Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,1996.
Commission File No. 0-25276
DIGIMEDIA USA, INC.
-------------------
(Exact name of small business issuer in its charter)
Nevada 88-0320364
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2454 N.E. 13th Avenue,
Fort Lauderdale, FL 33305
-------------------------
(Address of principal executive offices)
(954) 565-8726
--------------
(Issuer's telephone number)
International Training & Education Corp.
100 West Cypress Creek Road, Suite 635, Fort Lauderdale, FL 33309
-----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
--- ---
The number of shares of issuer's Common Stock outstanding as of December 31,
1996 was 12,056,225.
<PAGE>
WANT & ENDER, CPA, P. C.
________________________________________________________________________________
CERTIFIED PUBLIC ACCOUNTANTS
37 East 28th Street 8th Floor
New York, NY l0016
MARTIN ENDER, CPA Telephone (212) 684-2414
STANLEY Z. WANT, CPA, CFP Fax (212) 584-5433
Independent Auditor's Report
----------------------------
To the Shareholders and Board of Directors:
DigiMedia USA, Inc.
We have audited the accompanying balance sheet of DIGIMEDIA USA, INC., as at
December 31, 1996 and 1995, the related statements of income 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 audit.
We lave conducted our audit 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 also 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 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 DIGIMEDIA USA, INC. as at
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
The Company is in the development stage. Recovery of the Company's assets is
dependent upon future events, the outcome of which is uncertain. In addition,
successful completion of this Company's development program and its transition,
ultimately, to attaining profitable operations dependent upon obtaining adequate
financing to fulfill its development activities and achieving a level of revenue
adequate to support the Company's cost structure. The accompanying financial
statements have been prepared assuming that the company will continue as a going
concern.
Martin Ender, CPA
Want & Ender CPA, P.C.
Certified Public Accountants
New York, NY
April 21, 1997
<PAGE>
DIGIMEDIA USA, INC.
(FORMERLY 1NTERNAT10NAL TRAINING & EDUCATION CORP.)
Balance Sheet
As At December 31, 1996
Current Year Prior Year 1
12-31-96 12-31-95
-------- --------
Assets
Current Assets
Cash - Checking $ 32,079 $ 108
Accounts Receivable 57,400 (35,744)
--------- ---------
Total Current Assets: 89,479 (35,636)
--------- ---------
Fixed Assets
Office Equipment 98,623 233,605
Acc Depr Office Eqpt (59,790) (48,930)
Furniture And Fixtures 25,052 24,456
Acc Depr Furn And Fixt (16,201) (11,275)
Leasehold Improvements 0 93,603
Acc Depr Leasehold Impr 0 0
Copyright (net) 32,276 32,276
Accu. Amortization copy (4,298) (2,149)
--------- ---------
Total Fixed Assets: 79,622 321,335
--------- ---------
Other Assets
Organization Costs 52,568 2,668
Acc Amort Org Costs (21,068) (10,534)
Security Deposits 1,075 1,075
--------- ---------
Total Other Assets: 32,675 (6,791
--------- ---------
Total Assets: $ 197,776 278,903
========= =========
<PAGE>
DIGIMEDIA USA, INC.
(FORMERLY KNOWN AS INTERNATIONAL TRAINING & EDUCATION CORP.)
Balance sheet
As At December 31, 1996
Current Year Prior Year 1
12-31-96 12-31-95
-------- --------
Liabilities & Stockholders Equity
Current Liabilities
Accounts Payable $ 26,675 26,675
Notes Payable offcr 0 13,657
Stock subs Payable 0 364,000
Notes Payable stock 0 50,000
Capital Lease - Current 0 6,279
Accr Expenses 52,276 66,172
----------- -----------
Total Current Liabilities: 78,951 526,783
Long Term Liabilities:
Mortg,notes,bonds - 1 Yr 16,667 26,667
Capital Lease - Long Term 0 32,953
----------- -----------
Total Long Term Liabilities: 16,667 79,620
----------- -----------
Total Liabilities: (95,618) (606,403)
----------- -----------
Stockholders' Equity
Convertible Preferred Stock, 0.001 Par Value
12%, Cumulative, Authorized 3,000 shares
Issued and Outstanding 96.50
Liquidation and redemption value of
$1,000 Plus Unpaid and
Accumulated Dividends 37,683 37,861
Common Stock, $ .00067 Par value
Authorized 75,000,000 shares
Issued and Outstanding 12,356,225 556 378
Addtl Paid in Capital 1,457,703 879,712
Retained Earnings - Un Ap (1,393,784) (1,245,446)
----------- -----------
Total Equity: 102,158 327,495
----------- -----------
Total Liabilities & Equity: $ 197,774 278,908
=========== ===========
<PAGE>
DIGIMEDIA USA, INC.
Statement of Cash Flows
For the Period Ended December 31, 1996
Current Year Prior Year
12-31-96 12-31-95
-------- --------
Cash Flows from Operating Activities
Net Income ($148,338) ($ 38,209)
Adjustments to Reconcile Net Income
to net Cash Provided by
Operating Activities:
Depreciation and Amortization 28,448 38,382
(Increase) Decrease in Accs Rec (3,144) (53,906)
(Increase) Decrease in Prepaid Exp 0 9,4l0
(Increase) Decrease in Other Assets 0 11,918
Increase (Decrease) in Accs Payables 0 (10,325)
Increase (Decrease) in Current Liabs (27,553) (430,294)
--------- ---------
Total Adjustments (2,229) (434,8l5)
--------- ---------
Net Cash Provided (Used) By
Operating Activities ( $150,567) (473,026)
--------- ---------
Cash Flows from Investing Activities
Cash Proceeds from the Sale of Property 26,546 223,093
Deferred Organizational Cost; 0 (50,000)
--------- ---------
Net Cash Provided (Used) By
Investing Activities 28,546 173,093
--------- ---------
Cash Flows from Financing Activities
Proceeds from issuance of Long Term Debt 0 16,667
Capital Lease - Long Term 0 (52,953)
Proceeds from Issuance of Common Stock 178 0
Issue of Convertible Preferred Stock (178) 0
Increase In Additional Paid in Capital 153,991 338,300
--------- ---------
Net Cash Provided (Used) By Financing
Activities 153,991 302,9l4
--------- ---------
Net Increase (Decrease) in Cash 31,970 2,083
Cash at Beginning of Period 108 (1,974)
--------- ---------
Cash at End of Period $ 32,878 $ 109
========= =========
<PAGE>
DIGIMEDIA USA INC.
( FORMERLY INTERNATIONAL TRAINING & EDUCATION CORP-)
Income Statement
For the Year Ended December, 31, 1996
Year to Date Prior Year 1
12-31-96 12-31-95
-------- --------
Revenues
Sales 17,400 2,345
Sales Returns & Allowance 0 45,000
Dividend Income 0 (698)
Miscellaneous Income 0 1,396
--------- ---------
Total Revenues 17,400 51,043
Expenses
Video Production 52,313 0
Research & Development 0 24,295
Marketing 0 4,721
General & Administrative 11,894 7,368
Utilities 985 0
Legal Fees 25,893 1,402
Professional Fees 10,625 3,150
Rent 6,960 4,250
Telephone Expenses 6,074 1,923
Office Expenses 1,217 651
Office Supplies 3,446 437
Postage Expenses 2,186 182
Messenger Service l,318 0
Bank and Finance Charges 1,066 73
Stock Transfer Fees 506 0
Advertising & Promotion 13,640 0
License and Permits 935 198
Outside Contracting 776 0
Interest 0 200
Depreciation 36,485 25,699
Amortization 12,683 12,683
FUI and SUI 0 35
Federal Corp Tax 0 1,985
Preferred Dividend 2 0
--------- ---------
Total Expenses 165,738 89,252
--------- ---------
Net Income (Loss) ($148,338) ($ 38,209)
========= =========
<PAGE>
DigiMedia USA, Inc.
(formerly known as International Training & Education Corp)
Notes to Financial Statements
December 31, 1996
Note I - BACKGROUND
DigiMedia USA, Inc. (the "Company", formerly known as International Training &
Education Corp., a Nevada corporation, was formed in 1991 as the National
Institute of Liability, Inc., a Florida corporation. In June of 1994, the
Company merged with Sunwest Industries, Inc., a publicly-held Utah corporation.
Sunwest was inactive with no significant assets, liabilities or operations.
Pursuant to the merger, Sunwest changed its name to International Training &
Education Corp., and further amended its Articles of Incorporation to reflect a
recapitalization. In June of 1994, the Company merged into a newly formed Nevada
corporation with the same number of authorized shares of Common and Preferred
Stock as the Utah corporation. As of February 1996, the name of the Company was
changed to DigiMedia USA, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
- -------------------
Revenue from contracts are recognized at the time the products are delivered and
services are rendered and accepted by the customer. Prospective losses on
contracts are provided for when they become known.
Property and Depreciation
- -------------------------
Property and equipment are recorded at cost. Depreciation is provided for using
the straight-line method over the estimated useful life of the assets which
range from five to seven years. Expenditures for maintenance and repairs are
charged to income as Expenditures for maintenance and repairs and charged to
income as incurred. Major expenditures for betterments and renewals are
capitalized. The carrying amounts of asses sold or retired and related
accumulated depreciation are eliminated in the year of disposal and the
resulting gains and losses are included in income.
Loss Per Share
- --------------
Loss per share is calculated by dividing net loss by the weighted average Common
shares outstanding during each period. Common stock equivalents are not included
as their effect is anti-dilutive.
Income Taxes
- ------------
Certain income and expense items are accounted for differently for financial
reporting purposes and for income tax purposes. Deferred taxes in recognition of
timing differences are not reflected in the financial statements as the Company
has operating loss carryforwards.
<PAGE>
Statement of Cash Flows
- -----------------------
For purposes of the statements of cash flows, the Company generally considers
all highly liquid securities with a maturity or redemption option of three
months or less, to be cash equivalents. The Company has not paid any income
taxes due to losses in each year.
NOTE 3 - LONG-TERM DEBT
There is a note in the amount of $16, 667 payable to one investor.
NOTE 4 - CAPITAL STOCK
- ----------------------
In February 1996, in conjunction with the name of the Company being changed to
Digimedia USA, Inc., the Articles of Incorporation were amended to increase the
authorized shares of Common Stock to 75,000,000.shares.
In May, 1994, the Company offered in a private placement 300 Units each
consisting of (1) 10 shares of Preferred Stock, (11) 2,874 shares of Common
Stock, and (iii) 5 Warrants, each of which entities the holder, for a period of
two years from the initial issuance date, to purchase 575 shares of Common Stock
at a price of $1.50 per share.
The Preferred Stock calls for the payment of a cumulative dividend at the rate
of $120 per share per annum, when and as declared by the Board of Directors,
payable quarterly. Each share of Preferred is convertible 'into 287 shares of
Common Stock ($3.52 per share). The Preferred is redeemable in whole or in part,
at the options of the holder, at a price of $1,000 per share plus accrued
cumulative dividends 30 days after the completion of a successful initial public
offering of the Company's securities, should this occur. The Preferred is also
callable at the option of the Company. The holders are entitled to preference in
liquidation over holders of Common Stock at $1,000 per share plus accrued
dividends.
96.8 Units were sold. The proceeds to the Company aggregated $968,000. In
connection with such sale, 968 shares of Preferred Stock, 278,,203 shares of
Common Stock, and 484 Warrants were issued.
NOTE 5 - PROVISION FOR INCOME TAXES
- -----------------------------------
The Company has experienced cumulative net losses since inception, which are
available through December 31, 2010. Deferred income taxes will be provided in
the futures for the temporary differences arising from accounting for contract
revenue on the completed contract method for financial reporting purposes.
NOTE 6 - STOCK OPTIONS
- ----------------------
The company has not adopted a stock option plan. However, specific grants have
been made to officers. In May 1994, the two founders and principal stockholders
were granted options to purchase 1,379,328 shares of Common Stock, exercisable
over the three-year ten-n with an exercise prices of $ .087 per share. These
options were exercised in full in December, 1996. For fiscal 1996, in lieu of
salaries, Messrs. Girrbach and Farmer received 360,000 and 240,000 shares of
Common Stock respectively.
<PAGE>
NOTE 7 - COMMITMENTS
- --------------------
The Company leases its administrative facilities under a lease running through
March 1, 1998 at an annual cost of $7,200.
The Company has entered into employment agreements with its two principals. In
addition, stock-bonus agreements are in effect with certain consultants which
provide for the issuance of shares based upon the generation of specified levels
of revenue and new capital for the Company.
April 21, 1997 /s/ Gene Farmer
- -------------- ----------------------
Date Gene Farmer, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 32,079
<SECURITIES> 0
<RECEIVABLES> 53,400
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 89,475
<PP&E> 152,879
<DEPRECIATION> 75,941
<TOTAL-ASSETS> 197,776
<CURRENT-LIABILITIES> 78,951
<BONDS> 0
0
37,683
<COMMON> 556
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 197,776
<SALES> 17,400
<TOTAL-REVENUES> 17,400
<CGS> 165,738
<TOTAL-COSTS> 165,738
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (148,398)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
