UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A
- --------------------------------------------------------------------------------
(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ------- --------------
ACT OF 1934
For the quarterly period ended September 30, 1997
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
- --------------------------------------------------------------------------------
Commission File Number: 1-12572
MILLENNIA, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 59-2158586
- ------------------------ -----------------------
(State of incorporation) (IRS Employer ID Number)
16910 Dallas Parkway, Suite 100, Dallas TX
75248 (Address of principal executive
offices)
(972) 248-1922
(Issuer's telephone number)
- --------------------------------------------------------------------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
November 11, 1997: 2,275,635
Transitional Small Business Disclosure Format (check one): YES NO X
---- ----
<PAGE>
MILLENNIA, INC.
Form 10-QSB for the Quarter ended September 30, 1997
Table of Contents
Page
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 11
Part II - Other Information
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
2
<PAGE>
Part 1 - Item 1 - Financial Statements
MILLENNIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1997 and June 30, 1997
<TABLE>
<S> <C> <C>
ASSETS
(Unaudited) (Audited)
September 30, June 30,
1997 1997
---------------------------
Current Assets
Cash on hand and in bank $ 83,697 $ 54,048
Marketable securities 18,750 -
Accounts receivable, net of allowance for doubtful
accounts of $25,000 and $25,000, respectively 58,876 70,021
Accrued oil & gas sales 62,056 115,894
Income taxes recoverable - 10,659
Inventory 113,631 106,440
Prepaid expenses and other 5,600 583
----------- ---------
Total current assets 342,610 357,645
----------- ---------
Oil & Gas Properties, net of accumulated
depletion of $187,897 and $154,449, respectively 1,722,103 1,774,243
----------- ---------
Other Assets
Investment in affiliated company 661,326 614,281
Other property and equipment - net 39,486 26,223
Other 6,107 6,107
----------- ---------
Total other assets 706,919 646,611
----------- ---------
TOTAL ASSETS $2,771,632 $2,778,499
=========== =========
</TABLE>
- Continued -
The accompanying notes are an integral part of these consolidated financial
statements. The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
3
<PAGE>
MILLENNIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
September 30, 1997 and June 30, 1997
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
(Unaudited) (Audited)
September 30, June 30,
1997 1997
--------------------------
Current Liabilities
Current portion of long-term debt $ 3,930 $ 3,930
Accounts payable - trade 274,283 215,162
Due to stockholder and other affiliated entities 242,110 258,800
Other accrued liabilities and deferred credits 275,374 260,509
---------- --------
Total current liabilities 795,697 738,401
----------- --------
Long-term Debt, net of current maturities 1,594,308 1,594,308
----------- ---------
Commitments and Contingencies
Stockholders' Equity
Preferred stock - $0.00001 par value. 10,000,000 shares
authorized. None issued and outstanding - -
Common stock - $0.0002 par value. 50,000,000 shares
authorized. 2,275,635 and 2,274,385 issued
and outstanding, respectively. 455 454
Additional paid-in capital 7,021,544 6,786,614
Shares deemed to be treasury stock (47,016 and
84,318 shares, respectively) (3,297) (35,049)
Unrealized gain (loss) on marketable securities (3,332) -
Retained earnings (6,633,743) (6,306,229)
------------ -----------
Total stockholders' equity 381,627 445,790
------------ ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,771,632 $2,778,499
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements. The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
4
<PAGE>
<TABLE>
MILLENNIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three months ended September 30, 1997 and 1996
(Unaudited)
<S> <C> <C>
1997 1996
-------------------------
Net Revenues $303,859 $130,165
Cost of Sales 297,150 96,832
-------- --------
6,709 33,333
-------- --------
Operating Expenses
Selling expenses 12,426 11,669
General and administrative expenses 132,900 251,468
Depreciation and depletion 37,656 1,212
-------- -------
Total operating expenses 182,982 264,349
-------- -------
Loss from Operations (176,273) (231,016)
Other Income (Expenses)
Gain on sales of marketable securities
and securities of affiliated entity 18,751 11,283
Interest and other income 308 35,391
Interest expense (48,447) -
Equity in loss of affiliated entity (121,853) (5,786)
--------- --------
Loss from Continuing Operations
before Provision for Income Taxes (327,514) (190,128)
Benefit from Income Taxes - 1,429
-------- --------
Loss from Continuing Operations (327,514) (188,699)
Discontinued Operations, net of income taxes
Loss from discontinued operations of American Quality
Manufacturing Corporation, net of income tax benefits of $-0- - (566,991)
Gain on disposition of American Quality Manufacturing
Corporation, net of income tax provision of $617,412 - 1,585,566
--------- ----------
Income from discontinued operations - 1,018,575
--------- ----------
Net Income (Loss) $(327,514) $ 829,876
========= ==========
Earnings (loss) per weighted-average share of common stock outstanding
From continuing operations $(0.14) $(0.09)
From discontinued operations - 0.49
-------- ---------
Total loss per share $(0.14) $ 0.40
========== =========
Weighted-average number of shares of common stock outstanding 2,274,738 2,083,914
========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements. The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
5
<PAGE>
<TABLE>
<CAPTION>
MILLENNIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended September 30, 1997 and 1996
(Unaudited)
<S> <C> <C>
1997 1996
----------- -----------
Cash Flows from Operating Activities
Net income (loss) $ (327,514) $ 829,876
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities
Depreciation and depletion 38,869 1,212
Provision for doubtful accounts -- 9,900
(Gain) loss on sales of marketable securities
and securities of affiliated entity (18,751) (11,283)
Equity in earnings (loss) of affiliated entity 121,853 (5,786)
Discontinued operations -- (1,575,541)
(Increase) decrease in:
Accounts receivable 11,145 (15,882)
Accrued oil and gas sales 53,838 --
Recoverable income taxes 10,659 --
Inventory (7,191) 6,572
Prepaid expenses and other (5,017) 369,169
Deferred tax benefit -- 612,643
Increase (decrease) in:
Accounts payable 59,129 (1,779)
Other accrued liabilities 14,865 (16,054)
----------- -----------
Net cash provided by (used in) operating activities (48,115) 203,047
----------- -----------
Cash Flows from Investing Activities
Proceeds from sales of securities of affiliated entity 113,425 22,273
Proceeds from sales of marketable securities 101,357 32,482
Purchases of marketable securities (122,828) (225,198)
----------- -----------
Net cash provided by (used in) investing activities 91,954 (170,443)
----------- -----------
Cash Flows from Financing Activities
Repayment of advances from officer -- (16,000)
Repayment of advances from stockholder (16,690) --
Proceeds from exercise of employee stock options 2,500 --
----------- -----------
Net cash used in financing activities (14,190) (16,000)
----------- -----------
Increase in Cash and Cash Equivalents 29,649 16,604
Cash and cash equivalents at beginning of period 54,048 36,628
----------- -----------
Cash and cash equivalents at end of period $ 83,697 $ 53,232
=========== ===========
</TABLE>
- Continued -
The accompanying notes are an integral part of these consolidated financial
statements. The financial information presented herein has been prepared by
management
without audit by independent certified public accountants.
6
<PAGE>
MILLENNIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Three months ended September 30, 1997 and 1996
(Unaudited)
1997 1996
--------------------------------
Supplemental Disclosures of
Interest and Income Taxes Paid
Interest paid during the period $ 18,526 $ -
======= ======
Income taxes paid (refunded) $(10,659) $ -
====== ======
The accompanying notes are an integral part of these consolidated financial
statements. The financial information presented herein has been prepared by
management without audit by independent certified public accountants.
7
<PAGE>
MILLENNIA, INC. AND SUBSIDIARIES
Notes to Financial Statements
Note 1 - Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Millennia, Inc. and all majority- owned subsidiaries, collectively referred to
as "Company". The consolidated subsidiaries include Omni Doors, Inc. (Omni),
Doblique Energy, Inc. (Doblique) and Millennia Entertainment, Inc. (MEI). All
significant intercompany accounts and transactions have been eliminated.
The Company holds an approximate 10.5% or 13.2% interest in Digital
Communications Technology Corporation as of September 30, 1997 and June 30,
1997, respectively. The Company held equivalent interests of approximately 17.0%
and 17.6% as of September 30, 1996 and June 30, 1996, respectively.
Effective August 31, 1996, the Company sold 100.0% of its ownership interest in
American Quality Manufacturing Corporation (AQM) to a corporate unrelated third
party for the assumption of all outstanding liabilities of AQM as of the sale
date. The results of operations of AQM are presented in the accompanying
statement of operations as discontinued operations.
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 U. S. Securrities and Exchange Commission.
The June 30, 1997 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 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.
Note 2 - Summary of Significant Accounting Policies
a) Marketable securities
Marketable securities consist of equity securities which had an aggregate
cost of approximately $22,000 at September 30, 1997. The marketable
securities portfolio contains net unrealized losses of approximately $3,250,
resulting in a net carrying amount of approximately $18,750 at September 30,
1997. The unrealized losses are reported as a separate component of
stockholders' equity. The Company's marketable securities portfolio is
classified as "available for sale" securities.
8
<PAGE>
MILLENNIA, INC. AND SUBSIDIARIES
Notes to Financial Statements - Continued
Note 2 - Summary of Significant Accounting Policies - continued
b) Pending changes in accounting standards
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share (FAS 128). FAS
128 specifies new standards designed to improve the EPS information provided
in financial statements by simplifying the existing computational guidelines,
revising the disclosure requirements, and increasing the comparability of EPS
data on an international basis. Some of the changes made to simplify the EPS
computations include: (a) eliminating the presentation of primary EPS and
replacing it with basic EPS, with the principal difference being that common
stock equivalents are not considered in computing basic EPS, (b) eliminating
the modified treasury stock method and the three percent materiality
provision, and (c) revising the contingent share provisions and the
supplemental EPS data requirements. FAS 128 also makes a number of changes to
existing disclosure requirements. FAS 128 is effective for financial
statements issued for periods ending after December 15, 1997, including
interim periods. The Company has not yet determined the impact of the
implementation of FAS 128.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
(SFAS 130). SFAS 130 establishes standards for reporting and display of
comprehensive income. The purpose of reporting comprehensive income is to
present a measure of all changes in equity that result from recognized
transactions and other economic events of the period other than transactions
with owners in their capacity as owners. SFAS 130 requires that an enterprise
classify items of other comprehensive income by their nature in a financial
statement and display the accumulated capital in the equity section of the
balance sheet. SFAS 130 is effective for fiscal years beginning after
December 15, 1997, with earlier application permitted. The Company has not
yet determined the impact, if any, of the implementation of SFAS 130.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" (SFAS 131). SFAS 131 specifies revised
guidelines for determining an entity's operating segments and the type and
level of financial information to be disclosed. Once operating segments have
been determined, SFAS 131 provides for a two-tier test for determining those
operating segments that would need to be disclosed for external reporting
purposes. In addition to providing the required disclosures for reportable
segments, SFAS 131 also requires disclosure of certain "second level"
information by geographic area and for products/services. SFAS 131 also makes
a number of changes to existing disclosure requirements. SFAS 131 is
effective for fiscal years beginning after December 15, 1997, with earlier
application encouraged. The Company has not yet determined the impact, if
any, of the implementation of SFAS 131.
9
<PAGE>
MILLENNIA, INC. AND SUBSIDIARIES
Notes to Financial Statements - Continued
<TABLE>
Note 3 - Inventory
Inventory consists of purchased doors, related parts and other supplies
necessary to assemble commercial metal doors for resale. These items are carried
at the lower of cost or market using the first-in, first-out method of
accounting. Inventory consists of the following components as of September 30,
1997 and June 30, 1997, respectively:
September 30, June 30,
<S> <C> <C>
1997 1997
Finished goods and purchased product $96,585 $ 99,777
Other raw materials and supplies 17,046 6,663
-------- ---------
$113,631 $106,440
======= =======
Note 4 - Equity investment in DCT
Summarized financial statement information for DCT is presented below (unaudited)
For the three For the three
months ended months ended
September 30, September 30,
1997 1996
-------------- -------------
Net sales $2,205,858 $7,019,937
Operating profit (loss) $(1,115,340) $168,137
Income (loss) from continuing operations $(989,942) $130,748
Net income (loss) $(594,715) $65,667
Earnings (loss) per share $(0.08) $0.01
As of As of
September 30, June 30,
1997 1997
------------- ------------
Total assets $9,939,178 $12,345,302
Total liabilities $7,084,434 $7,699,408
Total stockholders' equity $2,851,744 $4,645,894
</TABLE>
(Remainder of this page left blank intentionally)
10
<PAGE>
Part I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(1) Results of Operations
Overview
Gross revenues for the first quarter of Fiscal 1998 increased approximately
$174,000 from amounts realized for the same period in Fiscal 1997. The most
significant reason for this increase was the addition of the Company's
wholly-owned subsidiary, Doblique Energy Corporation during the second quarter
of Fiscal 1997. The addition of this operating subsidiary also caused the
Company to experience significant increases in costs of sales related to the
operation of various oil and gas wells, principally located in Texas and New
Mexico.
Operating expenses declined by approximately $81,000 from the first quarter of
Fiscal 1997 compared to the first quarter of Fiscal 1997 due to reduced
corporate overhead expenses and lower legal and professional fees related to the
stockholder derivative litigation. Some of these cost savings were offset by
approximately $36,000 in depletion expenses related to Doblique Energy
Corporation.
The Company experienced increases in gains on sales of marketable securities and
sales of securities of an affiliated entity, Digital Communications Technology
Corporation (DCT), of approximately $7,500 from approximately $11,000
experienced in the first quarter of Fiscal 1997 to approximately $18,700
experienced in the first quarter of Fiscal 1998.
The Company continues to experience non-monetary losses related to the use of
the equity method of accounting related to its approximate 10.5% investment in
DCT. During the first quarter of Fiscal 1997, this accounting transaction
recognized losses of approximately $5,700 while the Company recognized
approximately $122,000 in proportionate losses for the first quarter of Fiscal
1998.
The Company experienced losses from continuing operations per weighted-average
share of common stock outstanding of approximately $0.14 per share for the first
quarter of Fiscal 1998 as compared to a losses of approximately $0.09 per share
for the first quarter of Fiscal 1997. Approximately $0.05, or the entire
comparative increase, is attributable to the non-monetary loss recognition of
the Company's proportionate share of the net losses of DCT.
Door Distribution Segment
Omni Doors, Inc. is the Company's oldest continuing operating subsidiary. For
the first quarter of Fiscal 1998, Omni experienced revenues of approximately
$128,000 as compared to approximately $130,000 for the equivalent period during
Fiscal 1997. This overall decline is nominal and reflective of the highly
competitive construction market in South Florida which can lead to periodic
fluctuations which are caused by price sensitive consumer demands and overall
construction activity. During Fiscal 1997, Omni had an exterior door product
approved for installation in Dade County, Florida. This approval process was
initiated at the local governmental level in response to damages caused by
Hurricane Andrew to the South Florida region. Management is of the opinion that
having approved products will enhance the overall product line and acceptability
of Omni in the South Florida marketplace.
11
<PAGE>
Omni experienced a net loss from operations of approximately $5,000 for the
first three months of Fiscal 1998 as compared to approximately $2,900 for the
same period during Fiscal 1997. The primary reason for this increase relates to
increases in various selling expenses for increased visibility of Omni and its
product lines in the South Florida region.
Oil and Natural Gas Segment
Operations in Doblique Energy Corporation were started on October 1, 1997.
During the three month period from July 1997 to September 1997, Doblique
experienced revenues of approximately $129,000 from sales of oil and natural gas
products. Due to domestic demand and pricing fluctuations and other market
pressures, Doblique experienced production and management costs related to these
sales of approximately $135,000. Further, depletion on the properties and
approximately $48,000 in interest expense on the related purchase debt for the
properties caused an overall quarterly operating loss of approximately $99,000
in this segment.
Video Duplication Segment
The Company formed Millennia Entertainment, Inc. (MEI) in February 1997 to
acquire and distribute family classic films and other home video products on a
"by order" basis. MEI acquires the rights to duplicate the programming,
outsources the physical duplication of the programming and distributes the
finished product to the buyer. By working on a "by order" basis, MEI is best
able to control its inventory requirements and minimize lead times between the
time an order is placed and ultimately shipped to MEI's customers.
Due to the start-up nature of this venture, MEI is currently operating in a
deficit position for the first quarter of Fiscal 1998. During this time period,
MEI experienced revenues of approximately $47,000 and generated a loss from
operations of approximately $12,000. Management is pursuing all possible avenues
of marketing and market penetration to elevate sales levels to meet or exceed
all fixed operational costs. Further, due to competitive pressures, management
continually monitors all raw material and production costs to assure that both
MEI and its customer receive the best value for the contracted sales prices.
(2) Liquidity
During the first quarter of Fiscal 1998, the Company experienced net cash
requirements by operating activities of approximately $48,000 as compared to
cash provided by operating activities during the first quarter of Fiscal 1997 of
approximately $203,000. Further, the Company experienced net positive cash flows
from marketable securities transactions of approximately $92,000. These proceeds
were utilized to support the cash deficit created by operating activities.
The primary sources of funding for the operations of the Company during Fiscal
1998 will be proceeds from transactions in its marketable securities portfolio
and the sale of investment securities in DCT to provide cash as needed.
Additionally, the Company intends to seek out additional business acquisition
candidates which will provide supplemental operating cash necessary to further
fund the Company's operational requirements.
(3) Other Comments
The Company's door distribution segment's sales levels historically follow the
commercial construction market and activity levels in South Florida. Therefore,
this segment is subject to economic, climatic and other intangible influences
that affect the segment's trade area.
12
<PAGE>
The Company's activities have not been, and in the near term are not expected to
be, materially affected by inflation or changing prices in general. However, the
results of operations and cash flow of the Company's oil and natural gas segment
have been and will continue to be affected to a certain extent by the domestic
and international volatility in oil and natural gas prices. Should this segment
experience a significant increase in oil and natural gas prices that is
sustained over a prolonged period, it would be anticipated that corresponding
increases in production costs and related operating expenses would occur.
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings of
shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
None
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MILLENNIA, INC.
November 11 , 1997 /s/ Kevin B. Halter
-------- -------------------------------
Kevin B. Halter
Chairman and Principal Accounting Officer
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM (A)
FORM 10-QSB for the quarter eneded September 30,1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B)Form 10-QSB
</LEGEND>
<CIK> 0000814920
<NAME> Millennia, Inc.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 83697
<SECURITIES> 18750
<RECEIVABLES> 83876
<ALLOWANCES> 25000
<INVENTORY> 113631
<CURRENT-ASSETS> 342610
<PP&E> 1910000
<DEPRECIATION> 187897
<TOTAL-ASSETS> 2771632
<CURRENT-LIABILITIES> 795697
<BONDS> 0
0
0
<COMMON> 455
<OTHER-SE> 381172
<TOTAL-LIABILITY-AND-EQUITY> 2771632
<SALES> 303859
<TOTAL-REVENUES> 303859
<CGS> 297150
<TOTAL-COSTS> 182982
<OTHER-EXPENSES> 102794
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48447
<INCOME-PRETAX> (237514)
<INCOME-TAX> 0
<INCOME-CONTINUING> (237514)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (237514)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
