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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
(UNDER SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934)
MILLENNIUM DIRECT, INC.
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(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 13-3786306
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION IDENTIFICATION
NUMBER)
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<S> <C>
Hcr 30-a, North Blenheim, NY 12131
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(Address of Principal Executive Offices) (Zip code)
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Issuer's Telephone Number: (607) 588-8885
---------------------------
Securities to be registered under Section 12(b) of the Act:
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<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
<S> <C>
None N/A
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Securities to be Registered under Section 12(g) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
<S> <C>
Common Stock, $.0001 par value N/A
Preferred Stock $.0001 par value N/A
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TABLE OF CONTENTS
<TABLE>
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PART I - INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Business..................................................................................3
Item 2. Management's Discussion and Analysis or Plan of Operation................................................9
Item 3. Description of Property.................................................................................11
Item 4. Security Ownership of Certain Beneficial Owners and Management..........................................11
Item 5. Directors, Executive Officers, Promoters and Control Persons............................................12
Item 6. Executive Compensation..................................................................................14
Item 7. Certain Relationships and Related Transactions..........................................................15
Item 8. Description of Securities...............................................................................15
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters..............................................................................16
Item 2. Legal Proceedings.......................................................................................17
Item 3. Changes in and Disagreements With Accountants...........................................................18
Item 4. Recent Sales of Unregistered Securities.................................................................19
Item 5. Indemnification of Directors and Officers...............................................................22
PART F/S Financial Statements..............................................................................FS1-FS15
PART III
Item 1. Index to Exhibits.......................................................................................37
Item 2. Description of Exhibits.................................................................................38
</TABLE>
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ITEM 1. DESCRIPTION OF BUSINESS
Millennium was incorporated in the State of Delaware on September 13,
1994 as Kid Rom, Inc. ("KRI"). Millennium develops, produces and distributes
entertaining and educational videos for the toddler, children and teenage
markets. In February 1998, KRI acquired UltraDerma, Ltd. ("UDL"), a company
which develops, markets and distributes anti-aging skin care products. On
November 18, 1999, KRI changed its name from Kid Rom, Inc. to Millennium Direct,
Inc. Millennium's corporate office is located at HCR 30-A, North Blenheim, New
York 12131.
Millennium currently operates two divisions, educational videos (KRI's
business since incorporation) and skin care products (the business of UDL
acquired in February, 1998).
EDUCATIONAL VIDEOS. Millennium attempts to make its videos both
entertaining and educational. All educational videos developed by Millennium
have five characteristics which Millennium hopes will distinguish it from its
competition:
(i) All videos involve a form of animated transportation vehicle or
construction equipment;
(ii) All videos include children interacting with animated and live
equipment and asking questions regarding how the equipment
works or operates;
(iii) All videos feature original music and narrative soundtracks;
(iv) All videos demonstrate a theme or moral that Millennium
believes worthy of instilling in children; and
(v) All videos are free of violence.
Millennium has completed two videos in its "I Wonder..."'TM' series,
"Toby the Tugboat" and "Brett the Jet". Millennium's "I Wonder..."'TM' series is
dedicated to bringing to children real life experiences with animation, music
and song and a story which can be enjoyed by both children and parents.
Millennium presently has four additional videos in development which it believes
also feature these characteristics. The videos are approximately 30 minutes each
and can be adapted for sale or syndication in foreign markets. In addition, we
are seeking to develop additional videos and several weekly combination live
action/animated shows aimed at the teenage market. In developing our videos and
weekly shows, we attempt to create characters with cross-over merchandising
appeal into areas such as clothing, board games, interactive CD-ROM games,
books, toys, dolls and video games.
In "Toby the Tugboat", two children are shown traveling through New
York Harbor aboard an actual tugboat. The animated "Toby the Tugboat" appears on
screen and teaches the children how
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small tugboats, with their large engines, are necessary for moving huge
ocean-going vessels, such as the QE2, around the harbor. The moral is that no
matter how big or small one is, it is what is inside that matters most. The
theme song "Toby the Tugboat" was written specifically for the video, which is
targeted at children between the ages of 3 and 8.
"Brett the Jet" is a video about teamwork. Made with the cooperation of
the U.S. Thunderbird F-16 Demonstration Team and the U.S. Army Golden Knights,
"Brett" features jets, cargo planes, acrobatic planes and commercial airlines.
The animated "Brett the Jet" shows two brothers, ages 10 and 12, the importance
of teamwork by showing how people in the radar tower, the ground crew and the
crew aboard the plane all work together to help different types of planes fly
safely and securely. This video also features an original soundtrack and title
song.
We currently have four additional videos in development which also
feature the five characteristics incorporated in our completed videos. These
videos are:
Rob The Racing Car
"Rob The Racing Car" is set against the exhilarating world of stock car
racing. Children learn first hand there's a time and proper place for
everything.
Benjamin The Fire Engine
An extraordinary story about the rewards of helping and giving to
others as told by our animated fire engine, Benjamin, as he takes
children along with firemen and fire engines in life saving situations.
Flip The Ship
Children are taken on a journey throughout the world by our animated
character, Flip The Ship, and travel on some of the world's greatest
vessels learning all the time about the importance of relating to other
people.
Jane The Crane
Contains some of the most amazing aerial footage taken from high above
the ground on construction cranes, underscoring the importance of
communication, especially between children and their parents.
Millennium contracts on a case-by-case basis with various writers,
animators, directors, producers, musicians and post-production staff to complete
the videos and prepare them for videotape release. Currently, these contracts
are on a fixed fee basis but may, in the future, be on a revenue sharing basis.
Millennium is in the process of seeking to market its videos through
general video
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distributors, specialists in the toddler and children's markets and direct
response television and print advertising. Millennium is also seeking to
distribute its videos directly to major video store chains as well as through
educational institutions, direct mail catalogs and internet advertising.
ANTI-AGING COSMETICS AND SKIN CARE PRODUCTS. Millennium has exclusive,
worldwide proprietary rights to an anti-aging formula designed to rejuvenate
skin cells and eliminate wrinkles and other signs of aging. Millennium's
signature line of cosmetics and skin care products, sold under the TheraCel
brand name, is an all natural product that does not use any acid-based
ingredients or any invasive procedures. In addition to the TheraCel brand,
Millennium owns a patent on a pillow designed to help minimize the facial
wrinkles some women experience after a night of sleep marketed under the name
"The Anti-Wrinkle Pillow".
Millennium contracts with outside sources for the manufacture,
bottling, packaging and distribution of its skin care products. Some of these
contracts are at a fixed rate while others are on a per unit basis. Millennium
markets these products through direct response television.
Millennium's target market for its skin care products is primarily
women between the ages of 28 and 55.
Millennium centralizes its management, production, sales and marketing
divisions for both the videos and the skin care products all within the
Millennium corporate entity. Financial information concerning production,
development, sales, marketing, operating costs and other expenses of Millennium
are maintained in accordance with generally accepted accounting principles, but
not allocated according to specific product.
ACQUISITION OF ULTRADERMA, LTD.
On February 1, 1998, Millennium, through a wholly-owned subsidiary,
acquired substantially all of the assets of UDL (the "Acquisition"), for a total
purchase price of $6,334,600. The consideration consisted of $400,000 in cash
and the issuance of 3,025,000 restricted shares of our common stock valued at
$5,934,600. Concurrent with the Acquisition, Millennium executed a letter
agreement which granted to Ardis Balis, the Chairperson and Founder of UDL,
anti-dilution rights pursuant to which Millennium agreed to maintain Ms. Balis'
interest in Millennium, pending a public offering of Millennium's securities
registered with the Securities and Exchange Commission, at not less than
fifty-one percent (51%) of the issued and outstanding common stock. For purposes
of such calculation, Millennium is permitted to include shares of common stock
held by George Balis, the Chairman and Chief Executive Officer of Millennium and
the husband of Ardis Balis.
SUBSTANTIAL THIRD PARTY AGREEMENT; SALES AND MARKETING
In September 1999, we terminated a sales and marketing agreement with a
prior marketer (the "Previous Marketer"). Although the Previous Marketer
successfully launched the TheraCel product
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line through a media infomercial campaign, it was not prepared to handle the
immediate large volume of sales generated by the infomercial. The Previous
Marketer sought to improve its fulfillment, customer service and call center
abilities and decreased its media purchases to make these changes, as it, too,
realized its facilities in this area were not working effectively. Millennium
was not satisfied with the changes the Previous Marketer made to cure these
problems. In addition, Millennium was approached by other potential marketers
who not only offered what management believed were superior call center,
customer service and fulfillment capabilities, but, in the opinion of
management, significantly better financial arrangements, which could permit
Millennium's gross profit margin to be materially improved. As part of the
termination agreement, Millennium and the Previous Marketer agreed that the
Previous Marketer would continue to sell on behalf of Millennium the
approximately 9,000 units remaining in the Previous Marketer's possession. There
is no deadline for this sale of remaining inventory, but the Previous Marketer
continues to have an obligation to report all sales to Millennium, which has
retained audit rights with respect to such inventory. In June, 1999, Millennium
also terminated a separate licensing agreement it had with the Previous Marketer
to assist Millennium in distributing the educational videos produced by
Millennium. Millennium paid $59,000, in the form of 200,000 shares of Common
Stock, to terminate such agreement. Other than as set forth above, neither the
Previous Marketer nor Millennium has any rights, liabilities or obligations to
the other.
We currently sell all of our products directly to consumers through
direct response advertising. We have entered into a Production Services and
Marketing Agreement (the "Production Agreement") with a third party marketing
corporation (the "Marketer") to absorb much of the high costs of producing new
direct response television advertising and producing other print and television
advertising, manufacturing, packaging and warehousing, fulfillment and database
management costs.
Pursuant to the Production Agreement, the Marketer, among
other things, would create and produce a 30-minute direct response television
commercial and a one- or two-minute television commercial for Millennium's skin
care products. Pursuant to the Production Agreement, Millennium also entered
into an incentive based Stock Option Agreement (the "Option Agreement") with the
Marketer. Pursuant to the Option Agreement, Millennium granted the Marketer
options to buy a number of shares of Common Stock, at a particular price per
share, based on the total number of Product Units sold in each Performance Year,
as such terms are defined in the Option Agreement. The Option Agreement is for a
total of three Performance Years. Options to purchase Common Stock are
exercisable for a period of five (5) years from the end of the then-applicable
Performance Year. If the Option Agreement continues for three Performance Years
and the Marketer qualifies for the maximum number of options in each Performance
Year, Millennium will issue the Marketer options to purchase 270,000 shares of
Common Stock at an exercise price of $.55 for the first Performance Year (based
on the sale of 95,000 Product Units at a current retail sales price of $149 per
Product Unit), options to purchase 480,000 shares of Common Stock at an exercise
price of $.50 for the second Performance Year (based on the sale of 160,000
Product Units) and options to purchase 600,000 shares of Common Stock at an
exercise price of $.50 for the third Performance
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Year (based on the sale of 200,000 Product Units). Under the Production
Agreement, Millennium retains all proprietary information and trademarks as well
as the customer list, while giving to the Marketer a percentage based on media
advertising dollars spent and sales achieved. This strategy reduces Millennium's
costs and risk. Once a consumer has purchased products from Millennium,
Millennium seeks to sell him or her additional products that might be of
interest. Through flyers and other promotional mailings, consumers are urged to
re-order products once their current supply has been exhausted and order
additional products manufactured by Millennium. Alternatively, consumers can
elect to enroll in programs which automatically charge their credit cards and
send replenishment supplies at requested intervals.
Our marketing strategy regarding our educational videos is to further
enhance the image and awareness of our videos by producing entertaining,
educational and non-violent characters and stories. We will continue to promote
the "TheraCel" brand, and other skin care products, by seeking to demonstrate
the ease, safety and effectiveness of these products.
PACKAGING, WAREHOUSING, SHIPPING AND DISTRIBUTION
Currently, Millennium undertakes all costs and obligations with respect
to the packaging, warehousing, shipping and distribution needs for the
educational videos. All of Millennium's packaging, warehousing, shipping and
distribution needs with respect to its skin care products are served by the
Marketer pursuant to the Production Agreement. We are seeking to enter into a
similar agreement with respect to the educational videos, although no assurance
can be given that such an arrangement can be made or that it will be on terms
favorable to Millennium. With respect to Millennium's skin care products, a
fulfillment center receives orders via Millennium's direct response advertising
or via the Internet and transmits these orders to the appropriate contractor.
These contractors each have facilities which Millennium uses to package, store
and ship its products. This eliminates the need for Millennium to undertake the
cost and administrative burden of maintaining large scale warehouse and other
fulfillment services. Management believes that concentrating their efforts on
developing and marketing their brands, and on sales and merchandising, rather
than operating a warehouse, will result in a much greater rate of growth without
any diminution in services to its customers. As Millennium's business grows, it
will continually examine the costs and benefits of obtaining its own
distribution center.
QUALITY CONTROL
A vital concern to management is quality control. Strict quality
control standards are required in order to maintain and build relationships with
consumers. Millennium carefully monitors the output of its producers and
contractors to insure they produce videos and skin care products consistent with
the brand and image of Millennium. All contractors and vendors, including video
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producers and post-production staff, are carefully supervised by Millennium.
INVENTORY
Due to the nature of Millennium's video business, Millennium does not
regularly maintain inventory in any material amount. Once fully produced and
ready for distribution, thousands of videos can be produced in a short period of
time, eliminating the need to anticipate sales. Because Millennium only orders
goods after they have received orders from purchasers, inventory is kept to a
minimum.
Although Millennium's skin care products can be made and packaged
relatively easily, due to Millennium's marketing strategy for these products
inventory must be kept on hand. Millennium's current method of marketing is
through direct response television. By law, orders received via such medium must
be fulfilled within thirty (30) days of receipt of a credit card number from the
consumer. The Production Agreement requires the Marketer to provide the funds
necessary for Millennium to purchase and maintain such inventory. This
arrangement allows Millennium to advance minimal funds prior to sales of its
products.
RESEARCH AND DEVELOPMENT
Because of the Production Agreement, Millennium's most significant
expenditure is in the writing, animation and overall production of its videos
and in the research and development area of its skin care products. The ability
to utilize the same video characters multiple times (through sequels and
cross-merchandising) and the success of Millennium's current anti-aging and
other skin care products will have a large impact on the ability of Millennium
to keep these costs as low as possible.
EXPANSION STRATEGY
Millennium believes that it can successfully build on its existing
customer base and marketing, packaging and shipping relationships and expand its
market share in both the educational video and skin care markets. Millennium has
no plans to open additional offices, but could enter into additional
distribution arrangements and/or licensing arrangements as business warrants.
Millennium may also expand the number of suppliers and manufacturers it
contracts with if there is a surge in demand for Millennium's product lines.
Millennium has the capacity to, and intends to, hire additional employees with
respect to development of its electronic commerce efforts. There can be no
assurance that Millennium will be successful in any of these efforts.
ELECTRONIC COMMERCE
Millennium has developed its own websites, www.theracelskin.com and
www.antiwrinklepillow.com in connection with its skin care products, and
www.kidrominc.com in connection with its educational videos.
EMPLOYEES
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As of September, 2000, Millennium employed three full-time individuals
who operate in executive, administrative, sales, marketing and production
capacities. None of Millennium's employees is represented by a labor
organization and Millennium considers its relationship with its employees to be
excellent.
COMPETITION
There are many companies that offer similar or competitive products to
the products produced by Millennium. Both the educational video and skin care
industries are occupied by some of the largest, most well-known companies in the
world, including Disney, Time-Warner, Revlon, Estee Lauder, Scimitar and Anchor
Bay. Despite this substantial and intense competition against foreign and
domestic competitors with substantially greater resources and distribution
capabilities than Millennium, Millennium seeks to distinguish itself in
specialized niches within these industries by attempting to offer unique stories
and characters for its educational videos and by seeking to develop patented and
proprietary products for skin care and anti-aging not offered by its larger
competitors.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
The following is a discussion of certain factors affecting Millennium's
results of operations, liquidity and capital resources. You should read the
following discussion and analysis in conjunction with our consolidated financial
statements and related notes that are included herein.
The following discussion regarding Millennium and its business and
operations contains forward-looking statements. Such statements consist of any
statement other than a recitation of historical fact and can be identified by
the use of forward-looking terminology such as "may," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof or other variations thereon or
comparable terminology. The reader is cautioned that all forward-looking
statements are necessarily speculative and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward-looking statements.
Millennium is active in two distinct and separate areas; the production
and marketing of children's videos and the design, manufacture and sale of skin
care products. The videos are a combination of live action and animation and
contain original music and narrative soundtracks. A very key concept in these
videos is the fact that they are completely free of any type of violence or
violent material. Each video is approximately 30 minutes long and can be adapted
for sale or syndication in foreign markets. Additionally, Millennium is seeking
to develop both additional videos and several weekly combination live
action/animated shows aimed at the teenage market. In developing its videos and
weekly shows, Millennium attempts to create characters with cross-over
merchandising appeal into areas such as clothing, board games, interactive
CD-ROM games which are both entertaining and educational, books, toys, dolls and
video games. Millennium contracts on a case by case basis with various writers,
animators, directors, producers, musicians and post- production staff to
complete the videos and prepare them for release. Currently, two videos are
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available for sale and several others are in various stages of completion.
Millennium has developed a proprietary line of skin care products
designed to combat the effects of aging by rejuvenating skin cells and
eliminating wrinkles and other signs of aging. The products are custom made for
Millennium based on an exclusive formula that is not available through any other
source in the United States. The skin care line is marketed under the TheraCel
brand. In addition to the TheraCel brand, Millennium also owns a patent on a
pillow designed to minimize the facial wrinkles some women experience after a
night of sleep. Millennium contracts with outside sources for the manufacture,
bottling, packaging and distribution of its skin care products.
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 COMPARED
WITH THE YEAR ENDED DECEMBER 31, 1998
Millennium recorded $(443,772) in net sales returns for the year ended
December 31, 1999 as compared with $6,064,378 for the previous year.
Millennium's gross profit (loss) for these years was $(469,412) and $480,469
respectively. During 1998, Millennium was involved in a very active marketing
program consisting primarily of infomercials on various television outlets. This
program ended during 1998 due to disagreements with the marketer at that time.
All sales returns recorded in 1999 were the results of sales from the marketing
efforts of the prior year.
Operating expenses for the year ended December 31, 1999 were $353,716
and $495,562 for the year ended December 31, 1998. The decreased expenses were
the result of a reduced sales and marketing program during 1999 as compared with
1998.
As a result, the loss from operations, before depreciation and
amortization was $1,215,217 for the year ended December 31, 1999 compared with a
loss from operations before depreciation and amortization of $15,093 for the
year ended December 31, 1998. The net loss for the years ended December 31, 1999
and 1998 were $791,717 and $342,359 respectively.
Millennium had cash of $342,376 as of December 31, 1999 and $321,704 as
of December 31, 1998. As of December 31, 1999 Millennium had stockholders equity
of $6,954,891 and $6,875,534 as of December 31, 1998. The changes in the
stockholders equity was primarily the result of the acquisition of UDL as well
as additional investments made by shareholders via the sale of common stock and
the issuance of stock to certain directors and consultants.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
COMPARED WITH THE NINE MONTHS ENDED SEPTEMBER 30, 1999
Millennium recorded no sales for the nine months ended September 30,
2000 as compared with $82,891 for the nine months ended September 30, 1999.
Millennium's gross loss for these periods was $3,924 and $27,799 respectively.
During the period ended September 30, 2000 Millennium was producing its new
30-minute infomercial with its new Marketer as part of its new Production
Agreement.
Operating expenses for the nine months ended September 30, 2000 and
1999 were $375,909 and $191,617 respectively.
As a result, the loss from operations, before depreciation and
amortization was $379,834 for the nine months ended September 30, 2000 and
$219,416 for the nine months ended September 30, 1999. The net loss for the nine
months ended September 30, 2000 and 1999 were $367,495 and $313,502
respectively.
Millennium had cash at September 30, 2000 and 1999 of $329,251 and
$287,753 respectively. Millennium had stockholders equity as of September 30,
2000 and 1999 of $6,611,995 and $8,780,034. The increase in stockholders' equity
results from the issuance of common stock in exchange for services rendered.
LIQUIDITY AND CAPITAL RESOURCES
Millennium has financed its operations and met its capital requirements
primarily through funds raised in private placements conducted since 1996.
Beginning in 1998 with its acquisition of UDL, Millennium has been able to
finance, in part, operations from income. The principal uses of operating cash
are to further develop and produce Millennium's children's videos as well as its
skin care products marketed under the Theracel brand.
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ITEM. 3 DESCRIPTION OF PROPERTY
Millennium leases property for use as its executive offices at HCR
30-A, North Blenheim, New York, from Ardis Balis, the President and a director
of Millennium, at a rate of $2,000 per month. Millennium currently has no policy
with respect to investments or interests in real estate, real estate mortgages
or securities of, or interests in, persons primarily engaged in real estate
activities.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
The following persons are known to Millennium to be officers, directors
and/or beneficial owners of more than five percent of Millennium's common stock
as of June 30, 2000 (the numbers in the following table reflect a 1 for 12
reverse stock split effected in June 2000):
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NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF CLASS
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP
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George Balis 54,254(1)(3) 5.2%
HCR 30-A
North Blenheim, New York 12131
Ardis Balis 474,833(2)(3) 45.4%
HCR 30-A
North Blenheim, New York 12131
Louis Tallarini 18,750 2.0%
HCR 30-A
North Blenheim, New York 12131
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<S> <C> <C>
Dan Gorczycki 21,833 1.7%
HCR 30-A
North Blenheim, New York 12131
John Rissi 44,217 4.6%
HCR 30-A
North Blenheim, New York 12131
ALL OFFICERS AND
DIRECTORS AS A
GROUP (5 Individuals) 615,360 58.8%
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* Indicates less than 1%.
(1) Excludes shares owned by Ardis Balis, Mr. Balis' wife, as to which shares
Mr. Balis disclaims beneficial ownership.
(2) Excludes shares owned by George Balis, Ms. Balis' husband, as to which
shares Ms. Balis disclaims beneficial ownership.
(3) Ardis Balis' shares are subject to a voting agreement entered into in May
2000 pursuant to which all of Ms. Balis' shares are voted by George Balis.
(c) Change in Control
There are no arrangements, including any pledge by any person of
securities of Millennium, the operation of which may at a subsequent date result
in a change in control of the registrant.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following Table sets forth certain information regarding the
executive officers and directors of Millennium as of November 10, 2000.
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NAME AGE DATE OF ELECTION POSITION
<S> <C> <C> <C>
George Balis 49 September, 1994 Chairman of the Board of Directors, Chief
HCR 30-A Executive Officer, Secretary
North Blenheim
New York 12131
Ardis Balis 48 February, 1998 President, Director
HCR 30-A
North Blenheim,
New York 12131
Dan Gorczycki 37 November, 1999 Director
HCR 30-A
North Blenheim,
New York 12131
John Rissi 37 November, 1999 Executive Vice President, Director
HCR 30-A
North Blenheim,
New York 12131
Louis Tallarini 52 June, 2000 Director
HCR 30-A
North Blenheim,
New York 12131
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GEORGE BALIS. George Balis, the Chairman of the Board of Directors,
Chief Executive Officer and Secretary of Millennium, was in the private practice
of law from 1975 through 1986, concentrating in the areas of securities,
corporation and entertainment law. From 1986 through 1992, Mr. Balis was
Chairman and President of American Screen Company, a diversified entertainment
company which, among other things, developed properties for motion picture and
television release. From 1993 to 1998, Mr. Balis was in the private practice of
law specializing in corporate and entertainment matters. In January, 1998, Mr.
Balis became full-time Chairman and Chief Executive Officer of Millennium. Mr.
Balis has served on various boards of directors of corporations in the
cosmetics, entertainment and gourmet food industries. Mr. Balis is a graduate of
both Columbia University's School of Law and Graduate School of Business, and is
admitted to practice law in the State of New York.
ARDIS BALIS. Ardis Balis, the President and a director of Millennium,
founded UltraDerma, Ltd., a company which was acquired by Millennium in
February, 1998. Ms. Balis has both financed and researched the development of
rejuvenative skin care products. She has appeared on numerous instructional
videos, informercials and television talk shows. Since February, 1998, Ms. Balis
has been the President of Millennium. Prior thereto, she had been Chief
Executive Officer and President of UltraDerma, Ltd.
DAN E. GORCZYCKI, C.P.A. Dan Gorczycki, a director of Millennium, has
been a director of Holliday, Fenoglio, Fowler, L.P., a wholly-owned subsidiary
of Lend Lease (USA), Inc. since 1999. Mr. Gorczycki is currently involved in the
placement of financing and debt restructuring in real estate transactions. His
experience includes work in institutional real estate sales for firms including
Landauer Associates, where he worked from 1997 until 1999, Julien J. Studley,
Inc., where he worked from 1995 through 1997, and Legg Mason. Mr. Gorczycki
additionally was employed by The Greater New York Savings Bank from 1993 until
1995 where he was responsible for completing workouts on overleveraged assets.
Mr. Gorczycki's career also contained experience in the financial services
industry at both Cowen & Company (now SG Cowen) and Salomon Brothers (now
Salomon Smith Barney) as a financial analyst. Mr. Gorczycki started his
professional career at Price Waterhouse, where he worked for the Small Business
Group as an auditor. Mr. Gorczycki received his MBA from New York University and
a BS from St. John's University. He is both a Certified Public Accountant
(inactive) and a Licensed Real Estate Salesperson in New York and a member of
the Real Estate Board of New York.
JOHN RISSI. John Rissi, a director of Millennium, began his career in
telecommunications sales for Cable & Wireless Communications, Inc. where he
oversaw a sales staff of more than 30 sales representatives from 1986 to 1989.
In February 1989, Mr. Rissi started his own marketing company, Tele- Save, where
he marketed telecommunications services for companies including AT&T, Worldcom
and Sprint. In August 1995, Mr. Rissi entered into an agreement with VoiceNet
Corporation to market their credit calling card program through April 1999. From
April 1999 to the present, Mr. Rissi co-founded Mutual Media Corporation, Inc.,
a marketing company that specializes in marketing major web sites throughout the
world. Mr. Rissi received his B.S. at Hofstra University.
LOUIS A. TALLARINI. Louis Tallarini, a director of Millennium, has been
executive vice president for Fuller Development Company, a division of Cappelli
Enterprises, Inc. from October 1999 to the present. From 1991 to September 1999
he served as Executive Vice President and member of the Executive Committee of
The Value Companies, where he was responsible for the asset management of a
national real estate portfolio of commercial properties. Mr. Tallarini began his
career as an accountant with the international certified public accounting firm
Pannell, Kerr Foster. Following his career as an accountant, he entered private
industry where he has supervised institutional real estate management teams
13
<PAGE>
throughout the United States. Mr. Tallerini has been involved in philanthropic
endeavors, including serving as Chairman of the Board of the Singers Forum
Foundation; funding scholarships for underprivileged minority children through
the Graham Windham foster child program; and making available affordable housing
for needy families. Mr. Tallarini sits on the Executive Committee of Value
Express, a national commercial real estate lender. Mr. Tallarini received his
B.S. from Fordham University.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid or to be paid
by Millennium, as well as certain other compensation paid or accrued, to
officers, directors and certain key employees.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
SALARY BONUS OTHER
NAME AND PRINCIPAL POSITION
<S> <C> <C> <C> <C>
George Balis 2000 -0- -0- -0-
Chairman, Chief Executive Officer 1999 -0- -0- (2)
and Secretary 1998 -0- -0- -0-
Ardis Balis (1) 2000 -0- -0- -0-
President and Director 1999 -0- -0- (2)
1998 -0- -0- -0-
</TABLE>
--------------------
(1) Ms. Balis became an employee of Millennium in February, 1998.
(2) On November 18, 1999, each of George Balis and Ardis Balis was issued
350,000 shares of Common Stock, at a value of $.10 per share or $35,000, as
compensation for services rendered by each of them as officers and directors of
Millennium in 1999.
It is intended, that each of George Balis, Ardis Balis and John Rissi
will execute employment agreements with Millennium in form and substance to be
negotiated and agreed between Millennium and each such individual. These
employment agreements are expected to include base salaries, expense allowances,
bonuses and a portion of the pre-tax profit of Millennium as compensation for
their services to Millennium, in addition to the opportunity to acquire
additional shares of common stock. These employment agreements are expected to
include non-competition, confidentiality and non-raid provisions to be
negotiated. It is not anticipated that these agreements will be drafted or
negotiated prior to the first quarter of 2001. Among the factors which will be
taken into consideration in determining the compensation package to be included
in any such agreements will be Millennium's revenues, gross profits and net
income at the time such agreements are negotiated and as anticipated over the
immediate future.
On November 18, 1999, each of George Balis and Ardis Balis was issued
350,000 shares of Common Stock, at a value of $.10 per share or $35,000, as
compensation for services rendered by each of them as officers and directors of
Millennium in 1999. No other compensation has been paid to any officer or
director of Millennium since 1996 and, other than as set forth above, no
compensation has been accrued since that time through September 30, 1999. George
Balis received 300,000 shares of common stock, having a value of $15,000, as a
director's fee for his service as a director in 1997. Mr. Balis is not owed any
further compensation for any services rendered to Millennium prior to November
15, 1999. Additionally, 300,000 shares of common stock, having a value of
$15,000, were issued to an individual in 1997 for his services as a director in
1997 (the "Former Director"). The Former Director no longer serves as a director
of Millennium and is not owed any further compensation. Pursuant to a certain
surrender agreement executed by and between Millennium and the Former Director
on February 26, 1999, the Former Director surrendered to Millennium all 300,000
shares issued to him as compensation for his services as a director in 1997.
Certain officers have received loans from Millennium. See " Management
Relationships and Related Transactions." Historically, Directors who are not
members of management have not received any compensation for their service as
such; however, in June 2000 all such non-management directors were awarded 6,250
shares of common stock and
14
<PAGE>
warrants to purchase 6,250 shares of common stock at an exercise price of $.50
per share, and John Rissi was awarded 31,250 shares of common stock in addition
to the aforementioned warrants.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
George Balis is the husband of Ardis Balis. They were married in May,
1998. Mr. Balis currently serves as the Chairman of the Board of Directors (the
"Board"), the Chief Executive Officer and Secretary of Millennium. Ms. Balis
currently serves as President and a member of the Board. All of Ardis Balis'
shares of Millennium common stock are subject to a voting agreement entered into
in May 2000 pursuant to which all of Ms. Balis' shares are voted by George
Balis.
As of December 31, 1997, George Balis owed Millennium $9,031 for money
advanced to him. Such amount was repaid by Ardis Balis in 1998 through the
application of proceeds from the acquisition of UDL by Millennium. As of
December 31, 1998, Millennium owed Ardis Balis $162,500 in cash pursuant to the
acquisition by Millennium of UDL. Such amount was offset by a cash advance to
Ms. Balis of $213,427. Accordingly, as of September 30, 1999, there was a
balance owed by Ms. Balis to Millennium of $50,927, which such amount remains
outstanding.
As of December 31, 1998, Millennium had invested $161,621 to obtain a
nineteen percent (19%) equity interest in a company which develops and markets
gourmet snack foods.
On May 1, 1998 and September 28, 1998, George Balis transferred 400,000
shares and 200,000 shares, respectively, of common stock to Ardis Balis to
enable Millennium to meet its obligation to Ms. Balis with respect to the
Acquisition Agreement. On November 18, 1999 Millennium issued an additional
450,000 shares of common stock to Ardis Balis to enable Millennium to meet its
obligation to Ms. Balis with respect to the Acquisition Agreement. The
Acquisition Agreement requires Millennium to insure that Ardis Balis, until such
time as Millennium shall complete a public offering of its shares registered
with the Securities and Exchange Commission, maintains an equity position in
Millennium of no less than 51% of all issued and outstanding shares of common
stock of Millennium. For purposes of such calculation, Millennium is permitted
to include shares of common stock held by George Balis, the Chairman and Chief
Executive Officer of Millennium and the husband of Ardis Balis.
In August 2000, Millennium undertook a private offering of 4,000,000
shares of its common stock pursuant to to Section 4(2) of the Securities Act and
Regulation D promulgated thereunder, specifically, Rule 504. Simultaneously with
the closing of the pending private offering, 4,570,913 shares of common stock
will be issued to George and Ardis Balis to enable Millennium to meet its
obligation to Ms. Balis with respect to the Acquisition Agreement. In addition,
382,258 shares of common stock will be issued to certain consultants in
consideration for services rendered in connection with the development and
marketing of Millennium's educational videos and skin care products, including
50,000 shares to each of Messrs. Rissi and Tallarini and 30,000 shares to Mr.
Gorczycki, each of whom is a director of Millennium.
ITEM 8. DESCRIPTION OF SECURITIES
Millennium is authorized by its Certificate of Incorporation, as
amended, to issue an aggregate of 25,000,000 shares of common stock, par value
$.0001 per share and 10,000,000 blank check preferred shares. As of June 30,
2000, 1,046,829 shares of common stock were issued and outstanding and 500,000
shares of Series A Preferred Stock were issued and outstanding. Other than the
common stock and preferred stock, Millennium is not authorized to issue any
other class of capital stock.
COMMON STOCK
All outstanding shares of common stock are of the same class and have
equal rights and attributes. The holders of common stock are entitled to one
vote per share on all matters submitted to a vote of
15
<PAGE>
shareholders of Millennium. All shareholders are entitled to share equally in
dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available. In the event of liquidation, the
holders of common stock are entitled to share ratably in all assets remaining
after payment of all liabilities. The shareholders do not have cumulative or
preemptive rights.
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders of Millennium. In addition, such
holders are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available. In the event of the dissolution, liquidation or winding-up of
Millennium, the holders of common stock are entitled to share ratably in all
assets remaining after payment of all liabilities of Millennium. Shareholders
are not entitled to accumulate their votes in any election. Holders of common
stock have no preemptive rights or other rights to subscribe or convert shares
of common stock into other securities.
PREFERRED STOCK
The Board of Directors is authorized, subject to limitations prescribed
by Delaware law, to provide for the issuance of preferred stock in one or more
series, to establish from time to time the number of shares to be included in
each such series, to fix the voting powers, designations, preferences and
rights, and the restrictions of those preferences and rights, of the shares of
each such series and to increase, but not above the total number of authorized
shares of preferred stock, or decrease, but not below the number of shares of
such series then outstanding, the number of shares of any such series without
further vote or action by the stockholders. The Board of Directors is authorized
to issue preferred stock with voting, conversion, and other rights and
preferences which could adversely affect the voting power or other rights of the
holders of common stock. On June 21, 2000 we issued 500,000 shares of Series A
Preferred Stock to George Balis and Ardis Balis. The Series A preferred shares
have rights to dividends, rights with respect to liquidation and other rights
equivalent to those of holders of our common stock except that each share of
Series A Preferred Stock entitles the holder to ten votes with respect to all
matters to be voted on by shareholders.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON MILLENNIUM'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Millennium's common stock is presently trading on the National
Quotation Bureau's OTC "pink sheets" under the symbol MMLD. As of November 10,
2000, there were approximately 108 holders of
16
<PAGE>
our common stock. Millennium is presently not required to file reports with the
SEC pursuant to the Exchange Act.
The following table sets forth the range of the high and low closing
bid prices per share of our common stock during each of the calendar quarters
identified below. These bid prices were obtained from the OTC Bulletin Board
Quarterly Quote Summary Report received from Nasdaq Trading Market Services and
the Standard & Poor's Comstock, and do not necessarily reflect actual
transactions, retail markups, markdowns or commissions.
THE HIGH AND LOW BID SALES PRICES FOR THE EQUITY FOR EACH FULL
QUARTERLY PERIOD WITHIN THE TWO MOST RECENT FISCAL YEARS AND ANY SUBSEQUENT
INTERIM PERIOD FOR WHICH FINANCIAL STATEMENTS ARE INCLUDED ARE AS FOLLOWS:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Year Quarter High Bid Low Bid Year Quarter High Bid Low Bid
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1st* 10.313 2.75 1999 1st* 1.531 0.375
1998 2nd* 4.813 0.625 1999 2nd* 1.063 0.375
1998 3rd* 2.813 1.25 1999 3rd* 0.563 0.250
1998 4th* 2.625 1.50 1999 4th 1.25 0.250
Year Quarter High Bid Low Bid
2000 1st* 1.25 0.25
2000 2nd* 1.25 0.25
2000 3rd* 1.25 0.25
--------------------------------------------------------------------------------
</TABLE>
We have not paid any cash dividends to date and do not anticipate or
contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of
Millennium's business.
ITEM 2. LEGAL PROCEEDINGS
Millennium is not a party to or involved in any material litigation,
nor is it aware, to the best of its knowledge, of any pending or contemplated
proceedings against it by any third party or any
17
<PAGE>
government authorities.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
(a) Previous independent accountants
(i) As a result of the Merger, on December 30, 1999, the Registrant
dismissed Vlahakis & Associates, CPA as its independent accountant.
(ii) the reports of Vlahakis & Associates, CPA on the consolidated
financial statements for the past two fiscal years ended December 31, 1999 and
December 31, 1998 contained no adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting
principle.
(iii) The Registrant's Board of Directors participated in and
approved the decision to change independent accountants.
(iv) In connection with its audits for the two most recent fiscal
years ended December 31, 1999 and December 31, 1998 and through April 20, 2000,
there have been no disagreements with Vlahakis & Associates, CPA on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements if not resolved to the
satisfaction of Paritz & Company, P.A. would have caused them to make reference
thereto in their report on the consolidated financial statements for such years.
(v) The Registrant has requested that Vlahakis & Associates, CPA
furnish it with a letter addressed to the SEC stating whether or not it agrees
with the above statements.
(b) New independent accountants
(i) The Registrant retained Paritz & Company P.A. as its new
independent accountants as of January 1, 2000. During the two most recent fiscal
years ended December 31, 1999 and December 31, 1998 and through April 20, 2000,
the Registrant has not consulted with Paritz & Company, P.A.. on items which (1)
were or should have been subject to SAS 50 or (2) concerned the subject matter
of a disagreement or reportable event with the former auditor. The Registrant
authorized Paritz & Company, P.A. to respond to any and all inquiries of the
successor accountant.
18
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In February, 1997, Millennium issued 2,300,000 shares of Common Stock
at a price of $.0001 per share. This transaction was exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
Section 4(2) thereof, since they were issued solely to members of management and
directors of Millennium. Also in February, 1997, Millennium issued 578,000
shares of Common Stock for par value ($.0001) as compensation for services
rendered. This transaction was exempt from registration under the Securities
Act, pursuant to Section 4(2) thereof since they were issued solely to members
of management and directors of Millennium.
In December, 1997, Millennium issued 600,000 shares of Common Stock to
two individuals as compensation for serving as directors of Millennium. This
transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act since they were issued solely to members of management and
directors of Millennium. Also in December, 1997, Millennium sold 398,000 shares
of Common Stock for $.25 per share, which such transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act and Regulation D
promulgated thereunder, specifically, Rule 504 thereof. Also in December, 1997,
Millennium sold 82,353 shares of Common Stock for $.25 per share. This
transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act and Regulation D promulgated thereunder, specifically, Rule 504
thereof.
In March, 1998, Millennium issued 500,000 shares of Common Stock to
Ardis Balis, an officer and director of Millennium, pursuant to the Acquisition
Agreement, which transaction was exempt from registration pursuant to Section
4(2) of the Securities Act.
In April, 1998, Millennium issued 800,000 shares to Ardis Balis to
comply with the terms of the Acquisition Agreement. This transaction was exempt
from registration pursuant to Section 4(2) of the Securities Act. Also in April,
1998, Millennium sold 300,000 shares at a price per share of $.16 and 250,000
shares for $.25 per share. These transactions were exempt from registration
pursuant to Section 4(2) of the Securities Act and Regulation D promulgated
thereunder, specifically, Rule 504 thereof.
In April, 1998, Millennium issued 400,000 shares of Common Stock at par
value, $.0001, to George
19
<PAGE>
Balis, an officer and director of Millennium. This transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act.
In April, 1998, Millennium sold 100,000 shares at a price of $.50 per
share, and an additional 100,000 shares for $.85 per share, which such
transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act and Regulation D promulgated thereunder, specifically, Rule 504
thereof.
Also in April, 1998, Millennium issued 350,000 shares to Ardis Balis to
remain in compliance with the terms of the Acquisition Agreement. This
transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act. Additionally, Millennium sold 350,000 restricted shares of
Common Stock for $.35 per share, which such transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act and Regulation D
promulgated thereunder, specifically, Rule 504 thereof. In April, 1998,
Millennium sold an additional 300,000 shares of Common Stock at $.166 per share.
This transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act and Regulation D promulgated thereunder, specifically, Rule 504
thereof.
In July, 1998, Millennium issued 275,000 shares to Ardis Balis to
remain in compliance with the terms of the Acquisition Agreement, which such
transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act. Also in July, 1998, Millennium sold 75,000 shares to one entity
and 200,000 shares to another entity, both at a price per share of $.50, and
both exempt from registration pursuant to Section 4(2) of the Securities Act and
Regulation D promulgated thereunder, specifically, Rule 504 thereof.
In September, 1998, Millennium sold 137,500 shares, pursuant to Section
4(2) of the Securities Act and Regulation D promulgated thereunder,
specifically, Rule 504 thereof, for $.50 per share. Also in September, 1998,
Millennium issued 700,000 shares to Ardis Balis to remain in compliance with the
terms of the Acquisition Agreement. Also in September, 1998, Millennium sold
120,000 shares of Common Stock for $.20 per share, pursuant to an exemption from
registration pursuant to Section 4(2) of the Securities Act and Regulation D
promulgated thereunder, specifically, Rule 504 thereof.
In September, 1998, in three unrelated transactions, Millennium sold
50,000 shares of Common Stock at $.30 per share, 80,000 shares at $.50 per share
and 50,000 shares at $.65 per share, all pursuant to an exemption from
registration pursuant to Section 4(2) of the Securities Act and Regulation D
promulgated thereunder, specifically, Rule 504 thereof.
20
<PAGE>
In October, 1998, Millennium sold 2,985 shares of Common Stock at $.40
per share, pursuant to an exemption from registration pursuant to Section 4(2)
of the Securities Act and Regulation D promulgated thereunder, specifically,
Rule 504 thereof.
In November, 1998, Millennium sold 25,000 shares of Common Stock for
services rendered, which such services were valued at $44,500, or $.56 per
share. This transaction was exempt from registration pursuant to Section 4(2) of
the Securities Act.
In November, 1998, Millennium sold 75,000 shares at $.80 per share.
This transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act and Regulation D promulgated thereunder, specifically, Rule 504
thereof.
In three unrelated transactions in December, 1998, Millennium sold
80,000, 290,000 and 30,000 shares of Common Stock each for $.50 per share,
pursuant to an exemption from registration pursuant to Section 4(2) of the
Securities Act and Regulation D promulgated thereunder, specifically, Rule 504
thereof.
In December, 1998, Millennium sold 25,000 shares for $.80 per share,
pursuant to Section 4(2) of the Securities Act and Regulation D promulgated
thereunder, specifically, Rule 504 thereof. Also in December, 1998, Millennium
sold 12,000 shares of Common Stock for $.48 per share, pursuant to Section 4(2)
of the Securities Act and Regulation D promulgated thereunder, specifically,
Rule 504 thereof.
In January, 1999, Millennium sold 170,000 shares for $.50 per share,
pursuant to Section 4(2) of the Securities Act and Regulation D promulgated
thereunder, specifically, Rule 504 thereof.
In February, 1999, Millennium issued 75,000 restricted shares for
services rendered valued at $69,750, or $.93 per share, which such transaction
was exempt from registration pursuant to Section 4(2) of the Securities Act.
In March, 1999, Millennium sold 30,000 shares of Common Stock, pursuant
to Section 4(2) of the Securities Act and Regulation D promulgated thereunder,
specifically, Rule 504 thereof, for $.50 per share.
In April, 1999, Millennium sold 750,000 shares of Common Stock,
pursuant to Section 4(2) of the Securities Act and Regulation D promulgated
thereunder, specifically, Rule 504 thereof, for $.25 per share.
21
<PAGE>
Also in April, 1999, Millennium sold 20,000 shares of Common Stock for services
rendered valued at $11,200, or $.56 per share, which such transaction was exempt
from registration pursuant to Section 4(2) of the Securities Act.
In July, 1999, Millennium sold 200,000 shares of Common Stock in
consideration for the termination of a marketing agreement, valued at $59,375 or
$.296 per share. Also in July, 1999, Millennium issued 50,000 shares of
restricted Common Stock in connection with services rendered, valued at $13,250,
or $.265 per share, which such transaction was exempt from registration pursuant
to Section 4(2) of the Securities Act.
In November, 1999, Millennium issued 350,000 shares of Common Stock to
Ardis Balis and 350,000 shares to George Balis for services rendered by each of
them as officers and directors of Millennium during 1999. Additionally,
Millennium issued 400,000 shares of Common Stock to be in compliance with the
terms of the Acquisition Agreement. All of these transactions were exempt from
registration pursuant to Section 4(2) of the Securities Act since they were
issued solely to members of management and directors of Millennium. Also in
November, 1999, Millennium sold 50,000 shares of Common Stock for services
rendered, which such services were valued at $5,000, or $.10 per share. This
transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act.
In June 2000, Millennium issued 1,923,000 shares of its common stock to
certain consultants in consideration for services rendered, which services were
valued at a price of $.10 per share. All of these transactions were exempt from
registration pursuant to Section 4(2) of the Securities Act. In addition,
1,923,000 shares of its common stock were issued to Ardis Balis in compliance
with the terms of the Acquisition Agreement.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our charter provides that no director shall be personally liable to us or to any
stockholder for monetary damages arising out of such director's breach of
fiduciary duty, except to the extent that the elimination or limitation of
liability is not permitted by Delaware law. Delaware law, as currently in
effect, permits charter provisions eliminating the liability of directors for
breach of fiduciary duty, except that such provisions do not eliminate or limit
the liability of directors for (a) any breach of the director's duty of loyalty
to a corporation or its stockholders, (b) any acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, (c)
any payment of a dividend or approval of a stock purchase which is illegal under
Section 174 of the Delaware General Corporation Law or (d) any transaction from
22
<PAGE>
which the director derived an improper personal benefit. A principal effect of
this provision of our charter is to limit or eliminate the potential liability
of our directors for monetary damages arising from any breach of their duty of
care, unless the breach involves one of the four exceptions described in (a)
through (d) above.
Our charter and by-laws further provide for the indemnification of our
directors and officers to the fullest extent permitted by Section 145 of the
Delaware General Corporation Law, including circumstances in which
indemnification is otherwise discretionary. Insofar as indemnification for
liabilities arising under the Act may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the SEC that indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
23
<PAGE>
PART FS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report FS2 - FS3
Financial Statements:
Balance Sheets,
December 31, 1999 and 1998 FS4
Statement of Operations, Years Ended
December 31, 1999 and 1998 FS5
Statement of Cash Flows, for the
Years Ended December 31, 1999 and 1998 FS6
Notes to Financial Statements FS7 - FS11
Management's Report FS12
Balance Sheets,
September 30, 2000 (Unaudited) FS13
Statement of Operations, Nine Months
Ended September 30, 2000 and 1999
(Unaudited), FS14
Statement of Cash Flows, for the
Nine Months Ended September 30, 2000 and
1999 (Unaudited), FS15
</TABLE>
FS-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
MILLENNIUM DIRECT, INC. AND SUBSIDIARIES
North Blenheim, New York
We have audited the accompanying consolidated balance sheet of
MILLENNIUM DIRECT, INC. AND SUBSIDIARIES as of December 31, 1999 and the related
consolidated statements of operations and accumulated deficit and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of MILLENNIUM DIRECT,
INC. AND SUBSIDIARIES as of December 31, 1999, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
Paritz & Company, P.A.
Hackensack, New Jersey
November 23, 2000
FS-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Millennium Direct, Inc. and Subsidiaries
North Blenheim, New York
We have audited the accompanying consolidated balance sheet of
MILLENNIUM DIRECT, INC. AND SUBSIDIARIES as of December 31, 1998 and the related
consolidated statements of operations and accumulated deficit and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of MILLENNIUM DIRECT,
INC. AND SUBSIDIARIES as of December 31, 1998, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
VLAHAKIS & ASSOCIATES, CPA
Stamford, NY
November 23, 2000
FS-3
<PAGE>
MILLENNIUM DIRECT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
---------DECEMBER 31,---------
1999 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 342,376 $ 321,704
Accounts receivable -- 336,690
Inventories -- 15,000
Investments -- 171,621
----------- -----------
TOTAL CURRENT ASSETS 342,376 845,015
----------- -----------
Property and equipment, net of accumulated
depreciation of $10,216 in 1999 and $5,179 in 1998 18,862 11,399
----------- -----------
OTHER ASSETS:
Intangible assets, net of accumulated amortization
of $712,502 in 1999 and $323,183 in 1998 5,862,079 6,242,519
Officer loan receivable 95,952 --
Deferred income taxes 423,500 --
----------- -----------
TOTAL OTHER ASSETS 6,381,531 6,242,519
----------- -----------
TOTAL ASSETS $ 6,742,769 $ 7,098,933
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses $ 79,800 $ --
Notes payable (current portion) 115,000 162,500
----------- -----------
TOTAL CURRENT LIABILITIES 194,800 162,500
----------- -----------
Notes payable 115,000 --
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock 2,645 650
Additional paid-in capital 7,826,422 7,317,342
Accumulated deficit (1,396,098) (442,459)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 6,432,969 6,875,533
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,742,769 $ 7,038,033
=========== ===========
</TABLE>
================================================================================
See notes to financial statements
FS-4
<PAGE>
MILLENNIUM DIRECT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
================================================================================
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998
<S> <C> <C>
SALES $ (443,742) $ 6,064,378
COST OF GOODS SOLD 25,670 5,583,909
----------- -----------
GROSS PROFIT (LOSS) (469,412) 480,469
Selling, general and administrative expenses 353,716 495,562
----------- -----------
LOSS FROM OPERATIONS (823,128) (15,093)
Loss on non-marketable securities (161,922) --
----------- -----------
LOSS BEFORE DEPRECIATION, AMORTIZATION
AND INCOME TAX CREDIT (985,050) (15,093)
Depreciation and amortization 392,089 327,266
----------- -----------
LOSS BEFORE INCOME TAX CREDIT (1,377,139) (342,359)
Income tax credit 423,500 --
----------- -----------
NET LOSS (953,639) (342,359)
ACCUMULATED DEFICIT - BEGINNING OF YEAR (442,459) (100,100)
----------- -----------
ACCUMULATED DEFICIT - END OF YEAR $(1,396,098) $ (442,459)
=========== ===========
</TABLE>
================================================================================
See notes to financial statements
FS-5
<PAGE>
MILLENNIUM DIRECT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (953,639) $ (342,359)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 386,551 324,280
Deferred income taxes (423,500) --
Changes in operating assets and liabilities:
Accounts receivable 336,690 (336,690)
Inventories 15,000 (15,000)
Accrued expenses 18,901 59,999
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (619,997) (309,770)
----------- -----------
INVESTING ACTIVITIES:
Investments 9,699 (171,621)
Loss on non-marketable securities 161,922 --
Acquisition of property, plant and equipment (13,574) (8,109)
Acquisition of intangible assets -- (6,495,694)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (158,047) (6,675,424)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from sale of common stock 511,074 7,035,064
Net increase (decrease) in stockholder loans (28,452) 171,534
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 482,622 7,206,598
----------- -----------
INCREASE IN CASH 20,672 221,404
CASH - BEGINNING OF YEAR 321,704 100,300
----------- -----------
CASH - END OF YEAR $ 342,376 $ 321,704
=========== ===========
</TABLE>
================================================================================
See notes to financial statements
FS-6
<PAGE>
MILLENNIUM DIRECT, INC. (FORMERLY KID ROM INC.) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
Millennium Direct, Inc ("Millennium"), and its subsidiary, which is
wholly owned. All material inter-company balances and transactions have
been eliminated.
BUSINESS DESCRIPTION
Millennium was incorporated in the State of Delaware on September 13,
1994 as Kid Rom, Inc. ("KRI"). Millennium develops, produces and
distributes entertaining and educational videos for the toddler,
children and teenage markets. In February 1998, KRI acquired
UltraDerma, Ltd. ("UDL"), a company which develops, markets and
distributes anti-aging skin care products. On November 18, 1999, KRI
changed its name to Millennium Direct, Inc.
Millennium currently operates two divisions; educational videos (KRI's
business since incorporation) and skin care products (the business of
UDL acquired in February, 1998).
USES OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of net
revenue and expenses during each reporting period. Actual results could
differ from those estimates.
REVENUE RECOGNITION
Revenue from product sales is recognized at the time the product is
shipped.
INVENTORIES
Inventories are valued at the lower of cost (determined on the
first-in, first-out basis) or market (replacement cost).
PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost. Major additions,
improvements and renewals, which substantially increase the useful
lives of assets, are capitalized. Maintenance, repairs and minor
renewals are charged to expense when incurred.
Depreciation is provided for both financial reporting and income tax
purposes using the straight-line and accelerated methods.
FS-7
<PAGE>
================================================================================
INTANGIBLES
Goodwill and intangibles represent the excess of cost over the fair
value of the intangibles acquired and are amortized over fifteen years
for trademarks, patents and product development costs. Goodwill is
amortized over twenty-five years using the straight-line method.
INCOME TAXES
The Company provides for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for
Income Taxes". SFAS 109 requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of
temporary differences between the financial statement carrying amounts
and the tax basis of assets and liabilities.
EARNINGS PER SHARE
In 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per share", which required
retroactive adoption. The new standard simplifies the computation of
earnings per share and requires the presentation of basic and fully
diluted earnings per share. Basic income per share amounts are based
upon the weighted average number of shares of common stock outstanding
during the years presented. Diluted earnings per share amounts are
based on the weighted average number of shares of common stock and
stock options outstanding during the years presented.
COMPREHENSIVE INCOME (LOSS)
Effective January 1, 1998, the Company adopted the provisions of SFAS
No. 130, "Reporting Comprehensive Income", which modifies the financial
presentation of comprehensive income and its components. In accordance
with this statement, a consolidated statement of comprehensive income
is included in the consolidated financial statements to present all
changes in stockholders' equity in the periods presented resulting from
transactions related to the Company's stock.
STOCK BASED COMPENSATION
SFAS No. 123, "Accounting for Stock Based Compensation" ("SFAS 123")
encourages, but does not require companies to record compensation costs
for stock-based employee compensation. Millennium has chosen not to
adopt SFAS 123 and to continue to account for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
related interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price
of the Company's stock at the date of the grant over the amount an
employee must pay to acquire the stock.
FS-8
<PAGE>
================================================================================
IMPAIRMENT OF LONG-LIVED ASSETS
Millennium accounts for the impairment of long-lived assets in
accordance with SFAS No. 121 which requires that long-lived assets and
identifiable intangibles held and used by a company be reviewed for
possible impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt investments with original
maturities of three months or less when purchased to be cash
equivalents. The carrying amounts approximate fair market value because
of the short maturity.
The Company maintains cash balances at various financial institutions.
Accounts at each institution are insured by the Federal Deposit
Insurance Corporation up to $100,000. The Company's accounts at these
institutions may, at times, exceed the federally insured limits. The
Company has not experienced any losses in such accounts.
2 BUSINESS ACQUISITION
On February 1, 1998, Millennium, through a wholly-owned subsidiary,
acquired substantially all of the assets of UDL (the "Acquisition"),
for a total purchase price of $6,334,600. The consideration consisted
of $400,000 in cash and the issuance of 3,025,000 restricted shares of
common stock valued at $5,934,600. Concurrent with the Acquisition,
Millennium executed a letter agreement which granted to the Chairperson
and Founder of UDL, anti-dilution rights pursuant to which Millennium
agreed to maintain her interest in Millennium, pending a public
offering of Millennium's securities registered with the Securities and
Exchange Commission, at not less than fifty-one percent (51%) of the
issued and outstanding common stock. For purposes of such calculation,
Millennium is permitted to include shares of common stock held by the
Chairman and Chief Executive Officer of Millennium and her husband. The
excess of the consideration paid over the fair value of assets
acquired, along with their related straight-line amortization periods,
were:
<TABLE>
<CAPTION>
Amortization
Amount Period
<S> <C> <C>
Trademarks $2,700,000 15 years
Product development 1,350,000 15 years
Patents 300,000 15 years
Goodwill 1,962,000 25 years
----------
$6,312,000
==========
</TABLE>
FS-9
<PAGE>
================================================================================
3 INTANGIBLES
The Company examines the carrying value of its intangible assets to
determine whether there are any impairment losses. Considerable
management judgement is necessary to estimate the fair value of these
assets. Accordingly, the realized value of these assets could vary
significantly from management's estimates.
No impairment loss has been recorded in the accompanying financial
statements as management's estimates of the future cash flows generated
by these assets are in excess of their related carrying values.
4 LONG-TERM DEBT
As of December 31, 1999 long-term debt consists of various notes, with
maturity dates ranging from December 15, 2000 through December 31,
2000. The notes bear interest at 8 1/2% per annum an are payable fifty
percent of the outstanding principal plus the accrued interest on the
entire balance is payable in December 2000. The balance of the
remaining principal along with any accrued interest is payable in
December 2001.
In the event of a default by the Company, any remaining balance at the
time of the default is due and payable immediately. Upon such default,
the note holder shall receive the right to convert any portion of the
outstanding principal into common shares of the Company at a conversion
price of $.50 per share. The note holder would also, upon default, be
entitled to, among other things, an increased interest rate of
approximately 11% per annum, additional payments of .15% of annual
gross sales for two years and the issuance of warrants to purchase one
share for each dollar of the initial principal amount.
5 NET LOSS PER SHARE
Basic loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding for each year. The weighted
average number of shares used to compute basic loss per share for the
years ended December 31, 1999 and 1998 were 6,790,001 and 4,291,062,
respectively.
Diluted loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding during the year plus, for
1999 and 1998, the incremental shares that would have been outstanding
had the Company been required to issue additional shares pursuant to
the Anti-Dilution Rights. In 1999 and 1998, issuance of shares
pursuant to these rights would have been anti-dilutive and, therefore,
were not considered in the computation of diluted loss per share. As a
result, for the years ended December 31, 1999 and 1998 diluted loss per
share equals basic loss per share.
FS-10
<PAGE>
================================================================================
6 COMMITMENTS
In September 1999, the Company terminated a sales and marketing
agreement with a prior marketer (the "Previous Marketer"). As part of
the termination agreement, Millennium and the Previous Marketer agreed
that the Previous Marketer would continue to sell on behalf of
Millennium the approximately 9,000 units remaining in the Previous
Marketer's possession. There is no deadline for this sale of remaining
inventory, but the Previous Marketer continues to have an obligation to
report all sales to Millennium, which has retained audit rights with
respect to such inventory. In June, 1999, Millennium also terminated a
separate licensing agreement it had with the Previous Marketer to
assist Millennium in distributing the educational videos produced by
Millennium. Millennium paid $59,000, in the form of 200,000 shares of
Common Stock, to terminate such agreement. Other than as set forth
above, neither the Previous Marketer nor Millennium has any rights,
liabilities or obligations to the other.
During November 1999, the Company entered into a new marketing and
related production agreement with a new marketing company to market the
Company's Theracel product line. The marketer is to develop direct
response television advertising and will also perform certain
manufacturing, warehousing and production activities. In connection
with this agreement, the Company granted the Marketer certain incentive
based stock options. The options are exercisable for a period of up to
five years following the completion of a "performance year" as defined
in the Agreement. This Agreement allows the Marketer to acquire up to
1,350,000 shares at prices ranging between $.50 and $1.50.
7 RELATED PARTIES
The Company leases its office space, on a month-to-month basis, from a
stockholder. For 1999 and 1998, the Company recorded rent expense under
these leases of approximately $32,000and $29,800, respectively.
At December 31, 1998, the Company had invested $161,621 to obtain a 19%
equity interest in a company, which develops and markets gourmet snack
foods. The Company's investment, which is controlled by Boyd and the
Company's chairman, is carried at cost, which approximates fair value.
8 INCOME TAXES
There is no current or deferred tax expense for the year ended December
31, 1998 due to the Company's net loss for those years. Future tax
benefits, such as net operating loss carryforwards, are not recognized
in the accompanying financial statements for the year ended December
31, 1998. For the year ended December 31, 1999, the Company recorded a
deferred tax asset of $ 423,500 consisting entirely of the net
operating loss carryforward.
FS-11
<PAGE>
MILLENNIUM DIRECT, INC.
Avalon Plaza
North Blenheim, NY 12131
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-SB and Article 10 of
Regulation SB. Accordingly, they do not include all of the information and
footnotes necessary for a comprehensive presentation of financial position and
results of operations.
It is management's opinion, however, that all material adjustments
(consisting of normal recurring accruals) have been made which are necessary for
a fair financial statement presentation. The results of the interim period are
not necessarily indicative of the results to be expected for the year.
For further information, refer to the consolidated financial statements
and footnotes included in the Company's annual report on Form 10-SB for the year
ended December 31, 1999.
Millennium Direct, Inc.
By /s/ George S. Balis
----------------------------------
George S. Balis, CEO
FS-12
<PAGE>
MILLENNIUM DIRECT, INC. AND SUBSIDIARIES
BALANCE SHEET
SEPTEMBER 30, 2000
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 329,252
---------------
TOTAL CURRENT ASSETS 329,252
---------------
Property and equipment, net of accumulated
depreciation of $10,216 12,797
---------------
OTHER ASSETS:
Intangible assets, net of accumulated amortization
of $837,099 5,636,482
Officer loan receivable 113,843
Deferred income taxes 667,500
---------------
TOTAL OTHER ASSETS 6,417,825
---------------
TOTAL ASSETS $ 6,759,874
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses $ 79,800
Notes payable (current portion) 115,000
---------------
TOTAL CURRENT LIABILITIES 194,800
---------------
Notes payable 115,000
---------------
STOCKHOLDERS' EQUITY:
Common stock 6,491
Additional paid-in capital 8,207,176
Accumulated deficit (1,763,593)
---------------
TOTAL STOCKHOLDERS' EQUITY 6,450,074
---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,759,874
===============
</TABLE>
================================================================================
FS-13
<PAGE>
MILLENNIUM DIRECT, INC. AND SUBSIDIARIES
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
2000 1999
<S> <C> <C>
SALES $ -- $ 82,891
COST OF GOODS SOLD 3,924 110,690
-------------- --------------
GROSS PROFIT (LOSS) (3,924) (27,799)
Selling, general and administrative expenses 375,909 191,617
-------------- --------------
LOSS FROM OPERATIONS (379,833) (219,416)
Depreciation and amortization 231,662 94,086
-------------- --------------
LOSS BEFORE INCOME TAX CREDIT (611,495) (313,502)
Income tax credit 244,000 --
-------------- --------------
NET LOSS (367,495) (313,502)
ACCUMULATED DEFICIT - BEGINNING OF PERIOD (1,396,098) (442,459)
-------------- --------------
ACCUMULATED DEFICIT - END OF PERIOD $(1,763,593) $ (755,961)
============== ==============
</TABLE>
================================================================================
FS-14
<PAGE>
MILLENNIUM DIRECT, INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2000
(Unaudited)
================================================================================
<TABLE>
<S> <C>
OPERATING ACTIVITIES:
Net loss $ (367,495)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 231,662
Deferred income taxes (244,000)
--------------
NET CASH USED IN OPERATING ACTIVITIES (379,833)
--------------
FINANCING ACTIVITIES:
Proceeds from sale of common stock 384,600
Net increase (decrease) in stockholder loans (17,891)
--------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 366,709
--------------
DECREASE IN CASH (13,124)
CASH - BEGINNING OF PERIOD 342,376
--------------
CASH - END OF PERIOD $ 329,252
==============
</TABLE>
================================================================================
FS-15
<PAGE>
PART III
Item 1. Index to Exhibits
The Following list describes the exhibits filed as part of this Registration
Statement on Form 10-SB:
<TABLE>
<CAPTION>
Exhibit Number Description of Document
-------------- -----------------------
<S> <C>
2.1 Certificate of Incorporation
2.2 Amendments to the Certificate of Incorporation
2.3 Bylaws
2.4 Application for Authority to Conduct Business in the State of New York
5.1 Voting trust Agreement dated July 5, 2000.
5.2 Letter Agreement among Kid Rom, Inc., UltraDerma, Ltd.
and Ardis Boyd dated February 1, 1998.
6.1 Production Services and Marketing Agreement, dated November 3, 1999
between the Company and Marketer, and related Stock Option Agreement
8.1 Acquisition Agreement dated February 1, 1998, by and between UltraDerma, Ltd.,
and Kid Rom, Inc.
10.1 Consent of Independent Auditors
10.2 Consent of Independent Auditors
</TABLE>
ITEM 2 - DESCRIPTION OF EXHIBITS
The required exhibits are attached hereto, as noted in Item 1 above.
37
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
MILLENNIUM DIRECT, INC.
-----------------------
(Registrant)
Date: 11/10/00
-----------------------
By: /s/ George S. Balis
------------------------
George S. Balis
Chief Executive Officer
38
STATEMENT OF DIFFERENCES
The trademark symbol shall be expressed as..................................'TM'
