SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: Commission File No.:
---------------------------------- --------------------
September 9, 2003 0-12169
MediaWorx, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wyoming 98-0152226
------------------------------- -----------------------
(State or other jurisdiction of (IRS Identification No.)
incorporation or organization)
1895 Preston White Drive, Suite 250, Reston, Virginia 20191
-----------------------------------------------------------
(Address of principal executive offices)
703-860-6580
-------------------------
(Issuer telephone number)
N/A
----------------------------------------
(Former name, if changed since last report)
N/A
-------------------------------------------------------------
(Former address, if changed since last report)
On July 1, 2003, MediaWorx Acquisition Company, L.L.C., a Nevada
limited liability company and wholly owned subsidiary of the Registrant
("MWAC"), merged with and into Advanced Capital Services, L.L.C., a Nevada
limited liability company ("ACLLC"), with MWAC being the surviving corporation
and continuing its existence under the laws of the State of Nevada (the
"Merger"). Articles of Merger were filed with the State of Nevada on July 1,
2003, being the Effective Date of the Merger. The terms of the Merger were set
forth in an Agreement and Plan of Merger dated July 1, 2003 by and among the
Registrant, the Merger Sub, and ACLLC. The Merger was the subject of a Schedule
14C Information Statement filed July 1, 2003 and a Form 8-K filed July 11, 2003.
The purpose of this amended current report on Form 8-K/a is to amend
the previous current report on Form 8-K to file the financial statements and pro
forma financial statements as required.
Item 7. Financial Statements and Exhibits
(a) Audited Financial Statements of MediaWorx, Inc. (formerly
Advanced Gaming Technology, Inc.) as of December 31, 2002
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report................................................F-1
Consolidated Balance Sheets.................................................F-2
Consolidated Statements of Operations.......................................F-3
Consolidated Statements of Stockholders' Equity (Deficit)...................F-4
Consolidated Statements of Cash Flows.......................................F-5
Notes to Consolidated Financial Statements..................................F-6
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Advanced Gaming Technology, Inc.
We have audited the accompanying consolidated balance sheets of Advanced Gaming
Technology, Inc. and subsidiaries as at December 31, 2002 and 2001, and the
consolidated statements of operations, stockholders' deficit, and cash flows for
the years then ended. 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 auditing standards generally accepted
in the United States of America. 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 audit provides 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 Advanced Gaming Technology,
Inc. and subsidiaries as of December 31, 2002 and 2001 and the results of their
operations, and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $411,670 for 2001 and has incurred
substantial net losses in recent years. These factors, and the other discussed
in Note 8, raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
Respectfully submitted,
/s/ Robison, Hill & Co.
- -----------------------------
Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
April 15, 2003
F-1
ADVANCED GAMING TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
Years Ended December 31,
2002 2001
----------- -----------
ASSETS
CURRENT ASSETS
Cash and equivalents $ 10,759 $ 45,709
Short-term loans - related party 5,331 0
Investment in marketable equity securities 11,500 0
Prepaid expenses 0 1,000
----------- -----------
Total current assets 27,590 46,709
----------- -----------
PROPERTY AND EQUIPMENT
Furniture, fixtures and equipment, net 1,187 66,862
----------- -----------
Total property and equipment 1,187 66,862
----------- -----------
Total Assets $ 28,777 $ 113,571
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 14,148 $ 10,000
Notes payable 1,025,332 1,367,424
----------- -----------
Total current liabilities 1,039,480 1,377,424
----------- -----------
Total Liabilities 1,039,480 1,377,424
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock-10% cumulative, $0.10 par value, 4,000,000
authorized; 0 issued and outstanding 0 0
Common stock, $0.005 par value, 150,000,000 authorized;
21,430,587 issued and outstanding 107,153 107,153
Additional paid-in capital 0 0
Accumulated comprehensive income 2,500 0
Accumulated deficit (1,120,356) (1,371,006)
----------- -----------
Total stockholders' equity (deficit) (1,010,703) (1,263,853)
----------- -----------
Total Liabilities and Stockholders' Equity (Deficit) $ 28,777 $ 113,571
=========== ===========
The accompanying notes are an integral part of the financial statements.
F-2
ADVANCED GAMING TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
2002 2001
------------ ------------
REVENUES $ 0 $ 87,184
OPERATING EXPENSES
Salaries 98,125 225,000
Depreciation 66,970 82,638
Other operating expenses 24,491 39,011
------------ ------------
Total operating expenses 189,586 346,649
------------ ------------
Operating income (loss) (189,586) (259,465)
------------ ------------
OTHER INCOME (EXPENSE)
Interest income 0 9,959
Interest expense (97,292) (83,986)
Equity in earnings of affiliate 0 (78,178)
Gain from lawsuit settlement 17,500 0
Gain on forgiveness of debt 520,026 0
------------ ------------
Total other income (expense) 440,234 (152,205)
------------ ------------
Net income (loss) 250,648 (411,670)
------------ ------------
OTHER COMPREHENSIVE INCOME (LOSS)
Marketable equity securities holding gain 2,500 0
------------ ------------
Total other comprehensive income (loss) 2,500 0
------------ ------------
Comprehensive income (loss) $ 253,148 $ (411,670)
============ ============
Net income (loss) per common share, basic $ 0.01 $ (0.02)
============ ============
Weighted average number of common shares outstanding 21,430,587 21,430,587
============ ============
The accompanying notes are an integral part of the financial statements.
F-3
ADVANCED GAMING TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
TOTAL
NUMBER ADDITIONAL ACCUMULATED STOCKHOLDERS'
OF COMMON PAID-IN COMPREHENSIVE RETAINED EQUITY
SHARES STOCK CAPITAL INCOME EARNINGS (DEFICIT)
------------ ------------------------- ---------------- --------------- --------------
BEGINNING BALANCE,
December 31, 1999 25,000,000 $125,000 $0 $0 $(394,895) $(269,895)
Net loss 0 0 0 0 (564,441) (564,441)
------------ ------------------------- ---------------- --------------- --------------
BALANCE, December 31, 2000 25,000,000 125,000 0 0 (959,336) (834,336)
Cancellation of reserved shares (3,569,413) (17,847) 0 0 0 (17,847)
Net loss 0 0 0 0 (411,670) (411,670)
------------ ------------------------- ---------------- --------------- --------------
BALANCE, December 31, 2001 21,430,587 107,153 0 0 (1,371,006) (1,263,853)
Other comprehensive income (loss) 0 0 0 2,500 0 2,500
Net income 0 0 0 0 250,648 250,648
------------ ------------------------- ---------------- --------------- --------------
ENDING BALANCE, December 31, 2002 21,430,587 $107,153 $0 $2,500 $(1,120,358) $(1,010,705)
============ ========================= ================ =============== ==============
The accompanying notes are an integral part of the financial statements.
F-4
ADVANCED GAMING TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
2002 2001
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 250,648 $(411,670)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 66,970 82,638
Loss from earnings of affiliate 0 78,178
Cancellation of reserve for common stock 0 (17,847)
Gain on forgiveness of debt (520,026) 0
Changes in operating assets and liabilities:
(Increase) decrease in inventory 0 20,000
(Increase) decrease in prepaid expenses 1,000 0
Increase (decrease) in accounts payable and accrued liabilities 102,291 153,121
(Increase) decrease in accrued interest 97,292 0
--------- ---------
Net cash provided (used) by operating activities (1,825) (95,580)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,294) (23,747)
Short-term loan extended (10,000) 0
Short-term loan repaid 10,000 0
Short-term loan to related party extended (11,832) 0
Short-term loan to related party repaid 6,500 0
Investment in marketable equity securities (9,000) 0
--------- ---------
Net cash provided (used) by investing activities (15,626) (23,747)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds received from debt and notes 0 0
Repayment of debt and notes (17,500) (6,771)
--------- ---------
Net cash provided (used) by financing activities: (17,500) (6,771)
--------- ---------
Net increase (decrease) in cash and equivalents (34,951) (126,098)
CASH and equivalents, beginning of period 45,709 171,807
--------- ---------
CASH and equivalents, end of period $ 10,758 $ 45,709
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Payment of interest in cash $ 0 $ 35,451
========= =========
The accompanying notes are an integral part of the financial statements.
F-5
ADVANCED GAMING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNT POLICIES
THE COMPANY The Company was incorporated under the laws of the State of
Wyoming in 1963 under the name of MacTay Investment Co. The Company
changed its name to Advanced Gaming Technology, Inc. in 1991. The
Company's executive offices are located in San Antonio, Texas where it
is principally engaged in the development and marketing of technology
for the casino and hospitality industry.
The financial statements have been prepared in conformity with
accounting principles generally accepted in the United States. In
preparing the financial statements, management is required to make
estimates and assumptions that effect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as
of the dates of the balance sheets and statements of operations for the
years then ended. Actual results may differ from these estimates.
Estimates are used when accounting for allowance for bad debts,
collectibility of accounts receivable, amounts due to service
providers, depreciation, litigation contingencies, among others.
Certain reclassifications have been made in the 2001 financial
statements to conform with the 2002 presentation.
A summary of the significant accounting policies applied in the
preparation of the accompanying financial statements is as follows:
A) PRINCIPLES OF CONSOLIDATION The consolidated financial statements
include the accounts of Advanced Gaming Technology, Inc. and its
wholly-owned subsidiaries, Executive Video Systems, Inc., Palace
Entertainment Limited, Prisms, Inc., Pleasure World Ltd., Prisms
(Bahamas) Ltd., and A.G.T. Acceptance Corp. All significant
intercompany accounts and transactions have been eliminated.
B) CASH EQUIVALENTS The Company considers all highly liquid debt
instruments equivalents. At times during any year, there may be a
concentration of cash at any one bank or financial institution in
excess of insurance limits.
C) FIXED ASSETS Property and equipment is stated at cost. Depreciation
is computed on the straight-line method, based on the estimated useful
lives of the assets of generally three to five years. Expenditures for
maintenance and repairs are charged to operations as incurred. Major
overhauls and improvements are capitalized and depreciated over their
useful lives. Upon sale or other disposition of property and equipment,
the cost and related accumulated depreciation or amortization if
removed from the accounts, and any gain or loss is included in the
determination of income or loss.
D) NET INCOME (LOSS) PER COMMON SHARE, BASIC Net income (loss) per
share is computed by dividing the net income by the weighted average
number of shares outstanding during the period. Net income per share,
diluted, is not presented, as no potentially dilutive securities are
outstanding.
F-6
ADVANCED GAMING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(2) INCOME TAXES Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax
and financial reporting purposes. The Company had net operating loss
carryforwards for income tax purposes of approximately $1,143,000,
expiring at various dates from December 31, 2008 and December 31, 2021.
A loss generated in a particular year will expire for federal tax
purposes if not utilized within fifteen years. The Internal Revenue
Code contains provisions that would reduce or limit the availability
and utilization of these net operating loss carryforwards if certain
ownership changes have been or will be taking place .In accordance with
SFAS No. 109, a valuation allowance is provided when it is more likely
than not that all or some portion of the deferred tax asset will not be
realized. Due to the uncertainty with respect to the ultimate
realization of the loss carryforwards, the Company established a
valuation allowance for the entire net deferred income tax asset of
$457,000 as of December 31, 2002.
(3) STOCKHOLDERS' EQUITY The company has authorized 150,000,000 shares of $0.005
par value common stock and 4,000,000 shares of $0.10 par value
preferred stock, with 21,430,587 and 0 shares issued and outstanding,
respectively. Rights and privileges of the preferred stock are to be
determined by the Board of Directors prior to issuance.
(4) CHANGE IN CONTROL On June 12, 2002, PowerHouse Management, Inc., of San
Antonio, Texas, purchased approximately 56% of the issued and
outstanding shares of common stock of the Company. At the same time,
all former officers and directors resigned after electing new directors
who appointed new officers.
(5) NOTES PAYABLE Notes payable consist of the following:
2002 2001
------------ -------------
Note payable, interest at 9%, due in monthly
payments of $6,200 beginning March 1, 2000.
The note is due in July of 2006. The note is
convertible into common stock at a rate of
$0.53 per share. $1,025,332 $940,939
Note payable, interest at prime plus 2%,
payable to an officer of the company and
secured by all assets of the company. 0 426,485
------------ -------------
Net long-term debt $1,025,332 $1,367,424
============ =============
As part and parcel to the change in control, (see Note 4), the officer
owed the note payable agreed to forgive all but $40,000 of his note.
His note had included accrued salary and accrued interest. These
amounts were accrued up to the date of the change of control, June 12,
2002. As a result, the Company recognized a gain on the forgiveness of
debt of $497,526.
F-7
(6) COMMITMENTS AND CONTINGENCIES The Company filed for reorganization under
Chapter 11 of the US Bankruptcy Code in Las Vegas, Nevada on August 26,
1998. Under Chapter 11, certain claims against the Debtor in existence
prior to the filing of the petitions for relief under the Federal
Bankruptcy Laws are stayed while the Debtor continues business
operations as Debtor-in-possession. These claims were reflected in the
March 31, 1999 balance sheet as "liabilities subject to compromise".
The bankruptcy plan was approved June 29, 1999 and became effective on
August 19, 1999. On February 15, 2000, the Bankruptcy Court in the
District of Las Vegas approved the final decree of the Company closing
the Chapter 11 bankruptcy case of the Company.
Pursuant to the plan, obligations to secured creditors were
renegotiated. All remaining liabilities of the Company were fully
satisfied through issuance of new common stock. Unsecured creditors
received 1.88 shares of new common stock for each $1.00 of allowed
claim. The Company issued 25,000,000 shares of new common stock in
conjunction with the plan. The existing common stock was cancelled.
Existing shareholders of the company on the effective date received 1
share of new common stock for each 66 shares of common stock currently
owned. Approximately 21,000,000 shares were issued to creditors,
existing shareholders and new investors. A reserve of approximately
4,000,000 shares if maintained for additional allowed claims.
(7) REORGANIZATION ACCOUNTING The Company accounted for the reorganization using
fresh-start reporting. Accordingly, all assets and liabilities were
restated to reflect their reorganization value, which approximates fair
value at the date of reorganization.
(8) GOING CONCERN The accompanying financial statements have been prepared in
conformity with accounting principles generally accepted in the United
States, which contemplates the Company as a going concern. However, the
Company has sustained substantial operating losses in recent years and
has used substantial amounts of working
(8) GOING CONCERN (CONTINUED) capital in its operations. Realization of a major
portion of the assets reflected on the accompanying balance sheet is
dependent upon continued operations of the Company which, in turn, is
dependent upon the Company's ability to meet its financing requires and
succeed in its future operations. Management believes that actions
presently being taken to revise the Company's operating and financial
requirements provide them with the opportunity for the Company to
continue as a going concern. As the Company now has no operations, it
is evaluating the options available to it.
(9) FIXED ASSETS Subsequent to the change in control, the Company elected to
write off the undepreciated value of its fixed assets. As a result, the
Company recorded $36,862 in depreciation in excess of the previous
$15,000 per quarter. In addition, the Company intends to dispose of
these fixed assets, which it believes have no value.
(10) MARKETABLE EQUITY SECURITIES In the fourth quarter, the Company purchased
shares of an OTC: BB listed company as a short-term investment in the
amount of $9,000. These shares were worth $11,500 at December 31, 2002.
(11) SHORT-TERM LOANS TO RELATED PARTIES In September 2002, the Company extended
two short-term loans to related parties totaling $11,832. $6,500 was
repaid in December 2002. These loans are demand loans with no stated
interest rate.
F-8
(b) Unaudited Financial Statements of MediaWorx, Inc. as of June 30, 2003
INDEX TO FINANCIAL STATEMENTS
Consolidated Balance Sheets................................................ F-10
Consolidated Statements of Income ......................................... F-11
Consolidated Statements of Stockholders' Equity (Deficit).................. F-12
Consolidated Statements of Cash Flows...................................... F-13
Notes to Consolidated Financial Statements................................. F-14
F-9
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
June 30, December 31,
2003 2002
----------- -----------
CURRENT ASSETS
Cash and equivalents $ 5,603 $ 10,759
Prepaid expenses 3,778 --
Short term loans - related party -- 5,331
Investments - marketable securities -- 11,500
----------- -----------
Total current assets 9,381 27,590
----------- -----------
PROPERTY AND EQUIPMENT
Furniture, fixtures and equipment 784,188 784,188
Less accumulated depreciation 783,217 783,001
----------- -----------
Net furniture, fixtures and equipment 971 1,187
----------- -----------
TOTAL ASSETS $ 10,352 $ 28,777
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 15,765 $ 14,148
Accrued interest -- 84,393
Notes payable 100,000 940,939
----------- -----------
Total current liabilities 115,765 1,039,480
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock - 10% cumulative, $0.10 par value,
4,000,000 authorized; 0 issued and outstanding -- --
Common stock - $.005 par value, 150,000,000 authorized,
1,024,306 issued and outstanding at June 30,2003 and
214,306 at December 31, 2002 respectively 5,122 1,072
Paid-In-Capital 138,031 106,081
Accumulated comprehensive income -- 2,500
Accumulated deficit (248,566) (1,120,356)
----------- -----------
Total stockholders' equity (deficit) (105,413) (1,010,703)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,352 $ 28,777
=========== ===========
See accompanying notes to financial statements
F-10
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
---- ---- ---- ----
REVENUES $ -- $ -- $ -- $ --
--------- --------- --------- ---------
OPERATING EXPENSES
Salaries -- 41,875 -- 98,125
Professional/consulting fees 45,439 -- 47,168 --
Storage 750 -- 1,540 --
Depreciation 108 51,862 216 66,862
Other operating expenses 165 6,206 166 10,141
--------- --------- --------- ---------
Total operating expenses 46,462 99,943 49,090 175,128
--------- --------- --------- ---------
Operating income (loss) (46,462) (99,943) (49,090) (175,128)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Miscellaneous income -- -- 8,745 --
Interest expense -- (26,727) (21,171) (54,949)
Permanent impairment of marketable
securities (5,500) -- (14,331) --
Gain on forgiveness of debt 947,637 497,526 947,637 497,526
--------- --------- --------- ---------
Total other income (expense) 942,137 470,799 920,880 442,577
--------- --------- --------- ---------
Net income (loss) 895,675 370,856 871,790 267,449
--------- --------- --------- ---------
Net income per common share, basic $ 3.909 $ 1.730 $ 3.929 $ 1.248
========= ========= ========= =========
Net income per common share, diluted $ 3.826 $ 1.730 $ 3.880 $ 1.248
========= ========= ========= =========
See accompanying notes to financial statements
F-11
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
COMMON STOCK
PAR PAID-IN ACCUMULATED RETAINED TOTAL
SHARES VALUE CAPITAL COMPREHENSIVE EARNINGS/ STOCKHOLDERS'
INCOME (DEFICIT) EQUITY/(DEFICIT)
Balance, December 31, 2001 21,430,587 $ 107,153 $ -- $ -- $(1,371,004) $(1,263,851)
Retroactive adjustment for
100:1 reverse stock split
June 23, 2003 (21,216,281) (106,081) 106,081 -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Restated balance at
December 31, 2001 214,306 1,072 106,081 -- (1,371,004) (1,263,851)
Other comprehensive income -- -- -- 2,500 0 2,500
Net income -- -- -- -- 250,648 250,648
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2002 214,306 1,072 106,081 2,500 (1,120,356) (1,010,703)
Issuance of stock for services,
June 17, 2003 10,000 50 19,950 -- -- 20,000
Issuance of stock for services,
June 30,2003 800,000 4,000 12,000 -- -- 16,000
Other comprehensive (loss) -- -- -- (2,500) -- (2,500)
Net income -- -- -- -- 871,790 871,790
----------- ----------- ----------- ----------- ----------- -----------
Ending Balance, June 30, 2003 1,024,306 $ 5,122 $ 138,031 $ 0 $ (248,566) $ (105,413)
=========== =========== =========== =========== =========== ===========
See accompanying notes to financial statements
F-12
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the six months
Ending June 30,
2003 2002
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 871,790 $ 267,449
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 216 66,862
Gain on forgiveness of debt (947,637) (497,526)
Grant of stock-based compensation 36,000 --
Permanent impairment of marketable securities 14,331 --
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses (3,778) 1,000
Increase (decrease) in accounts payable 2,750 (4,794)
Decrease in accrued interest 21,172 --
Increase in notes payable -- 153,092
--------- ---------
Net cash used in operating activities (5,156) (13,917)
Cash flows from investing activities
Short-term loan to related party extended 5,331 --
Investments in marketable equity securities (5,331) --
--------- ---------
Net cash provided in investing activities -- --
Cash flows from financing activities -- --
--------- ---------
Net cash provided by financing activities -- --
--------- ---------
NET DECREASE IN CASH (5,156) (13,917)
Cash and equivalents, beginning 10,759 45,709
Cash and equivalents, ending $ 5,603 $ 31,792
========= =========
NON CASH ACTIVITY
During the three months ended June 30,2003, accrued interest and note payable of
$105,565 and $840,939, respectively, were forgiven, as well as a payable of
$1,133.
See accompanying notes to financial statements
F-13
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Advanced Gaming Technology, Inc is
presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
INTERIM REPORTING
The unaudited financial statements as of June 30, 2003 and for the six month
period then ended, reflect, in the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to fairly state the
financial position and results of operations for the six months. Operating
results for interim periods are not necessarily indicative of the results which
can be expected for full years.
ORGANIZATION
Advanced Gaming Technology, Inc. (the Company) was incorporated under the laws
of the State of Wyoming in 1963 under the name MacTay Investment Co. The company
changed its name to Advanced Gaming Technology, Inc. in 1991. The Company's
executive offices were located in San Antonio, TX. In June 2002, the Company
ceased its primary operating activities, developing and marketing technology for
the casino and hospitality industry. Since that time the Company has been
seeking merger candidates. In preparation for a reverse triangular merger, the
Board voted on June 24, 2003, to approve a name change to MediaWorx, Inc. to be
effective in July after completion of the merger and to change the Company's
address to 1895 Preston White Drive, Suite 250, Reston, Virginia.
USE OF ESTIMATES
The financial statements are prepared in conformity with accounting principles
generally accepted in the United States of America. In preparing the financial
statements, management is required to make estimates and assumptions that effect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities as of the date of the balance sheet and statement of
operations for the year then ended. Actual results may differ from these
estimates. Estimates are used when accounting for allowance for bad debts,
collectibility of accounts receivable, amounts due to services providers,
depreciation, and litigation contingencies, among others.
F-14
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 31, 2003 AND 2002
(UNAUDITED)
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PRINCIPALS OF CONSOLIDATION:
The consolidated financial statements include the accounts of Advanced Gaming
Technology, Inc. and its wholly-owned, inactive subsidiaries: Executive Video
Systems, Inc.; Palace Entertainment Limited; Prisms, Inc.; Pleasure World Ltd.;
Prisms (Bahamas) Ltd.; and A.G.T. Acceptance Corp. All significant intercompany
accounts and transactions have been eliminated
CASH EQUIVALENTS
For the purpose of reporting cash flows, the Company considers all highly liquid
debt instruments purchased with maturity of three months of less to be cash
equivalents to the extent the funds are not being held for investment purposes.
CONCENTRATION OF RISK
At times during any year, there may be a concentration of cash at any one bank
or financial institution in excess of insurance limits.
FIXED ASSETS
Property and equipment is stated at cost. Depreciation is computed on the
straight-line method, based on the estimated useful lives of the assets of
generally three to five years. Expenditures for maintenance and repairs are
charged to operations as incurred. Major overhauls and improvements are
capitalized and depreciated over their useful lives. Upon sale or other
disposition of property and equipment, the cost and related accumulated
depreciation or amortization if removed from the accounts, and any gain or loss
is included in the determination of income or loss.
NET INCOME (LOSS) PER COMMON SHARE, BASIC
Basic earnings per share are computed by dividing earnings available to common
stockholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflect per share amounts that would have
resulted if dilutive potential common stock had been converted to common stock.
The following reconciles amounts reported in the financial statements:
F-15
For the Three Months Ended June 30, 2003
----------------------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------------------------------------------------------
Income Available to Common
Stockholders $ 895,675 229,106 $ 3.909
==================
Effect of Dilutive Securities:
Warrants - 5,000
---------------------------------------
Income Available to Common
Stockholders - Diluted Earnings Per Share $ 895,675 234,106 $ 3.826
==========================================================
For the Three Months Ended June 30, 2002
----------------------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------------------------------------------------------
Income Available to Common
Stockholders $ 370,856 214,306 $ 1.730
==================
Effect of Dilutive Securities: - -
----------------------------------------
Income Available to Common
Stockholders - Diluted Earnings Per Share $ 370,856 214,306 $ 1.730
==========================================================
For the Six Months Ended June 30, 2003
----------------------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------------------------------------------------------
Income Available to Common
Stockholders $ 871,790 221,906 $ 3.929
==================
Effect of Dilutive Securities:
Warrants - 2,800
---------------------------------------
Income Available to Common
Stockholders - Diluted Earnings Per Share $ 871,790 224,706 $ 3.880
==========================================================
For the Six Months Ended June 30, 2002
----------------------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------------------------------------------------------
Income Available to Common
Stockholders $ 267,449 214,306 $ 1.248
==================
Effect of Dilutive Securities: - -
---------------------------------------
Income Available to Common
Stockholders - Diluted Earnings Per Share $ 267,449 214,306 $ 1.248
==========================================================
F-16
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATION
Certain reclassifications have been made in the 2002 financial statements to
conform with the June 30, 2003 presentation.
NOTE 2 - INCOME TAXES
Deferred income taxes (benefits) are provided for certain income and expenses
which are recognized in different periods for tax and financial reporting
purposes. The Company had net operating loss carryforwards for income tax
purposes of approximately $1,143,000, expiring at various dates from December
31, 2008 through December 31, 2021. A loss generated in a particular year will
expire for federal tax purposes if not utilized within fifteen years. The
Internal Revenue Code contains provisions that would reduce or limit the
availability and utilization of these net operating loss carryforwards if
certain ownership changes have been or will be taking place. In accordance with
SFAS No. 109, a valuation allowance is provided when it is more likely than not
that all or some portion of the deferred tax asset will not be realized. Due to
the uncertainty with respect to the ultimate realization of the loss
carryforwards, the Company established a valuation allowance for the entire net
deferred income tax asset as of June 30, 2003.
NOTE 3 - STOCKHOLDERS' EQUITY
The Company has authorized 150,000,000 shares of $0.005 par value common stock
and 4,000,000 shares of $0.10 par value preferred stock. Rights and privileges
of the preferred stock are to be determined by the Board of Directors prior to
issuance.
On June 17, 2003, the Company issued 1,000,000 shares of common stock to a
former officer in exchange for continued consulting for the company. The shares
were valued at $.02 and the company recorded $20,000 of consulting expenses.
These shares were subject to the 100:1 stock split described below.
On June 23, 2003, the Board of Directors approved a proposal to effectuate a 100
to 1 reverse stock split of the Company's outstanding common shares with no
effect on the par value or on the number of authorized shares. As a result of
this action, the total number of outstanding shares of common stock are reduced
from 22,430,587 to 224,306 shares.
On June 30, 2003, the Company issued 800,000 shares of common stock to the Law
Offices of Henry S. Meyer for legal services and consulting. The shares were
valued at $.02 and the Company recorded $16,000 of consulting expenses.
F-17
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 4 - CHANGE IN CONTROL
On June 12, 2002, PowerHouse Management, Inc., of San Antonio, Texas, purchased
approximately 56% of the issued and outstanding shares of common stock of the
Company. At the same time, all former officers and directors resigned after
electing new directors who appointed new officers.
NOTE 5 - NOTES PAYABLE
A note payable to SDA List Brokers, Inc. (SDA), in the amount of $940,939,
accrued interest at 9%, and was due in monthly payments of $6,200 beginning
March 1, 2000. On June 25, 2003, this note and the accrued interest totaling
$1,046,504 was settled by the Company in return for issuing a promissory note to
SDA in the amount of $25,000, with 2% interest per annum, and a warrant to
purchase up to 100,000 shares of common stock of the Company. If the warrant is
not exercised by the expiration date of June 25, 3004, than the Company shall
pay SDA $75,000. As a result of this transaction, debt forgiveness income in the
amount of $946,504 was recognized during the three month period ending June 30,
2003.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company filed for reorganization under Chapter 11 of the US Bankruptcy Code
in Las Vegas, Nevada on August 26, 1998. Under Chapter 11, certain claims
against the Debtor in existence prior to the filing of the petitions for relief
under the Federal Bankruptcy Laws are stayed while the Debtor continues business
operations as Debtor-in-possession. These claims were reflected in the March 31,
1999 balance sheet as "liabilities subject to compromise". The bankruptcy plan
was approved June 29, 1999 and became effective on August 19, 1999. On February
15, 2000, the Bankruptcy Court in the District of Las Vegas approved the final
decree of the Company closing the Chapter 11 bankruptcy case of the Company.
The Company accounted for the reorganization using fresh-start reporting.
Accordingly, all assets and liabilities were restated to reflect their
reorganization value, which approximates fair value at the date of
reorganization.
F-18
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 7 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, which
contemplates the Company as a going concern. However, the Company has sustained
substantial operating losses in recent years and has used substantial amounts of
working capital in its operations. Realization of a major portion of the assets
reflected on the accompanying balance sheet is dependent upon continued
operations of the Company which, in turn, is dependent upon the Company's
ability to meet its financing requirements and succeed in its future operations.
Management believes that actions presently being taken to revise the Company's
operating and financial requirements provide them with the opportunity for the
Company to continue as a going concern. As the Company now has no operations, it
is evaluating the options available to it.
NOTE 8 - MARKETABLE EQUITY SECURITIES
During 2002, the Company purchased 100,000 shares of Solar Satellite
Communications, Inc. an OTCBB listed company as a short-term investment in the
amount of $14,332. As of June 30, 2003, this investment has been written down to
$0 with a loss of $14,331.
NOTE 9 - ACCOUNTS PAYABLE
Management negotiated with a vendor to settle a $5,133 account payable for
$4,000, which was paid during the three month period ending June 30, 2003. Debt
forgiveness income in the amount of $1,133 was recognized.
NOTE 10 - SUBSEQUENT EVENTS
On July 1, 2003, the Company completed a reverse triangular merger (`the
Merger") whereby the Company acquired the assets a subsidiary of Solar Satellite
Communication, Inc. ("SSCI"), a print and cross-media marketing and management
company. The Merger involved Advanced Capital Services, L.L.C, a Nevada limited
liability company ("ACLLC"), MediaWorx Acquisition Company, L.L.C., a newly
formed Nevada limited liability company and wholly owned subsidiary of the
Company ("MWAC"), and the Company.
ACLLC, owned by Diamond Capital LLC and Quest Capital Resources, LLC, purchased
the assets of The MediaWorx, Inc., a wholly owned subsidiary of Solar Satellite
Communication, Inc., a Colorado corporation, for 3,000,000 ACLLC membership
interests. The assets of SSCI were primarily the business plan and people
involved in the management and procurement of print, packaging, and cross-media
services.
F-19
MEDIAWORX, INC.
(FORMERLY ADVANCED GAMING TECHNOLOGY, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
On July 1, 2003, as part of the Merger, ACLLC was merged pursuant to Nevada law
into MWAC. As a consequence of the Merger, MWAC became the surviving entity and
continues to be a wholly owned subsidiary of the Company. A copy of the
associated Plan of Merger was filed with a Schedule 14C Information Statement on
July 1, 2003.
In the exchange, as described above, the original members of ACLLC received
4,000,000 of the Company's common shares and 3,500,000 preferred shares
convertible 1 to 5 into common shares with voting rights as if converted, i.e.,
17,500,000 common shares, and SSCI received 250,000 of the Company's shares.
Additionally, ACLLC purchased a convertible promissory note held by Private
Investor Equity, LLC which was originated when SSCI received $500,000 from
Private Investors Equity, LLC. In lieu of exercising the default provisions,
ACLLC converted the Note and accrued interest into 27,216,650 SSCI common shares
and converted 250,000 Preferred C shares into shares with conversion rights of 1
to 40 into shares having conversion and voting rights of 1 to 360. These shares
were partially distributed to ACLLC and to the owners of ACLLC, Diamond Capital
LLC and Quest Capital Resources, LLC. As a result, MWAC now has 49% voting
control of SSCI and Diamond and Quest respectively each own 23% voting control
of SSCI. Furthermore, as a result of this transaction, MWAC holds the note
payable of $500,000 and accrued interest of $44,333 due to Private Investors
Equity, LLC.
On July 1, 2003, the Company engaged an offshore licensed brokerage firm to
raise on a best efforts basis from $1.5 million to $3.0 million, depending on
market price, for 11,000,000 of the Company's common stock.
Effective July 2003, the Company changed its name to MediaWorx, Inc.
F-20
(c) Proforma Financial Information
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
MediaWorx Acquisition Company, LLC (MWAC) was formed on June 27,
2003 solely for the purpose of merging with Advanced Capital Services, LLC
(ACLLC). It had no assets or liabilities, and startup costs of $2,000. ACLLC was
formed on June 27, 2003 solely for the purpose of acquiring the assets of Solar
Satellite Communications, Inc. (SSCI) and merging with MWAC. Prior to the
purchase it had no assets and no liabilities. On July 1, 2003, ACLLC purchased
the assets of The MediaWorx, Inc., a wholly owned subsidiary of SSCI, a Colorado
corporation, for 3,000,000 ACLLC membership interests. Also on July 1, 2003,
MediaWorx, Inc. and its newly formed wholly owned subsidiary MWAC merged with
and into ACLLC. As a result of the merger and purchase, the Company acquired the
assets of SSCI, which consisted primarily of a business plan and the people
involved in the management and procurement of print, packaging, and cross-media
services and a promissory note payable of $500,000 with accrued interest of
$44,333 in exchange for 4,250,000 Common Shares and 3,500,000 Preferred Shares,
convertible 1 Preferred to 5 Common Shares. See "The Merger". The following
unaudited pro forma condensed combined financial statements are based on the
June 30, 2003 historical financial statements of MediaWorx, Inc. contained
elsewhere herein, giving effect to the transaction under the purchase method of
accounting, with MediaWorx, Inc. treated as the acquiring entity for financial
reporting purposes.
The unaudited pro forma condensed combined balance sheet presenting the
financial position of the Surviving Corporation assumes the purchase occurred as
of June 30, 2003. The unaudited pro forma condensed combined statement of
operations for the year ended December 31, 2002 and the six months ended June
30, 2003 presents the results of operations of the Surviving Corporation,
assuming the merger was completed on January 1, 2002.
The unaudited pro forma condensed combined financial statements have
been prepared by management of MediaWorx, Inc. and Advanced Capital Services,
LLC based on the financial statements included elsewhere herein. The pro forma
adjustments include certain assumptions and preliminary estimates as discussed
in the accompanying notes and are subject to change. These pro forma statements
may not be indicative of the results that actually would have occurred if the
combination had been in effect on the dates indicated or which may be obtained
in the future. These pro forma financial statements should be read in
conjunction with the accompanying notes and the historical financial information
of MediaWorx, Inc. (including the notes thereto) included in this Form.
See "FINANCIAL STATEMENTS."
F-21
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 2003
Media Worx Advanced Pro Forma
Media Worx, Acquisition, Capital Pro Forma Combined
Inc. LLC Services, LLC Adjustments Balance
---------------- ------------------- ------------------------------ ------------
ASSETS
Current Assets $ 9,381 $ - $ - $ - $ 9,381
Fixed Assets (net) 971 - - - 971
---------------- ------------------- ------------------------------ ------------
Total Assets $ 10,352 $ - $ - $ - $ 10,352
================ =================== ============================== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable & Accrued Expenses $ 15,765 $ - $ - $ - $ 15,765
Accrued Interest - - - 44,333 A 44,333
Notes Payable 100,000 - - 500,000 A 600,000
---------------- ------------------- ------------------------------ ------------
Total Liabilities 115,765 - - 544,333 660,098
---------------- ------------------- ------------------------------ ------------
Stockholders' Equity:
Preferred Stock - - - 350,000 B 350,000
Common Stock 5,122 - - 20,000 B
1,250 B 26,372
Additional Paid in Capital 138,031 - - - 138,031
Members Equity - 2,000 - (2,000) B -
Retained Earnings (Deficit) (248,566) (2,000) - (544,333) A
(369,250) B 1,164,149)
---------------- ------------------- ------------------------------ ------------
Total Stockholders' Equity (Deficit) (105,413) - - (544,333) (649,746)
---------------- ------------------- ------------------------------ ------------
Total Liabilities and Stockholders' Equity $ 10,352 $ - $ - $ - $ 10,352
================ =================== ============================== ============
See accompanying notes to unaudited pro forma condensed combined financial statements.
F-22
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
Media Worx Advanced Pro Forma
Media Worx, Acquisition, Capital Pro Forma Combined
Inc. LLC Services, LLC Adjustments Balance
-------------- --------------- ------------------- ------------------ ------------
Revenues $ - $ - $ - $ - $ -
Expenses:
General & Administrative 49,090 2,000 - - 51,090
-------------- --------------- ------------------- ------------------ ------------
Total Operating Expenses 49,090 2,000 - - 51,090
-------------- --------------- ------------------- ------------------ ------------
Net Operating Income (Loss) (49,090) (2,000) - - (51,090)
-------------- --------------- ------------------- ------------------ ------------
Other Income (Expense)
Interest Expense (21,171) - - (30,688) D (51,859)
Writedown of Investment in SSCI - - - - -
Other Income (Expense) 942,051 - - (913,583) C 28,468
-------------- --------------- ------------------- ------------------ ------------
Total Other Income (Expense) 920,880 - - (944,271) (23,391)
-------------- --------------- ------------------- ------------------ ------------
Net Income (Loss) $ 871,790 $ (2,000) $ - $ (944,271) $ (74,481)
============== =============== =================== ================== ============
Loss per Share, Basic $ 3.93 $ - $ - $ -
============== =============== =================== ============
Loss per Share, Diluted $ 3.88 $ - $ - $ -
============== =============== =================== ============
Weighted Average Shares Outstanding, Basic 221,906 - - 21,971,906
============== =============== =================== ============
Weighted Average Shares Outstanding, Diluted 224,706 - - 21,974,706
============== =============== =================== ============
See accompanying notes to unaudited pro forma condensed combined financial statements.
F-23
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
MediaWorx Advanced Pro Forma
MediaWorx, Acquisition, Capital Pro Forma Combined
Inc. LLC Services, LLC Adjustments Balance
--------------- ------------------- -------------- ---------------- --------------
Revenues $ - $ - $ - $ - $ -
Expenses:
General & Administrative 189,586 - - - 189,586
--------------- ------------------- -------------- ---------------- --------------
Total Operating Expenses 189,586 - - - 189,586
--------------- ------------------- -------------- ---------------- --------------
Net Operating Income (Loss) (189,586) - - - (189,586)
--------------- ------------------- -------------- ---------------- --------------
Other Income (Expense)
Interest Expense (97,292) - - (63,336) D (160,628)
Writedown of Investment in SSCI - - - - -
Other Income (Expense) 537,526 - - (913,583) C (376,057)
--------------- ------------------- -------------- ---------------- --------------
Total Other Income (Expense) 440,234 - - (976,919) (536,685)
--------------- ------------------- -------------- ---------------- --------------
Net Income (Loss) 250,648 - - (976,919) (726,271)
--------------- ------------------- -------------- ---------------- --------------
Other Comprehensive Income 2,500 - - - 2,500
--------------- ------------------- -------------- ---------------- --------------
Comprehensive Income $ 253,148 $ - $ - $ (976,919) $ (723,771)
=============== =================== ============== ================ ==============
Loss per Share, Basic $ 1.18 $ - $ - $ (0.03)
=============== =================== ============== ==============
Weighted Average Shares Outstanding, Basic 214,306 - - 21,964,306
=============== =================== ============== ==============
See accompanying notes to unaudited pro forma condensed combined financial statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) GENERAL
On July 1, 2003, Advanced Capital Services, LLC (ACLLC) purchased the
assets of Solar Satellite Communications, Inc., which consisted mainly of a
business plan, in exchange for 3,000,000 ACLLC member ship interests
(convertible into 250,000 commons shares of Media Worx, Inc. stock) and a
$500,000 note payable with accrued interest of $44,333. At the time of the
purchase ACLLC had no assets or liabilities.
Also on July 1, 2003, MediaWorx, Inc. and its wholly owned subsidiary
MediaWorx Acquisition Company, LLC merged with and into ACLLC. As a result of
the merger the Company acquired the assets of ACLLC, which consisted primarily
of a business plan and the people involved in the management and procurement of
print, packaging, and cross-media services and a promissory note payable of
$500,000 with accrued interest of $44,333 in exchange for 4,250,000 Common
Shares and 3,000,000 Preferred Shares, convertible 1 Preferred to 5 Common
Shares.
The pro forma adjustments discussed below are subject to change.
(2) FISCAL YEAR ENDS
The unaudited pro forma condensed combined statements of operations for
the six months ended June 30, 2003 and the year ended December 31, 2002, include
MediaWorx, Inc., MediaWorx Acquisition Company, LLC and Advanced Capital
Services, LLC operations on a common fiscal year.
(3) PRO FORMA ADJUSTMENTS
The adjustments to the accompanying unaudited pro forma condensed
combined balance sheet as of June 30, 2003, are described below:
( A ) To record purchase of assets of Solar Satellite
Communications, Inc. By Advanced Capital Services, LLC for 3,000,000 ACLLC
membership interests (convertible into 250,000 common shares of MediaWorx,
Inc.). The assets of SSCI were primarily the business plan and people involved
in the management and procurement of print, packaging, and cross-media services
and a promissory note payable of $500,000 with accrued interest of $44,333.
( B ) To record merger with MediaWorx Acquisition Company, LLC
and Advanced Capital Services LLC by issuing 4,000,000 shares of Common Stock,
par value $.005 and 3,500,000 shares of Convertible Preferred Stock, par value
$.10 of MediaWorx, Inc. stock to the members of Advanced Capital Services, LLC.
To record the conversion of the 3,000,000 membership interests issued above into
250,000 shares of MediaWorx, Inc.'s common stock.
F-25
The adjustments to the accompanying unaudited pro forma condensed
combined statements of operations are described below:
( C ) To writedown investment in SSCI.
( D ) To record accrued interest on $500,000 note payable at
12% for the six months ended June 30, 2003 in the amount of $30,688 and for the
year ended December 31, 2002 in the amount of $63,336.
EXHIBIT ITEM
None
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.
Date: September 9, 2003 By: /s/ Linda A. Broenniman
--------------------------------------------
Linda A. Broenniman, Chief Executive Officer