<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number: 0-23780
MEDIAX CORPORATION
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 84-1107138
- ---------------------------- ---------------------------------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3960 Ince Boulevard, Second Floor, Culver City, California 90222
----------------------------------------------------------------
(Address of principal executive offices including zip code)
(310) 815-8002
--------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 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 No___
As of September 30, 1996, 13,312,100 shares of common stock, $.0001 par value
per share, were outstanding.
Transitional Small Business Disclosure Format (check one): Yes___ No X
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
For the Period Ended
September 30, December 31,
1996 1995
------------ -----------
ASSETS
Current Assets:
Cash $ 54,539 $ 231,254
Accounts Receivable 794 344
Prepaid Assets 1,298 0
Total Current Assets 56,631 $ 231,498
Fixed Assets:
Equipment, Furniture, Improvements 281,553 0
Depreciation & Amortization (64,252) 0
Total Furniture and Equipment 217,301 0
Other Assets:
Loan to officer 100,000 50,000
Goodwill Net of Amortization 153,424 0
Deposits 436 0
Total Other Assets 253,860 50,000
TOTAL ASSETS $ 527,792 $ 281,498
(Continued)
The accompanying notes are an integral part of this statement.
-2-
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS - CONTINUED
(Unaudited)
For the Period Ended
September 30, December 31,
1996 1995
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 36,999 $ 17,627
Loans 209,531 319,250
Current Portion of Capital lease 11,615 0
Total Current Liabilities 258,145 336,877
Long Term Liabilities:
Capital Lease 3,589 0
Payable for Acquisition of MediaX 350,000 0
Total Liabilities 611,734 0
Stockholders' Equity:
Common Stock 308,021 21
Additional paid-in capital 249,902 249,902
Retained Earnings (Deficit) (641,865) (305,302)
Total Stockholders' Equity (83,942) (55,379)
Total Liabilities and Stockholders' Equity $ 527,792 $ 281,498
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the For the
Nine Months Ended Three Months Ended
9/30/96 9/30/95 9/30/96 9/30/95
--------- --------- --------- ---------
Revenue
Contract Revenue $ 141,067 $ 0 $ 141,051 $ 0
Interest Income 530 0 530
Miscellaneous Income 194 0 (806) 0
Total Income 141,791 0 140,775 0
Cost of Goods Sold 135,408 0 129,128 0
Gross Profit 6,383 0 11,647 0
Expenses:
Consulting Fees 53,754 13,500 23,736 4,500
Bad Debts 0 0 0 0
Depreciation/Amortization 6,000 0 4,361 0
Fees & Licenses 0 504 0 200
Legal & accounting 21,977 0 7,543 0
Office Expense 34,222 0 70,025 0
Other G & A 47,178 1,978 45,846 283
Rent 11,124 2,250 7,733 750
Salaries 83,333 49,798
Travel & Entertainment 8,922 0 5,603 0
Other Exp. - Interest 6,408 0 (2,111) 0
Total Expenses 342,943 18,232 212,534 5,733
Net Income(Loss) (336,500) (18,232) (200,887) (5,733)
Weighted average
Number of shares 11,000,122 210,229 13,312,100 210,229
Loss per common share ($0.03) ($.09) ($0.02) ($0.03)
The accompanying notes are an integral part of this statement.
-4-
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended
9/30/96 9/30/95
(Unaudited) (Unaudited)
OPERATING ACTIVITIES
Net income(loss) $(336,560) $ (18,232)
Changes in Assets & Liabilities:
(Increase)decrease in A/R (450) 0
(Increase)decrease in Prepaid Assets (1,298) 0
(Increase)decrease in Equipment 0 0
(Increase)decrease in Loans Receivable 0
Increase(decrease) in A/P 19,372 13,771
(Increase)decrease in Other Assets (50,436) 0
Increase(decrease) in Loans Payable (109,719) 0
Increase(decrease) in Current Lease 11,615 0
Cash provided by (used in)
operating activities (467,476) (4,461)
INVESTING ACTIVITIES:
(Increase)decrease Intangibles (153,424) 0
(Increase)decrease in Equipment (217,061) 0
Cash (used in) investing activities (370,725) 0
FINANCING ACTIVITIES:
LT debt - MediaX 350,000 0
Increase(decrease) in LT Lease 3,586 0
Increase(decrease) in Common Stock 308,000 0
Increase(decrease) in loans-Mediax X 0
Cash provided by financing activities 661,586 0
Net increase (decrease) in cash (176,615) (4,461)
CASH, BEGINNING 231,154 5,959
CASH, ENDING 54,539 1,498
The accompanying notes are an integral part of this statement.
-5-
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1996 (Unaudited)
Note A - Summary of Significant Accounting Policies
ORGANIZATION
MediaX Corporation (the "Company") was incorporated under the laws of the
State of Colorado on August 15, 1986 under the name Fata Morgana, Inc. On
September 15, 1988, the Company amended its articles of incorporation to
change its name to Edinburgh Capital, Inc.
During April, 1994 the Company effected a 1 for 300 reverse stock split
and on February 23, 1996 the Company effected a 3.13 for 1 forward split. All
financial information and share data in this Report give retroactive effect to
these two stock splits.
On February 23, 1996 the Company changed its name to Zeitgeist Werks,
Inc. On February 24, 1996, the Company acquired all of the issued and
outstanding shares of Zeitgeist Inc. in exchange for 12,500,000 shares of its
common stock.
On June 27, 1996 the Company acquired all of the issued and outstanding
common stock of MediaX in exchange for 2,037,500 shares of its common stock.
The Company also agreed to pay $350,000 in cash to the MediaX shareholders.
On the closing, Assisi Limited Partnership, one of the Company's principal
shareholders, surrendered for cancellation 2,037,500 of its shares of Common
Stock. On August 16, 1996, the Company changed its name to MediaX Corporation.
INCOME TAXES
The Company has recorded no income tax benefit because it has incurred
losses since its inception. Net operating losses can be carried forward for
fifteen years.
NET LOSS PER SHARE
The net loss per share of common stock is computed by dividing the net
loss by the weighted average number of shares outstanding during the period.
GOODWILL
The Company recognized Goodwill as the result of the acquisition of
MediaX. Goodwill will be amortized over a period of sixty months.
Note B - Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock
with a $.0001 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 in each, including preferences, rights and restrictions, by
resolution upon the establishment of such series.
-6-
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
On June 27, 1996, the Company completed a transaction in which MediaX, a
California corporation, was merged with and into the Company's wholly-owned
subsidiary, Zeitgeist, Inc. ("Zeitgeist"). The Company issued a total of
2,037,500 shares of its Common Stock to the shareholders of MediaX at the
Closing, and Assisi Limited Partnership surrendered for cancellation 2,037,500
of its shares of Common Stock.
MediaX is a multimedia production studio. Based in Santa Cruz, California,
MediaX for the past three years has produced interactive multimedia titles for
MCA Entertainment and EMI/Capitol, and has created works for Toshiba, Dow
Jones, Apple Computer, New-Line Cinema, and I-Werks Entertainment.
All of the contract revenue and nearly all of the expenses during both the
three and nine month periods ended September 30, 1996 are related to the
multimedia production business which was acquired in the transaction with
MediaX.
Prior to the acquisition of MediaX, the Company's business activities were
very limited. Therefore, there are no meaningful comparisons which can be
made between the results for the three months and nine months ended September
30, 1996 and September 30, 1995 because there were no business activities in
the Company in the three and nine months ended September 30, 1995.
At September 30, 1996, the Company had a working capital deficit of
approximately ($201,514), as compared to a working capital deficit of
($105,379) on December 31, 1995. The most significant use of cash has been
the net loss for the nine months of $336,560. The Company is in the process
of raising additional funds to finance the growth of the Company. The outcome
of these efforts is critical to the Company's future and management is unable
to determine the likelihood of success of these efforts.
At September 30, 1996, the Company had no material commitments for capital
expenditures.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
-7-
<PAGE>
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule: Filed herewith electronically
(b) Reports on Form 8-K.
The Registrant filed Amendment No. 2 to its Current Report on Form 8-K
dated February 24, 1996, reporting information under ITEM 7. FINANCIAL
STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
-8-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
MEDIAX CORPORATION
By:/s/ Nancy Poertner
Nancy Poertner, President and
Chief Financial Officer
Date: November 19, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations found on
pages 2, 3 and 4 of the Company's Form 10-QSB for the year to date, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 54,539
<SECURITIES> 0
<RECEIVABLES> 794
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,631
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 527,792
<CURRENT-LIABILITIES> 258,145
<BONDS> 0
<COMMON> 308,021
0
0
<OTHER-SE> (224,079)
<TOTAL-LIABILITY-AND-EQUITY> 527,792
<SALES> 141,067
<TOTAL-REVENUES> 141,791
<CGS> 135,408
<TOTAL-COSTS> 135,408
<OTHER-EXPENSES> 342,943
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (336,560)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (336,560)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
