Here is the 10QSB that was filed on Feb. 10
PART I
(Note: The Company has elected to follow Disclosure Alternative 3 in the
preparation of this Registration Statement.)
ITEM 1. DESCRIPTION OF BUSINESS
Millennium Group Holdings, Inc. ("MGH" or the "Company"), a Delaware
corporation, provides consulting services and investing in development stage
companies and projects demonstrating promise for future growth. The Company has
the capability for administering and monitoring client companies as to
performance against plans, adherence to strategy, ability to finance after
initial investment, as well as tactical advice so that each company might take
advantage of short- term opportunities. The executive officers and other
personnel of the Company have experience, which allows the Company to focus on
virtually every aspect of the business mix of each client company.
One of the most important needs of an emerging company is the need to develop
the ability to sell its products or services on a sustained basis. Company
personnel are equipped to provide specific strategies to client companies to
develop these abilities.
A second activity of the Company is the evaluation of target companies and
businesses for acquisition.
The Company believes that its nurturing process for developing businesses will
provide candidates that will prosper from initial capital infusion and that
these companies may add further growth from participation in the public capital
markets.
Currently the Company is engaged in providing services as follows:
Caribbean Funding Corporation, a Delaware Corporation, has a verbal agreement
with the Company to sell 40% of the company to MGH in exchange for funding in
the amount of five hundred thousand dollars ($500,000). The Company is in the
process of completing its part of the agreement, subject to the acquisition of
the required funding.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of operation
The Company has never received any revenues during its existence. The Company
will continue to finance operations from advantageous business relationships and
from the sale of its securities. There is no assurance that this kind of
financing can be found on a continuous basis.
Results of operations
During 1999, the Company purchased equipment of $2,210 and 300,000 shares of a
start-up company for $92,000. The deferred tax asset increased by $22,810 due to
increased tax loss carryforwards. The Company paid down its outstanding bridge
loans by $38,000 (See Note D of the Financial Statements for additional
information). Interest payable increased $47,045 due to the continued accrual of
interest on bridge loans outstanding and the issuance of debentures during 1999.
Accounts payable and accrued expenses decreased $7,050 from 1998 to 1999 as the
Company paid outstanding payables. Funds received from the issuance of
debentures as well as received from stock subscriptions were the primary source
of funds for the Company during 1999.
During 1999, the Company's total expenses increased $248,657 or 186% from 1998.
The consulting fees increased $222,637 or 458% from 1998. The consulting fees
are primarily composed of the payment for services rendered by the Company's
officers. The Company had kept the compensation of the officers low in prior
years as the Company had low levels of cash. Therefore, in 1999 when the Company
received the funds from the issuance of the debentures, the Company increased
the officer's compensation. Their compensation may be decreased in the future if
cash levels decrease again. Interest expenses increased $23,099 or 68% in 1999
from 1998 due primarily to the issuance of the debentures during 1999. (See Note
E of the Financial Statements for additional information) Other general and
administration expenses increased $6,093 or 58% in 1999 from 1998 due to overall
increased costs of operations (telephone, utilities, insurance). Professional
fees decreased $3,383 or 15% in 1999 from 1998 due to decreased legal services
required in 1999.
2
ITEM 3. DESCRIPTION OF PROPERTY
The Company leases its approximately 1,100 square feet of executive office space
at 230 Boylston Street, Chestnut Hill, MA. 02467 for $1,500.00 per month, The
Company is a tenant at will. Should the Company be required to relocate its
offices, management believes that replacement space is readily available in the
same general area.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the security ownership, as of December 31, 1999
of (a) each officer or director and (b) each person or firm owning 5% or more of
the Company's Common Stock.
Name and Address Amount and Nature Percent of
Title of Class of Beneficial Owner of Beneficial Owner Class
-------------- ------------------- ------------------- ----------
Common Robert M. Felleman 15,000,000 27.4%
President
230 Boylston Street
Chestnut Hill, MA 02467
Common Ethan L. Felleman 5,715 .0001%
Vice President
230 Boylston Street
Chestnut Hill, MA 02467
Common MLS Niphix, LTD. 16,519,109 30.1%
80 Everett Ave. #221
Chelsea, MA 02150
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Robert M. Felleman - Chairman, President, Treasurer and Director
Robert M. Felleman is a lawyer by training, but a businessman by profession. Mr.
Felleman holds a BA from Middlebury College in Vermont, a Master of Science
degree from the London School of Economics, and a JD degree from Boston College
Law School. Mr. Felleman has been a trial attorney as well as an instructor in
law. Currently, Mr. Felleman is also President of Caribbean Funding Corp., a
mortgage-lending corporation that was established to service real estate buyers
throughout the Caribbean. Mr. Felleman is also the -President of Half Moon Bay,
Ltd., an ongoing luxury villa development in St. Kitts, West Indies. Mr.
Felleman is also a partner in - and owner of - Monarch Development Corp., a
residential development company concentrating on development projects throughout
New England. Finally, Mr. Felleman is President and owner of Monarch Financial
Associates, a commercial mortgage company.
Ethan L. Felleman - Vice President, Secretary and Director
Mr. Felleman studied business at NorthEastern University in Boston, and received
his BA from the University of Massachusetts. Mr. Felleman currently is a
licensed Real Estate salesman working in the Boston real estate brokerage
business. Mr. Felleman is also a part owner of Monarch Financial Associates as
well as a part owner of Monarch Development Corp. Mr. Ethan Felleman is the son
of Robert.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets out the compensation paid on a cash basis for the year
ended December 31, 1999 to (i) the Company's highest paid officer or director
and (ii) the Company's officers and directors as a group.
Name or Identity of Group Title Compensation
------------------------- ----- ------------
Robert M. Felleman President Consulting: $118,225
Treasurer, Chairman
Director
Ethan L. Fellman Vice President Consulting: $6,000
Secretary, Director
3
Consulting fees were paid in lieu of salary because of the uncertainty of the
Company's cash position. In addition, the following shares of stock were issued
for services performed.
Name Shares
---- ------
Robert M. Felleman 32,880,784
Ethan L. Felleman 5,715
Roger N. Carlsten 30,000
(Resigned as Secretary in
March, 1999)
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company pays consulting fees in cash and stock of the Company to the
officers of the Company as compensation of their services rendered in performing
the daily operations of the Company.
Caribbean Funding Corporation, a Delaware Corporation, has a verbal agreement
with Millennium Group Holdings, Inc. a mortgage-lending corporation that was
established to service real estate buyers throughout the Caribbean, to sell a
40% interest to the Company in exchange for funding in the amount of five
hundred thousand dollars ($500,000). Mr. Robert Felleman is President and 100%
owner of Caribbean Funding Corp.
On January 2, 1998 the Company had acquired a 20% interest in Half Moon Bay
Ltd., a real estate development company on St. Kitts, for a consideration of
$800,000 consisting of 400,000 shares of its Common Stock plus a Note for
$400,000. This transaction required that the Note be paid in full by January 2,
2002. As the Company lacked the resources to pay the interest on the Note, a
settlement was reached with the sellers and the Note and stock were cancelled as
of November 1, 1999 in exchange for a return of the investment. No gain or loss
was recognized by the Company on this transaction. The Company incurred no
interest expense in 1998 and in 1999 on the Note. Mr. Robert Felleman is
President and 20% owner of Half Moon Bay, Ltd.
In August 24, 1999 MLS-NIPHIX, Ltd., a Delaware corporation engaged in business
development and investments, acquired 16,519,109 shares of the Company's Common
Stock from Robert Felleman and in connection with that transaction the Company
made a $92,000 cash investment in MLS-NIPHIX, Ltd. in exchange for 350,000
shares of MLS-NIPHIX, Ltd. Common Stock.
ITEM 8. DESCRIPTION OF SECURITIES
The Company's Articles of Incorporation, as amended, authorize the issuance of
100,000,000 shares of Common Stock, par value $.001 per share. On March 25,
1999, the Company's board of directors authorized a 35 to 1 reverse split. All
share amounts have been adjusted for this split. As of December 31, 1999 there
were 54,840,725 shares of Common Stock outstanding.
On all matters submitted to a vote of shareholders each holder of Common Stock
has the right to one vote for each share held of record. Holders of Common Stock
are entitled to receive ratably such dividends as may be declared by the Board
of Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share ratably in all assets remaining after payment of
liabilities. Holders of Common Stock have no preemptive rights and no right to
convert their Common Stock into any other securities. There are no redemption or
sinking fund provisions applicable to shares of Common Stock. All shares are
fully paid and non-assessable.
Delaware law does not require shareholder approval for the issuance of
authorized but unissued shares of Common Stock. Such issuances may be for a
variety of corporate purposes including future public and private offerings to
raise additional capital or to facilitate corporate acquisitions.
4
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Quarter Ending High Low
-------------- ---- ---
9-30-98 $2.00 $.06
12-31-98 .25 .02
3-31-99 .22 .02
6-30-99 .55 .02
9-30-99 .35 .01
12-31-99 .02 .01
The Company has paid no dividends on its Common Stock.
ITEM 2. LEGAL PROCEEDINGS
None
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company was incorporated in 1992 as Concord Financial Corp., a Nevada
corporation. On December 27, 1997 the Company issued 250,000 shares of its
Common Stock to Robert Felleman in connection with a merger of his wholly owned
Delaware corporation, Millennium Group Holdings, Inc. into the Company.
Thereafter the Company changed its domicile to Delaware and in May 12, 1998
changed its name to its present name, Millennium Group Holdings, Inc. No
commissions or other remuneration were paid by the Company in connection with
the issuance to Robert Felleman. These securities were acquired by him for
investment and not with a view to distribution and were issued subject to
restrictive legends preventing further transfer without proof of exemption or
registration. This transaction was exempt from the registration requirements of
the 1933 Act by virtue of Section 4(2) thereof.
On January 2, 1998 the Company had acquired a 20% interest in Half Moon Bay
Ltd., a development on St. Kitts, for a consideration of $800,000 consisting of
400,000 shares of its Common Stock plus a Note for $400,000. No commissions or
other remuneration were paid by the Company in connection with any of these
transactions. All securities were acquired for investment and not with a view to
distribution and were issued subject to restrictive legends preventing further
transfer without proof of exemption or registration. These transactions were
exempt from the registration requirements of the 1933 Act by virtue of Section
4(2) thereof. This transaction required that the Note be paid in full by January
2, 2002. As the Company lacked the resources to pay the interest on the Note, a
settlement was reached with the sellers as of November 1, 1999 and the Note and
stock were cancelled in exchange for a return of the investment. No gain or loss
was recognized by the Company on this transaction. The Company incurred no
interest expense in 1998 and in 1999 on the Note. Mr. Robert Felleman is
President and 20% owner of Half Moon Bay, Ltd.
Between August 3, 1998 and November 9, 1999 the Company privately issued
32,916,499 shares of its Common Stock to officers and directors for services
performed. All securities were acquired for investment and not with a view to
distribution and were issued subject to restrictive legends preventing further
transfer without proof of exemption or registration. These transactions were
exempt from the registration requirements of the 1933 Act by virtue of Section
4(2) thereof.
Between May 12, 1998 and December 20, 1999 Mr. Robert Felleman privately
transferred 1,361,675 of the above-referenced shares of Common Stock to 78
persons each of whom had independently agreed to transfer to Mr. Felleman
his/her shares in a private company named Lemon Tree Enterprises, Inc. in
exchange for these shares. These transactions were not undertaken by the Company
and the Company did not participate in any way. No general solicitation was made
by Mr. Felleman. No commissions or other remuneration were paid by the Company
or Mr. Felleman in connection with any of these transactions. All securities
were acquired for investment and not with a view to distribution and were issued
subject to restrictive legends preventing further transfer without proof of
exemption or registration. These transactions were exempt from the registration
requirements of the 1933 Act by virtue of Sections 3(9) and 4(2) thereof.
5
In 1998 and 1999 the Company issued 1,208,000 shares to investors in individual
private transactions for an aggregate of $17,500. No general solicitation was
made by the Company. No commissions or other remuneration were paid by the
Company in connection with any of these transactions. All securities were
acquired for investment and not with a view to distribution and were issued
subject to restrictive legends preventing further transfer without proof of
exemption or registration. These transactions were exempt from the registration
requirements of the 1933 Act by virtue of Sections 3(9) and 4(2) thereof.
On January 11, 1999 ($300,000) and July 30, 1999 ($600,000) the Company issued
two senior redeemable convertible debentures, Series A and B, to 2 investors.
Series A was due January 2000 and Series B was due July 2001. Both debentures
carried interest at a rate of 8% per annum. Both debentures were redeemable by
the Company for cash or convertible into the Company's Common Stock at a 30%
discount to the Company's market price per share. As of December 31, 1999, the
Company had obtained $500,000 in cash from the issuance of the debentures and
$500,000 of principal amount of these debentures had been converted into shares
of the Company's Common Stock. The debentures were acquired by each investor for
investment and not with a view to distribution and were non-transferable without
proof of exemption or registration. No commissions or other remuneration were
paid by the Company in connection with the issuance of the debentures. The sales
by the Company were exempt from the registration requirements of the 1933 Act by
virtue of Section 4(2) thereof.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article XI of the Company's By-Laws provides as follows:
Section 1: Every person who was or is a party to, or is threatened to be made a
party to, or is involved in any action, suit or proceedings, whether civil,
criminal, administrative or investigative, by reason of the fact that he or a
person of whom he is the legal representative is or was a director or officer of
the corporation or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless, to the fullest extent legally permissible under the laws of the
State of Delaware, against all expenses, liability and loss, including attorneys
fees, judgments, fines and amounts paid or to be settlement, reasonably incurred
or suffered by him in connection therewith. Such right of indemnification shall
be a contract right which may be enforced in any manner desired by such person.
Section 2: This indemnification is intended to provide at all times the fullest
indemnification permitted by the laws of the State of Delaware and the
corporation may purchase and maintain insurance on behalf of any person who is
or was a director or officer of the corporation, or is or was at the request of
the corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the corporation would
have the power to indemnify such person.
6
PART F/S
Independent Auditor's Report
To the stockholders of
Millennium Group Holdings, Inc.
We have audited the accompanying balance sheet of Millennium Group Holdings,
Inc. as of December 31, 1999, and the related statements of loss, comprehensive
loss, retained earnings, and cash flow for the years ended December 31, 1999 and
1998. 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.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Millennium Group Holdings, Inc.
as of December 31, 1999, and the results of its operations and its cash flows
for the years ended December 31, 1999 and 1998 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note L to the
financial statements, the Company has suffered losses from operations and has a
net capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Management's plan in regard to these matters is
also described in Note L. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Reardon and Company LLP
Quincy, Massachusetts
February 2, 2000
7
Millennium Group Holdings, Inc.
Balance Sheet
December 31, 1999
Assets
Current assets:
Cash and cash equivalents $ 9,169
-------------
Total current assets 9,169
Equipment, at cost, less accumulated
depreciation of $221 1,989
Receivable from debenture investor 400,000
Deferred tax asset 197,327
Investment, at cost 92,000
-------------
$ 700,485
=============
Liabilities and Stockholders' Equity
Current liabilities:
Bridge loans payable 292,150
Accrued interest expense 82,474
Accounts payable and other accrued
expenses 18,700
-------------
Total current liabilities 393,324
Debentures 400,000
Common stock, $.001 par value, 100,000,000
shares authorized, 54,840,725 shares issued
and outstanding 54,841
Additional paid in capital 471,383
Retained deficit (619,063)
-------------
$ 700,485
=============
See Notes to Financial Statements.
8
Millennium Group Holdings, Inc.
Statements of Loss, Comprehensive Loss and Retained Deficit
December 31, 1999 and 1998
Year Ended December 31,
1999 1998
------------ ------------
Income $ - $ -
Costs and expenses:
Consulting expenses $ 271,265 $ 48,628
Rent expense 18,000 18,000
Professional fees 19,314 22,697
Other general and administrative
expenses 16,555 10,462
Interest expense 56,902 33,813
Depreciation 221 -
------------ ------------
Total costs and expenses 382,257 133,600
------------ ------------
Loss before income taxes (382,257) (133,600)
Income tax benefit 129,251 27,538
------------ ------------
Net loss (253,006) (106,062)
============ ============
Retained deficit at beginning of year (366,057) (259,995)
============ ============
Retained deficit at end of year (619,063) (366,057)
============ ============
Net loss per common share - basic (.02) (.44)
============ ============
Net loss per common share - diluted (.01) (.44)
============ ============
Comprehensive loss (253,006) (106,062)
============ ============
See Notes to Financial Statements.
9
Millennium Group Holdings, Inc.
Statement of Cash Flows
For the Two Years Ended December 31, 1999
1999 1998
------------- ------------
Cash flows from operating activities:
Net loss $ (253,006) $ (106,062)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation $ 221 $ -
Deferred income tax benefit (129,251) (27,538)
Stock issued for compensation in lieu
of cash 31,597 2,352
Stock issued for interest on debentures 6,057 -
Stock issued for bridge loans treated
as interest expense - 1,198
Increase in interest expense accrued 47,045 32,615
Increase (decrease) in accounts payable
and other accrued expenses (7,050) 16,750
------------- ------------
Total adjustments (51,381) 25,377
------------- ------------
Net cash used in operating activities (304,387) (80,685)
Cash flows from investing activities:
Equipment purchased (2,210) -
Cash paid for investment (92,000) -
------------- ------------
Net cash used in investing activities (94,210) -
Cash flows from financing activities:
Gross proceeds from debentures 500,000 -
Debenture conversion costs (64,980) -
Repayments of bridge loans (38,000) -
Proceeds from issuance of bridge loans - 65,500
Proceeds from stock subscriptions 10,000 7,500
------------- ------------
Net cash provided by financing
activities 407,020 73,000
------------- ------------
Net increase (decrease) in cash and cash
equivalents 8,423 (7,685)
Cash and cash equivalents at beginning of year 746 8,431
------------- ------------
Cash and cash equivalents at end of year $ 9,169 $ 746
============= ============
Supplemental Disclosures:
Cash paid for interest $ 3,800 $ -
See Notes to Financial Statements.
10
Millennium Group Holdings, Inc.
Statement of Stockholders' Equity
For the Two Years Ended December 31, 1999
Common Paid in Retained
Stock Capital Deficit Total
---------- ---------- ---------- ----------
Balance, January 1, 1998 $ 11 $ 32,489 $ (259,995) $ (227,495)
Net loss (106,062) (106,062)
Stock subscriptions 429 7,071 7,500
Stock issued for bridge
loans 34 1,164 1,198
Stock issued for
services 67 2,285 2,352
---------- ---------- ---------- ----------
Balance, December 31, 1998 $ 541 $ 43,009 $ (366,057) $ (322,507)
Net loss (253,006) (253,006)
Stock subscriptions 779 9,221 10,000
Stock issued for
debenture repayment 21,924 419,153 |
