U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the Fiscal Year ended: December 31, 1997
                           Commission File No. 0-23780

                               MEDIAX CORPORATION
        (Exact Name of Small Business Issuer as Specified in its Charter)

                                     Nevada
         (State or Other Jurisdiction of Incorporation or Organization)

                                   84-1107138
                     (I.R.S. Employer Identification Number)

        8522 National Boulevard, Suite 110, Culver City, California 90232
          (Address of Principal Executive Offices, Including Zip Code)

                                 (310) 815-8002
                            Issuer's Telephone Number

        Securities Registered Pursuant to Section 12(b) of the Act: None.
           Securities Registered Pursuant to Section 12(g) of the Act:

                    SHARES OF COMMON STOCK, $.0001 PAR VALUE

Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act 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 []

Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained,  to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

The Issuer's revenues for its most recent fiscal year were $228,511.

The aggregate market value of the Issuer's Common Stock,  $.0001 Par Value, held
by non-affiliates  of the Issuer,  based on the closing sale price of the Common
Stock  on  February  26,  1998  as  reported  on the  OTC  Bulletin  Board,  was
approximately $6,600,000.

As of February  26, 1998 there were  16,080,447  shares of the  Issuer's  Common
Stock, $.0001 Par Value, outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

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                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS

GENERAL

         MediaX Corporation (the "Registrant" or 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  changed its name to Edinburgh
Capital,  Inc. On May 13, 1994, the Company merged into Edinburgh Capital,  Inc.
(a Nevada corporation) in order to change its state of domicile to Nevada.

         The Company was  originally  formed for the primary  purpose of seeking
out  acquisitions  of  properties,  businesses,  or merger  candidates,  without
limitation as to the nature of the business operations or geographic area of the
acquisition  candidate.  From  inception  through the date of  completion of its
initial public  offering of securities,  the Company's  activities were directed
toward the acquisition of operating capital.

         The Company  completed its initial  public  offering in October,  1989,
receiving net proceeds of  approximately  $245,000 from the sale of 30,000 Units
(each Unit  consisting  of 1,000  shares of the  Company's  no par value  common
stock, and 100 common stock purchaser  warrants  exercisable at $.02) at $10 per
unit. The warrants expired in 1992.

         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 stock split.
All financial  information  and share data in the remainder of this Report gives
retroactive effect to these two stock splits.

         On February 23, 1996,  the name of the Company was changed to Zeitgeist
Werks,  Inc. On February  24, 1996,  the Company  acquired all of the issued and
outstanding  shares of Zeitgeist,  Inc., a Nevada  corporation,  in exchange for
12,500,000 shares of its common stock.

         On June 27, 1996,  MediaX,  a California  corporation,  was merged into
Zeitgeist,  Inc., and the Company issued 2,037,500 shares of its common stock to
the former  shareholders  of MediaX.  On August 16, 1996 the Company changed its
name to MediaX Corporation.

         The Company is engaged in the business of developing  and  distributing
multimedia  products.  These  products are developed  for the personal  computer
market and are primarily designed for informational and entertainment  purposes.
MediaX  maintains its offices in Culver City and Santa Cruz,  California and has
approximately 22 employees.

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DESCRIPTION OF BUSINESS

         As a result  of the  Company's  acquisition  of all of the  issued  and
outstanding  shares of  Zeitgeist,  Inc.  and  MediaX,  the  Company now has new
management  and a new business  plan.  The Company is engaged in the business of
developing,  publishing and distributing interactive CD-ROM and Internet content
for the expanding multimedia market.  Management believes that due to the varied
and extensive  expertise of its President,  Executive Vice President and outside
director in the areas of artist and record company management,  film production,
software  development and distribution and proprietary  technology  development,
the Company will bridge the entertainment and technology markets.

         The Company will operate  primarily in multimedia  services and product
development.  It is currently in the process of  developing  creative  authoring
tools, has obtained rights to intellectual properties, producing, publishing and
distributing  multimedia  software and content.  The Company intends to maintain
strict  control of both quality and costs and to retain profit  margins that are
traditionally  dispersed across many small companies,  by taking a comprehensive
approach to production and distribution of its products.

PRINCIPAL PRODUCTS AND SERVICES

         The Company  develops,  produces and markets software  products for the
information/entertainment  and development tool sector of the software  industry
in the form of software distributed on floppy disks and CD-ROM's. Three recently
released  CD-ROM  entertainment   products  are  "On  the  Road  with  BB  King,
"Queensryche's  Promised  Land"  and  "Peter  Norton PC Guru" and they are being
distributed by MCA, EMI Records and MediaX, respectively. A product called "Surf
& Destroy" has been delivered to Grolier  Interactive.  At this point in time it
will not be released, since Grolier has closed down its game department.

         MediaX was selected by Apple Computer to produce the Welcome Experience
for their limited edition Twentieth  Anniversary  Macintosh which was introduced
on March  19,  1997.  MediaX  developed  the  production  to  capitalize  on the
Twentieth   Anniversary   Macintosh's  extreme  multimedia   capabilities.   The
multimedia   presentation  features  leading-edge   animation,   digital  video,
interactive 3D graphics, original soundtrack and theater quality audio.

         During  December 1996, the Company signed an Electronic  Rights License
Agreement with Newspeak Media, Inc., which grants the Company the production and
exclusive  publishing  rights for  George  Orwell's  novel  "1984"  dubbed  "Big
Brother" in consideration  for an agreed upon royalty.  Production has commenced
and the product is expected to be released into the market late 1998.

         The Company has signed a contract  with Peter Norton and Verbum for the
production  and the  exclusive  distribution  rights for a CD-ROM  called "Peter
Norton PC Guru." The Company has commenced  work on this product and it has been
released in December of 1997.  Peter Norton PC Guru is a Windows 3.1 and Windows
95 CD-ROM  developed  specifically  to help PC owners  understand  and use their
computer systems,  to enhance both work and home life, and to get support when a
problem or question arises. It introduces the user to key hardware internals and
available software  solutions for common personal and professional  applications
through   illustrated,   animated   tutorials,   and  hands-on  experience  with
demonstration  versions  of  popular  software  products  included  on the disc.
Software update,  support and other current information is provided to owners of
the CD via  "hot-links"  to active third party Internet Web Sites and a specific
companion PC Guru website. The information provided on the disc is comprehensive
and accurate,  from top technical experts.  The major sections of the disc cover
system software and hardware, peripheral devices, major application categories

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(such as "creativity" and "learning"),  troubleshooting,  hands-on demonstration
software applications, and usable utilities and system customizing elements such
as background  graphics and start-up sounds.  The additional  ability to connect
directly from the CD-ROM to major  Internet  sites  assures that the user,  even
long after the purchase of the CD-ROM, will always have the opportunity to bring
his knowledge  up-to-date and in addition,  take advantage of many existing down
load opportunities for free software on the Internet.

         MediaX has recently  signed a marketing  co-op agreement with AT&T, one
of the  industry's  most  influential  company's  to  participate  in the Norton
project  and  promotional  activity  for  comprehensive  co-marketing  with  its
WorldNet Internet Service.

         The Company's  Orwell-based  "Big Brother"  project is  progressing  on
schedule for a 2nd half 1998  introduction.  Additional  personnel  for the game
design  and  engineering  area  have  been  hired  to bring  staffing  up to the
necessary levels. Discussions for marketing cooperation are currently proceeding
with several domestic and international companies.

         The  Company  is in the  process of  completing  Media  Manager  and is
deciding if the product  should  enter the market by retail  distribution  or by
licensing/OEM.  Multimedia, Internet and traditional text processing and desktop
or printing productions  (accessing data on existing networks or archives,  such
as legal or medical  documents) almost always involve many individuals or groups
of people with various talents and specialties. Often these groups work together
on one  project,  either  within the same  location  or in  separate  locations,
connected through LAN's or wide area networks.  A single multimedia  production,
for  example,  can consist of 6,000 to 20,000 files  composed of graphic  bitmap
images,  sound  files and  animation.  Keeping  track of those  files  or,  more
importantly,  managing modifications to various files and keeping track of which
individual  or group is actually  working on a file,  or a set of files,  at any
given  time  can be a  never-ending  and  cost  intensive  task  for  production
companies,  law firms or any large  corporation.  An absolute  critical  task is
indexing,  sharing,  retrieving  and  maintaining  such files and their multiple
versions on a real-time  basis. The objective of Media Manager is to manage this
process by cataloging all work, automatically keeping historical information and
maintaining strict version control.

         Media Manager should  administrate  this task in a very transparent and
visual manner,  reproducing  thumbnails of graphic images,  sound files and text
and  spreadsheets  files  among  others.  File access will be achieved by simply
double  clicking  those images.  Media Manager  should store digital data of any
kind in a proprietary storage system, manage and version control it and create a
flexible,  transparent and visual  archiving/administration  system which can be
dynamically  used by different  individuals or project groups over a LAN network
or over the Internet.

         Media  Manager  runs on a Windows 95 or Windows  NT  platform  and also
performs the function of HTML server.  Users who are on various  other  machines
and/or different operating platforms (i.e., MacIntosh's or SGI's) should be able
to browse any media  regardless of operating  system or computing  platform,  as
well as check files in and out.  As an add-on,  Media  Manager  provides a stand
alone Web server application, so clients can also run a simple Web server.

PATENTS, TRADEMARKS AND LICENSES

         The Company  presently  owns no patents,  trademarks or licenses.  As a
developer,  the Company  intends to develop mainly its own  proprietary  titles,
which will result in the  development  of innovative  technology  solutions with
broad  applications  in  other  growing  markets,   especially  in  the  on-line
environment.  The Company will file the  appropriate  applications  for patents,
trademarks or licenses as its products are developed.

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COMPETITION

         The Company is a minor  participant  among  companies  which  engage in
multimedia  development.  Many of these  companies  have  significantly  greater
capitalization and greater experience in this industry.

EMPLOYEES

         The Company presently has 22 employees and subcontractors.

ITEM 2.           DESCRIPTION OF PROPERTY

         The Company maintains its corporate offices at 8522 National Boulevard,
Suite 110, Culver City,  California 90232. The Company pays approximately $3,200
per month for rent  pursuant to a lease  which  expires  February  3, 1999.  The
Company maintains its software  development  office at 303 Petrero St., #42-302,
Santa Cruz,  California 95060. The Company pays  approximately  $3,146 per month
for rent for its Santa Cruz operations pursuant to a lease which expires in June
2000.

ITEM 3.           LEGAL PROCEEDINGS

         There are no pending legal proceedings, and the Company is not aware of
any threatened legal proceedings to which it is a party.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year ended December 31, 1997.



                                     PART II

ITEM 5.           MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS

         (a) MARKET  INFORMATION.  The  Company's  Common Stock is traded on the
over-the-counter  market.  The  following  table sets forth the high and low bid
price for the  Company's  Common Stock for the periods  indicated as reported by
the  NASD's  Electronic   Bulletin  Board.  These  prices  are  believed  to  be
inter-dealer quotations and do not include retail mark-ups, mark-downs, or other
fees or commissions, and may not necessarily represent actual transactions.


        Quarter Ended             High Bid          Low Bid
March 31, 1997                     $2.12        $1.43
June 30, 1997                      $1.25        $ .94
September 30, 1997                 $1.38        $1.00
December 31, 1997                  $1.09        $ .84

         (b) HOLDERS.  As of March 15, 1998,  the Company had  approximately  48
shareholders  of record.  This does not include  shareholders  who hold stock in
their accounts at broker/dealers.

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         (c) DIVIDENDS. The Company has never paid a cash dividend on its common
stock and does not expect to pay a cash dividend in the foreseeable future.

         (d)      RECENT SALES OF UNREGISTERED SECURITIES.

                  On March 25, 1997, the Company sold to an accredited  investor
for $450,000,  a convertible  debenture which pays interest at 2% per annum over
the prime  rate of the Bank of  America,  calculated  monthly  on the  principal
portion of  $350,000  from  February  11, 1997 and on the  principal  portion of
$100,000 from March 25, 1997. The debenture is due on February 28, 1998, but the
principal  sum and any accrued  interest may be converted  into shares of common
stock at any time before the due date at a price of $1.00 per share.

                  On April 20, 1997, the Company engaged a consultant to provide
financial public relations services for the Company for a term of twelve months.
As part of the  compensation  for  such  services,  the  Company  issued  to the
consultant 75,000 shares of the Company's common stock and 125,000 options, each
option  to  purchase  one  share of  common  stock at $1.25  per  share,  and an
additional 125,000 options, each option to purchase one share of common stock at
$2.50 per share.  All such options vest in monthly  increments of one-twelfth or
8.333% of the total share and options per month from April 10, 1997.

                  On July 21, 1997,  the Company  engaged a firm to act as sales
representative for the Company's software. As part of the consideration for such
services,  the Company  granted the  principals  of the firm options to purchase
250,000  shares of the  Company's  common  stock at a price of $1 1/8 per share.
Options to purchase  25,000  shares  vested on September  30,  1997.  Additional
options vest upon the future shipment of units.

                  On August 1, 1997, the Company sold a convertible debenture to
an  accredited  investor for  $320,000,  which pays interest on the principal of
$320,000 at 2% per annum over the prime rate of the Bank of America,  calculated
monthly from August 1, 1997.  The  debenture  is due on July 31,  1998,  but the
principal  sum and any accrued  interest may be converted  into shares of common
stock at any time before the due date at a price of $0.70 per share.

                  On August  12,  1997,  the  Company  engaged a firm to provide
investor  relations/public  relations services for the Company for a term of one
year. As part of the  consideration  for such services,  the Company granted the
firm 45,000 options,  each option to purchase one share of the Company's  common
stock at a price of $1.38 per  share.  The  options  vest at a rate of 3,750 per
month, each month.

                  On August 22, 1997,  the Company sold 200,000 shares of common
stock to an accredited investor for $148,000.

                  On August 29, 1997,  the Company sold 50,000  shares of common
stock and 50,000 warrants (each warrant to purchase one share of common stock at
an exercise price of $1.30 per share,  exercisable  for five years from the date
of sale) to an accredited investor for $52,000.

                  On September 2, 1997, the Company sold 50,000 shares of common
stock and 50,000 warrants (each warrant to purchase one share of common stock at
an exercise price of $1.30 per share,  exercisable  for five years from the date
of sale) to an accredited investor for $52,000.

                  On  September  7, 1997,  the Company  sold  100,000  shares of
common stock and 100,000  warrants (each warrant to purchase one share of common
stock at an exercise price of $1.30 per share,  exercisable  for five years from
the date of sale) to an accredited investor for $104,000.

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                  On  September  9, 1997,  the Company  sold  100,000  shares of
common stock and 100,000  warrants (each warrant to purchase one share of common
stock at an exercise price of $1.30 per share,  exercisable  for five years from
the date of sale) to an accredited investor for $104,000.

                  On  September  10,  1997,  the Company  sold 50,000  shares of
common stock and 50,000  warrants  (each warrant to purchase one share of common
stock at an exercise price of $1.30 per share,  exercisable  for five years from
the date of sale) to an accredited investor for $52,000.

                  On  September  25, 1997,  the Company  sold 192,308  shares of
common stock and 192,308  warrants (each warrant to purchase one share of common
stock at an exercise price of $1.50 per share,  exercisable  for five years from
the date of sale) to an accredited investor for $200,000.

                  On November  4, 1997,  the Company  issued  400,000  shares of
common  stock to an  unrelated  third party in exchange  for $600,000 of prepaid
advertising.

                  On February  13,  1998,  the Company  sold  200,000  shares of
common stock and 100,000  warrants (each warrant to purchase one share of common
stock at an exercise price of $1.50 per share,  exercisable  for five years from
the date of sale) to an accredited investor for $200,000.

                  On March 1, 1998,  the Company  replaced  the two  convertible
debentures with a new convertible  debenture due September 1, 1998, for $850,000
which pays  interest at the same rate as the replaced  debenture.  The principal
sum of the new debenture and any accrued  interest may be converted  into common
shares at any time prior to the due date at $.60 per share.

                  Exemption from registration  under the Securities Act of 1933,
as amended (the "Act"),  is claimed for the sale of all the securities set forth
above in reliance upon the exemption afforded by Section 4(2) of the Act.

ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         The  following  information  should  be read in  conjunction  with  the
financial  statements  and the notes  thereto.  The  analysis set forth below is
provided pursuant to applicable  Securities and Exchange Commission  regulations
and is not intended to serve as a basis for projections of future events.

FORWARD-LOOKING STATEMENTS

         EXCEPT  FOR  HISTORICAL   INFORMATION  CONTAINED  HEREIN,  THE  MATTERS
DISCUSSED IN THIS FORM 10-KSB ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO
CERTAIN  RISKS AND  UNCERTAINTIES  THAT  COULD  CAUSE  ACTUAL  RESULTS TO DIFFER
MATERIALLY FROM THOSE SET FORTH IN SUCH FORWARD LOOKING  STATEMENTS.  SUCH RISKS
AND UNCERTAINTIES INCLUDE,  WITHOUT LIMITATION,  THE COMPANY'S DEPENDENCE ON THE
TIMELY DEVELOPMENT, INTRODUCTION AND CUSTOMER ACCEPTANCE OF PRODUCTS, THE IMPACT
OF COMPETITION  AND DOWNWARD  PRICING  PRESSURES,  THE ABILITY OF THE COMPANY TO
REDUCE  ITS  OPERATING  EXPENSES  AND RAISE ANY  NEEDED  CAPITAL,  THE EFFECT OF
CHANGING ECONOMIC CONDITIONS, AND RISKS IN TECHNOLOGY DEVELOPMENT.

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GOING CONCERN

         The Company has experienced recurring net losses and has limited liquid
resources.  Management's  intent is to increase the Company's sales and continue
searching for additional  sources of capital.  In the interim,  the Company will
continue  operating with minimal overhead and  administrative  functions will be
provided  by key  employees  and  consultants,  some  of  whom  are  compensated
primarily in the form of the  Company's  common  stock.  The Company may need to
utilize  its  common  stock  to  fund  its   operations   through  fiscal  1998.
Accordingly,  the  accompanying  consolidated  financial  statements  have  been
presented under the assumption the Company will continue as a going concern.

RESULTS OF OPERATIONS

         The financial  results in the  Statements  of  Operations  for the year
ended December 31, 1997, reflect the complete year of MediaX  operations.  Since
MediaX is the only operating business, there are no meaningful comparisons which
can be made with the  statements of operations  for the year ended  December 31,
1996,  because  the  1996  results  reflect  the  operations  for the  Company's
subsidiary  MediaX for the period from June 27, 1996 through  December 31, 1996,
and the operations of the Company for the complete year.

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 1997, the Company had a working capital of $134,046, as
compared to negative  working  capital of $435,564  at December  31,  1996.  The
improvement  in  working   capital  is   attributable  to  the  Company  raising
approximately  $1,000,000 in cash and $600,000 of prepaid  advertising  from the
issuance  of  common  stock,  offset  by cash used for the  payment  of  current
liabilities for on going operations during the year ended December 31, 1997.

         The  Company's  success and ongoing  financial  viability is contingent
upon its selling of its products and the related  generation of cash flows.  The
Company is currently generating relatively little revenue and related cash flows
and  anticipates  this trend will continue until such time, if any, new products
are  released  and  current  products  accepted in the  marketplace.  Management
believes that its existing cash and working capital  balances will be sufficient
to meet its  working  capital  needs for the  balance of the fiscal  year ending
December 31, 1998. However,  the Company may need to utilize its common stock to
fund its operations through fiscal 1998. If the Company decides to commence with
additional productions, it may be necessary to raise additional financing.

         The Company  evaluates  its liquidity and capital needs on a continuous
basis and based on the Company's requirements and capital market conditions may,
from time to time,  raise  working  capital  through  additional  debt or equity
financing.  There is no assurance  that such  financing will be available in the
future to meet  additional  capital needs of the Company,  or as to the terms or
conditions  of any  such  financing  that  is  available.  Should  there  be any
significant delays in the release of new products,  or lack of acceptance in the
marketplace  for such  products if released,  or the Company's  working  capital
needs otherwise exceed its resources,  the adverse consequences would be severe.
The  generation  of the  Company's  current  growth  and  the  expansion  of the
Company's  current  business  involve  significant  financial  risk and  require
significant capital investment.

         As of the date of this Report, the Company had no material  commitments
for capital expenditures.

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         The Company is planning to do  additional  private  placements  of it's
common stock to raise up to an additional $1 million to provide  working capital
for the Company's planned business activities.  The success, or lack thereof, of
this funding may have a material impact on the future of the Company. Similarly,
the lack of  sufficient  sales of the  Company's  products  will have a material
impact on the future of the Company.

ITEM 7.           FINANCIAL STATEMENTS

         Please see pages F-1 through F-16.


ITEM 8.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE

         Not applicable.


                                    PART III

ITEM 9.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS;  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The  directors  and  executive  officers  of the  Company,  their ages,
positions held in the Company, and duration as such, are as follows:

         NAME                       AGE     POSITION HELD AND TENURE

         Nancy Poertner             42      President, Secretary and Director
                                            since February 23, 1996
         Rainer Poertner            50      Director since February 23, 1996
         Matthew MacLaurin          31      Director, Executive V.P. since June
                                            27, 1996

BUSINESS EXPERIENCE

         The  following  is a  brief  account  of  the  education  and  business
experience  during  at least  the past five  years of the  Company's  directors,
executive officers,  and key employees,  indicating the principal occupation and
employment  during  that  period,  and the name and  principal  business  of the
organization in which such occupation and employment were carried out.

         NANCY POERTNER,  PRESIDENT,  SECRETARY AND DIRECTOR. Nancy Poertner has
been involved in the  entertainment  industry since 1979.  From 1981 to December
1995, she was Vice President for a major artist management  company based in Los
Angeles,  where she was  responsible  for all  aspects  of artist  management  -
domestic and international touring,  marketing,  promotion and album recordings.
In addition, from 1991 to December 1995, she led the international department of
a major record label distributed through MCA, resulting in sales generating five
international  gold  records,  five  top  fifteen  singles  and two  number  one
positions.  Several of the  entertainers  she has worked  with  include  Matthew
Broderick,  Rod Stewart,  Toni Braxton,  Suzanne  Hoffs  (Bangles) and recording
artist  Morrissey.  As a result of her years in the business,  Ms.  Poertner has
extensive personal relationships  throughout the domestic and international film
and recording industries.  Ms. Poertner was educated overseas,  graduated with a
Bachelor of Arts in Education and taught in  Afghanistan  and Turkey through the
Peace Corps.

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         RAINER POERTNER, DIRECTOR. Mr. Poertner has served as a Director of the
Company since February 23, 1996.  Rainer Poertner has a twelve-year track record
of bringing new and innovative  computer hardware and software technology to the
international  market  place.  He has  served as  President  and a  Director  of
Syncronys  Softcorp since May 8, 1995, and as Chief Executive Officer since July
1, 1995. He co-founded Seamless Software Corporation  ("Seamless") and served as
Director and as President of Seamless  from its  inception in May 1993 until its
merger  with  Syncronys  Softcorp  on May 8, 1995.  After  having  held  several
positions in the European and U.S. entertainment  industries,  he founded Hybrid
Arts, Inc., in 1986 by arranging $3 million of venture  financing for ADAP - the
first Direct-to-Disk Digital Recording System. After arranging Hybrid Art's sale
in 1991, Mr.  Poertner  became CEO of Hydra Systems,  Inc.,  which developed and
marketed ANDOR - a fully functional Macintosh CPU on a PC peripheral card. Hydra
Systems subsequently sold the technology and the inherent rights to a company in
Seoul,  South Korea in 1992. Mr. Poertner received degrees in economics from the
University of Frankfurt in 1975 and the Klinger Business School in 1973.

         Rainer Poertner and Nancy Poertner are husband and wife.

         MATTHEW  MACLAURIN,   EXECUTIVE  VICE  PRESIDENT.  Matthew  MacLaurin's
experience  stretches  back to the early  days of PCS  when,  16 years  ago,  he
developed  games for the  Commodore  Pet 2001.  Later,  Matthew  joined  Sapiens
Software to create tools for artificial  intelligence  engineering on the IBM PC
XT platform.  He was the key engineer for the development and  implementation of
Common Lisp, a computer language for the 640K DOS platform. At Apple Computer he
secured  funding for,  designed  and led the  development  of the patented  GATE
system,  a  leading-edge  artificial  intelligence  testing  system.  In  Apples
Advanced  Product Group,  he led the  development of a  revolutionary  pen-based
computer  called  Bauhaus,  which  incorporated  handwriting  recognition and an
advanced  artificial  intelligence memory system. In 1994, Matthew joined forces
with Gaben Chancellor to found the original MediaX.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         No persons who were either a Director,  Officer or beneficial  owner of
more than 10% of the Company's  Common  Stock,  failed to file on a timely basis
reports  required by Section  16(a) of the  Exchange  Act during the most recent
fiscal year.

ITEM 10.          EXECUTIVE COMPENSATION

         The  following  table sets forth  information  regarding  the executive
compensation for the Company's  President and Executive V.P. for the years ended
December 31, 1997, 1996 and 1995 from the Company and its subsidiaries. No other
executive  officer  received  compensation  in excess of $100,000  during  these
periods.


       Summary Compensation Table
------------------------------------------
 Name and Principal      Fiscal    Salary    Other Annual        Options
     Position            Year      ($)       Compensation ($)    Granted (#)
---------------------    ------    -------   ----------------    -----------

Nancy Poertner           1997      158,458        6,720               N/A
President, Secretary,    1996      114,583        7,200               N/A
 Director                1995      N/A            N/A                 N/A

                                                    [MEDIAX\10-KSB:123197.KSB]-9

                                                    9

<PAGE>

       Summary Compensation Table
------------------------------------------
 Name and Principal      Fiscal    Salary    Other Annual        Options
     Position            Year      ($)       Compensation ($)    Granted (#)
----------------------   ------    ------    ----------------    -----------

Matthew MacLaurin        1997      114,000        N/A                 N/A
Executive VP, Director   1996      23,665         N/A                 N/A
                         1995      N/A            N/A                 N/A

EMPLOYMENT AGREEMENTS

         On January 1, 1996,  the Company  entered into an employment  agreement
with Nancy Poertner, the Company's President. The agreement expires December 31,
1999, but is automatically renewable for additional two year terms unless either
party elects to terminate the  agreement.  The agreement  provides for a monthly
salary of $10,417  during the period from January 1, 1996 through  September 30,
1996,  and an annual base salary of $155,000  during the period from  October 1,
1996, through September 30, 1997. The salary level increases by $30,000 for each
year thereafter.  The agreement also provides that Nancy Poertner will be paid a
bonus within 30 days after the end of each  quarter in amounts to be  determined
by the Board of  Directors.  Nancy  Poertner can  terminate the agreement at any
time.

         On June 26, 1996, the Company entered into an employment agreement with
Matthew MacLaurin, the Company's Executive Vice President. The agreement expires
June 30, 1997,  but is  automatically  renewable for  additional  two year terms
unless either party elects to terminate the  agreement.  The agreement  provides
for an annual  base  salary of  $100,000  during  the  period  from July 1, 1996
through June 30, 1997,  and an annual base salary of $125,000  during the period
from July 1, 1997 through June 30, 1998.  The salary level  increases by $30,000
for each year  thereafter.  The agreement  also provides that Matthew  MacLaurin
will be paid a bonus  within 30 days after the end of each quarter in amounts to
be  determined by the Board of  Directors.  Matthew  MacLaurin can terminate the
agreement at any time.

STOCK OPTION PLAN

         During April 1996,  the Board of Directors  adopted a Stock Option Plan
(the "Plan"), and on July 3, 1996, the Corporation's  shareholders  approved the
Plan.  The Plan  authorizes  the issuance of options to purchase up to 1,000,000
shares of the Company's Common Stock.

         The Plan allows the Board to grant stock  options  from time to time to
employees, officers, directors and consultants of the Company. The Board has the
power to  determine  at the time that the option is granted  whether  the option
will be an Incentive  Stock Option (an option which  qualifies under Section 422
of the  Internal  Revenue  Code of 1986) or an option  which is not an Incentive
Stock Option. Vesting provisions are determined by the Board at the time options
are  granted.  The  option  price for any  option  will be no less than the fair
market value of the Common Stock on the date the option is granted.

         Since all options granted under the Plan must have an exercise price no
less than the fair  market  value on the date of  grant,  the  Company  will not
record any expense upon the grant of options,  regardless of whether or not they
are incentive  stock  options.  Generally,  there will be no federal  income tax
consequences  to the Company in connection  with Incentive Stock Options granted
under the Plan. With regard to options that are not Incentive Stock Options, the
Company will ordinarily be entitled to deductions for income tax purposes of the
amount that option holders  report as ordinary  income upon the exercise of such
options, in the year such income is reported.

                                                    [MEDIAX\10-KSB:123197.KSB]-9

                                                        10

<PAGE>

         Options to  purchase a total  678,164  shares at an  exercise  price of
$2.25 per share were  granted  during  April 1996.  No options  were  granted to
officers or directors of the Company during fiscal 1997.

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

         The  following  table  sets  forth,  as of March  15,  1998,  the stock
ownership of each person known by the Company to be the beneficial owner of five
percent  or more of the  Company's  Common  Stock,  each  Officer  and  Director
individually,  and all Officers and  Directors as a group.  Each person has sole
voting and investment power over the shares except as noted.


                                   Amount and Nature
Name and Address                   of Beneficial Interest        Percent
of Officers and Directors          of Common Stock               of Class
--------------------------------   ----------------------        ---------
Nancy Poertner                            8,093,750 (1)               49%
8522 National Blvd., Suite 110
Culver City, CA 90232

Rainer Poertner                           8,093,750 (1)               49%
3958 Ince Boulevard
Culver City, CA 90232

Assisi Limited Partnership                8,093,750 (1)               49%
10866 Wilshire Blvd., 15th Floor
Los Angeles, CA  90024

Mizzentop Holdings Ltd.                      902,500 (2)              5.5%
4 George Street
Nassau, Bahamas

Matthew MacLaurin                            956,250                  5.8%
325A River Street
Santa Cruz, CA  95060

All Directors and Officers                 9,050,000 (1)              54.8%
  as a group (3 persons)

----------------------------------
(1)      Assisi Limited  Partnership  is a Nevada  Limited  Partnership of which
         Nancy Poertner is a General  Partner and owns a 100%  interest.  Rainer
         Poertner may be deemed to be a beneficial  owner of the shares owned by
         Assisi  Limited  Partnership by virtue of his spousal  relationship  to
         Nancy Poertner.  Mr. Poertner disclaims any beneficial interest in such
         shares.

(2)      Mizzentop  Holdings  Ltd. is a Bahamas  corporation  in which Mr. Kevin
         O'Neill,  a Canadian  citizen,  has an  indirect  beneficial  interest.
         Mizzentop Holdings Ltd. and Mr. O'Neill, however, disclaim ownership by
         Mr. O'Neill of shares in the Company.

         The Company knows of no arrangement or understanding,  the operation of
which may at a subsequent date result in a change of control of the Company.

                                                    [MEDIAX\10-KSB:123197.KSB]-9

                                                        11

<PAGE>

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ACQUISITION OF ZEITGEIST, INC.

         On February 24, 1996, the Company acquired all of the outstanding stock
of  Zeitgeist,  Inc.  ("Zeitgeist").  The Company  issued a total of  12,500,000
shares (approximately 95%) of its common stock to the shareholders of Zeitgeist.

         The  stock   issuances   were  made  pursuant  to  an  Agreement   (the
"Agreement") among the Company,  Zeitgeist and the Zeitgeist  shareholders.  The
terms of the Agreement were the result of  negotiations  between the managements
of the  Company and  Zeitgeist.  However,  Mark R.  Moldenhauer,  the  Company's
President  and a Director  prior to the  acquisition,  held a 5.6%  interest  in
Zeitgeist  and  received  700,000  shares  of common  stock in the  transaction.
Further,  the Board of  Directors  did not  obtain  any  independent  "fairness"
opinion or other evaluation regarding the terms of the Agreement due to the cost
of obtaining such opinions or evaluations.

         The  12,500,000  shares issued to acquire  Zeitgeist were issued to the
following shareholders of Zeitgeist in the amounts set forth:

                  NAME                               NUMBER OF SHARES
              --------------------------             ----------------
              Assisi Limited Partnership                9,475,000
              Cabana Holdings Ltd.                      1,162,500
              Mizzentop Holdings Ltd.                   1,162,500
              Mark R. Moldenhauer                         700,000
                    Total                              12,500,000

ACQUISITION OF MEDIAX

         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.  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.

         The stock  issuances  were made  pursuant to an  Agreement  and Plan of
Reorganization  ("Agreement") among the Company,  Zeitgeist, MediaX and MediaX's
shareholders. The terms of the Agreement were the result of negotiations between
the managements of the Company and MediaX.  However,  the Board of Directors did
not obtain any independent  "fairness" opinion or other evaluation regarding the
terms  of  the  Agreement,  due  to the  cost  of  obtaining  such  opinions  or
evaluations.

         The  2,037,500  shares  issued to  acquire  MediaX  were  issued to the
following shareholders of MediaX in the amounts set forth:

                  NAME                               NUMBER OF SHARES
         -----------------                           ----------------
         Matthew MacLaurin                               956,250
         Gaben Chancellor                                956,250
         David Traub                                     125,000
                  Total                                2,037,500

                                                    [MEDIAX\10-KSB:123197.KSB]-9

                                                        12

<PAGE>

TRANSACTIONS INVOLVING THE COMPANY

         On  December  6, 1995,  Zeitgeist,  Inc.  loaned  Nancy  Poertner,  the
Company's  President,  $50,000 pursuant to an unsecured note bearing interest at
4% and with a due date of January 1, 2000.  On February 25, 1996,  an additional
$50,000 was loaned to Ms. Poertner on the same terms.

         On  February  20,  1997,  the  Company  entered  into  a  Disengagement
Agreement with Gaben Chancellor ("Chancellor"), a Vice President of the Company,
pursuant to which  Chancellor  agreed to resign as an officer of the Company and
to  transfer  656,250  of his  shares of the  Company's  common  stock to Assisi
Limited Partnership.  In addition,  Chancellor agreed to enter into a Consulting
Agreement with the Company to act as project manager for the "Apple Project" and
to  receive  a monthly  consulting  fee of $6,000  until the  completion  of the
project.  (The project was completed during March 1997.) The Company also agreed
to pay  Chancellor  a  one-time  cash  compensation  of  $32,500  for  his  past
contributions to the Company.

         On  January  2,  1998,  the  Company  engaged  a firm  to act as  sales
representative   in  Canada  for  the  Company's   software.   As  part  of  the
consideration  for such services,  the Company granted the principal of the firm
options to purchase  25,000 shares of the  Company's  common stock at a exercise
price of $.87 per  share.  On March 31,  1998,  5,000  shares of the  option are
immediately  exercisable,  with the remaining  shares of the option vesting each
three months after at the rate of 2,500 shares per three months.



                                     PART IV

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K

                  (a)      3.       EXHIBITS.

<TABLE>
<CAPTION>

     NUMBER                          DESCRIPTION                                       LOCATION
-----------      ---------------------------------------------       ----------------------------------------
<S>              <C>                                                 <C>

3.1              Certificate of Incorporation                        Incorporated by reference to Exhibit 3.1
                                                                     to the Company's Registration
                                                                     Statement on Form S-18 (No.
                                                                     33-28258)

3.1(a)           Articles of Amendment to the Articles of            Incorporated by reference to Exhibit
                 Incorporation dated February 23, 1996, for          3.1(a) to the Company's Form 10-KSB
                 the name change to Zeitgeist  Werks, Inc.           for the year ended December 31, 1995

3.1(b)           Articles of Amendment to the Articles of            Incorporated by reference to Exhibit
                 Incorporation dated August 15, 1996, for the        3.1(b) to the Company's Form 10-KSB
                 name change to MediaX Corporation                   for the year ended December 31, 1996

3.2              Bylaws                                              Incorporated by reference to Exhibit 3.2
                                                                     to the Company's Registration
                                                                     Statement of Form S-18 (No. 33-28258)

10.1             Disengagement Agreement dated February              Incorporated by reference to Exhibit
                 20, 1997, with Gaben   Chancellor                   10.1 to the Company's Form 10-KSB
                                                                     for the year ended December 31, 1996

</TABLE>

                                                    [MEDIAX\10-KSB:123197.KSB]-9

                                                        13

<PAGE>

<TABLE>
<CAPTION>

     NUMBER                          DESCRIPTION                                       LOCATION
-----------      ---------------------------------------------       -----------------------------------------
<S>              <C>                                                 <C>

10.2             Employment Agreement dated January 1,               Incorporated by reference to Exhibit
                 1996                                                with  Nancy Poertner 10.2 to the
                                                                     Company's Form 10-KSB for the
                                                                     year  ended December 31, 1996.

10.3             Employment Agreement dated June 26, 1996            Incorporated by reference to Exhibit
                 with Matthew MacLaurin                              10.3 to the Company's Form 10-KSB
                                                                     for the year ended December 31, 1996.

27               Financial Data Schedule                             Filed herewith electronically

</TABLE>

        (b)  REPORTS ON FORM 8-K.  No Reports on Form 8-K were filed  during the
fourth quarter of the Company's fiscal year ended December 31, 1997.

                                                    [MEDIAX\10-KSB:123197.KSB]-9

                                                        14

<PAGE>

                                   SIGNATURES



                  Pursuant  to the  requirements  of  Section 13 or 15(d) of the
Securities  Exchange Act of 1934,  the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.

Date:  March 27, 1998                   MEDIAX CORPORATION

                                        By:  /s/  Nancy Poertner
                                             ----------------------------------
                                                  Nancy Poertner, President

                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following person on behalf of the
Registrant and in the capacities and on the dates indicated.

         Signature                  Title                              Date
----------------------              --------------------      ----------------
/s/  Nancy Poertner                 President, Secretary      March 27, 1998
----------------------              and Director

/s/  Rainer Poertner                Director                  March 27, 1998
----------------------
     Rainer Poertner

/s/  Matthew MacLaurin              Executive V.P. and        March 27, 1998
----------------------
     Matthew MacLaurin              Director

                                                    [MEDIAX\10-KSB:123197.KSB]-9

                                                        15

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Board of Directors
MediaX Corporation
(A Development Stage Company)

We have audited the accompanying balance sheet of MediaX Corporation at December
31,  1997  and the  related  statements  of  changes  in  stockholders'  equity,
operations  and cash flows for each of the two years ended December 31, 1996 and
1997 and for the period from  inception  (March 30,  1995) to December 31, 1997.
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 Corporation at December
31,  1997 and the results of its  operations  and its cash flows for each of the
two years ended December 31, 1996 and 1997 for the period from inception  (March
30, 1995) to December 31, 1997 in conformity with generally accepted  accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will  continue as a going  concern.  As discussed in Note 2, the Company
has minimal capital  resources  presently  available to meet  obligations  which
normally  can be  expected  to be  incurred  by  similar  companies,  and has an
accumulated  deficit of ($2,279,196)  at December 31, 1997.  These factors raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans in regard to these matters are also described in Note 2. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

                                        /s/  Davis & Co., CPAs, P.C.
                                        ---------------------------------------
                                             Davis & Co., CPAs, P.C.
                                             Certified Public Accountants

Englewood, Colorado
March 6, 1998

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                                       F- 1

<PAGE>

<TABLE>
<CAPTION>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                      Balance Sheet As Of December 31, 1997

<S>                                                            <C>

ASSETS
Current assets
   Cash and cash equivalents                                   $         392,673
   Accounts receivable                                                    10,343
   Inventories                                                            51,817
   Prepaid advertising costs                                             600,000
   Other prepaid expenses                                                 37,389
                                                               -----------------
                                                               $       1,092,222
Property and equipment
   Computers and office equipment                              $         211,218
   Software                                                              143,740
   Furniture and fixtures                                                 18,424
                                                               -----------------
   Less: accumulated depreciation                                        373,382
                                                                        (172,553)
                                                               $         200,829
Other assets
   Note and interest receivable - officer                      $         107,830
   Deferred software development costs                                   300,000
   License agreement and trademark                                        21,153
   Organization costs, net                                                 2,285
   Deposits and other assets                                               9,339
                                                               -----------------
                                                                         440,607
                                                               $       1,733,658
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities
   Convertible debentures payable                              $         822,712
   Notes payable, other                                                   15,968
   Notes payable to former MediaX shareholders                            10,663
   Accounts payable - trade                                               78,708
   Accounts payable - related parties                                     24,455
   Obligation under capital lease                                          5,670
                                                               -----------------
                                                               $         958,176
Commitments, contingency and subsequent events (Notes 5, 6, and 9)
Stockholders' equity (deficit)
   Preferred stock, $.0001 par value per share;
        10,000,000 shares authorized and no shares
        issued                                                 $              --
   Common stock, $.0001 par value per share;
        75,000,000 shares authorized; 15,880,447
        shares issued and outstanding                                      1,588
   Additional paid-in capital                                          3,053,090
   Deficit accumulated during the development stage                   (2,279,196)
                                                               -----------------
                                                                         775,482
                                                               $       1,733,658

</TABLE>

         The accompanying notes are an integral part of this statement.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                                       F- 2

<PAGE>

<TABLE>
<CAPTION>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                  Statement of Changes in Stockholders' Equity
                 For the Period From Inception (March 30, 1995)
                              to December 31, 1997

                                                       COMMON STOCK
                                            -------------------------------------
                                               SHARES                                       ADDITIONAL
                                            (As Restated)            AMOUNT               PAID-IN CAPITAL
---------------------------------------     ----------------  -------------------   --------------------------
<S>                                         <C>               <C>                   <C>

Shares issued in March 1995
   for cash of $.000008 per share
   to an officer and director                     12,500,000  $             1,250   $                  (1,150)
Net loss for the period from
   inception (March 30, 1995) to
   December 31, 1995
Balance at December 31, 1995                      12,500,000                 1,250                     (1,150)
Adjustment for shares of
   Zeitgeist Werks, Inc.
   outstanding immediately prior
   to reorganization on February
   23, 1996, valued at net
   monetary asset amount                             658,039                   66                     249,757
Exchange of 154,000 shares
   during March 1996 for notes
   and interest payable of
   $308,000                                          154,000                    15                     307,985
Issuance of 125,000 shares to
   consultant on April 20, 1996
   in exchange for services                          125,000                    13                    124,987
Cancellation of 2,037,500 shares
   by majority shareholder on
   June 27, 1996                                 (2,037,500)                 (204)
Issuance of 2,037,500 shares on
   June 27, 1996 in exchange for
   all of the stock of MediaX                      2,037,500                   204
Sale of 25,100 shares to
   unrelated parties during June
   and July 1996 at $2 per share                      25,100                    2                       52,198
Sale of 350,000 shares to
   unrelated parties during Nov.                     350,000                    35                    349,965
   and Dec. 1996 at $1 per share
Net (loss) for year ended Dec. 31,
   1996
Balance at December 31, 1996                      13,812,139  $              l,381  $                1,083,742

</TABLE>

                                                                      (Continued

         The accompanying notes are an integral part of this statement.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                                           F- 3

<PAGE>

<TABLE>
<CAPTION>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                  Statement of Changes in Stockholders' Equity
                 For the Period From Inception (March 30, 1995)
                              to December 31, 1997
                                    (Page 2)

                                                       COMMON STOCK
                                            -------------------------------------
                                               SHARES                                       ADDITIONAL
                                            (As Restated)            AMOUNT               PAID-IN CAPITAL
                                            ---------------   -------------------   -------------------------
<S>                                         <C>               <C>                   <C>

Sale of 350,000 shares to various
   unrelated parties during
   January and February 1997 at
   $1 per share                                     350,000   $                35   $                 349,965
Sale of 100,000 shares and
   warrants to unrelated party
   during May 1997 at $.70 per
   unit                                             100,000                    10                      69,990
Sale of 542,308 shares to various
   unrelated parties during
   August and September 1997 at
   $1.04    per share                               542,308                    54                     563,946
Sale of 200,000 shares to
   unrelated party during August
   1997 at $.74 per share                           200,000                    20                     147,980
Conversion of note and interest
   payable to Westridge Capital
   (unrelated party) into 400,000
   shares of common stock at
   $.794 per share in August
   1997                                             400,000                    40                     317,507
Issuance of 400,000 shares at
   $1.50 per share to unrelated
   party in exchange for prepaid
   advertising during November
   of 1997                                          400,000                    40                     599,960
Commissions paid to unrelated
   party for private placement
   sales of stock                                        --                    --                     (80,000)
Issuance of 76,000 shares at par
   value to unrelated parties
   pursuant to other agreements
   during 1997                                       76,000                     8                          --
Net (loss) for year ended
   December 31, 1997                                     --                    --                          --
                                         ------------------   -------------------   -------------------------
Balance at December 31, 1997                     15,880,447   $             1,588   $               3,053,090
                                         ===================  ====================  =========================

</TABLE>

                                                                     (Continued)

         The accompanying notes are an integral part of this statement.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                                           F- 4

<PAGE>

<TABLE>
<CAPTION>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                  Statement of Changes in Stockholders' Equity
                 For the Period From Inception (March 30, 1995)
                              to December 31, 1997
                                    (Page 3)

                                                      DEFICIT
                                                    ACCUMULATED                    TOTAL
                                                    DURING THE                 STOCKHOLDERS'
                                                    DEVELOPMENT                   EQUITY
                                                       STAGE                     (DEFICIT)
                                             -----------------------   ---------------------------
<S>                                          <C>                       <C>

Shares issued in March 1995
   for cash of $.000008 per share
   to an officer and director                $                         $                       100
Net loss for the period from
   inception (March 30, 1995) to
   December 31, 1995                                          (37,238)                     (37,238)
                                             ------------------------  ---------------------------
Balance at December 31, 1995                                  (37,238)                     (37,138)
Adjustment for shares of Zeitgeist
   Werks, Inc. outstanding
   immediately prior to
   reorganization on February 23,
   1996, valued at net monetary
   asset amount                                              (268,064)                     (18,241)
Exchange of 154,000 shares
   during March 1996 for notes and
   interest payable of $308,000                                    --                      308,000
Issuance of 125,000 shares to
   consultant on April 20, 1995 in
   exchange for services                                           --                      125,000
Cancellation of 2,037,500 shares
   by majority shareholder on June
   27, 1996                                                        --                         (204)
Issuance of 2,037,500 shares on
   June 27, 1996 in exchange for all
   of the stock of MediaX                                          --                          204
Sale of 25,100 shares to unrelated
   parties during June and July 1996
   at $2 per share                                                 --                       52,200
Sale of 350,000 shares to unrelated
   parties during Nov. and Dec.
   1996 at $1 per share                                            --                      350,000
Net (loss) for year ended Dec. 31,
   1996                                                      (643,554)                    (643,554)
                                             ------------------------  ---------------------------
Balance at December 31, 1996                 $               (948,855) $                   136,268

</TABLE>

                                                                     (Continued)

         The accompanying notes are an integral part of this statement.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                                           F- 5

<PAGE>

<TABLE>
<CAPTION>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                  Statement of Changes in Stockholders' Equity
                 For the Period From Inception (March 30, 1995)
                              to December 31, 1997
                                    (Page 4)

                                                      DEFICIT
                                                    ACCUMULATED                    TOTAL
                                                    DURING THE                 STOCKHOLDERS'
                                                    DEVELOPMENT                   EQUITY
                                                       STAGE                     (DEFICIT)
                                             ------------------------  ----------------------------
<S>                                          <C>                       <C>

Sale of 350,000 shares to various
   unrelated parties during January
   and February 1997 at $1 per share                               --  $                    350,000
Sale of 100,000 shares and warrants
   to unrelated party during May
   1997 at $.70 per unit                                           --                        70,000
Sale of 542,308 shares to various
   unrelated parties during August
   and September 1997 at $1.04 per
   share                                                           --                       564,000
Sale of 200,000 shares to unrelated
   party during August 1997 at $.74
   per share                                                       --                       148,000
Conversion of note and interest
   payable to Westridge Capital
   (unrelated party) into 400,000
   shares of common stock at $.794
   per share in August 1997                                        --                       317,547
Issuance of 400,000 shares at $1.50
   per share to unrelated party in
   exchange for prepaid advertising
   during November of 1997                                         --                       600,000
Commissions paid to unrelated party
   for private placement sales of
   stock                                                           --                       (80,000)
Issuance of 76,000 shares at par
   value to unrelated parties
   pursuant to other agreements
   during 1997                                                     --                             8
Net (loss) for year ended December
   31, 1997                                                (1,330,341)                   (1,330,341)
                                             ------------------------  ----------------------------
Balance at December 31, 1997                 $             (2,279,196) $                    775,482
                                             ========================  ============================

</TABLE>

         The accompanying notes are an integral part of this statement.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                                           F- 6

<PAGE>

<TABLE>
<CAPTION>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                            Statements of Operations

                                                                                                        FOR THE PERIOD
                                                                                                             FROM
                                                                                                          INCEPTION
                                                               FOR THE YEAR ENDED                      (March 30, 1995)
                                                                  DECEMBER 31,                         TO DECEMBER 31,
                                                          1997                     1996                      1997
                                                ------------------------  ---------------------- ---------------------------
<S>                                             <C>                       <C>                    <C>

SALES/COST OF SALES
      Sales                                     $               228,511   $             392,125  $                   620,636
      Cost of sales                                             268,258                 142,644                      410,902
                                                -----------------------   ---------------------  ---------------------------
      Gross profit (loss)                                       (39,747)                249,481                      209,734
GENERAL AND ADMINISTRATIVE
  EXPENSES
      Amortization                                                  944                  35,939                       36,883
      Depreciation                                               57,589                  28,929                       86,518
      Employee benefits                                          11,709                   9,034                       20,743
      Insurance                                                  32,689                  23,043                       55,732
      Legal and accounting                                       81,762                  46,196                      129,528
      Other administrative                                       56,654                  25,644                       83,152
      Postage and delivery                                       11,930                   7,096                       19,026
      Professional and outside services                         399,475                 259,793                      680,268
      Publicity and promotion                                    40,074                  27,119                       67,193
      Rent and utilities                                         69,731                  21,524                       90,985
      Salaries                                                  377,901                 345,737                      723,638
      Supplies                                                   38,617                  13,894                       57,820
      Taxes - payroll                                            25,266                  16,317                       41,583
      Taxes and licenses                                          8,272                   9,046                       17,318
      Telephone                                                  18,212                  11,687                       29,899
      Travel                                                     29,460                  11,836                        46,881
                                                -----------------------   ---------------------  ----------------------------
                                                              1,260,285                 892,384                     2,187,437
OTHER INCOME (EXPENSES)
      Interest income                                             17,182                  5,403                       22,585
      Interest expense                                          (63,398)                 (7,198)                     (73,516)
      Gain on sale of asset                                          --                   1,000                        1,000
      Other income                                               15,907                     594                       16,501
                                                -----------------------   ---------------------  ---------------------------
                                                                (30,309)                   (201)                     (33,430)
                                                -----------------------   ---------------------  ---------------------------
Net (loss)                                                  $(1,330,341)  $            (643,554) $                (2,011,133)
                                                ========================  =====================  ===========================
Weighted average number of common
  shares                                                     14,618,160              13,285,972                   13,521,025
                                                =======================   =====================  ===========================
Net (loss) per common share (primary)           $                  (.09)  $                (.05) $                      (.15)
                                                =======================   =====================  ===========================
Net (loss) per common share (fully
 diluted)                                       $                  (.08)  $                (.04) $                      (.14)
                                                =======================   =====================  ===========================

</TABLE>

         The accompanying notes are an integral part of this statement.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                                           F- 7

<PAGE>

<TABLE>
<CAPTION>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                            Statements of Cash Flows

                                                                                                      FOR THE PERIOD
                                                                                                             FROM
                                                                                                          INCEPTION
                                                                    FOR THE YEAR ENDED                 (March 30, 1995)
                                                                       DECEMBER 31,                    TO DECEMBER 31,
                                                                 1997                1996                    1997
                                                          ------------------- ------------------ ---------------------------
<S>                                                       <C>                 <C>                <C>

Cash Flows from Operating Activities
      Net income (loss)                                   $       (1,330,341) $        (643,554) $                (2,011,133)
      Adjustments to reconcile to net cash
      provided by operating activities
           Stock issued for services                                       8            125,000                      125,008
           Amortization                                                  944             35,939                       36,883
           Depreciation                                               57,589             28,929                       86,518
      Changes in assets and liabilities
           Decrease (increase) in accounts
              receivable                                              89,992           (100,335)                     (10,343)
           Decrease (increase) in accounts
              receivable - officer                                    19,043            (19,043)                          --
           (Increase) in prepaid expense                             (21,804)           (15,585)                     (37,389)
           (Increase) in inventories                                 (51,817)                --                      (51,817)
           (Increase) in deposits and other assets                    (8,412)              (582)                      (9,338)
           (Increase) in note and interest
              receivable - officer                                    (4,000)           (53,830)                    (107,830)
           Increase (decrease) in accounts
           payable   - trade                                         (11,721)            86,664                       78,708
           Increase (decrease) in accounts
           payable   - related parties                               (14,793)            28,658                       24,455
           (Decrease) increase in interest payable                        --             (2,920)                          --
                                                          ------------------  -----------------  ---------------------------
           Net cash (used) by operating activities                (1,275,312)          (530,659)                  (1,876,277)
Cash Flows from Investing Activities
      Deferred software development costs                           (200,000)          (100,000)                    (300,000)
      Purchase of fixed assets                                      (135,944)           (71,208)                    (207,152)
      Proceeds from sale of fixed assets                               1,222              1,600                        2,822
                                                          ------------------  -----------------  ---------------------------
      Net cash (used) by investing activities                       (334,722)          (169,608)                    (504,330)
Cash Flow from Financing Activities
      Principal payments on capital lease                             (7,978)           (14,443)                     (22,421)
      Net proceeds from sale of stock to private
         investors                                                 1,052,000            402,200                    1,454,300
      Retirement of notes payable                                   (117,843)            (5,150)                    (122,993)
      Proceeds received from issuance of notes
         payable and convertible debentures                          852,197            312,197                    1,464,394
                                                          ------------------  -----------------  ---------------------------
      Net cash provided by financing activities                    1,778,376            694,804                    2,773,280
                                                          ------------------  -----------------  ---------------------------

</TABLE>

                                                                     (Continued)

         The accompanying notes are an integral part of this statement.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                      F- 8

<PAGE>

<TABLE>
<CAPTION>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                            Statements of Cash Flows
                                    (Page 2)

                                                                                                        FOR THE PERIOD
                                                                                                             FROM
                                                                                                          INCEPTION
                                                                    FOR THE YEAR ENDED                 (March 30, 1995)
                                                                       DECEMBER 31,                    TO DECEMBER 31,
                                                                 1997                1996                    1997
                                                          ------------------- ------------------ ---------------------------
<S>                                                       <C>                 <C>                <C>

Increase (decrease) in cash and cash equivalents          $          168,342  $          (5,463) $                   392,673
Cash and cash equivalents, beginning of period                       224,331             229,794                          --
                                                          ------------------  ------------------ ---------------------------
Cash and cash equivalents, end of period                  $          392,673  $         224,331  $                   392,673
                                                          ==================  =================  ===========================
Supplemental Disclosures of Cash Flow Information Cash paid during year for:
            Interest expense                              $           55,851  $          10,188  $                     66,039
                                                          ==================  =================  ============================
        Cash received during the year for:
            Interest income                               $           13,182  $           1,573  $                    14,755
                                                          =================== =================  ===========================
        Cash paid during the year for:
            Income taxes                                  $              800  $             800  $                     1,600
                                                          =================== ================== ===========================

</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

        On June 27, 1996, the Company acquired all of the issued and outstanding
shares of MediaX (a California S-  corporation)  in exchange for a $350,000 note
payable to the former MediaX  shareholders and 2,037,500 shares of the Company's
common stock. The non-cash portion of this acquisition  included $152,517 of net
property and  equipment,  primarily  specialized  computers and software used in
developing,  publishing and distributing interactive CD-Rom and Internet content
for the multi-media  market. In addition,  the Company received $24,479 of other
non-cash  assets,  $10,188 of cash and  assumed  $89,561 of the  liabilities  of
MediaX that existed at June 27, 1996.

        In August of 1997,  the Company's note and accrued  interest  payable in
the amount of $317,547 to Westridge Capital was converted into 400,000 shares of
common  stock with a basis of $.794 per share.  In  November of 1997 the Company
exchanged 400,000 shares of common stock for $600,000 of prepaid advertising.

         The accompanying notes are an integral part of this statement.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                      F- 9

<PAGE>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

Note 1:     SIGNIFICANT ACCOUNTING POLICIES

        Significant accounting policies are as follows:

a.      ORGANIZATION AND MERGER

        MediaX Corporation ("the Company")  (formerly  Zeitgeist Werks, Inc. and
Edinburgh Capital,  Inc.) was incorporated as Fata Morgana,  Inc. under the laws
of the State of Colorado on August 15, 1986. On September 15, 1988,  the Company
amended its Articles of Incorporation  to change its name to Edinburgh  Capital,
Inc. The Company was in the development stage as more fully defined in Statement
No. 7 of the Financial  Accounting Standards Board. Planned principal operations
of the Company had not yet  commenced,  and  activities to February 22, 1996 had
been limited to its formation, obtaining initial capitalization,  the completion
of a public offering of its common stock, and limited investments and loans.

        Prior to 1988,  the activity of the Company was limited to its formation
and the issuance of 208,667  shares of its common  stock.  Such shares were paid
for in September 1988. The Company  intended to seek,  investigate  and, if such
investigation warranted, acquire an interest in business opportunities presented
to it by persons who or firms  which  desired to employ the  Company's  funds in
their business or seek the perceived advantages of a publicly held corporation.

        On February 23, 1996, the Company merged with Zeitgeist,  Inc. which was
also  in the  development  stage  and  whose  principal  operations  had not yet
commenced. Zeitgeist's activities up to this time were limited to its formation,
obtaining initial capitalization, and limited investments and loans.

        The  acquisition  was  accomplished  through an exchange  of  12,500,000
newly-issued  shares of the  Company's  common  stock in exchange for all of the
outstanding  common stock of Zeitgeist,  Inc. Upon completing this  transaction,
the  stockholders  of  Zeitgeist,  Inc.  controlled  approximately  95%  of  the
outstanding common shares of the combined company.

        Because  the  Zeitgeist  shareholders  obtained a majority of the voting
rights in the Company as a result of this transaction,  for financial  reporting
purposes, the merger was accounted for as a recapitalization of Zeitgeist and an
acquisition by Zeitgeist,  Inc. of the Company.  Accordingly,  the  accompanying
financial  statements  reflect  transactions  from March 30, 1995, the inception
date of Zeitgeist, Inc. Zeitgeist Inc., as the acquiror,  continued its business
operations under the Company's name which was changed to Zeitgeist  Werks,  Inc.
effective  February 23, 1996.  The  Company's  name was later  changed to MediaX
Corporation  effective with the acquisition of MediaX on June 27, 1996 (see Note
6b., herein).

        MediaX  Corporation is still  considered to be in the development  stage
because although its principal  business  activities have commenced,  it had not
yet generated significant revenues from these activities.

b.      BASIS OF PRESENTATION

        The  accompanying   financial   statements  include  the  activities  of
Zeitgeist, Inc. from its inception (March 30, 1995) to December 31, 1995 and for
the year ended  December  31,  1996;  and the  activities  of the  Company  from
February 23, 1996, the effective date of the Zeitgeist,  Inc. merger to December
31, 1997. The activities of MediaX have been included from the effective date of
the MediaX  acquisition  (which was accounted  for using the purchase  method of
accounting), June 27, 1996, through December 31, 1997.

c.      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.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                      F- 10

<PAGE>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

d.      INVENTORIES

        Inventory at December 31, 1997 consists of certain  packaging  materials
and the two compact discs that will comprise the Company's first  production lot
of "Peter Norton, PC Guru" scheduled for shipment to distributors in early 1998.
Inventory  is  recorded  at the  lower  of cost or  market  using  the  first-in
first-out method.

e.      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 the  straight-line
method based upon estimated useful lives as follows:

        Computer equipment         -   5 years
        Software                   -   3 years
        Furniture and fixtures     -   7 years

f.      DEFERRED SOFTWARE DEVELOPMENT COSTS

        Certain   development  costs  for  CD-rom  masters  are  capitalized  in
accordance with SFAS No. 86 "Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed" and are reported at the lower of unamortized
cost or net realizable  value.  Amortization  will be taken  commencing with the
sales activity of the related product using the  straight-line  method and asset
lives approximating the retail sales life of the final product,  generally three
to five years.

g.      NET INCOME (LOSS) PER COMMON SHARE

        The net income  (loss) per common  share is computed by dividing the net
loss for the period by the weighted average number of shares outstanding.

h.      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.

i.      FAIR VALUE OF FINANCIAL INSTRUMENTS

        The  fair  values  of cash and cash  equivalents,  accounts  receivable,
short-term debt and accounts  payable  approximate cost because of the immediate
or short-term  maturity of these  financial  instruments.  The fair value of the
Company's  long-term  note  and  interest  receivable  from  officers  does  not
significantly differ from cost at December 31, 1997.

j.      INCOME TAXES

        Under SFAS 109,  "Accounting for Income Taxes",  deferred tax assets and
liabilities  are  generally  determined  based  on the  difference  between  the
financial  statements and the tax bases of assets and liabilities  using enacted
tax rates in  effect  for the years in which the  differences  are  expected  to
reverse. Recognition of a deferred tax asset is allowed if future realization is
more-likely-than-not.  The Company has provided a full  valuation  allowance for
its deferred tax asset  (relative to net operating loss  carryforwards)  because
its realization is not considered more-likely than-not.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                      F- 11

<PAGE>

                              MEDIAX CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

        As  of  December  31,  1997,  the  Company  has  a  net  operating  loss
carryforward of approximately $1,807,000 available for income tax purposes. This
carry-forward expires in 2012.

        The Company's  prior net operating  losses  totaling  $268,000 expire in
years 2003 to 2010.  Usage of the earlier net operating  losses is limited based
on IRS Code Sec.  382.  This code section  limits the use of  pre-change  losses
whenever a stock  ownership  change of more than 50% occurs  within the "testing
period", which is generally a three-year period.

Note 2:     GOING CONCERN

        The Company has minimal capital  resources  presently  available to meet
obligations which normally can be expected to be incurred by similar  companies,
and to carry  out its  planned  operations  and has an  accumulated  deficit  of
($2,279,196) at December 31, 1997. These factors raise  substantial  doubt about
the Company's ability to continue as a going concern.

        Management believes that its cash flow requirements in the next year can
be met from its anticipated  cash flows from initial sales of "Peter Norton,  PC
Guru" and that the Company can also obtain  additional equity or debt financing.
There is no assurance  that the Company  will be able to obtain such  financing.
The financial  statements,  herein,  do not include any  adjustments  that might
result from the outcome of this uncertainty.

Note 3:     NOTE RECEIVABLE - OFFICER

        On December 6, 1995, $50,000 was loaned to the Company's President.  The
uncollateralized  note bears interest at 4% per annum and is due in full,  along
with  interest,  on  January  1,  2000.  Pursuant  to the terms of the note,  an
additional $50,000 was loaned on February 25, 1996 under the same terms. Accrued
interest at December 31, 1997 was $7,830.

Note 4:     CONVERTIBLE SUBORDINATED DEBENTURES AND NOTES PAYABLE

        a. An  uncollateralized  note payable to an unrelated party for $297,000
dated  November  15, 1995 had  interest at the bank's prime rate and was due the
earlier of November  15, 1997 or when the Company  raised  $500,000 or more in a
private  placement of its common  stock.  See Note 6c.,  herein,  regarding  the
conversion of this note and accrued  interest of $20,547 into 400,000  shares of
the Company's common stock on May 9, 1997.

        b.  Also  included  in notes  payable  - other is a  $15,968  short-term
uncollateralized loan from a vendor with interest at 9% per annum.

        c. The Company also owes $10,663 to a former  shareholder of MediaX (see
Note 6b., herein).  This payable is  uncollateralized,  non-interest bearing and
due on demand.

        d. On March  29,  1997,  the  Company  sold to an  accredited  unrelated
investor  for $450,000 a  convertible  debenture  which pays  interest at 2% per
annum  over the prime  rate of the Bank of  America,  calculated  monthly on the
principal  portion of  $350,000  from  February  11,  1997 and on the  principal
portion of $100,000  from March 25, 1997.  The  debenture is due on February 28,
1998,  but the  principal  sum and any accrued  interest may be  converted  into
shares of common  stock at any time  before the due date at a price of $1.00 per
share. Accrued interest at December 31, 1997 was $39,480.

        On August 1, 1997, the Company sold a convertible  debenture to the same
investor for  $320,000,  which pays  interest on the principal of $320,000 at 2%
per annum over the prime rate of the Bank of America,  calculated  monthly  from
August 1, 1997. The debenture is due on July 31, 1998, but the principal sum and
any accrued  interest may be  converted  into shares of common stock at any time
before the due date at a price of $0.70 per share.  Accrued interest at December
31, 1997 was $13,232.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                      F- 12

<PAGE>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

        On March 1,  1998,  the  Company  replaced  both  debentures  with a new
convertible  debenture for $850,000  which pays interest at the same rate as the
replaced  debentures  and is due on September 1, 1998.  The principal sum of the
new  debenture and any accrued  interest may be converted  into common shares at
any time prior to the due date at $.60 per share

Note 5:     COMMITMENTS AND CONTINGENCIES

        a.  LEASE COMMITMENTS

        The Company  leases  certain  computer  equipment  under a capital lease
agreement.  Required  minimum lease  payments under this agreement over the next
two years as of December 31, 1997 is as follows:


                             YEAR                           AMOUNT
----------------------------------------------------   -----------------
1998                                                   $           5,484
1999                                                               1,096
                                                       -----------------
Total minimum lease payments                                       6,580
Less estimated amount representing interest                         (910)
                                                       -----------------
Obligations under capital lease at December 31, 1997   $           5,670
                                                       =================

        The Company leases space for its research and production studio in Santa
Cruz,  California  from an unrelated  party under an operating  lease  agreement
which expires June 30, 2000. The minimum lease  payments  required to the end of
the lease are as follows:


         YEAR                AMOUNT
----------------------  -----------------
         1998           $          37,752
         1999                      37,752
         2000                      18,876
                        -----------------
                        $          94,380
                        =================

        Rental expense for 1997 and 1996 for the Company's Santa Cruz studio and
corporate  offices  in  Culver  City,   California  were  $57,410  and  $17,396,
respectively.

        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.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                      F- 13

<PAGE>

                              MEDIAX CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

        c. CREDIT RISK - UNINSURED DEMAND DEPOSITS

        The Company's  demand deposits at a local bank at December 31, 1997 were
$409,231,  which  exceeds the maximum FDIC insured  balance limit of $100,000 by
$309,231.

        d.  OTHER COMMITMENTS

            During the normal  course of its  business,  the Company has entered
into a software  licensing  agreement  which  requires an additional  payment of
$30,000 upon satisfactory  completion of the contract by the vendor. The Company
has also entered into three  professional  services  contracts  requiring future
payments.  The first is with a public  relations  firm and requires  payments of
$3,000 per month to August 12, 1998.  The second is with a  manufacturers  sales
representative  and  requires  $3,000  monthly  retainers  (to  be  offset  with
commissions  earned)  through  July 31,  1999.  The  third  is with a  marketing
consultant and requires $7,000 monthly payments through March 31, 1998.

Note 6:     COMMON STOCK AND STOCK OPTIONS

        a.  REORGANIZATION

            On February  24,  1996,  the Company  acquired all of the issued and
outstanding  shares of Zeitgeist,  Inc. (a Nevada  corporation)  in exchange for
12,500,000  shares of its common stock.  The effect of this  reorganization  has
been  retroactively  restated to the March 30, 1995 inception date of Zeitgeist,
Inc.

        b.  ACQUISITION OF MEDIAX BY ZEITGEIST, INC.

            On June 27, 1996, the Company issued  2,037,500 shares of its common
stock for all of the  issued and  outstanding  shares of  MediaX,  a  California
S-corporation engaged in the business of developing, publishing and distributing
interactive  CD-rom and Internet content for the fast growing multimedia market.
Pursuant to the merger  agreement,  the  Company's  largest  shareholder  Assisi
Limited  Partnership   ("Assisi")  (owned  100%  by  the  Company's   President)
surrendered for cancellation  2,037,500 shares of common stock. In addition, the
Company  agreed to pay  $350,000  to the three  shareholders  of  MediaX.  As of
December  31,  1996,  this  amount  had not been paid and was  listed as a "Note
Payable to Former MediaX  Shareholders"  in the balance sheet.  During 1997, the
balance of the note was reduced to $10,663 by a  combination  of $77,837 in cash
payments,  the exchange of equipment  worth $12,536,  the netting of $21,805 due
from the former  shareholders  of  MediaX,  Inc.,  and  write-offs  of  previous
goodwill relative to the 1996 acquisition totaling $227,159.

        c.  CONVERSION OF NOTE PAYABLE

            On March 21, 1996, the Company  converted  $300,000 of notes payable
and $8,000 of accrued  interest due to an unrelated party into 154,000 shares of
common stock at $2 per share. On May 9, 1997 the Company  converted  $297,000 of
notes  payable and $20,547 of accrued  interest due to another  unrelated  party
into 400,000 shares of common stock at $.794 per share (see Note 4a.).

        d.  PRIVATE SALES

            During  June and July 1996,  25,100  shares  were sold to  unrelated
private investors for cash proceeds of $52,200.  During November and December of
1996,  350,000 shares were sold to unrelated private investors for cash proceeds
of  $350,000.  During  1997  additional  shares were sold to  unrelated  private
investors as follows:

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                      F- 14

<PAGE>

                              MEDIAX CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

<TABLE>
<CAPTION>

                                                                 PRICE PER
        TIME PERIOD      SHARES                   NUMBER SHARE   PROCEEDS
-------------------      --------- ------------   ------------   ----------
<S>                      <C>                      <C>            <C>            <C>

January/February         350,000                  $     1.00     $  350,000     $  350,000
May                                                  100,000            .70         70,000
August/September                                     542,308           1.04        564,000
August                                               200,000            .74        148,000
                                                  ------------                  -----------
                                                  $1,192,308                    $1,132,000
Less : Commissions                                                                 (80,000)
                                                                                -----------
Net Proceeds                                                                    $1,052,000
                                                                                ===========

</TABLE>

               e.    STOCK ISSUED FOR CONSULTING AND PROFESSIONAL SERVICES

                     On April 20, 1996,  the Company  issued  125,000  shares of
common stock to an unrelated third party
consultant in exchange for services  rendered.  At the same time the  consultant
was granted  options to purchase up to 250,000  shares of the  Company's  common
stock at $2.00 per share. These options expire on April 20, 1999.

                     On July 21,  1997,  the  Company  engaged  a firm to act as
sales representative for the Company's software.
As  part of the  consideration  for  such  services,  the  Company  granted  the
principals  of the firm  options to  purchase  250,000  shares of the  Company's
common stock at a price of $1 1/8 per share.  Options to purchase  25,000 shares
vested on September 30, 1997.  Additional  options vest upon the future shipment
of units.

                     On August 12, 1997,  the Company  engaged a firm to provide
investor  relations/public  relations services for the Company for a term of one
year. As part of the  consideration  for such services,  the Company granted the
firm 45,000 options,  each option to purchase one share of the Company's  common
stock at a price of $1.38 per  share.  The  options  vest at a rate of 3,750 per
month, each month.

                     On November 4, 1997,  the Company  issued 400,000 shares of
common stock to an unrelated third party
in exchange for $600,000 of prepaid advertising costs.

               f.    STOCK OPTIONS

                     26,100  of the  shares of common  stock  sold to  qualified
private  investors  during  1996 each  included an option to purchase a share of
common stock at an exercise price of $3.00 expiring June 18, 1998.

                     The 100,000  shares of common  stock sold to an  accredited
investor in May of 1997 each included an
option to  purchase a share of common  stock at an  exercise  price of $1.20 per
share until June 12, 2000.

                     350,000 of the shares of common  stock sold  during  August
and  September  1997 for $1.04 each  included a warrant to purchase one share of
common stock at an exercise price of $1.30 per share, exercisable for five years
from the date of sale.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                      F- 15

<PAGE>

                               MEDIAX CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

               g.    STOCK OPTION PLAN

                     In April 1996 the Company adopted a stock option plan which
authorized  the  issuance of options to purchase up to  1,000,000  shares of the
Company's  common stock. All options granted must have an exercise price no less
than the stock's fair market value on the date of grant.  On April 18, 1996, the
Company issued options under this stock option plan to non-officer employees and
consultants  for the purchase of up to 678,164  shares of the  Company's  common
stock at a price of $2.25 per share. The options expire on April 18, 2001.

Note 7:        RELATED PARTY TRANSACTIONS

               a.    LOANS TO OFFICER

                     See Note 3, herein,  regarding  loans made to the Company's
President.

               b.    COMMITMENT - EMPLOYMENT AGREEMENTS

                     Effective  January  1, 1996,  the  Company  entered  into a
four-year employment  agreement with its President.  The Company is obligated to
pay annual base salary as follows:

                    $185,000           January 1, 1998 to October 31, 1998
                    $215,000           November 1, 1998 to October 31, 1999

                    Unless  terminated  by  either  party  upon 60 days  written
notice,  this agreement will automatically  renew for additional  two-year terms
after the initial four-year term expires.

                    Effective  June  26,  1996,  the  Company   entered  into  a
three-year  employment agreement with its Executive  Vice-President by which the
Company is obligated  to pay base  salaries of $125,000 and $155,000 for each of
two years ended June 30, 1998 and 1999, respectively.

                    Both of these agreements also provide for a bonus at the end
of each fiscal quarter as determined by the Company's  Board of Directors.  Both
the President and  Executive  Vice-President  may  voluntarily  terminate  their
employment at any time.

              c. REVENUE FROM RELATED ENTITY

                     1997  revenue   includes   $75,000  received  for  services
provided to an entity which has a common director with the Company.

Note 8:       MAJOR CUSTOMERS

                    During the year  ended  December  31,  1997,  the  Company's
revenues were generated from three major customers located throughout the United
States,  which has been the trend  from  inception.  This trend is  expected  to
change  during 1998 as the Company  begins to sell "Peter  Norton,  PC Guru" and
other products to various distributors throughout the United States and Europe.

                                                     [MEDIAX\10-KSB:123197.FS]-4

                                      F- 16

<PAGE>

Note 9:       SUBSEQUENT EVENTS

              On February  13, 1998,  the Company sold 200,000  shares of common
stock to an accredited unrelated investor for $200,000.

              On  March  1,  1998,  the  Company  replaced  the two  convertible
debentures  described in Note 4d. with a new convertible  debenture for $850,000
which pays  interest at the same rate as the replaced  debentures  and is due on
September  1, 1998.  The  principal  sum of the new  debenture  and any  accrued
interest may be converted  into common  shares at any time prior to the due date
at $.60 per share.

<PAGE>

                    EXHIBIT 27 - FINANCIAL DATA SCHEDULE

This schedule contains summary financial  information extracted from the balance
sheets and statement of  operations  found on pages F-2 and F-5 of the Company's
Form 10-KSB for the fiscal year ended December 31, 1997, and is qualified in its
entirety by reference to such financial statements.