SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): September 12, 1997
MILLENNIUM ELECTRONICS, INC.
----------------------------
(Exact name of registrant as specified in it charter)
Nevada 000-22515 33-0750730
------ --------- ----------
(State of incorporation) (Commission (I.R.S. Employer
File Number) Identification Number)
31642 South Coast Highway, Suite 100, Laguna Beach, California 92677
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(Address of principal executive offices)
Registrant's telephone number, including area code: (714) 499-0877
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This Amendment No. 1 to the Registrant's Current Report on Form 8-K dated
September 12, 1997 (the "Report") relates to the Registrant's completion of the
acquisition of NETRAM Components, Inc., a corporation organized under the laws
of the State of California ("Netram"), by means of a merger (the "Merger") with
and into Millennium Memory, Inc., a corporation organized and existing under the
laws of the State of California and a wholly owned subsidiary of the Registrant
("Merger Sub"), pursuant to the Agreement of Merger dated as of September 30,
1996 (the "Merger Agreement"), among the Registrant, Merger Sub and Netram. The
purpose of this Amendment is to amend Item 7(a) to provide the financial
statements of Netram and Item 7(b) to provide the required pro forma financial
information relating to the business combination between the Registrant and
Netram on September 30, 1997 which were unavailable at the time the Registrant
filed the Report. In addition, the Registrant is providing the information set
forth in Item 5.
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Item 5. Other Events
Certain of the Company's outstanding Common Stock Purchase Warrants
and options to purchase the Company's Common Stock (collectively,
the "Warrants") originally issued by Beacon Capital Investment,
Inc., the Company's predecessor, were scheduled to expire December
15, 1997. On December 3, 1997, the Company's Board of Directors
adopted resolutions which extended the exercise period of the
Warrants to December 31, 1997.
If the Company's Common Stock issuable upon the exercise of the
Warrants requires registration, the Company has authority to suspend
the exercise of the Warrants until such registration is obtained.
Item 7. Financial Statements and Exhibits
The following financial statements and exhibits are filed as part of
this report:
(a) Financial statements of business acquired, prepared pursuant to
Rule 3-05 of Regulation S-X:
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Netram COMPONENTS
(A CALIFORNIA PARTNERSHIP)
FINANCIAL STATEMENTS
DECEMBER 31, 1996
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Netram COMPONENTS
(A CALIFORNIA PARTNERSHIP)
CONTENTS
As of December 31, 1996
- --------------------------------------------------------------------------------
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations and Partners' Capital 3
Statement of Cash Flows 4
Notes to Financial Statements 5 - 7
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Netram Components
We have audited the accompanying balance sheet of Netram Components (a
California partnership) as of December 31, 1996, and the related statements of
operations and partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership'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 Netram Components as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
November 26, 1997
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Netram COMPONENTS
(A CALIFORNIA PARTNERSHIP)
BALANCE SHEET
As of December 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Current assets
Cash $ 17,228
Accounts receivable 198,724
Note receivable (Note 2) 85,000
---------
Total current assets 300,952
Furniture and equipment, net (Note 3) 8,648
---------
Total assets $ 309,600
=========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable and accrued liabilities (Note 4) $ 209,208
Note payable to partner (Note 5) 143,800
---------
Total current liabilities 353,008
---------
Commitments (Note 6)
Partners' capital (43,408)
---------
Total liabilities and partners' capital $ 309,600
=========
The accompanying notes are an integral part of these financial statements.
2
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Netram COMPONENTS
(A CALIFORNIA PARTNERSHIP)
STATEMENT OF OPERATIONS AND PARTNERS' CAPITAL
For the Year Ended December 31, 1996
Net sales $ 3,283,750
Cost of sales 3,105,854
-----------
Gross profit 177,896
Operating expenses 185,044
-----------
Loss from operations (7,148)
Other income
Interest income 1,660
-----------
Net loss (5,488)
Partners' capital at January 1, 1996 --
Partners' capital contributions 4,080
Distributions to partners (42,000)
-----------
Partners' capital at December 31, 1996 $ (43,408)
===========
The accompanying notes are an integral part of these financial statements.
3
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Netram COMPONENTS
(A CALIFORNIA PARTNERSHIP)
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1996
Cash flows from operating activities
Net loss $ (5,488)
Adjustments to reconcile net loss
to net cash provided by operating activities
Depreciation 1,212
Decrease in accounts receivable (198,724)
Increase in accounts payable and accrued liabilities 209,208
---------
Net cash provided by operating activities 6,208
---------
Cash flows from investing activities
Advances for note receivable (85,000)
Purchase of furniture and equipment (5,780)
---------
Net cash used in investing activities (90,780)
---------
Cash flows from financing activities
Proceeds from note payable to partner 143,800
Distributions to partners (42,000)
---------
Net cash provided by financing activities 101,800
---------
Net increase in cash 17,228
Cash, beginning of period --
---------
Cash, end of period $ 17,228
=========
Supplemental schedule of non-cash investing and financing activities
- --------------------------------------------------------------------
During the period ended December 31, 1996, one of the partners contributed
furniture and fixtures with a value of $4,080 to the Partnership (see Note 3).
The accompanying notes are an integral part of these financial statements.
4
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Netram COMPONENTS
(A CALIFORNIA PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Line of Business
- ---------------------------------
Netram Components (the "Partnership" or "Netram") commenced operations on
January 1, 1996 and is engaged in the distribution of memory chips for computers
and computer systems, and grants credit to its customers throughout the United
States. The Partnership was converted to an "S"
corporation in January 1997.
Cash Equivalents
- ----------------
For purposes of the statement of cash flows, the Partnership considers all
highly-liquid investments purchased with original maturities of three months or
less to be cash equivalents.
Furniture and Equipment
- -----------------------
Furniture and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets as follows:
Computer equipment 5 years
Office furniture 7 years
Betterments, renewals, and extraordinary repairs that extend the lives of the
assets are capitalized; other repairs and maintenance charges are expensed as
incurred. The costs and related accumulated depreciation applicable to assets
retired are removed from the accounts, and the gain or loss on disposition is
recognized in current operations.
Revenue Recognition
- -------------------
The Partnership recognizes revenue from product sales at the time of shipment,
net of expected returns. The Partnership has established programs that enable
its customers to return product under specified conditions.
Income Taxes
- ------------
No provision for income taxes has been made for federal or state income taxes as
these taxes are the personal responsibility of the partners.
5
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Netram COMPONENTS
(A CALIFORNIA PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Estimates
- ---------
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 disclosures of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of sales and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
- -----------------------------------
The Partnership measures its financial assets and liabilities in accordance with
generally accepted accounting principles. For certain of the Partnership's
financial instruments, including cash, accounts receivable, and accounts payable
and accrued liabilities, the carrying amounts approximate fair value due to
their short maturities. The amounts shown for note receivable and note payable
also approximate fair value because current interest rates and terms offered to
the Partnership for similar debt are substantially the same.
Concentrations of Credit Risk
- -----------------------------
Financial instruments which potentially subject the Partnership to
concentrations of credit risk consist of cash and trade receivables. The
Partnership places its cash with high quality financial institutions, and at
times, cash may exceed the FDIC $100,000 insurance limit. The Partnership sells
products in the United States and extends credit based on an evaluation of the
customer's financial condition, generally without requiring collateral. Exposure
to losses on receivables is principally dependent on each customer's financial
condition. The Partnership monitors its exposure for credit losses and maintains
allowances for anticipated losses.
NOTE 2 - NOTE RECEIVABLE
Note receivable represents a non-interest bearing note due May 17, 1997 which
was paid in full on April 3, 1997. This note was due from the president of the
company that acquired the Partnership in September 1997 (see Note 8).
6
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Netram COMPONENTS
(A CALIFORNIA PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
NOTE 3 - FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following at December 31, 1996:
Computer equipment $3,952
Office furniture 5,908
------
9,860
Less accumulated depreciation 1,212
------
Total $8,648
NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following at December
31, 1996:
Accounts payable $196,049
Customer deposits 12,445
Other 714
--------
Total $209,208
========
NOTE 5 - NOTE PAYABLE TO PARTNER
Note payable to partner represents a non-interest bearing note for monies
borrowed on various dates from one of its partners for working capital purposes.
The entire principal outstanding at December 31, 1996 of $143,800 was paid in
full on January 31, 1997.
NOTE 6 - COMMITMENTS
Lease Agreements
- ----------------
The Partnership leases certain facilities for its corporate and operations
offices on a month-to-month basis. Rent expense was approximately $5,127 for the
year ended December 31, 1996.
NOTE 7 - SALES
During the period ended December 31, 1996, the Partnership had a major customer,
Millennium Electronics, Inc. ("MEI"), that accounted for approximately 39% of
total sales. At December 31, 1996, the amount due from MEI was $167,525.
7
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Netram COMPONENTS
(A CALIFORNIA PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
NOTE 8 - SUBSEQUENT EVENTS (UNAUDITED)
On September 30, 1997, the assets and operations of the Partnership were
acquired by MEI for 576,000 shares of MEI's common stock and $120,000 in cash.
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(b) Pro forma financial information required pursuant to Article
11 of Regulation S-X:
MILLENNIUM ELECTRONICS, INC./
NETRAM COMPONENTS
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED
DECEMBER 31, 1996 AND
THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
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MILLENNIUM ELECTRONICS, INC./
NETRAM COMPONENTS
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
Millennium NetRam
Electronics Components Adjustments Total
----------- ---------- ----------- -----
Net sales $ 34,345,569 $ 3,283,750 a$(2,038,255) $ 35,591,064
Cost of sales 30,525,511 3,105,854 (2,038,255) 31,593,110
------------ ------------ ----------- ------------
Gross profit 3,820,058 177,896 -- 3,997,954
Selling, general,
and administrative
expenses 2,560,119 185,044 -- 2,745,163
------------ ------------ ----------- ------------
Income (loss)
from operations 1,259,939 (7,148) -- 1,252,791
Other income
(expense) (285,700) 1,660 -- (284,040)
------------ ------------ ----------- ------------
Income (loss)
before provision
for income taxes 974,239 (5,488) -- 968,751
Provision for
income taxes 15,800 -- -- 15,800
------------ ------------ ----------- ------------
Net income (loss) $ 958,439 $ (5,488) $ -- $ 952,951
============ ============ =========== ============
Net income per
share $ 0.18 $ 0.16
============ ============
Weighted average
shares
outstanding 5,203,868 c 5,779,868
============ ============
The accompanying notes are an integral part of these financial statements.
1
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MILLENNIUM ELECTRONICS, INC./
NETRAM COMPONENTS
PRO FORMA STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1997
- --------------------------------------------------------------------------------
Millennium NetRam
Electronics Components Adjustments Total
----------- ---------- ----------- -----
Net sales $ 36,586,973 $ 8,449,721 a$(6,544,940) $ 38,491,754
Cost of sales 32,700,813 7,835,295 (6,544,940) 33,991,168
------------ ------------ ----------- ------------
Gross profit 3,886,160 614,426 -- 4,500,586
Selling, general,
and administrative
expenses 2,949,131 520,634 -- 3,469,765
------------ ------------ ----------- ------------
Income from
operations 937,029 93,792 -- 1,030,821
Other expense (412,455) -- -- (412,455)
------------ ------------ ----------- ------------
Income before
provision for
income taxes 524,574 93,792 -- 618,366
Provision for
income taxes 31,971 -- b 37,500 69,471
------------ ------------ ----------- ------------
Net income $ 492,603 $ 93,792 $ (37,500) $ 548,895
============ ============ =========== ============
Net income per
share $ 0.07 $ 0.07
============ ============
Weighted
average shares
outstanding 7,285,046 c 7,861,046
============ ============
The accompanying notes are an integral part of these financial statements.
2
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MILLENNIUM ELECTRONICS, INC./
NETRAM COMPONENTS
NOTES TO PRO FORMA FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
NOTE 1 - BASIS OF PRESENTATION
The accompanying pro forma statements of operations for the year
ended December 31, 1996 and the nine months ended September 30, 1997
present the accounts of Millennium Electronics, Inc. ("MEI") and
NetRam Components ("NetRam") as if the acquisition took place on
January 1, 1996. A pro forma balance sheet as of September 30, 1997
is not presented since the acquisition of NetRam by MEI took place on
September 30, 1997, and the balance sheet of MEI presented in its
September 30, 1997 10-Q includes the accounts of NetRam at that date.
The following adjustments would be required if the acquisition
occurred as indicated above:
a) To eliminate intercompany sales and related cost of goods
sold for sales from MEI to NetRam and from NetRam to MEI.
b) To record a tax provision for the income earned by NetRam.
c) The weighted average shares outstanding was increased for
the 576,000 shares of MEI's common stock issued for the
acquisition.
3
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(c) Exhibits in accordance with Item 601 of Regulation S-K
Exhibit No. Description
- ----------- -----------
2.1 Agreement of Merger, dated as of September 30, 1997
by and among NETRAM Components, Inc., John
Torres, Terry Tonini, Jeff Hylton, Don Klosterman,
David Erickson, Bret Pool, Millennium Electronics,
Inc. and Millennium Memory, Inc. (Incorporated
herein by reference to Registrant's Current Report on
Form 8-K filed on October 15, 1997, File No.
000-22515.)
99.1 Press release dated October 7, 1997. (Incorporated
herein by reference to Registrant's Current Report on
Form 8-K filed on October 15, 1997, File No.
000-22515.)
99.2 Form of Common Stock Purchase Warrant (the
"Warrant") which were part of the units offered and
sold in the initial public offering of Beacon Capital
Investment, Inc., the Registrant's predecessor.
(Incorporated herein by reference to Exhibit 10.2 to
Beacon Capital Investment, Inc.'s registration
statement, as amended, on Form S-18 (Registration No.
33-45838C) filed on February 18, 1992.)
99.3 Option Agreement - (Incorporated herein by reference
to Exhibit 10.4 to Beacon Capital Investment, Inc.'s
registration statement, as amended, on Form S-18
(Registration No. 33-45838C) filed on February 18,
1992.)
99.4 Option Agreement - (Incorporated herein by reference
to Exhibit 10.5 to Beacon Capital Investment, Inc.'s
registration statement, as amended, on Form S-18
(Registration No. 33-45838C) filed on February 18,
1992.)
99.5 Option Agreement - (Incorporated herein by reference
to Exhibit 10.6 to Beacon Capital Investment, Inc.'s
registration statement, as amended, on Form S-18
(Registration No. 33-45838C) filed on February 18,
1992.)
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Signatures
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
MILLENNIUM ELECTRONICS, INC.
Date: December 15, 1997 By: /s/ Troy D. Barnes
----------------------------
Troy D. Barnes
President, Chief Executive Officer
and Chairman of the Board
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Exhibit Index
Exhibit No. Description
- ----------- -----------
2.1 Agreement of Merger, dated as of September 30, 1997
by and among NETRAM Components, Inc., John
Torres, Terry Tonini, Jeff Hylton, Don Klosterman,
David Erickson, Bret Pool, Millennium Electronics, Inc.
and Millennium Memory, Inc. (Incorporated herein by
reference to Registrant's Current Report on Form 8-K
filed on October 15, 1997, File No. 000-22515.)
99.1 Press release dated October 7, 1997. (Incorporated
herein by reference to Registrant's Current Report on
Form 8-K filed on October 15, 1997, File No.
000-22515.)
99.2 Form of Common Stock Purchase Warrant (the
"Warrant") which were part of the units offered and
sold in the initial public offering of Beacon Capital
Investment, Inc., the Registrant's predecessor.
(Incorporated herein by reference to Exhibit 10.2 to
Beacon Capital Investment, Inc.'s registration statement,
as amended, on Form S-18 (Registration No. 33-45838C) filed
on February 18, 1992.)
99.3 Option Agreement - (Incorporated herein by reference
to Exhibit 10.4 to Beacon Capital Investment, Inc.'s
registration statement, as amended, on Form S-18
(Registration No. 33-45838C) filed on February 18,
1992.)
99.4 Option Agreement - (Incorporated herein by reference
to Exhibit 10.5 to Beacon Capital Investment, Inc.'s
registration statement, as amended, on Form S-18
(Registration No. 33-45838C) filed on February 18,
1992.)
99.5 Option Agreement - (Incorporated herein by reference
to Exhibit 10.6 to Beacon Capital Investment, Inc.'s
registration statement, as amended, on Form S-18
(Registration No. 33-45838C) filed on February 18,
1992.)
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