As filed with the Securities and Exchange Commission on March 16, 1998
Registration No.333-39177
U.S. Securities and Exchange Commission
Washington, D.C.
FORM SB-2/A2
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)
Kevin B. Halter, 16910 Dallas Parkway, Suite 100, Dallas, TX 75248 (972)248-1922
(name, address and telephone number of agent for service)
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
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 March
31, 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 will apply
to have the Common Stock 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 but
there can be no assurance that quotation will definitely be granted.
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 March ___, 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.
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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. The business purpose of the Distribution is to
give the Parent's stockholders shares in the Company which, over
time, may grow in value. The Distribution should also enhance the
value of the Common Stock which the Parent retains.
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. The Distribution may benefit the Company by
allowing it, as a public company, in the future to obtain
financing from third parties and to use the Company's stock as a
payment vehicle for business acquisitions and growth
opportunities as they present themselves. There are no plans for
such expansion at this time.
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 after this Registration
Statement is effective but there can be no assurance that quotation
will definitely be granted.)
Distribution Agent, Record Securities Transfer Corporation, Dallas, Texas. The Distribution
Date and Mailing Date Agent will mail certificates as soon as possible after the
effective date of this Registration Statement. The record date
for the Distribution is March 31, 1998.
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 fiscal
year-end of June 30. The Company has incurred net losses for Fiscal 1998 through
December 31, 1997 of $76,352. As of December 31, 1997 the Company had a working
capital deficit of $131,820 and negative shareholder's equity of $110,317. The
Parent had advanced $34,500 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
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
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on his life. Given the Company's limited operating history, the Company's future
success is dependent upon the ability of Mr. Weinberg to develop and expand the
Company's operations. No assurance can be given that the Company will be able to
retain Mr. Weinberg or that he will succeed in making the Company a profitable
venture.
CONFLICTS OF INTEREST; CONTROL BY PARENT
Because the directors of the Company are also directors of the Parent there is
the possibility in the future that the interests of the Company and the Parent
might not be the same, or that a proposed transaction might involve both the
Parent and the Company but on opposite sides of that transaction, for example,
if the Parent were to loan funds to the Company. In any such event, the
Directors of the Company, acting in that capacity, will have to make their
decision as to the best course for the Company based on such objective
information as may be available to them so that, to the fullest extent possible,
the resulting transaction will represent an arms length negotiation between the
parties and the terms which the Company accepts will be no less favorable than
those which they could obtain if the transaction involved an unrelated third
party rather than a party which is under common control. While the directors of
the Company do not have any formal policies with regard to this situation, they
are aware of their fiduciary duties and will follow appropriate principles to
insure that any such conflicts are resolved as outlined herein.
The Company, after the distribution of the stock dividend contemplated herein,
will be owned 95% by the Parent. Accordingly, the Parent will continue to
determine the composition of the Company's Board of Directors and thereby
control the policies and affairs of the Company. The Distribution will not
change or diminish the Parent's control 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 PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Distribution, there has been no public market for the Company's
stock. There can be no assurance that an active public market will develop or be
sustained for the Common Stock. The Company expects that it will meet the OTC's
requirements for listing on the Bulletin Board because it will meet the OTC's
three criteria currently in force, namely, it will be a public corporation, it
will have audited financial statements, and it will be a reporting company to
the SEC. Thus, the Company believes that there will be no problem in obtaining
the OTC's approval for listing the Common Stock on the Bulletin Board. The
Company believes that such factors as investor perceptions of the Company,
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 fluctuations 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.
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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,
shareswithout 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."
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.
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Listing and Trading of the Common Stock
The Company believes that the Common Stock will be traded on the OTC Bulletin
Board after this Registration Statement is declared effective. The Company will
take steps to accomplish this as soon as this Registration Statement becomes
effective but there can be no assurance that it will definitely happen. 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 13.62 % of
the stock of Millennia, Inc. and Digital Communications Technology Corporation
currently owns 28.74% of the stock of Millennia, Inc. After the Distribution the
Company is expected to have approximately 1500 shareholders.
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.
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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.
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 with others for the duplication of the requested title(s). As of
December 31, 1997 this duplication service was performed by Digital
Communications Technology Corporation ("DCT") which is an affiliate of the
Company because it owns 28.74% of the Parent's stock. See "Business."
In the future the Company plans to increase sales levels based on the Company's
reputation for prompt service and the high quality of the videotapes which it
has produced. It is currently marketing a special videotape for a professional
baseball team and is seeking additional related business opportunities. Due to
the maturity of the general videotape business, the Company continues and will
continue to focus its sales and marketing efforts in the area of producing
videotapes of specific subjects to meet the needs of specific customers. It does
not duplicate tapes merely with the hope that customers will be found who will
buy them. Through this strategy, the Company anticipates that its exposure to
downtrends, if any, in the videotape market will be minimized.
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While the Company has less than one year of operating history and has
experienced losses on gross margins due to the competitive nature of the
Company's marketing strategy and its need to be especially sensitive to the
prices charges to its customers, management believes that it will have numerous
opportunities in the future to establish contractual relations with significant
customers who will be less price conscious. The Company's management anticipates
that the investment in these start-up losses will be beneficial in the long run
as the Company's reputation for timely performance and quality reproduction
becomes rooted in the custom videotape market. Management is seeking to develop
prospects located beyond its immediate geographic market.
The Company is being funded by cash advances from its parent company, Millennia,
Inc., and the Parent has indicated a willingness to continue this procedure for
the foreseeable future. Management believes that the Company may be able to
achieve profitable operations and a positive cash flow by the end of the
Company's 1998 Fiscal Year at June 30, 1998.
The Company does not presently anticipate any change in the number of employees
required to sustain its operations. The Company doesn't conduct any research or
development activities at this time. Further, the Company has no plant and/or
equipment requirements and anticipates no such expenditures, other than the cost
of acquiring video tape masters as required on a specific project basis.
Acquisitions
There are no plans, arrangements, commitments or understandings for the Company
to acquire, or be acquired by, any other company or business at this time.
Results of Operations
Six months ended December 31, 1997
During the first half of Fiscal 1998 which ended December 31, 1997, the Company
experienced net sales of approximately $73,500 as compared to $3,300 for the
first four months of operations. This sales growth reflects 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 $125,000 generating a
negative gross margin of approximately $52,000. Further, management's monitoring
of indirect overhead costs has limited selling, general and administrative costs
to approximately $24,400, including depreciation, for the six months ended
December 31, 1997. This total compares favorably to 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 six months ended December 31, 1997, the Company expended only
negligible resources for capital assets, including video tape masters. All sales
generated during the first half 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 December 31, 1997, the Company used cash in operating
activities of approximately $8,600. 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 at some future date.
However, there is no assurance that such financing or equity placements will be
available at amounts or rates favorable to the Company.
9
<PAGE>
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 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 with unrelated third parties to duplicate the requested title(s)
at market rates. The Company promptly delivers the completed tapes to its
customers so that no inventory of completed product is maintained.
10
<PAGE>
The Company plans to increase sales levels based on the Company's reputation for
prompt service and the high quality of the videotapes which it has produced for
general public consumption. It is currently duplicating and marketing a special
videotape for a professional baseball team and is seeking additional related
business opportunities. Due to the maturity of the general 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.
While the Company has less than one year of operating history and has
experienced losses on gross margins due to the competitive nature of the
Company's marketing strategy and its need to be especially sensitive to the
prices charges to its customers, management believes that it will have numerous
opportunities in the future to establish contractual relations with significant
customers who will be less price conscious. The Company's management anticipates
that the investment in these start-up losses will be beneficial in the long run
as the Company's reputation for timely performance and quality reproduction
becomes rooted in the custom videotape market. Management is seeking to develop
prospects located beyond its immediate geographic market.
The Company is being funded by cash advances from its parent company, Millennia,
Inc. and the Parent has indicated a willingness to continue this practice for
the foreseeable future. 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 it 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. There are no plans,
arrangements, commitments or understandings for the Company to acquire, or be
acquired by, any other company or business at this time.
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 prospective buyers of the duplicated
videotapes before they are ordered to be produced and by utilizing the video
duplication services of Digital Communications Technology Corporation ("DCT"),
an affiliate of the Company, the Company eliminates the need to maintain any
inventory of raw or finished inventory items. DCT prepares all duplicated
videotapes on a contract basis after an executed purchase order is received by
the Company. DCT bills the Company and transfers the related title to the
duplicated videotapes to the Company at the date the product is shipped by the
Company to the respective buyer. Further, DCT maintains its own raw materials
inventory and the related title to these materials which are necessary to
complete an order placed by the Company (or any other customer of DCT) as the
Company contracts with DCT for the purchase of completed duplicated videotapes
only. Accordingly, the Company recognizes the revenue at the time that product
is shipped to the respective buyer.
By eliminating the necessity to maintain any type of inventory, 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.
11
<PAGE>
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, as well as implementation of the Company's business plan.
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 B. Halter
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 December 31, 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.
12
<PAGE>
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 28, 1998 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.
<TABLE>
<S> <C>
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 4,829,040 (3)(4) 42.36%
Kevin B. Halter, Jr. 4,829,040 (3)(4) 42.36%
Jim Weinberg none 0
All Officers and Directors as a Group(3 persons) 4,829,040 (3)(4) 42.36%
</TABLE>
(1) pre distribution
(2) post distribution
(3) Halter Capital Corporation, which is owned 100% by Kevin B. Halter and Kevin
B. Halter, Jr., owns 309,940 shares or 13.62% of the outstanding shares of
Millennia, Inc., the Parent of the Company. The proportionate percentage of the
Company represented by this position is attributed to Kevin B. Halter and Kevin
B. Halter, Jr. as indirect ownership.
4) Digital Communications Technology Corporation ( a public corporation in which
Kevin B. Halter, Kevin B. Halter, Jr. and Halter Capital Corporation own in the
aggregate 236,781shares or 31.75% of the outstanding shares) owns 654,127 shares
or 28.74% of the outstanding shares of Millennia, Inc., the Parent of the
Company. The proportionate percentage of the Company represented by this
position is attributed to Kevin B. Halter and Kevin B. Halter, Jr. as indirect
ownership.
SHAREHOLDER DERIVATIVE LAWSUIT
On March 4, 1996, Adrian Jacoby, allegedly on behalf of the Parent,
Millennia, Inc. (the "Parent"), brought a purported shareholder derivative
lawsuit against Messrs. Kevin B. Halter, Kevin B. Halter, Jr., Gary C. Evans and
James Smith (who were then members of the Parent's Board of Directors), Halter
Capital Corporation and Securities Transfer Corporation (the "Defendants"). In
addition, the Parent was joined as a "nominal defendant." In this lawsuit, the
plaintiffs have alleged breaches of fiduciary duty, fraud, and violations of
state securities laws. The plaintiffs seek unspecified actual and exemplary
damages, a constructive trust against the assets of the Defendants and an
accounting of the affairs of the Defendants with respect to their dealings with
the Parent. In addition, the plaintiffs have requested a temporary injunction
and the appointment of a receiver for the Parent. The plaintiffs have brought
this lawsuit allegedly to vindicate the wrongs that the plaintiffs claim were
done to the Parent by the individual defendants and their affiliated companies,
and, if any damages are ultimately awarded to the plaintiffs, those damages will
be awarded on behalf of, and for the benefit of, the Parent and all of its
shareholders. If successful, the plaintiffs may, however, recover certain
attorneys' fees and costs. The case is entitled Richard Abrons et al v. Kevin B.
Halter et al, cause no. 96-02169-G, and is pending in the 134th Judicial
District for the District Court of Dallas County, Texas. Even though the Parent
is a nominal defendant in the lawsuit, the plaintiffs have not sought to recover
any damages against the Parent. In this type of lawsuit, the Parent is joined as
a procedural matter to make it a party to the lawsuit.
All of the Defendants have answered and denied the allegations contained in
the petition. All of the Defendants deny all the material allegations and claims
in the Petition, dispute the plaintiffs contention that this is a proper
shareholder derivative action, deny that the plaintiffs have the right to pursue
this lawsuit on behalf of the Parent and are vigorously defending the lawsuit.
In addition, the Defendants have filed counterclaims against the plaintiffs and
third party actions against Blake Beckham, attorney at law, Beckham & Thomas,
L.L.P., and Sanford Whitman, the former Chief Financial Officer of the Parent,
and Jack D. Brown, Jr., the former President of the Parent, seeking damages in
excess of $50 million. In this counterclaim, the Defendants have asserted that
the filing of this lawsuit and temporary restraining order caused the Parent
significant damages.
A court hearing related to this case commenced on February 9, 1998 to
ascertain if the plaintiffs have met the legal requirements to
13
<PAGE>
file and pursue this case. The Parent and its management continue to believe
that the results of this lawsuit will not have any material impact on the
operations or financial condition of the Parent other than expenditures for
legal and professional fees, which are currently in excess of $600,000 in the
aggregate. This case has not yet been set for trial.
CERTAIN TRANSACTIONS
During 1997, the Parent has advanced funds to the Company for working capital.
At December 31, 1997, the Company owed $34,500 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 December 31, 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.
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.
14
<PAGE>
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.
15
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
INDEX TO FINANCIAL STATEMENTS
Page
----
Quarter ended December 31, 1997
Balance Sheets
as of December 31, 1997 and June 30, 1997 F-2
Statements of Operations
for the six and three months ended December 31, 1997 F-3
Statement of Cash Flows
for the six months ended December 31, 1997 F-4
Notes to Financial Statements F-5
Period from February 20, 1997 (date of inception)
through June 30, 1997
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-1
<PAGE>
<TABLE>
<CAPTION>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Balance Sheets
December 31, 1997 and June 30, 1997
(Unaudited) (Audited)
December 31, June 30,
1997 1997
--------- ---------
ASSETS
<S> <C>
Current assets
Cash and cash equivalents $ -- $ 3,238
Accounts receivable - trade 12,351 103
--------- ---------
Total current assets 12,351 3,341
--------- ---------
Property and equipment
Video tape masters 22,463 13,650
Office furniture, fixtures and equipment 1,588 1,588
--------- ---------
24,051 15,238
Accumulated depreciation (2,547) (444)
--------- ---------
Net property and equipment 21,503 14,794
--------- ---------
Total Assets $ 33,854 $ 18,135
========= =========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Cash overdraft $ 2,119 $ --
Accounts payable and accrued liabilities
Trade 103,742 25,800
Parent company 34,500 20,250
Affiliate 3,810 6,050
--------- ---------
Total current liabilities 144,171 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 (111,317) (34,965)
--------- ---------
Total shareholder's equity (110,317) (33,965)
--------- ---------
Total Liabilities and Shareholder's Equity $ 33,854 $ 18,135
========= =========
</TABLE>
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-2
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Statement of Operations
Six and three months ended December 31, 1997
(Unaudited)
Six months Three months
ended ended
December 31, December 31,
1997 1997
Revenues ------------ ------------
Video products and services $ 73,466 $ 26,791
------------ ------------
Cost of goods sold
Materials, contract services and other 123,439 69,030
Depreciation 1,913 1,230
------------ ------------
Total cost of goods sold 125,352 70,260
------------ ------------
(51,886) (43,469)
Operating expenses
Selling, General and Administrative expenses 24,277 21,017
Depreciation and amortization 189 75
------------ ------------
Total operating expenses 24,466 21,092
------------ ------------
Loss from operations (76,352) (64,561)
Income tax provision -- --
------------ ------------
Net loss $ (76,352) $ (64,561)
============ ============
Loss per weighted-average share of
common stock outstanding $ (0.01) $ (0.01)
============ ============
Weighted-average number of shares
issued and outstanding during
each respective period 11,400,000 11,400,000
============ ============
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-3
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Statement of Cash Flows
Six months ended December 31, 1997
(Unaudited)
Cash flows from operating activities
Net loss for the period $(76,352)
Adjustments to reconcile net income to
net cash used in operating activities
Depreciation and amortization 2,102
(Increase) decrease in:
Accounts receivable (12,248)
Increase (decrease) in:
Accounts payable and accrued liabilities 77,942
Net cash used in operating activities (8,556)
--------
Cash flows from investing activities
Cash paid to acquire video tape masters,
furniture and equipment (8,811)
Net cash used in investing activities (8,811)
--------
Cash flows from financing activities
Increase in cash overdraft 2,119
Cash advances from parent company 14,250
Repayment of cash advances from affiliate (2,240)
--------
Net cash provided by financing activities 14,129
--------
Increase in cash (3,238)
Cash and cash equivalents at beginning of period 3,238
--------
Cash and cash equivalents at end of period $ --
========
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-4
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Notes to Financial Statements
December 31, 1997
Note 1 - Organization and Description of Business
Millennia Entertainment, Inc. (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).
During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB 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 in its Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 on Form 10-KSB 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 10- QSB, 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-5
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Notes to Financial Statements - Continued
December 31, 1997
Note 2 - Summary of Significant Accounting Policies - Continued
2. Accounts Receivable
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 and Canada. 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. Inventory
The Company utilizes the video duplication services of Digital
Communications Technology Corporation (DCT), an affiliate of the Company.
The Company recognizes revenue at the time that product is shipped to the
respective buyer. DCT prepares all product on a contract basis and
transfers title to the Company at the date that the product is shipped by
the Company to the respective buyer. Further, DCT retains title to all raw
materials necessary to complete an order placed by the Company as the
Company contracts for the purchase of completed product only. Accordingly,
the Company maintains no inventory at the end of any accounting period.
4. 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.
F-6
<PAGE>
MILLENNIA ENTERTAINMENT, INC.
(a wholly-owned subsidiary of Millennia, Inc.)
Notes to Financial Statements - Continued
December 31, 1997
Note 2 - Summary of Significant Accounting Policies - Continued
4. Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes. At December 31, 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 December 31,
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
December 31, 1997 and June 30, 1997, respectively, the calculated tax
benefits of approximately $11,453 and $5,200 allocated to the parent
company has been fully reserved due to the uncertainty of ultimate
realization.
Note 3 - Related Party Transactions
The Company's parent, Millennia, Inc., has cumulatively advanced approximately
$34,500 to the Company for working capital as of December 31, 1997. The advances
are noninterest bearing and are repayable upon demand.
Through September 30, 1997, the Company utilized, on an "as needed, part-time"
basis, the services of a certain administrative person employed by Digital
Communications Technology Corporation (DCT), an affiliate of Millennia, Inc.
This person became the sole full-time employee of the Company on October 1,
1997. These charges were made at the historical cost of the services to DCT
without markup or any additional profit-oriented charges. Further, until
December 31, 1997, the Company utilized the video duplication services of DCT.
It is the opinion of management that the rates charged for video duplication
services were 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 December 31, 1997 and June
30, 1997, respectively, the nominal administrative and sales office requirements
of the Company have been provided by the parent company at no allocated cost to
the Company.
Additionally, due to management and administrative oversight being provided by
DCT personnel, at DCT's historical cost, through September 30, 1997, and by
direct administrative oversight subsequent thereto, the Company's parent
provides very nominal administrative, management and/or operational oversight to
the Company. Further, all costs and expenses related to the Company's operations
are directly charged to and paid by the Company. Accordingly, there is no
administrative cost allocation from the Company's parent to the Company for the
period from July 1, 1997 through December 31, 1997.
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-7
<PAGE>
S. W. HATFIELD + ASSOCIATES
certified public accountants
Members: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of 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)
Use our past to assist your future sm
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) o [email protected] (e-mail)
F-8
<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-9
<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-10
<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-11
<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-12
<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. (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
4. 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 and Canada. 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-13
<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. Inventory
The Company utilizes the video duplication services of Digital
Communications Technology Corporation (DCT), an affiliate of the Company.
The Company recognizes revenue at the time that product is shipped to the
respective buyer. DCT prepares all product on a contract basis and
transfers title to the Company at the date that the product is shipped by
the Company to the respective buyer. Further, DCT retains title to all
raw materials necessary to complete an order placed by the Company as the
Company contracts for the purchase of completed product only.
Accordingly, the Company maintains no inventory at the end of any
accounting period.
4. 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.
5. 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.
F-14
<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
5. Income Taxes - continued
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.
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, on an "as needed, part-time" basis, the services of a
certain administrative person employed by Digital Communications Technology
Corporation (DCT), an affiliate of Millennia, Inc. The charges for these
personnel services were made at the historical cost of the services to DCT
without markup or any additional profit-oriented charges. As of June 30, 1997,
approximately $7,786 is reflected in the accompanying statement of operations
for allocated charged costs from DCT to the Company for management and personnel
services.
The Company also utilizes the video duplication services of DCT. It is the
opinion of management that the rates charged for video duplication services were
at rates which approximate those which would be obtained from unrelated
third-party vendors of similar services. 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.
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.
Additionally, due to management and administrative oversight being provided by
DCT personnel, at DCT's historical cost, the Company's parent provides very
nominal administrative, management and/or operational oversight to the Company.
Further, all costs and expenses related to the Company's operations are directly
charged to and paid by the Company. Accordingly, there is no administrative cost
allocation from the Company's parent to the Company for the period from February
20, 1997 (date of inception) through June 30, 1997.
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-15
<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>
<S> <C>
TABLE OF CONTENTS
MILLENNIA ENTERTAINMENT, INC.
Page
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 8
Use of Proceeds 8
Management's Discussion and 570,000 SHARES
Analysis or Plan of Operation 8
Business 10
Properties 12
Directors and Executive Officers 12 OF COMMON STOCK
Security Ownership of Beneficial
Owners and Management 13
Certain Transactions 14
Legal Matters 14
Experts 14
Additional Information 14
Changes in and Disagreements with
Accountants on Accounting
and Financial Disclosure 14
Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities 15
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 $3000
Accounting Fees and Expenses $3500
Legal Fees and Expenses $3500
Blue Sky Fees and Expenses -0-
TOTAL $10,177.80
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. 2 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 16th day of March, 1998.
MILLENNIA ENTERTAINMENT, INC.
By /s/ Kevin B. Halter
---------------
Kevin B. Halter, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 2
to the Registration Statement has been signed by the persons in the capacities
indicated below on March 16, 1998.
/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
---------------
Kevin B. Halter
Attorney-in-Fact
<PAGE>
EXHIBIT 5.1
(on stationery of Richard Braucher, Esq.)
March___,1998
Millennia Entertainment, Inc.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
Re: Form SB-2 Registration Statement
At your request, I have examined the Registration Statement under File No. 333 -
39177 and the amendments thereto, which you have filed with the Securities and
Exchange Commission, on Form SB-2/A2 (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.
In rendering the following opinion, I have examined and relied only upon the
documents, and certificates of officers and directors of 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.
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.
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
offering described therein. 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,
/S/ Richard Braucher, Esq.
----------------------
Richard Braucher, Esq.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
--------------------------------------------------
We consent to the use in Amendment No. 2 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. 2 to Form SB-2 Registration Statement
under The Securities Act of 1933, 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
March 13, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF ATTORNEY FOR REGISTRANT
The undersigned, as attorney for the registrant, Millennia Entertainment, Inc.,
hereby consents to the use in the Form SB-2/A2 Registration Statement under The
Securities Act of 1933, as amended, by OmniDoors, 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
-----------------
March 13, 1998 Richard Braucher, Esq.
