As filed with the Securities and Exchange Commission on December 24, 1997
Registration No.333-39177
U.S. Securities and Exchange Commission
Washington, D.C.
AMENDMENT NO. 1 to
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MILLENNIA ENTERTAINMENT, INC.
(Exact name of small business registrant as specified in its charter)
Texas 7822 75-2691537
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
16910 Dallas Parkway, Suite 100, Dallas, Texas
75248, (972) 248-1922 (Address and
telephone number of principal executive
offices)
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Kevin B. Halter, 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248 (972) 248-1922
(name, address and telephone number of agent for service)
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Copies to:
Richard Braucher, Esq.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
(972) 248-1922
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class Amount to be Proposed maximum offering Proposed maximum aggregate Registration fee
of securities to be registered (1) price per share (1) offering price (1)
registered
COMMON STOCK 570,000 shares $0.10 $57,000 $177.80
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Note: (1) Estimated solely for the purpose of calculating the registration fee.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PRELIMINARY PROSPECTUS
(subject to completion)
MILLENNIA ENTERTAINMENT, INC.
570,000 SHARES OF COMMON STOCK (no par value)
This Prospectus is being furnished by Millennia, Inc., a Delaware corporation
whose stock is listed on the American Stock Exchange, (the "Parent") in
connection with the distribution as a stock dividend (the "Distribution") of
570,000 shares of the Common Stock of Millennia Entertainment, Inc. (the
"Company") to the Parent's shareholders who are shareholders of record on
January __, 1998 (the "Record Date"). Based on the fact that there are currently
2,275,635 shares of the common stock of the Parent issued and outstanding, each
shareholder of the Parent will receive one share of the Common Stock for each
four shares of Millennia Inc owned on the record date. The Distribution will
result in approximately 5 % of the issued and outstanding Common Stock of the
Company being distributed to the holders of the Parent's common stock on a
prorata basis. Neither the Company nor Millennia, Inc. will receive any of the
proceeds from the Distribution.
There is no current public market for the Common Stock. The Company expects that
the Common Stock will be traded on the over-the-counter market maintained by
members of the National Association of Securities Dealers, Inc. (the "OTC
Bulletin Board") after this Registration Statement is declared effective.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING AT PAGE 4 FOR A DISCUSSION OF
CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Price to Public (1) Proceeds to the Company(2)
Per Share .................... $ 0.10 None
Total ........................ $57,000 None
(1) Estimated in accordance with Rule 457.
(2) All expenses (estimated to be approximately $10,000) associated with this
offering will be paid by the Company.
The date of this Prospectus is January ___, 1998.
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CAUTION REGARDING FORWARD-LOOKING INFORMATION
This prospectus contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of the Company or
management as well as assumptions made by and information currently available to
the Company or management. When used in this document, the words "anticipate,"
"believe," "estimate," "expect, " and "intend" and similar expressions, as they
relate to the Company or its management, are intended to identify
forward-looking statements. Such statements reflect the current view of the
Company regarding future events and are subject to certain risks, uncertainties
and assumptions, including the risks and uncertainties noted. Should one or more
of these risks or uncertainties materialize, or should the underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected or intended. In
each instance, forward-looking information should be considered in light of the
accompanying meaningful cautionary statements herein.
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere in this
Prospectus. Reference is made to, and this summary is qualified in its entirety
by, the more detailed information contained elsewhere in this Prospectus, which
should be read in its entirety.
Distributing Company
Millennia, Inc. (the "Parent"), a Delaware corporation whose stock is
listed on the American Stock Exchange, is a diversified management
company engaged, through its subsidiaries and/or investee companies,
in the assembly and sales of industrial metal doors, investing in
ownership interests in oil and natural gas properties, and as an
originator and distributor of home video tape programs.
Distributed Company
Millennia Entertainment, Inc. (the "Company") is a Texas corporation
which is a wholly-owned subsidiary of the Parent. The Company is a
start-up operation which is primarily a distributor of general
entertainment videos on a contract basis to resellers. The Company
obtains the appropriate duplication and distribution rights to various
titles selected by its customers and contracts with third parties to
duplicate the requested titles. See "Business."
Shares to be Distributed
570,000 shares of the Company's Common Stock. No fractional shares
will be distributed. The shares to be distributed constitute
approximately 5% of the issued and outstanding shares of Common Stock
of the Company.
Distribution Ratio
Each shareholder of the Parent will receive one share of the Common
Stock of the Company for every four shares of the Parent's common
stock held on the Record Date. This ratio was selected in order to
achieve the Parent's goal of distributing approximately 5% of its
ownership position in the Company to its shareholders as a dividend.
Fractional Share Interests
No fraction of a share of Common Stock will be issued as a result of
the Distribution. All fractional shares which would otherwise be
issuable as a result of the Distribution will be rounded up to the
nearest whole share and the shareholder will be issued one full share
in lieu thereof. See "The Distribution -- Manner of Effecting the
Distribution."
Trading Market
OTC Bulletin Board (Registrant will apply as soon as this Registration
Statement is effective.)
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Distribution Agent
and Mailing Date
Securities Transfer Corporation, Dallas, Texas. The Distribution Agent
will mail share certificates commencing about ten days after the
effective date of this Registration Statement.
Record Date
January __, 1998 (a date to be determined after this Registration
Statement is effective)
Tax Consequences
Shareholders of the Parent will be considered to have received a
taxable distribution equal to the market value of the Company's shares
received. See "The Distribution -- Federal Income Tax Consequences of
the Distribution.
Risk Factors
See "Risk Factors"
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THE COMPANY
Millennia Entertainment, Inc., a Texas corporation (the "Company"), is a
start-up operation, having started business in February of 1997. The Company's
primary business is to seek out wholesale buyers of video tape programming, to
obtain the rights to duplicate the programming and to outsource the duplication
of the video tape programming and printing. The Company's executive office is
located at 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248 and its
telephone number is (972) 248-1922.
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING RISK
FACTORS SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING THE COMPANY
AND ITS BUSINESS BEFORE PURCHASING THE COMMON STOCK.
LACK OF PROFITABILITY AND LACK OF OPERATING HISTORY
The Company has been in business since February 20, 1997 and has a year-end of
June 30. The Company has incurred net losses for Fiscal 1998 through September
30, 1997 of $ 11,791. As of September 30,1997 the Company has a working capital
deficit of $59,754 and negative shareholder's equity of $45,756. The Parent had
advanced $27,500 to the Company for working capital as of the same date. These
advances are noninterest bearing and are payable on demand.
The Company's operations are subject to all of the risks inherent in the
establishment of a new business enterprise, including the lack of operating
history and the inability to obtain capital from non-related parties. The
likelihood of success of the Company must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with the establishment of a new business. There can be
no assurance that future operations of the Company will be profitable . Future
revenues and profits, if any, will depend upon numerous factors, many of which
are beyond the control of the Company's management including general economic
conditions and the nature and speed of technological development relating to
video tapes and possible future competing devices and services.
ECONOMIC AND INDUSTRY CONDITIONS; RAPIDLY CHANGING TECHNOLOGY- MATURED MARKET
Demand for the Company's services is affected by economic conditions, including
consumer behavior and consumer confidence, and particularly the level of
personal discretionary spending. Sales are not limited to any geographic market
since orders are received by telephone, telefax and over the internet. Demand
for the Company's products is likely to fluctuate as a consequence of changes in
the economy (when people feel more affluent they tend to increase discretionary
spending for entertainment and related products and services), future trends in
the usage of video tapes for business and educational purposes, as well as the
development of competing products which may be more technologically advanced or
more appealing to users such as DVDs. Technology is rapidly advancing and may
adversely affect the Company's business as now conducted for some commentators
believe that the videotape industry is a mature market with limited capacity to
expand. The Company is aware that research and development are being conducted
with regard to competing products which the public may ultimately find more
appealing, if more costly, than videotapes. The Company anticipates that its
sales and future profitability will depend upon its ability to adjust to such
new technology and they are likely to fluctuate from time to time as a result of
the factors mentioned. See "Business."
COMPETITION
There are numerous competitors in the Company's industry, many of whom are
larger, have a record of profitable operation, and have greater financial,
technical and human resources. Such companies may develop products or services
that may be viewed as more effective than the Company's products and services
and they may be more successful in marketing their products and services. This
industry is competitive with respect to both price and service. While the
Company has had some success in obtaining the rights to duplicate programming
from many sources, there can be no assurance that it will be able to expand
these sources significantly or, if so, how quickly. No assurance can be given
that the Company will be able to compete successfully.
DEPENDENCE ON KEY PERSONNEL; CONTROL BY PARENT
The Company's future success will depend in large part upon the continued
services of its President, Mr. Jim Weinberg, who currently is the only employee
of the Company. The Company does not have an employment contract with Mr.
Weinberg and it does not maintain key-man insurance on his life. Given the
Company's limited operating history, the Company's success will also be
dependent upon its ability to attract and retain
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qualified personnel to develop and expand its operations. No assurance can be
given that the Company will be able to retain its current sales manager and that
it will be able to obtain the services of the personnel necessary for the
Company's growth and success.
The Company, after the distribution of the stock dividend contemplated herein,
will be owned 95% by the Parent. Accordingly, the Parent will determine the
composition of the Company's Board of Directors and thereby direct the affairs
of the Company. This fact may affect the Company's future growth and
development, as well as the marketability and price of its stock.
PENNY STOCK REGULATIONS - RESTRICTIONS ON MARKETABILITY
The Securities and Exchange Commission ( the "Commission") has adopted
regulations which generally define"penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. The Company's
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse). For transactions covered by the rule, the broker-dealers
must make a special suitability determination for the purchaser and receive the
purchaser's written agreement of the transaction prior to the sale.
Consequently, the rule may affect the ability of broker-dealers to sell the
Company's securities in the secondary market. Accordingly, market makers may be
less inclined to participate in marketing the Company's Common Stock, which may
have an adverse impact on the liquidity of the Common Stock.
LACK OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to this Offering, there has been no public market for the Company's common
stock. There can be no assurance that an active public market will develop for
the Common Stock, or if its develops that there will be trading volume
sufficient to provide any liquidity for the Company's stock. The Company
believes that such factors as quarterly variations in the Company's financial
results, announcements regarding operations of the Company and developments
affecting the Company, its market or products and services could cause
significant fluctuation in the market price of the Common Stock. In addition,
the stock market in general has recently experienced price and volume
fluctuations which appear to be unrelated to the operating performance of
individual companies. Broad market fluctuations may adversely affect the market
price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE AS A RESULT OF THIS DISTRIBUTION
The shares of Common Stock owned by the parent are deemed "restricted
securities" under the Securities Act of 1933, as amended, and in the future may
be sold under Rule 144 which provides, in essence, that a person holding
restricted securities for a period of at least one year may sell every three
months, in brokerage transactions and/or market maker transactions, an amount
equal to the greater of :(a) one percent (1%) of the Company's issued and
outstanding Common Stock ; or (b) the average weekly trading volume of the
Common Stock during the four calendar weeks prior to such sale.
Prior to this distribution the shares covered by this distribution were not for
sale. Upon the effectiveness of this Registration Statement all 570,000 shares
will be freely tradeable. No prediction can be made as to the effect, if any,
that sales of Common Stock or the availability of such shares for sale will have
on the market price. Nevertheless, the possibility that substantial amounts of
Common Stock may be sold in the public market may adversely affect prevailing
market prices for the Common Stock .
COMPANY'S LACK OF ANY NET LOSS CARRYFORWARDS
Because the Company is a component of the consolidated tax returns of its
Parent, it has no separate net operating loss carryforwards available to offset
future taxable income. In the event that the Company becomes ineligible to be
included in the consolidated tax returns of its Parent, the Company may have to
pay federal income taxes on virtually all of its future taxable income, if any,
without reduction for the losses which may have occurred prior to that time.
ANTI-TAKEOVER PROVISIONS
The Company's Articles of Incorporation authorizes the issuance of 25,000,000
shares of Common Stock. After the completion of the Distribution, there will be
11,400,000 shares of Common Stock issued and outstanding. The Company's Board of
Directors has the legal authority to issue the remaining unissued authorized
shares , without shareholder approval, for any purpose deemed to be in the best
interest of the Company. This authority could impede any merger, consolidation,
takeover or other business combination involving the Company or discourage a
potential acquirer from making a tender offer or otherwise attempting to acquire
control of the Company. Shares could be issued to deter or delay a takeover or
other change of control of the Company. See "Description of Common Stock."
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PLAN OF DISTRIBUTION
Reasons for the Distribution
The Board of Directors of Millennia, Inc. has determined that it is in the best
interest of that company and its shareholders to make the distribution in the
manner described herein. The Parent is a diversified management company engaged,
through its subsidiaries, in various unrelated businesses. The Distribution will
result in the Company being a separate publicly held company. The Parent's Board
of Directors believes that the Distribution will allow investors to better
evaluate the Company and its future prospects independently, enhancing the
likelihood that it will achieve appropriate market recognition regarding its own
performance and potential. The Parent's Board of Directors believes that, by
distributing the Common Stock to the Parent's shareholders, the potential for
increasing the long-term value of each shareholder's investment in the Parent
will be enhanced. In addition, the Company may expand its business through
acquisitions of existing businesses (although at the present time none are
specifically contemplated) and the Boards of Directors of the Parent and the
Company believe that having a public market for the Common Stock will allow the
Company to more readily make such acquisitions in the future by structuring them
as stock transactions.
Manner of Effecting the Distribution
The Parent will effect the Distribution by delivering shares of the Company's
Common Stock to Securities Transfer Corporation as the distribution agent (the
"Distribution Agent") for distribution to holders of record of the Parent's
common stock on the Record Date. The Distribution will be made on the basis of
one share of the Common Stock for every four shares of the Parent's common stock
owned on the Record Date, based on the fact that there are currently 2,275,635
shares of the Parent's common stock issued and outstanding. This ratio was
selected in order to achieve the Parent's goal of distributing approximately 5%
of the Parent's ownership position in the Company to the Parent's shareholders
as a dividend. All such shares of the Common Stock will be fully paid and
nonassessable and the holders thereof will not be entitled to preemptive rights.
See "Description of Common Stock".
The Distribution Agent will begin to mail the certificates representing shares
of Common Stock, registered in the name of the each shareholder(s) of record on
the Record Date, which are being distributed as a dividend to the Parent's
shareholders about ten days after the effective date of this Registration
Statement.
No certificates or scrip representing fractional shares of Common Stock will be
issued as part of the Distribution. All fractional shares will be rounded up to
the nearest whole share and each stockholder who would otherwise be entitled to
a fraction of a share will be issued one full share in lieu thereof.
No holder of the Parent's common stock will be required to submit any
documentation to the Distribution Agent or to pay any cash or other
consideration for the shares of Common Stock received in the Distribution or to
surrender or exchange any shares of the Parent's common stock in order to
receive the Common Stock which is being distributed as a dividend. The
Distribution will not affect the number of, or rights attaching to, outstanding
shares of the Parent's common stock.
Listing and Trading of the Common Stock
The Company expects that the Common Stock will be traded on the OTC Bulletin
Board. shortly after this Registration Statement is declared effective. The
Company will take steps to accomplish this as soon as this Registration
Statement becomes effective. Shares of Common Stock distributed to the Parent's
shareholders will be freely transferable, except for shares received by persons
who may be deemed to be "affiliates" of the Company under the Securities Act.
Persons who may be deemed to be affiliates of the Company include individuals or
entities that control, are controlled by or are under common control with the
Company, and may include directors and principal executive officers of the
Company, as well as any stockholder owning 5% or more of the total stock issued
and outstanding. Persons who are affiliates of the Company will be permitted to
sell their shares of Common Stock only pursuant to an effective registration
statement under the Securities Act or an exemption from the registration
requirements of the Securities Act which is applicable to them. In addition to
the three individuals listed as directors and executive management of the
Company (see "Management"), Halter Capital Corporation and Digital
Communications Technology Corporation are affiliates of the Company . Halter
Capital Corporation currently owns approximately 14 % of the stock of Millennia,
Inc. and Digital Communications Technology Corporation currently owns
approximately 33% of the stock of Millennia, Inc. After the Distribution the
Company is expected to have approximately 1500 shareholders.
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Federal Income Tax Consequences of the Distribution
Millennia, Inc. has received the opinion of Richard Braucher, Esq., counsel to
the Company and the Parent, regarding the federal income tax consequences of the
Distribution under the Internal Revenue Code, as amended (the "Code"). The
opinion generally provides as follows:
(i) Each shareholder of the Parent will be considered to have received a
taxable distribution in an amount equal to the fair market value on the Record
Date of the Common Stock received. Such a taxable distribution would be taxed as
a dividend received with respect to the shares of common stock of the Parent
then owned by the shareholder.
(ii) A shareholder's basis in the Common Stock received in the Distribution
will be equal to the fair market value of the Common Stock on the Record Date
and the shareholder's holding period will begin on the Record Date. The
stockholder's basis of the common stock of the Parent will not be affected by
the Distribution.
(iii) Millennia, Inc will recognize gain, but not loss, in an amount equal
to the difference between the fair market value of the Common Stock distributed
and its basis in that stock.
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR GENERAL
INFORMATION ONLY MAY NOT BE APPLICABLE TO STOCKHOLDERS WHO ARE NOT CITIZENS OR
RESIDENTS OF THE UNITED STATES OF AMERICA OR WHO ARE OTHERWISE SUBJECT TO
SPECIAL TREATMENT UNDER THE CODE. ALL STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO THEM,
INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
Similar Distribution of Affiliate's Stock to the Same Shareholders
The Company's Parent, Millennia, Inc., has proposed a similar distribution of
another subsidiary's stock as a dividend to its shareholders. OmniDoors, Inc.
(an affiliate of the Company because both are owned by the same corporation), a
Florida corporation all of whose issued and outstanding shares of stock are
owned by Millennia, Inc., has filed a registration statement with the Commission
describing the Parent's proposed dividend to its shareholders of one share of
the common stock of OmniDoors, Inc. for each four shares of Millennia, Inc.
owned by the Parent's shareholders on the Record Date. It is anticipated that
both distributions will be accomplished simultaneously but neither is
conditioned on the other and they could occur independently of one another.
DESCRIPTION OF COMMON STOCK
The Company's Articles of Incorporation authorizes the issuance of
25,000,000 shares of the Common Stock, with no par value. Holders of Common
Stock are entitled to one vote for each share owned on each matter submitted to
a vote of the shareholders. After the completion of this Distribution, there
will be issued and outstanding 11,400,000 shares of Common Stock. The Company's
Board of Directors has the legal authority to issue the remaining unissued
authorized shares, without shareholder approval, for any purpose deemed to be in
the best interest of the Company. Shares could be issued to deter or delay a
takeover or other change of control of the Company.
All outstanding shares of Common Stock of record are fully paid, validly
issued and nonassessable and the holders of Common Stock have no preemptive
rights to subscribe for or to purchase any additional securities issued by the
Company. Upon liquidation, dissolution or winding up of the Company, the holders
of Common Stock are entitled to share ratably in the distribution of assets
after payment of debts and expenses. There are no conversion, sinking fund or
redemption provisions, or any restrictions on alienability with respect to the
Common Stock.
The holders of the Common Stock are entitled to receive dividends, when and
if declared by the Board of Directors, out of funds legally available therefor.
See "Dividend Policy,"
Dividend Policy
The Company has never paid or declared any cash dividend on its Common
Stock and does not intend to pay cash dividends on its Common Stock in the
foreseeable future. The Company presently expects to retain its earnings, if
any, to finance the development and expansion of its business. The payment by
the Company of dividends, if any, on its Common Stock in the future is subject
to the discretion of the Board of Directors and will depend on the Company's
earnings, financial condition, capital requirements and other factors.
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Use of Proceeds
The Company will not receive any proceeds from the issuance and
distribution of the shares of Common Stock covered by this Prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with the
Company's financial statements and the notes associated with them as contained
elsewhere in this document. This discussion should not be construed to imply
that the results discussed herein will necessarily continue into the future or
that any conclusion reached herein will necessarily be indicative of actual
operating results in the future. Such discussion represents only the best
present assessment of management of the Company.
Caution Regarding Forward-Looking Information
This Registration Statement contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or its management as well as assumptions made by and information currently
available to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
Plan of Operation
Millennia Entertainment, Inc. was incorporated on February 20, 1997 under the
laws of the State of Texas as a wholly-owned subsidiary of Millennia, Inc., a
publicly owned corporation whose stock trades on the American Stock Exchange.
The Company began operations concurrently with its formation and, accordingly,
has had limited business operations due to the start-up nature of its business.
The Company is primarily a distributor of general entertainment videotapes on a
contract basis to resellers. The Company arranges for the appropriate
duplication and distribution rights to various titles specified by its customers
and contracts for third parties to duplicate the requested title(s). As of June
30,1997 and subsequent thereto, this work is usually placed with Digital
Communications Technology Corporation ("DCT") which is an affiliate of the
Company because it owns approximately 33% of the Parent's stock. See "Business."
The Company is experiencing increasing sales levels as a result of the Company's
reputation in the business and its affiliation with DCT which has a reputation
as a quality duplicator of videotapes for general public consumption. Due to the
maturity of the videotape business, the Company continues and will continue to
focus its sales and marketing efforts in the area of producing videotapes to
order for specific customers of specific subjects. Through this strategy, the
Company anticipates that its exposure to downtrends, if any, in the videotape
market will be minimized.
Due to the fact that the Company still has less than one year of operating
history, the Company continues to experience losses on gross margins due the
competitive nature of the Company's marketing strategy. Management anticipates
that the investment in these start-up losses will be beneficial in the
marketplace in the future as the Company's reputation for timely performance and
quality reproduction becomes rooted in the custom videotape market.
The Company is being funded by cash advances from its parent company, Millennia,
Inc. and through open accounts payable financing by DCT, an affiliate of the
Company. It is anticipated by management that the Company will be able to
achieve profitable operations and positive cash flows during the last half of
the Company's Fiscal Year ending June 30, 1998.
Due to the nature of the Company's business, the Company does not anticipate any
significant change in the number of employees required to sustain its operations
and conducts no research and development activities. Further, the Company has no
plant and/or equipment requirements other than the acquisition of video tape
masters which are acquired on a specific project basis.
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Results of Operations
Three months ended September 30, 1997
During the first quarter of Fiscal 1998 which ended September 30, 1997, the
Company experienced net sales of approximately $46,700 as compared to $3,300 for
the first four months of operations. This sales growth represents management's
belief that a quality market for custom videotape duplication and distribution
exists, principally in the United States and, potentially, internationally.
As the Company continues to mature and essentially remains in a start-up mode,
the Company experienced costs of sales of approximately $55,100 generating a
negative gross margin of approximately $(8,400). Further, management's
monitoring of indirect overhead costs has reduced selling, general and
administrative costs to approximately $3,400, including depreciation, for the
three months ended September 30, 1997. This total is approximately one-half of
the initial selling expenses incurred during the first four months of
operations.
As the Company generates sales and incurs costs on a contracted "by project"
basis, the Company's operations will, in essence, continue to be driven by
customer demand for the Company's services. As such, management continually
monitors production costs and administrative overhead costs in the preparation
of price quotations for prospective customers.
Capital Resources
During the quarter ended September 30, 1997, the Company expended no resources
for capital assets, including video tape masters. All sales generated during the
first quarter of Fiscal 1998 utilized video tape masters acquired in previous
periods. The Company does not currently have any further material commitments
for capital expenditures and does not anticipate any in the foreseeable future.
Liquidity
For the period ended September 30, 1997, the Company used cash in operating
activities of approximately $2,200. This operating deficit was met primarily
through working capital advances from its Parent. The Company currently meets
its operating requirements through daily operations and its parent company has
affirmed to fund any cash and/or working capital deficiencies, if any, should
they occur. Management also is of the opinion that either future bank financing
or equity placements may be available to provide liquidity in future periods.
However, there is no assurance that such financing or equity placements will be
available at amounts or rates favorable to the Company.
Period from February 20, 1997 (date of inception) through June 30, 1997
During the initial four months of operations, the Company generated limited
sales activity with total sales of approximately $3,300. Due to the initial
start-up costs of production and sample products, the Company incurred costs of
goods sold of approximately $13,900. Additionally, initial marketing costs of
approximately $7,600 and administrative costs of approximately $16,500
contributed to the overall net operating loss of approximately $35,000 for the
period ended June 30, 1997.
As the Company generates sales and incurs costs on a contracted "by project"
basis, the Company's operations will, in essence, continue to be driven by
customer demand for the Company's services. As such, management continually
monitors production costs and administrative overhead costs in the preparation
of price quotations for prospective customers.
Capital Resources
During the organizational phase of the Company, approximately $15,200 was
expended on capital assets, principally office furniture and related equipment.
The Company does not currently have any further material commitments for capital
expenditures and does not anticipate any in the foreseeable future.
Liquidity
For the period ending June 30, 1997, the Company used cash in operating
activities of approximately $8.800. This operating deficit was met primarily
through working capital advances from its parent company. The Company currently
meets its operating requirements through daily operations and its parent company
has affirmed to fund any cash and/or working capital deficiencies, if any,
should they occur. Management also is of the opinion that either future bank
financing or equity placements may be available to provide liquidity in future
periods. However, there is no assurance that such financing or equity placements
will be available at amounts or rates favorable to the Company.
The Company is a component of the consolidated Federal and/or State Income Tax
Return(s) of its parent. As such, the Company has no separate
9
<PAGE>
company net operating loss carryforwards available to offset taxable income, if
any, in future periods. The potential benefit to be received by the Company as a
result of its net operating loss contribution to its parent has been fully
reserved at June 30, 1997 as the ultimate realization of this amount,
approximately $5,200, is not readily determinable by the Company.
Other Comments
The Company's sales operations are directed from Florida but its potential
customer base is both national and international in scope because it accepts
orders by telephone, telefax and over the internet. At the present time, with
limited operations, virtually all sales activity has been located in the United
States. The Company's future sales levels are directly related to its marketing
efforts (some of which is done via the internet, some by mailings and some by
direct contact by its President), competitive pricing and customer demand.
Accordingly, a fluctuation in any one or all of these factors could have a
material impact on the Company's financial stability. In providing contracted
services, the Company's activities historically have not been, and in the near
term are nor expected to be, materially affected by inflation or changing prices
in general.
Year 2000 Concerns
The Company's manufacturing process is not reliant upon or contingent upon any
software or other equipment which is dependent on "system dating". Further, the
Company utilizes readily available personal computer commercial software for its
accounting and financial reporting processes. It is anticipated that the cost of
conversion to updated versions of the commercial accounting software will be
nominal and have no significant impact on the operations of the Company.
BUSINESS
Millennia Entertainment, Inc. was incorporated on February 20, 1997 under the
laws of the State of Texas as a wholly-owned subsidiary of Millennia, Inc., a
publicly owned corporation whose stock is listed on the American Stock Exchange.
The Company began operations concurrently with its formation and, accordingly,
has had limited business operations due to the start-up nature of its business.
The Company is primarily a distributor of general entertainment videotapes on a
contract basis to resellers. The Company arranges for the appropriate
duplication and distribution rights to various titles specified by its customers
and contracts for third parties to duplicate the requested title(s); this work
is usually done by Digital Communications Technology Corporation ("DCT") which
is an affiliate of the Company because it owns approximately 33% of the Parent's
stock.
The Company is experiencing increasing sales levels as a result of the Company's
reputation in the business and its affiliation with DCT which has a reputation
as a quality duplicator of videotapes for general public consumption. Due to the
maturity of the videotape business, the Company continues and will continue to
focus its sales and marketing efforts in the area of producing videotapes to
order for specific customers of specific subjects. Through this strategy, the
Company anticipates that its exposure to downtrends, if any, in the videotape
market will be minimized.
Due to the fact that the Company still has less than one year of operating
history, the Company continues to experience losses on gross margins due the
competitive nature of the Company's marketing strategy. Management anticipates
that the investment in these start-up losses will be beneficial in the
marketplace in the future as the Company's reputation for timely performance and
quality reproduction becomes rooted in the custom videotape market.
ECONOMIC AND INDUSTRY CONDITIONS; RAPIDLY CHANGING TECHNOLOGY
Demand for the Company's services is affected by economic conditions, including
consumer behavior and consumer confidence, and particularly the level of
personal discretionary spending. Sales are not limited to any geographic market
since orders are received by telephone, telefax and over the internet. Demand
for the Company's products is likely to fluctuate as a consequence of changes in
the economy (when people feel more affluent they tend to increase discretionary
spending for entertainment and related products and services), future trends in
the usage of video tapes for business and educational purposes, as well as the
development of competing products which may be more technologically advanced or
more appealing to users such as DVDs. Technology is rapidly advancing and may
adversely affect the Company's business as now conducted for some commentators
believe that the videotape industry is a mature market with limited capacity to
expand. The Company is aware that research and development are being conducted
with regard to competing products which the public may ultimately find more
appealing, if more costly, than videotapes. The Company anticipates that its
sales and future profitability will depend upon its ability to adjust to such
new technology and they are likely to fluctuate from time to time as a result of
the factors mentioned.
CUSTOMERS
By contracting purchase orders with the buyers of the duplicated videotapes
before they are produced the Company eliminates the need to maintain any
inventory of finished product. Typically finished product is shipped within two
days of production. By eliminating the need to hold any inventory,
10
<PAGE>
the Company keeps its capital requirements to a minimum. Thus far, none of the
Company's sales to any single customer has been so large as to be considered
significant in relation to the totality of all sales and no dependence has been
established on any single customer or group of customers. The Company
anticipates that the market for its services is such that, in the future, it
will not be dependent on a single customer for any significant part of its total
sales.
COMPETITION
There are numerous competitors in the Company's industry, many of whom are
larger, have a record of profitable operation, and have greater financial,
technical and human resources. Such companies may develop products or services
that may be viewed as more effective than the Company's products and services
and they may be more successful in marketing their products and services. This
industry is competitive with respect to both price and service. While the
Company has had some success in obtaining the rights to duplicate programming
from many sources, there can be no assurance that it will be able to expand
these sources significantly or, if so, how quickly. No assurance can be given
that the Company will be able to compete successfully.
RAW MATERIALS
The Company usually purchases its duplication services and video cassettes from
an affiliated company, Digital Communications Technology Corporation ("DCT").
DCT is an affiliate of the Company because it owns approximately 33% of the
stock of Millennia, Inc., the Company's Parent. All purchases are at arms length
and the prices and terms are the same as DCT provides to its best customers.
These services and the raw materials used by DCT are readily available on the
open market from a large number of suppliers.
EMPLOYEES
The Company currently has one full time employee, its President, Jim Weinberg.
Mr. Weinberg is responsible for all sales and marketing activities of the
Company.
PROPERTIES
The Company's operations as currently conducted require no warehouse or storage
space. The Company's administrative functions are handled in the Dallas office
of its parent. Due to the start-up nature of the Company, no rent is allocated
for these nominal requirements. The Company's sales and marketing activities are
pursued by its President who lives in Florida.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
NAME AGE POSITION
Jim Weinberg 41 President and Chief Operating Officer
Kevin B. Halter 62 Chairman of the Board and Chief Executive Officer
Kevin B. Halter, Jr. 36 Vice President, Secretary and Director
Jim Weinberg has served as President and Chief Operating Officer of the Company
since October l997. He is responsible for all of the Company's marketing and
sales efforts. Mr. Weinberg served as Chief Operating Officer of Digital
Communications Technology Corporation ("DCT") from May 1997 until September
1997, a position which he also held with DCT from April 1996 to March 1997. A
co-founder of DCT in 1987, Mr. Weinberg served as its Executive Vice President
until March 1996. From 1978 to 1987, Mr. Weinberg was the owner of Television
Services, Inc., a video production company specializing in national television
commercials and sporting events.
Kevin B. Halter has served as a director of the Company and Chairman of the
Board since its founding and as its President until March 1997. Mr. Halter has
served as President, Chairman of the Board, Chief Executive Officer and a
director of Millennia, Inc., the Company's parent, since 1994. In addition, Mr.
Halter has served as Chairman of the Board and Chief Executive Officer of Halter
Capital Corporation, a privately-held investment and consulting company, since
1987. Kevin B. Halter is the father of Kevin B. Halter, Jr.
Kevin B. Halter, Jr. has served as a director of the Company since its founding
and as its Vice President and Secretary since February 1997. Mr. Halter has also
served as Vice President, Secretary and a director of Millennia, Inc., the
Company's parent, since 1994. In addition, Mr. Halter also serves as Vice
President and Secretary of Halter Capital Corporation. He is the President of
Securities Transfer Corporation, a registered stock transfer company, a position
which he has held since 1987. Kevin B. Halter, Jr. is the son of Kevin R. Halter
11
<PAGE>
EXECUTIVE COMPENSATION
The officers and directors of the Company were not compensated in any way for
their service to the Company in the period beginning February 20, 1997 (the
inception of the Company) through September 30, 1997, although they receive
compensation from the Parent. Mr. Weinberg commenced full-time employment on
October 1, 1997 with a non-guaranteed annual salary of $75,000. No written
employment agreement exists between the Company and Mr. Weinberg.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of September 30, 1997 with
regard to the beneficial ownership of the Common Stock by (i) each person known
to the Company to be the beneficial owner of 5% or more of its outstanding
shares; (ii) by the officers and directors of the Company individually and (iii)
by the officers and directors as a group.
Name and Address of Beneficial Owner Amount Owned Percent
Millennia, Inc. 11,400,000 (1) 100 %
16910 Dallas Parkway, Suite 100 10,830,000 (2) 95 %
Dallas, Texas 75248
Kevin B. Halter none 0
Kevin B. Halter, Jr. none 0
Jim Weinberg none 0
All Officers and Directors as a Group none 0
(1) pre distribution
(2) post distribution
CERTAIN TRANSACTIONS
During 1997, the Parent has advanced funds to the Company for working capital.
At September 30, 1997, the Company owed $27,500 to the Parent as noninterest
bearing advances which are repayable upon demand. The Company utilizes the video
duplication services and certain administrative personnel of Digital
Communications Technology Corporation ("DCT"), an affiliate of Millennia, Inc.
As of September 30, 1997, the Company owed approximately $3800 to DCT under this
arrangement. While the Company has adopted no formal policies regarding entering
into transactions with related parties and there are no written contracts
between the Company and the Parent or between the Company and DCT, it is
anticipated that the Parent will continue to make advances for working capital
on the same terms in the future, and that the Company may continue to obtain the
same services from DCT for the foreseeable future on the same terms as are
currently offered or the Company may obtain these services from unrelated third
parties on substantially similar terms.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Richard Braucher, attorney at law.
EXPERTS
The financial statements of the Company for the period ended June 30, 1997
included herein have been audited by S.W. Hatfield +Associates, certified public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm in giving said report.
12
<PAGE>
ADDITIONAL INFORMATION
Upon completion of this offering, the Company will be subject to the reporting
requirements of the Securities and Exchange Act of 1934, as amended, and in
accordance therewith will file periodic reports and other information with the
Securities and Exchange Commission (the "Commission). Such reports and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at 75 Park Place, 14th
Floor, New York, New York, 10007, and Suite 1400, Northwestern Atrium Center,
500 West Madison St., Chicago, Illinois 60661. Copies of such material may be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C., 20549. The Commission maintains a
Web site that contains reports. proxy and information statements and other
information regarding issuers that file with the Commission electronically like
the Company which can be accessed over the internet at http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form SB-2
under the Securities Act of 1933, as amended, with respect to the Common Stock
covered by this Prospectus. For further information about the Company and the
Common Stock, reference is made to the Registration Statement and to the
financial statements and exhibits filed as a part thereof, copies of which can
be inspected and made at the addresses referenced above. Statements contained in
the Prospectus as to the contents of any contract or any other document are not
necessarily complete and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
The Company's bylaws provide that the Company will indemnify its directors and
officers to the full extent authorized or permitted under Texas law.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. ln the event that a claim for indemnification against such
liabilities (other than payment by the registrant of expenses incurred or paid
by a director, officer or controlling person in connection with the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
13
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
INDEX TO FINANCIAL STATEMENTS
Page
Balance Sheets as of September 30, 1997 and June 30, 1997 F-2
Statement of Operations
for the three months ended September 30, 1997 F-3
Statement of Cash Flows
for the three months ended September 30, 1997 F-4
Notes to Financial Statements F-5
Report of Independent Certified Public Accountants F-8
Balance Sheet as of June 30, 1997 F-9
Statement of Operations
for the period from February 20, 1997 (date of inception)
through June 30, 1997 F-10
Statement of Changes in Shareholder's Equity
for the period from February 20, 1997 (date of inception)
through June 30, 1997 F-11
Statement of Cash Flows
for the period from February 20, 1997 (date of inception)
through June 30, 1997 F-12
Notes to Financial Statements F-13
F-14
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Balance Sheets
September 30, 1997 and June 30, 1997
(Unaudited)(Audited)
September 30,June 30,
1997 1997
-----------------------
ASSETS
Current assets
Cash and cash equivalents $ 6,038 $ 3,238
Accounts receivable - trade 3,179 103
-------- --------
Total current assets 9,217 3,341
-------- --------
Property and equipment
Video tape masters 13,650 13,650
Office furniture, fixtures and equipment 1,588 1,588
-------- --------
15,238 15,238
Accumulated depreciation (1,240) (444)
-------- --------
Net property and equipment 13,998 14,794
-------- --------
Total Assets $ 23,215 $ 18,135
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Accounts payable and accrued liabilities
Trade $ 37,660 $ 25,800
Parent company 27,500 20,250
Affiliate 3,811 6,050
-------- --------
Total current liabilities 68,971 52,100
-------- --------
Contingencies and commitments
Shareholder's equity Common stock - no par value
25,000,000 shares authorized
11,400,000 shares issued and outstanding 1,000 1,000
Accumulated deficit (46,756) (34,965)
-------- --------
Total shareholder's equity (45,756) (33,965)
-------- --------
Total Liabilities and Shareholder's Equity $ 23,215 $ 18,135
======== ========
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management without
audit by independent certified public accountants.
F-15
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Statement of Operations
Three months ended September 30, 1997
(Unaudited)
Revenues
Video products and services $ 46,675
--------
Cost of goods sold
Materials, contract services and other 54,409
Depreciation 683
--------
Total cost of goods sold 55,092
--------
(8,417)
Operating expenses
Selling, General and Administrative expenses 3,260
Depreciation and amortization 114
--------
Total operating expenses 3,374
Loss from operations (11,791)
Income tax provision --
--------
Net loss $(11,791)
========
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management without
audit by independent certified public accountants.
F-16
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Statement of Cash Flows
Three months ended September 30, 1997
(Unaudited)
Cash flows from operating activities
Net loss for the period $(11,790)
Adjustments to reconcile net income to
net cash used in operating activities
Depreciation and amortization 796
(Increase) decrease in:
Accounts receivable (3,511)
Increase (decrease) in:
Accounts payable and accrued liabilities 12,295
Net cash used in operating activities (2,210)
--------
Cash flows from investing activities
Cash paid to acquire furniture and equipment --
--------
Net cash used in investing activities --
--------
Cash flows from financing activities
Cash advances from parent company 7,250
Repayment of cash advances from affiliate (2,240)
Net cash provided by financing activities 5,010
--------
Increase in cash 2,800
Cash and cash equivalents at beginning of period 3,238
--------
Cash and cash equivalents at end of period $ 6,038
========
Supplemental disclosures of
interest and income taxes paid
Interest paid during the year $ --
========
Income taxes paid during the year $ --
========
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management without
audit by independent certified public accountants.
F-17
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Notes to Financial Statements
September 30, 1997
Note 1 - Organization and Description of Business
Millennia Entertainment, Inc. (the Company) is a Texas corporation headquartered
in Dallas, Texas with its sales operations located in Florida. The Company is a
wholly-owned subsidiary of Millennia, Inc. The Company is primarily a
distributor of general entertainment videotapes on a contract basis. The Company
arranges for the appropriate duplication and distribution rights to the
requested titles and contracts for third-party duplication of bulk copies of the
respective title(s).
During interim periods, the Company follows the accounting policies set forth in
this Registration Statement under The Securities Act of 1933 on Form SB-2 filed
with the Securities and Exchange Commission. The June 30, 1997 consolidated
balance sheet data was derived from audited financial statements of the Company,
but does not include all disclosures required by generally accepted accounting
principles. Users of financial information provided for interim periods should
refer to the annual financial information and footnotes contained elsewhere in
this Form SB-2 when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form SB-2, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending June 30, 1998.
The costs of the Company's products are subject, from time-to-time, to
inflationary pressures and commodity price fluctuations. In addition, the
Company from time-to-time experiences increases in costs of materials and labor,
as well as other manufacturing and operating expenses. The Company's ability to
pass along such increased costs through increased prices has been difficult due
to competitive pressures. The Company attempts to minimize any effects of
inflation on its operations by monitoring and controlling these costs.
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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Company is dependent upon its parent company for nominal working capital
support. The parent company intends to continue providing the necessary working
capital support for foreseeable future periods.
Note 2 - Summary of Significant Accounting Policies
1. Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all cash on
hand and in banks, certificates of deposit and other highly liquid debt
instruments with a maturity of three months or less at the date of purchase
to be cash and cash equivalents.
F-18
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Notes to Financial Statements - Continued
September 30, 1997
Note 2 - Summary of Significant Accounting Policies - Continued
2. Accounts Receivable
The Company recognizes revenue at the time that product is shipped to the
respective buyer. In the normal course of business, the Company extends
unsecured credit to virtually all of its customers, which are principally
located in the United States. Because of the credit risk involved,
management has provided an allowance for doubtful accounts which reflects
its opinion of amounts which will eventually become uncollectible. In the
event of complete non-performance by entities owing the Company, the
maximum exposure to the Company is the outstanding accounts receivable
balance at the date of non-performance.
3. Property and Equipment
Property and equipment is recorded at its historical cost. Depreciation is
provided for in amounts sufficient to relate the asset cost to operations
over the estimated useful life (three to five years) using the straight
line method for financial reporting purposes.
Video tape masters are recorded at historical cost. Depreciation is
provided for using the straight-line method over a period of five (5) years
from the acquisition of the respective master, which approximates the
estimated useful life for duplication purposes of the respective video tape
master, in accordance with Statement of Financial Accounting Standard No.
53, "Financial Reporting by Producers and Distributors of Motion Picture
Films."
Gains and losses from disposition of property and equipment are recognized
as incurred and are included in operations.
Statement of Financial Accounting Standards No. 121 (SFAS 121), "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" was issued in March 1996 and adopted by the Company at its
inception. SFAS 121 requires that long-lived assets, such as property and
equipment, including video tape masters, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. This SFAS had no impact on
the financial statements of the Company for the period ended September 30,
1997.
4. Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes. At September 30, 1997, the deferred tax asset and deferred
tax liability accounts, consisting solely of temporary differences, were
not material to the financial statements. Temporary differences represent
differences in the recognition of assets and liabilities for tax and
financial reporting purposes, primarily accumulated depreciation.
The Company files its income tax returns as a component of its parent
company's consolidated tax return. Accordingly, all net operating losses
are offset against the tax liabilities, if any, of the Company's parent. No
separate company net operating loss carryforwards exist as of September 30,
1997 or June 30, 1997, respectively. The Company allocates and is allocated
its proportionate income tax benefit or liability as computed on a separate
company basis as of the end of each respective reporting period. As of
September 30, 1997 and June 30, 1997, respectively, the calculated tax
benefits of approximately $1,770 and $5,200 allocated to the parent company
has been fully reserved due to the uncertainty of ultimate realization.
F-19
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Notes to Financial Statements - Continued
September 30, 1997
Note 3 - Related Party Transactions
The Company's parent, Millennia, Inc., has cumulatively advanced approximately
$27,500 to the Company for working capital as of September 30, 1997. The
advances are noninterest bearing and are repayable upon demand.
The Company utilizes the video duplication services and certain administrative
personnel of Digital Communications Technology Corporation (DCT), an affiliate
of Millennia, Inc. It is the opinion of management that these services have been
charged at rates which approximate those which would be obtained from unrelated
third-party vendors of similar services.
The Company's operations require no warehouse, storage or significant
administrative space requirements. Accordingly, the Company has no agreements,
written or unwritten, in place for these items. As of June 30, 1997, the nominal
administrative and sales office requirements of the Company have been provided
by the parent company at no allocated cost to the Company.
Note 4 - Commitments
Effective October 1, 1997, the Company entered into a non-binding, unwritten
commitment with its President for annual compensation at a rate of $75,000 per
year.
F-20
<PAGE>
S. W. HATFIELD + ASSOCIATES
certified public accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholder
Millennia Entertainment, Inc.
We have audited the accompanying balance sheet of Millennia Entertainment, Inc.
(a Texas corporation and a wholly-owned subsidiary of Millennia, Inc.) as of
June 30, 1997 and the related statement of operations, changes in shareholder's
equity and cash flows for the period from February 20, 1997 (date of inception)
through June 30, 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 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 Millennia Entertainment, Inc.
as of June 30, 1997, and the results of its operations and its cash flows for
the period from February 20, 1997 (date of inception) through June 30, 1997 in
conformity with generally accepted accounting principles.
/s/ S. W. HATFIELD + ASSOCIATES
----------------------------
S. W. HATFIELD + ASSOCIATES
Dallas, Texas
July 24, 1997 (except for Note A and D
as to which the date is October 1, 1997)
P. O. Box 820392 o Dallas, Texas 75382-0392 o 214-342-9635
9236 Church Road, Suite 1040 o Dallas, Texas 75231 o 800-244-0639
214-342-9601 (fax)
F-21
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
BALANCE SHEET
June 30, 1997
ASSETS
Current assets
Cash and cash equivalents $ 3,238
Accounts receivable - trade 103
--------
Total current assets 3,341
--------
Property and equipment
Video tape masters 13,650
Office furniture, fixtures and equipment 1,588
--------
15,238
Accumulated depreciation (444)
--------
Net property and equipment 14,794
TOTAL ASSETS $ 18,135
========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Accounts payable and accrued liabilities
Trade $ 25,800
Parent company 20,250
Affiliate 6,050
--------
Total current liabilities 52,100
Contingencies and commitments
Shareholder's equity Common stock - no par value
25,000,000 shares authorized
11,400,000 shares issued and outstanding 1,000
Accumulated deficit (34,965)
--------
Total shareholder's equity (33,965)
--------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 18,135
========
The accompanying notes are an integral part of these financial statements.
F-22
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
STATEMENT OF OPERATIONS
Period from February 20, 1997 (date of inception) through June 30, 1997
Revenues
Video products and services $ 3,263
------------
Cost of goods sold
Materials, contract services and other 13,622
Depreciation 255
------------
Total cost of goods sold 13,877
------------
(10,614)
------------
Operating expenses
Selling expenses 7,630
General and administrative expenses 16,532
Depreciation and amortization 189
------------
Total operating expenses 24,351
------------
Loss from operations (34,965)
Income tax provision --
------------
Net loss $ (34,965)
============
Loss per adjusted weighted-average share
of common stock outstanding nil
============
Number of adjusted weighted-average
shares outstanding 11,400,000
============
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY Period from February 20,
1997 (date of inception) through June 30, 1997
Common Stock Accumulated
Shares Amount deficit
Totals
Balances at February 20, 1997 --$ --$ -- $ --
Issuance of common stock
to parent company 11,400,000 1,000 -- 1,000
Net loss for the period -- -- (34,965) (34,965)
---------- ---------- ---------- ----------
Balances at June 30, 1997 11,400,000 $ 1,000 $ (34,965) $ (34,965)
========== ========== ========== =========
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
STATEMENT OF CASH FLOWS
Period from February 20, 1997 (date of inception) through June 30, 1997
Cash flows from operating activities
Net loss for the period $(34,965)
Adjustments to reconcile net income to
net cash used in operating activities
Depreciation and amortization 444
(Increase) decrease in:
Accounts receivable (103)
Increase (decrease) in:
Accounts payable and accrued liabilities 25,800
Net cash used in operating activities (8,824)
--------
Cash flows from investing activities
Cash paid to acquire furniture and equipment (15,238)
--------
Net cash used in investing activities (15,238)
--------
Cash flows from financing activities
Cash advances from parent company 20,250
Cash advances from affiliate 6,050
Cash received for issuance of common stock 1,000
--------
Net cash provided by financing activities 27,300
--------
Increase in cash 3,238
Cash and cash equivalents at beginning of period --
--------
Cash and cash equivalents at end of period $ 3,238
========
Supplemental disclosures of
interest and income taxes paid
Interest paid during the year $ --
========
Income taxes paid during the year $ --
========
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Millennia Entertainment, Inc. (the Company) is a Texas corporation headquartered
in Dallas, Texas with operations located in Florida. The Company is a
wholly-owned subsidiary of Millennia, Inc. The Company is primarily a
distributor of general entertainment videotapes on a contract basis. The Company
arranges for the appropriate duplication and distribution rights to the
requested titles and contracts for third-party duplication of bulk copies of the
respective program(s).
On October 1, 1997, in anticipation of filing a Registration Statement under The
Securities Act of 1933, the Company approved a forward split of the issued and
outstanding shares of common stock raising the number of issued shares from the
initially issued amount of 1,000 shares to 11,400,000 shares. All amounts
related to issued and outstanding shares in the accompanying financial
statements reflect the effect of this forward stock split as if the split had
occurred at the beginning of the first period presented.
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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Company is dependent upon its parent company for nominal working capital
support. The parent company intends to continue providing the necessary working
capital support for foreseeable future periods.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2. Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all cash on
hand and in banks, certificates of deposit and other highly liquid debt
instruments with a maturity of three months or less at the date of
purchase to be cash and cash equivalents.
2. Accounts Receivable and Revenue Recognition
The Company recognizes revenue at the time that product is shipped to the
respective buyer. In the normal course of business, the Company extends
unsecured credit to virtually all of its customers, which are principally
located in the United States. Because of the credit risk involved,
management has provided an allowance for doubtful accounts which reflects
its opinion of amounts which will eventually become uncollectible. In the
event of complete non-performance by entities owing the Company, the
maximum exposure to the Company is the outstanding accounts receivable
balance at the date of non-performance.
F-26
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1997
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
3. Property and Equipment
Property and equipment is recorded at its historical cost. Depreciation
is provided for in amounts sufficient to relate the asset cost to
operations over the estimated useful life (three to five years) using the
straight line method for financial reporting purposes.
Video tape masters are recorded at historical cost. Depreciation is
provided for using the straight-line method over a period of five (5)
years from the acquisition of the respective master, which approximates
the estimated useful life for duplication purposes of the respective
video tape master, in accordance with Statement of Financial Accounting
Standard No. 53, "Financial Reporting by Producers and Distributors of
Motion Picture
Films."
Gains and losses from disposition of property and equipment are
recognized as incurred and are included in operations.
Statement of Financial Accounting Standards No. 121 (SFAS 121),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" was issued in March 1996 and adopted by the
Company at its inception. SFAS 121 requires that long-lived assets, such
as property and equipment, including video tape masters, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. This SFAS had no
impact on the financial statements of the Company for the period ended
June 30, 1997.
4. Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes. At June 30, 1997, the deferred tax asset and deferred tax
liability accounts, consisting solely of temporary differences, were not
material to the financial statements. Temporary differences represent
differences in the recognition of assets and liabilities for tax and
financial reporting purposes, primarily accumulated depreciation.
The Company files its income tax returns as a component of its parent
company's consolidated tax return. Accordingly, all net operating losses
are offset against the tax liabilities, if any, of the Company's parent.
No separate company net operating loss carryforwards exist as of June 30,
1997. The Company allocates and is allocated its proportionate income tax
benefit or liability as computed on a separate company basis as of the
end of each respective reporting period. As of June 30, 1997, the
calculated tax benefit of approximately $5,200 allocated to the parent
company has been fully reserved due to the uncertainty of ultimate
realization.
F-27
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1997
NOTE C - RELATED PARTY TRANSACTIONS
The Company's parent, Millennia, Inc., has advanced approximately $20,250 to the
Company for working capital as of June 30, 1997. The advances are noninterest
bearing and are repayable upon demand.
The Company utilizes the video duplication services and certain administrative
personnel of Digital Communications Technology Corporation (DCT), an affiliate
of Millennia, Inc. As of June 30, 1997, the Company owed DCT approximately
$6,050 for various services related to the Company's operations which are
reflected in the accompanying statement of operations. It is the opinion of
management that these services have been charged at rates which approximate
those which would be obtained from unrelated third-party vendors of similar
services.
As of June 30, 1997, approximately $7,786 is reflected in the accompanying
statement of operations for allocated costs from DCT to the Company for
management and related personnel services.
The Company's operations require no warehouse, storage or significant
administrative space requirements. Accordingly, the Company has no agreements,
written or unwritten, in place for these items. As of June 30, 1997, the nominal
administrative and sales office requirements of the Company have been provided
by the parent company at no allocated cost to the Company.
NOTE D - COMMITMENTS
Effective October 1, 1997, the Company entered into a non-binding, unwritten
commitment with its President for annual compensation at a rate of $75,000 per
year.
F-28
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus in connection with the offering herein contained, and if given or
made, such information or representation must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
any security other than the registered securities to which it relates, or an
offer to or solicitation of any person in any jurisdiction in which such offer
or solicitation would be unlawful. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that there has been no change in the facts set forth herein since the date
hereof.
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
Page MILLENNIA ENTERTAINMENT, INC.
Caution Regarding
Forward-Looking Information 3
Prospectus Summary 3
The Company 4
Risk Factors 4 PROSPECTUS
Plan of Distribution 6
Description of Common Stock 7
Dividend Policy 7
Use of Proceeds 8 570,000 SHARES
Management's Discussion and
Analysis or Plan of Operation 8
Business 10
Properties 11 OF COMMON STOCK
Directors and Executive Officers 11
Security Ownership of Beneficial
Owners and Management 12
Certain Transactions 12
Legal Matters 12
Experts 12
Additional Information 13
Changes in and Disagreements with
Accountants on Accounting
and Financial Disclosure 13
Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities 13
Index to Financial Statements F-1
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses of the offering, all of which are to be borne by the
Company, are as follows:
SEC Filing Fee $177.80
Printing Expense $*
Accounting Fees and Expenses $*
Legal Fees and Expenses $*
Blue Sky Fees and Expenses -0-
TOTAL $*
*to be supplied by amendment
Item 16. Exhibits.
3.1 Articles of Incorporation of the Company*
3.2 Bylaws of the Company*
4.1 Specimen Certificate of Common Shares, no par value
5.1 Opinion of Richard Braucher, Esq.
8.1 Opinion of Richard Braucher, Esq., regarding tax matters
23.1 Consent of S.W. Hatfield + Associates, C.P.A.
23.2 Consent of Richard Braucher, Esq
* previously filed
Item 17. Undertakings.
The undersigned registrant hereby undertakes as follows:
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer (herein the "Company") pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel he matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Amendment No. 1 to the Registration Statement on Form SB-2 to
be signed on its behalf by the undersigned thereunto duly authorized, in the
City of Dallas, State of Texas, on the 24th day of December, 1997.
MILLENNIA ENTERTAINMENT, INC.
/S/ Kevin B. Halter December 24, 1997
----------------------------------------
BY Kevin B. Halter, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1
to the Registration Statement has been signed by the persons
in the capacities indicated below on December 24, 1997.
/s/ Jim Weinberg *
Jim Weinberg, President and Chief Operating Officer
/s/ Kevin B. Halter *
Kevin B. Halter, Chairman of the Board
(Principal Executive, Financial and Accounting Officer)
/s/ Kevin B. Halter, Jr. *
Kevin B. Halter, Jr., Vice President,
Secretary and Director
* By:_________________________
Kevin B. Halter
Attorney-in-Fact
<PAGE>
EXHIBIT 4.1
<PAGE>
EXHIBIT 4.1
SPECIMEN COMMON STOCK CERTIFICATE
MILLENNIA ENTERTAINMENT, INC.
CUSIP NO.______________
a Texas corporation
Common Stock - Without Par Value
CERTIFICATE NO. ____________________ _____________ SHARES
This certifies that _______________________________________ is the owner of
___________________ fully paid and non-assessable shares of the Common Stock
(without par value) of Millennia Entertainment, Inc., a Texas corporation,
transferable only on the books of the corporation by the holder hereof in
person or by duly authorized attorney upon surrender of this certificate
properly endorsed. This certificate is not valid until countersigned by the
Transfer Agent.
In Witness Whereof, the corporation has caused this certificate to be signed by
the facsimile signatures of its duly authorized officers and to be sealed with
the facsimile seal of the corporation.
Dated:___________________
/s/ Kevin B. Halter, Jr. /s/ Kevin B. Halter
--------------------- ---------------------
Secretary Chairman of the Board
Millennia Entertainment, Inc.
Corporate Seal
Countersigned:
SECURITIES TRANSFER CORPORATION
By_____________________________________
Transfer Agent & Registrar, Authorized Signature
<PAGE>
EXHIBIT 5.1
<PAGE>
(on the stationery of Richard Braucher, Esq.)
January .1998
Millennia Entertainment, Inc.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
Re: Form SB-2 Registration Statement
Gentlemen:
At your request, I have examined the Registration Statement, No 33 - 39177 and
Amendment No. 1 thereto, which you have filed with the Securities and Exchange
Commission, on Form SB-2 (the "Registration Statement"), in connection with the
registration under the Securities Act of 1933, as amended, of an aggregate of
570,000 shares of your Common Stock {the "Stock") issuable to shareholders of
Millennia, Inc. as a stock dividend declared by that corporation (the
Distribution).
In rendering the following opinion, I have examined and relied only upon the
documents, and certificates of officers and directors, of Millennia
Entertainment, Inc.(the Company) as specifically described below. In my
examination, I have assumed the genuineness of all signatures, the authenticity,
accuracy and completeness of the documents submitted to me as originals, and the
conformity with the original documents of all documents submitted to me as
copies. My examination was limited to the following documents and no others:
1. Articles of Incorporation of the Company, as amended to date;
2. Bylaws of the Company, as amended to date;
3. Certified Resolutions adopted by the Board of the Company
authorizing the issuance of the Stock; and
4. The Registration Statement, as amended.
I have not undertaken, nor do I intend to undertake, any independent
investigation beyond such documents and records, or to verify the adequacy or
accuracy of such documents and records.
Based on the foregoing, it is my opinion that the Stock to be issued, subject to
the effectiveness of the Registration Statement and compliance with applicable
"blue sky" laws, when issued, will be duly and validly authorized, fully paid
and non-assessable.
<PAGE>
I express no opinion as to compliance with securities or "blue sky" laws of any
state in which the Stock is proposed to be delivered pursuant to the
Distribution or as to the effect, if any, which non-compliance with such laws
might have on the validity of issuance of the Stock.
I consent to the filing of this opinion as an exhibit to any filing made with
the Securities and Exchange Commission or under any state or other
jurisdiction's securities act for the purpose of registering, qualifying or
establishing eligibility for an exemption from registration or qualification of
the Stock described in the Registration Statement in connection with the
Distribution. Other than as provided in the preceding sentence, this opinion (i)
is addressed solely to you, (ii) may not be relied upon by any other party;
(iii) covers only matters of Texas and federal law and nothing in this opinion
shall be deemed to imply any opinion related to the laws of any other
jurisdiction, (iv) may not be quoted or reproduced or delivered by you to any
other person, and (v) may not be relied upon for any other purpose whatsoever.
Nothing herein shall be deemed to relate to or constitute an opinion concerning
any matters not specifically set forth above.
By giving this opinion and consent, I do not admit that I am an expert with
respect to any part of the Registration Statement or Prospectus within the
meaning of that term "expert" as used in Section 11 of the Securities Act of
1933, as amended, or the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
The information set forth herein is as of the date of this letter. I disclaim
any undertaking to advise you of changes which may be brought to my attention
after the effective date of the Registration Statement.
Yours very truly,
Richard Braucher, Esq.
<PAGE>
EXHIBIT 8.1
<PAGE>
(on the stationery of Richard Braucher, Esq.)
January ,1998
Millennia, Inc.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
Re: Tax Opinion
Gentlemen:
At your request, I have examined the Registration Statement, No. 333 - 39177 and
Amendment No. 1 thereto, which you have filed with the Securities and Exchange
Commission, on Form SB- 2, in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 570,000 shares of the
Common Stock of your subsidiary, Millennia Entertainment, Inc., issuable to your
shareholders as a stock dividend (the Distribution).You have requested an
opinion with regard to federal income tax consequences of the Distribution under
the Internal Revenue Code, as amended.
Based on my revenue of the facts as set forth in the Registration Statement with
regard to the Distribution and the relevant portions of the Internal Revenue
Code and applicable regulations thereunder, it is my opinion that:
(i) Each shareholder of Millennia, Inc. will be considered to have received a
taxable distribution in an amount equal to the fair market value on the Record
Date of the Common Stock received. Such a taxable distribution would be taxed as
a dividend received with respect to the shares of common stock of Millennia,
Inc. then owned by the shareholder.
(ii) A shareholder's basis in the Common Stock received in the Distribution will
be equal to the fair market value of the Common Stock on the Record Date and the
shareholder's holding period will begin on the Record Date. The stockholder's
basis of the common stock of Millennia, Inc. will not be affected by the
Distribution.
(iii) Millennia, Inc will recognize gain, but not loss, in an amount equal to
the difference between the fair market value of the Common Stock distributed and
its basis in that stock.
This summary of the federal income tax consequences is for general information
only and may not be applicable to certain of Millennia, Inc.'s shareholders such
as those who are not citizens or residents of the United States of America or
those who are otherwise subject to special treatment under the Internal Revenue
Code.
<PAGE>
I express no opinion with regard to the applicability and effect of state, local
and foreign tax laws.
I consent to the filing of this opinion as an exhibit to any filing made with
the Securities and Exchange Commission or under any state or other
jurisdiction's securities act for the purpose of registering, qualifying or
establishing eligibility for an exemption from registration or qualification of
the Common Stock described in the Registration Statement in connection with the
Distribution. Nothing herein shall be deemed to relate to or constitute an
opinion concerning any matters not specifically set forth above.
By giving this opinion and consent, I do not admit that I am an expert with
respect to any part of the Registration Statement or Prospectus within the
meaning of that term "expert" as used in Section 11 of the Securities Act of
1933, as amended, or the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
The information set forth herein is as of the date of this letter. I disclaim
any undertaking to advise you of changes which may be brought to my attention
after the effective date of the Registration Statement.
Yours very truly,
Richard Braucher, Esq.
<PAGE>
EXHIBIT 23.1
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We consent to the use in Amendment No. 1 to Form SB-2 Registration Statement
under The Securities Act of 1933 of Millennia Entertainment, Inc. (a Texas
corporation) of our report dated July 24, 1997 (except for Note A as to which
the date is October 1, 1997) on the financial statements of Millennia
Entertainment, Inc. as of June 30, 1997 and for the period from February 20,
1997 (date of inception) through June 30, 1997, accompanying the financial
statements contained in such Amendment No. 1 to Form SB-2 Registration Statement
under The Securities Act of 12933, and to the use of our name and statements
with respect to us as appearing under the heading "Experts".
/s/ S. W. Hatfield + Associates
---------------------------
S. W. HATFIELD + ASSOCIATES
Dallas, Texas
December 23, 1997
<PAGE>
EXHIBIT 23.2
<PAGE>
CONSENT OF ATTORNEY FOR REGISTRANT
The undersigned, as attorney for the registrant, Millennia Entertainment, Inc.,
hereby consents to the use in Form SB-2 Registration Statement under The
Securities Act of 1933, as amended, by Millennia Entertainment, Inc. of the
legal opinion and tax opinion rendered by the undersigned and referenced therein
and filed as exhibits thereto and the use of his name in said registration
statement.
Dallas, Texas /S/ Richard Braucher
December 24, 1997 Richard Braucher, Esq.
