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 March 31, 1996
Commission File Number: 0-23780
ZEITGEIST WERKS, INC.
----------------------------------------------------------------
(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 May 15, 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
ZEITGEIST WERKS, INC.
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheets as of March 31, 1996
and December 31, 1995 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 1996 and 1995,
for the year ended 12/31/95, and from August 15,
1986 (Date of Inception) through December 31, 1995 4
Statements of Cash Flows for the Three
Months Ended March 31, 1996 and 1995, from
August 15, 1986 (Date of Inception) through
March 31, 1996 and for the year ended 12/31/95
for Zeitgeist, Inc. 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
or Plan of Operations 7
PART II. OTHER INFORMATION 8
Signatures 8
ZEITGEIST WERKS, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1996 1995
--------- -----------
ASSETS
Current Assets:
Cash $ 135,502 $ 231,254
Total Current Assets 135,502 $ 231,254
Furniture and Equipment: 7,506
Depreciation (417)
Total Furniture and Equipment 7,089 0
Other Assets:
Loan to officer 50,000
Deposits 660
TOTAL ASSETS $ 193,251 $ 231,254
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 22,212 $ 19,601
Loans 299,996 299,996
Total Current Liabilities 322,208 319,597
Stockholders' Equity:
Common Stock, $.0001 par value,
75,000,000 shares authorized
13,158,100 and 210,229 shares issued
and outstanding 1,316 21
Additional paid-in capital 248,608 249,902
Retained Earnings (378,880) (338,266)
Total Stockholders' Equity (128,956) (88,343)
Total Liabilities and Stockholders' Equity $ 193,251 $ 231,254
NOTE: The December 31, 1995 balances are adjusted to reflect the acquisition
of Zeitgeist, Inc.
The accompanying notes are an integral part of the financial statements.
ZEITGEIST WERKS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
From
Year Inception
Three Months Ended Ended 8/15/86 to
3/31/96 3/31/95 12/31/95 12/31/95
-------- -------- -------- ----------
Revenues $ 1,000 $ 0 $ 0 $ 26,662
Total Revenues $ 1,000 $ 0 $ 0 $ 26,662
General & Administrative
Expenses:
Consulting $ 20,416 $ 4,500 $ 82,000 $ 185,200
Bad Debt Expense 75,000
Depreciation 417 0 0
Fees & licenses 400 856 6,121
Legal & accounting 4,778 0 1,733 21,453
Office Expense 8,760 0 3,000
Other G & A 3,053 1,059 3,516 16,251
Rent 500 750 3,069 19,200
Travel 3,690 0 0 11,703
Write off investment 30,000
TOTAL G & A 41,614 6,709 94,174 364,928
Income (Loss) from Operations (40,614) (6,709) (94,174) (338,266)
Other Income (Expense) 0 0 0 0
Net Income (Loss) (40,614) (6,709) (94,174) (388,266)
The accompanying notes are an integral part of the financial statements.
ZEITGEIST WERKS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
From
Inception
For the 3 Months Ended 8/15/86 to Zeitgeist,
3/31/96 3/31/95 12/31/95 Inc.
(Unaudited) (Unaudited) (Unaudited) 12/31/95
Cash Flows from operations:
Net income(loss) $(40,614) $(6,708) $(338,266) $(70,202)
Noncash items:
Bad Debts 75,000
Write-off Investment 30,000
Changes in Assets &
Liabilities:
Increase(decrease) in A/P 2,611 3,272 19,601
Increase(decrease)
in Other Assets (50,660)
Increase in Equipment (7,089) 0 0
Loans 299,996 299,996
Cash from operating
activities (95,752) (3,436) 86,331 229,794
Cash flow from investing:
(Increase) in Notes
Receivable (75,000)
Inv. In unrelated Co. (30,000)
0 0 (105,000) 0
Cash from financing activities:
Sale of common stock 0 0 309,450 100
Costs of offering (59,527)
Cash from financing activities 0 0 249,923 100
Net change in cash (95,752) (3,436) 231,254 229,894
CASH, BEGINNING 231,254 5,959 0 0
CASH, ENDING 135,502 2,523 231,254 229,894
The accompanying notes are an integral part of the financial statements.
ZEITGEIST WERKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996 (Unaudited)
Note A - Summary of Significant Accounting Policies
ORGANIZATION
Zeitgeist Werks, Inc. (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 April 5, 1996 the Company entered into an agreement to acquire MediaX.
If the transaction is closed the Company will issue 2,037,500 shares of its
common stock to the shareholders of MediaX and pay $350,000 in cash to such
shareholders at closing. The transaction had not closed as of May 20, 1996.
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.
DEFERRED OFFERING COSTS
Costs incurred in connection with the public offering were charged against
common stock proceeds.
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 distinguish-
ing features in each, including preferences, rights and restrictions, by reso-
lution upon the establishment of such series.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Company's financial condition improved during late 1995 when it
received a loan of approximately $300,000. Since that time the Company has
devoted its efforts towards certain strategic acquisitions and product
development.
On April 5, 1996 the Company entered into an Agreement and Plan of
Reorganization with MediaX which provides for the merger of Media X into
Zeitgeist, Inc., a wholly-owned subsidiary of the Company. The closing of this
transaction was scheduled for May 4, 1996 and has subsequently been extended.
The transaction is the subject of due diligence by both parties and the approval
by the board of directors of both parties. If the transaction is closed, the
Company will issue 2,037,500 shares of its common stock to the shareholders of
MediaX and pay $350,000 in cash to such shareholders at closing. The Company
would also have a contingent obligation to pay up to an additional $200,000
based on the achievement of certain income requirements in the future. The
Company would also be required to issue an undetermined amount of stock
options to the employees of MediaX. In connection with the agreement, Assisi
Limited Partnership, the Company's largest shareholder, has agreed to sur-
render for cancellation at least 2,037,500 shares of common stock on the
closing.
The Company is in the process of raising additional funds to pay for the
MeadiaX transaction and for its strategic growth. 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.
There are no meaningful comparisons which can be made between the results
for the three months ended March 31, 1996 and March 31, 1995 because there were
no business activities in either the Company or Zeitgeist, Inc. in the three
months ended March 31, 1995.
Net income for the three months ended March 31, 1996 compared to March 31,
1995 reflected an increased loss from ($6,709) to ($40,614). This increase was
due to the increase in personnel and costs associated with implementing the
Company's growth plans.
At March 31, 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.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A Form 8-K dated February 24, 1996 was filed which reported under Items
1 and 2 the acquisition of Zeitgeist, Inc. and the resulting change in control
of the Company.
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.
ZEITGEIST WERKS, INC.
By:/s/ Nancy Poertner
Nancy Poertner, President and
Chief Financial Officer
Date: May 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheets and statements of operations found on pages 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>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 135,502
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 135,502
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 193,251
<CURRENT-LIABILITIES> 322,208
<BONDS> 0
<COMMON> 1,316
0
0
<OTHER-SE> (127,640)
<TOTAL-LIABILITY-AND-EQUITY> 193,251
<SALES> 0
<TOTAL-REVENUES> 1,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 41,614
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (40,614)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (40,614)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
