay or charge sales taxes to its customers.
The state of California has indicated that it believes state sales taxes are
applicable to the Company's sales. The Company's position is that it does not
believe sales taxes are applicable to the Company's sales and therefore it has
not collected any sales taxes from its customers. The ultimate outcome of
this matter cannot be predicted. No amounts have been accrued in the
financial statements, herein, for any sales taxes which might ultimately be
determined to be owed. If sales taxes were to be owed on all of the Company's
California sales to date, approximately $134,000 of such sales taxes would be
due, plus any applicable interest and penalties.
Note 4: RELATED PARTY TRANSACTIONS
a. The Company rents its office space on a month-to-month basis for
$1,298 per month. The space is being sublet to the Company by the Company's
Executive Vice-President's brother.
F-8
MEDIAX, INC.
Notes to Financial Statements
June 27, 1996
Note 4: RELATED PARTY TRANSACTIONS (CONTINUED)
b. In 1996 the Company issued a note payable to Zeitgeist, Inc. (see
Note 5a.) for $5,150 for advances received. As of June 27, 1996 the note had
not been repaid.
c. The "advances from officers" in the balance sheet, herein,
represent non-interest bearing, unsecured working capital advances. The
advances are due on demand and are expected to be repaid by June 1997.
Note 5: SUBSEQUENT EVENT
a. EXCHANGE OF COMMON STOCK
Effective June 28, 1996, the Company merged with Zeitgeist, Inc.
(formerly Edinburgh Capital, Inc.), a publicly-held company. In connection
with this agreement, the stockholders of MediaX, Inc. received 2,037,500
shares of Zeitgeist, Inc. common stock in exchange for all of MediaX, Inc.
outstanding common stock. As a result of this transaction, the Company's
shareholders own 16% of the outstanding common shares of Zeitgeist, Inc. on
June 28, 1996.
Note 6: MAJOR CUSTOMERS
Each year the Company's revenues are typically generated from two to
three major customers located throughout the United States. These customers
usually change from year to year so that the Company believes it is not
dependent upon any one customer but rather must continually seek new customers
each year.
F-9
MEDIAX, INC.
(A Development Stage Company)
Unaudited Pro Forma Combined Financial Information
The following unaudited pro forma combined balance sheet and statement
of operations present the combined financial position and operations of
MediaX, Inc. and Zeitgeist, Inc. at December 31, 1995 and for the period from
inception (January 1, 1994) to December 31, 1995 and for the years ended
December 31, 1995 and 1994. This unaudited pro forma information gives effect
to the acquisition which occurred on June 27, 1996 as discussed in Note 5b. to
the financial statements. No unaudited pro forma adjustments were considered
necessary. This unaudited pro forma combined information should be read in
conjunction with the June 27, 1996 financial statements and notes presented
therein.
MEDIAX, INC.
Pro Forma Combined Balance Sheet
December 31, 1995
(Unaudited)
ZEITGEIST
HISTORICAL WERKS UNAUDITED
INC.(FKA: PRO FORMA
MEDIAX ZEITGEIST, EDINBURGH COMBINED
INC. CAPITAL) (A)
-------- -------- -------- --------
Assets
Cash $ 8,611 $229,794 $ 1,360 $239,765
Accounts receivable 27,350 -- -- 27,350
Note receivable - officer -- 50,000 -- 50,000
Property, plant and
equipment (net) 110,763 -- 110,763
Other 5,908 344 -- 6,252
-------- -------- -------- --------
Total assets $152,632 $280,138 $ 1,360 $434,130
Liabilities
Accounts payable - trade $ 18,761 $ 3,765 $ 351 $ 22,877
Accrued liabilities 13,075 13,511 19,250 45,836
Note payable 28,764 300,000 -- 328,764
Total liabilities 60,600 317,276 19,601 397,477
Equity
Common stock 75,086 100 249,823 325,009
Retained earnings (deficit) 16,946 (37,238) (268,064) (288,356)
Total equity (deficit) 92,032 (37,138) (18,241) 36,653
-------- -------- -------- --------
Total liabilities and equity $152,632 $280,138 $ 1,360 $434,130
S-1
MEDIAX, INC.
(A Development Stage Company)
Pro Forma Combined Statements of Operations
(Unaudited)
ZEITGEIST
HISTORICAL WERKS UNAUDITED
INC.(FKA: PRO FORMA
MEDIAX ZEITGEIST, EDINBURGH COMBINED
INC.(B) CAPITAL) (A)
------ --------- --------- ---------
For the period from incep-
tion (August 15, 1986) to
December 31, 1995:
Gross profit $740,493 $ -- $ 26,662 $740,493
General and administrative
expenses $494,309 $ 37,238 $ 294,726 $531,547
Net income (loss) $246,184 $(37,238) $(268,064) $208,446
Net income per common
share $ (.08)
For the year ended
December 31, 1995:
Gross profit $396,723 $ -- $ -- $396,723
General and administrative
expenses $363,129 $ 37,238 $ 23,972 $424,339
Net income (loss) $ 33,594 $(37,238) $ (23,972) $(27,616)
Net (loss) per common
share $ (.04)
(A) As adjusted for February 23, 1996 3.13 for one forward stock split of
Zeitgeist Werks, Inc.
(B) Zeitgeist, Inc. was incorporated on March 30, 1995 (inception).
The accompanying notes are an integral part of this statement.
S-2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
MEDIAX, INC.
Dated: May 7, By /s/ Nancy Poertner
Nancy Poertner, President