UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
QUARTERLY REPORT PURSUANT TO
Section 13 or 15(d) of the
SECURITIES AND EXCHANGE ACT of 1934
For the QUARTERLY Period Ended
August 31, 2007
Commission File Number
000-29385
MILLENIA HOPE INC.
(Exact name of Small Business Issuer as Specified in its Charter)
DELAWARE 98-0213828
(State or other Jurisdiction of (I.R.S Employer
Incorporation or Organization) Identification No.)
1250 Rene Levesque West, suite 2200, Montreal, Quebec H3B 4W8
(Address of Principal Executive Offices)
(514) 846-5757
Issuer's Telephone Number Including Area Code)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: At October 1, 2007 Issuer 246,260,250
outstanding shares of Common Stock.
INDEX
PART I: FINANCIAL INFORMATION
Item 1. Interim Consolidated Financial Statements
Consolidated Balance Sheets (Unaudited) at August 31, 2007 and
November 30, 2006. 1
Consolidated Statements of Operations (Unaudited) for the three
months and nine months ended August 31, 2007 and August 31, 2006 and
from inception (December 24, 1997) to August 31, 2007. 2
Consolidated Statements of Cash Flows (Unaudited) for the nine
months ended August 31, 2007 and August 31, 2006 and from inception
(December 24, 1997) to August 31, 2007. 3
Notes to the Consolidated Financial Statements (Unaudited) 4
Item 2. Plan of Operations 7
Item 3. Controls and procedures 15
PART II. Other Information
Item 2. Sale of Unregistered Securities 16
Item 6. Exhibits and Reports on Form
SIGNATURES 17
Millenia Hope Inc.
(A Development Stage Company)
Consolidated Balance Sheets
August 31, 2007
(Unaudited)
August 31, 2007 Nov. 30, 2006
(Unaudited) (Restated)
Assets
Current Assets
Cash $ 92,190 $ 2,582
Prepaid expenses 407,690 397,994
Research Tax Credits receivable 688,751 -
Accounts and taxes receivable 45,019 37,063
--------------------------
Total Current Assets 1,233,650 437,639
Property and equipment, net 561,757 646,011
---------------------------
$ 1,795,407 $ 1,083,650
===========================
Liabilities & Stockholders' (Deficit)
Current Liabilities
Accounts Payable and Accrued Liabilities $ 990,623 $ 745,865
Deferred Income & lease inducements 115,477 -
Advances from related parties 445,899 432,361
Notes Payable 2,659,637 418,899
---------------------------
Total Current Liabilities 4,211,636 1,567,125
---------------------------
Convertible Note Payable, net 1,175,752 1,265,460
Stockholders' (Deficit)
Preferred Stock, $.0001 par value 50,000,000 shares authorized
none issued and outstanding - -
Common Stock, $.0001 par value; 280,000,000 shares authorized,
245,510,250 shares issued and outstanding August 31, 2007 24,551 19,315
193,149,717 shares issued and outstanding November 30, 2006
Paid in Capital 26,031,834 24,614,759
Deferred Stock Compensation - (252,990)
(Deficit) Accumulated During the Development Stage (29,648,366) (26,130,019)
---------------------------
(3,591,981) (1,748,935)
---------------------------
$ 1,795,407 $ 1,083,650
===========================
See the accompanying notes to the financial statements.
1
(A Development Stage Company)
Consolidated Statements of Operations
Three Months and Nine months ended August 31, 2007 and August 31, 2006, and
the Period From Inception (December 24, 1997) to August 31, 2007
(Unaudited)
Three Months Three Months Nine months Nine months
Ended Ended ended ended Inception to
August 31,2007 August 31,2006 August 31, August 31, August 31,
2007 2006 2007
-------------- ------------- -----------------------------------------------
Revenues $ 350,504 $ 207,049 $ 815,829 $ 438,834 $ 2,774,279
Cost of Sales - - - - 789,540
-------------- ------------- -----------------------------------------------
Gross Profit 350,504 535,846 815,829 438,834 1,984,739
-------------- ------------- -----------------------------------------------
Operating Expenses
Biotech Wages 82,809 130,050 237,526 295,952 886,041
Administrative Salaries 32,396 137,770 70,625 398,231 4,817,961
Marketing 99,058 232,608 309,337 421,178 6,283,875
Development 155,559 658,045 1,467,576 2,102,596 7,860,766
Patent rights - - - - 1,005,827
Selling, general and administrative 509,262 815,786 1,544,606 2,123,677 7,503,683
-------------- ------------- -----------------------------------------------
879,084 1,974,259 3,629,670 5,341,634 28,358,153
-------------- ------------- -----------------------------------------------
Operating (Loss) (528,580) (1,767,210) (2,813,841) (4,902,800) (26,373,414)
-------------- ------------- -----------------------------------------------
Other income (expense)
Gain on disposition of subsidiary - 124,264 - 124,264 1,360,782
Interest Income - - 0 13,500 131,323
Interest expense (152,835) (28,280) (704,506) (42,467) (1,271,493)
Write-off of leasehold improvements, inventory - - - - (68,106)
Write-off of notes receivable, related parties - - - - (629,739)
Write-off of other assets - - - - (2,799,999)
-------------- ------------- -----------------------------------------------
(152,835) 95,984 (704,506) 95,297 (3,277,232)
-------------- ------------- -----------------------------------------------
(Loss) before minority interest (681,415) (1,671,226) (3,518,347) (4,807,503) (29,650,646)
Minority Interest 0 - 0 - 2,280
-------------- ------------- -----------------------------------------------
Net (Loss) $ (681,415) $ (1,671,226) $ (3,518,347) $ (4,807,503) $(29,648,366)
============== ============= ===============================================
Per share information - basic and diluted:
Weighted Average Number of Common
Shares Outstanding 241,002,750 141,440,887 221,888,661 137,248,630
============= ============= ==============================
(Loss) Per Common Share $ (0.00) $ (0.01) $ (0.02) $ (0.03)
============= ============= ==============================
See the accompanying notes to the financial statements.
2
Millenia Hope Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Nine months ended August 31, 2007 and August 31, 2006 and
the Period From Inception (December 24, 1997) to August 31, 2007
(Unaudited)
Nine Months Ended Nine Months Ended Inception to
August 31, August 31, August 31,
2007 2006 2007
---- ---- ----
Operating Activities
Cash (used in) operating activities $(1,496,348) $(2,142,021) $(7,902,467)
----------- ----------- -----------
Financing Activities
Bank Overdraft - (3,408) -
Advances from related parties 13,538 262,617 1,813,360
Proceeds from convertible note payable - 2,000,000 2,000,000
Payments on convertible note payable (136,221) (136,890) (315,371)
Proceeds from notes payable 1,190,680 315,000 1,916,139
Payments on notes payable - - (81,000)
Issuance of capital stock for cash 543,511 326,130 3,040,101
Contribution to paid in capital - - 1,318,347
----------- ----------- -----------
Cash provided by financing activities 1,611,508 2,763,449 9,691,576
----------- ----------- -----------
Investing activities
Additions to fixed assets (25,552) (526,270) (852,904)
Deposits on future acquisition - - (1,000,000)
Issue of stock for subsidiary cash balance - - 40,628
Repayment of subsidiary related party note receivable - - 34,233
Collection of subsidiary share subscription receivable - - 83,331
Note receivable - - (2,207)
----------- ----------- -----------
Cash flows provided by (used in) investing activities (25,552) (526,270) (1,696,919)
----------- ----------- -----------
Increase (decrease) in cash 89,608 95,188 92,190
Cash and cash equivalents
Beginning of period 2,582 24,837 -
----------- ----------- -----------
End of period $ 92,190 $ 120,035 $ 92,190
=========== =========== ===========
Supplemental Cash Flow Information
Cash Paid for Income Taxes $ - $ - $ -
=========== =========== ===========
Cash Paid for Interest $ - $ 28,280 $ 257,144
=========== =========== ===========
Issuance of capital stock for convertible note repayment $ 101,957 $ - $ 191,268
=========== =========== ===========
Issuance of subsidiary stock for debt repayment $ - $ - $ 225,560
=========== =========== ===========
Issuance of subsidiary stock as dividend $ - $ - $ 240
=========== =========== ===========
Issuance of warrants associated with convertible note payable $ - $ - $ 599,244
=========== =========== ===========
Cancellation of treasury shares $ - $ - $ 100
=========== =========== ===========
See the accompanying notes to the financial statements.
3
MILLENIA HOPE INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2007
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Millenia Hope
Inc. have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and Rule 10-01 of Regulation S-X. The financial statements reflect all
adjustments consisting of normal recurring adjustments, in the opinion of
management, necessary for a fair presentation of the results for the periods
shown. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.
These consolidated financial statements should be read in conjunction with the
audited financial statements and footnotes thereto of Millenia Hope Inc. as of
November 30, 2006, and the periods then ended on Form 10KSB as filed with the
Securities and Exchange Commission.
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
that effect 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
Earnings (Loss) Per Share
The Company follows Statement of Financial Accounting Standards ("SFAS") 128,
"Earnings Per Share." Basic earnings (loss) per common share ("EPS")
calculations are determined by dividing net income (loss) by the weighted
average number of shares of common stock outstanding during the year. Diluted
earnings per common share calculations are determined by dividing net income
(loss) by the weighted average number of common shares and dilutive common share
equivalents outstanding. During the periods presented common stock equivalents
were not considered, as their effect would be anti-dilutive.
Basis of Consolidation
The consolidated financial statements include the accounts of Millenia Hope
Inc., the parent company, and Millenia Hope Pharmaceuticals, a Canadian
Corporation, the Company's subsidiary. All significant inter-company balances
and transactions have been eliminated in consolidation.
Note 3. GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. The company reported a
consolidated net loss of $681,415 and $3,518,347 for the three and nine months
4
ended August 31, 2007 as well as reporting net losses of $29,648,366 from
inception (December 24, 1997). As reported on the consolidated statements of
cash flows, the Company had deficient cash flows from operating activities of
$1,496,348 for the nine months ended August 31, 2007 and has reported deficient
cash flows from operating activities of $7,902,467 from inception (December 24,
1997). To date, these losses and cash flow deficiencies have been financed
principally through the sale of common stock $3,040,101 and term debt $5,333,128
which is partially related party debt.
Additional capital and/or borrowings will be necessary in order for the Company
to continue in existence until attaining and sustaining profitable operations.
Management has continued to develop a strategic plan to maintain reporting
compliance and establish long-term relationships with other major organizations
to distribute the product MMH(TM)MALAREX /MMH(TM) 18 as well as generating
revenue from its subsidiary Millenia Hope Biopharma. Management anticipates
generating revenue through the sales of MMH(TM) MALAREX /MMH(TM) 18 during this
fiscal year and revenue from its subsidiary company. The directors and officers
of the company have committed to fund the operations of the organization during
the next fiscal year until the company can generate sufficient cash flow from
operations to meet current operating expenses and overhead.
Note 4 STOCKHOLDERS' EQUITY
During the period ended February 28, 2007, the Company issued 11,325,000 shares
of common stock, pursuant to Regulation S, in settlement of consulting services,
development costs, and administration salaries valued at $431,500 and 17,569,622
shares of common stock, pursuant to Regulation S, for $318,131 cash received and
1,000,000 common shares, under an SB-2 Registration Statement, in payment of
$90,000 of Convertible Note debt.
During the period ended May 31, 2007, the Company issued 9,450,911 shares of
common stock, pursuant to Regulation S, for $153,995 cash received and 4,000,000
common shares, under an SB-2 registration Statement, in payment of $190,000 of
Convertible Note debt.
During the period ended August 31, 2007 the Company issued 3,615,000 shares of
common stock, pursuant to Regulation S, in settlement of services and
administrative salary valued at $72,300 and 900,000 common shares for $71,385
cash received and 4,500,000 common shares under an SB-2 registration statements
in payment of $95,000 of convertible note debt.
Note 5 REFUNDABLE TAX CREDITS
The federal government of Canada and the state of Quebec give refundable tax
credits to Canadian companies engaged in scientific research and development,
based on specific expenditure criterion. Millenia Hope Pharmaceuticals has
qualified for these tax credits based on the research work it carries on and on
the salaries they paid and other expenditures incurred. The Company has claimed
a total of $688,751 for the periods to August 31, 2007, the net amount to be
received by Millenia Hope Pharmaceuticals.
Millenia Hope Pharmaceuticals had already received payment of its net $470,000
claim, for said tax credits, from the government of Canada and Quebec for fiscal
2006.
5
Note 6 SIGNIFICANT EVENTS
On December 11, 2006, the Company entered into an agreement with an unrelated
company to secure the rights for a method for treating hyper-cholesterol in all
indications and conditions. The Company issued 8,750,000 shares of its common
stock plus a note payable in the amount of $800,000 due in August 31, 2007,
bearing interest at 7% after the due date.
As of August 31, 2007, the Company has restated the November 30, 2006 balance of
Minority Interest from $529,016 CR to $0, a difference of $529,016 DR. The
Company has also restated the November 30, 2006 balance of Accumulated Deficit
from $26,659,035 DR to $26,130,019 DR, a difference of $529,016 CR. The latter
change was made to correctly reflect the accounting treatment of the sale of the
Company's Subsidiary shares as a capital gain and the former change to set the
Minority interest to a $0 balance in this case where there is a negative
Stockholders' Equity on the books of the Company's Subsidiary.
Note7 SUBSEQUENT EVENTS
Between September 1, 2007 and September 24, 2007, the company issued 7500,000
common shares, under an SB-2 Registration Statement, in payment of $7,500 of
Convertible Note debt.
6
ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINACIAL CONDITION AND RESULTS OF
OPERATIONS.
Special Note Regarding Forward-Looking Statements
Some of the statements under "Plan of Operations," "Business" and elsewhere in
this registration statement are forward-looking statements that involve risks
and uncertainties. These forward-looking statements include statements about our
plans, objectives, expectations, intentions and assumptions and other statements
contained herein that are not statements of historical fact. You can identify
these statements by words such as "August," "will," "should," "estimates,"
"plans," "expects," "believes," "intends" and similar expressions. We cannot
guarantee future results, levels of activity, performance or achievements. Our
actual results and the timing of certain events August differ significantly from
the results discussed in the forward-looking statements. You are cautioned not
to place undue reliance on any forward-looking statements.
Plan of Operation.
The following discussion should be read in conjunction with the financial
statements and related notes, which are included elsewhere in this prospectus.
Statements made below which are not historical facts are forward-looking
statements. Forward-looking statements involve a number of risks and
uncertainties including, but not limited to, general economic conditions and our
ability to market our product.
The business objectives of Millenia are twofold. First, is to bring to market
our drugs used to combat infectious diseases, initially via 2 major programs,
Malaria and HIV/AID. Our mission is to alleviate human suffering in individuals
afflicted with these diseases. We are determined to market affordable treatments
to individuals infected with Malaria and HIV/AIDS to help increase their
survival rate and offer them a better quality of life.
Millenia has endeavored diligently to position MALAREX/MMH(TM)18 as an accepted
control agent for the treatment and prevention of malaria, a $10 billion market,
throughout the world. We believe that MALAREX/MMH(TM)18 is a highly effective
anti-malarial drug, and will be made available at prices that are competitive
for a new anti-malarial agent with no parasitic resistance. The availability and
pricing of MALAREX/MMH(TM)18, and its lack of harmful side effects, will ensure
its use in the fight against malaria. To this end, the company is involved in
ongoing clinical trials of MALAREX/MMH(TM)18, to be monitored by regional
offices of the World Health Organization (WHO) designed to get MALAREX/MMH(TM)18
global recognition as an anti-malarial treatment. This will allow organizations,
such as the Global Fund and other international Non-Governmental Agencies (NGO),
to fund the purchase of our products on behalf of different countries.
Millenia are also pursuing its patent application (pending) to identify potent
inhibitors of a specific HIV enzyme, RNase H. There is a substantial amount of
information in the literature to indicate that inhibition of this enzyme or
certain mutations in the domain of this enzyme leads to the inhibition of HIV
replication. These observations are of the paramount importance to support our
drug development program for this enzyme target, that will lead to a successful
outcome. Successful development of a drug that targets HIV RNase H will play an
important role in the treatment of HIV/AIDS patients who have become resistant
to current therapy. The revenue of a first in class, orally bio-available drug
that targets HIV RNase H is estimated at US $350-$500 million, per year. The
current market for HIV drugs is about US$ 6 billion estimated to reach US$ 10
billion by 2010. Professor Michael A. Parniak (University of Pittsburgh School
of Medicine) presented some of our results at the 12th conference on
Retroviruses and Opportunistic Infections in Boston, Massachusetts (February
2005).
7
Inquiries were made by pharmaceutical companies, regarding the strong
correlation between the results of the bio-chemical and cell-based assays
obtained by Millenia Hope. These results are unique for this particular target,
HIV-1 RNaseH, and validate it as a highly valued program. Millenia made a
strategic decision to further develop this program, before considering
partnering with a pharmaceutical company.
Based on the strength of the scientific data obtained so far, we decided to
continue our collaboration with Prof. Parniak, a long time collaborator of
Millenia Hope, and to submit, under his leadership, a grant application to the
National institute of Health, USA (NIH). To strengthen the application we
invited Prof. Eddie Arnold and Prof. Ron Levy, both from Rutgers University, to
participate in this application. This grant was approved by the NIH as of March
20, 2007 and will support the efforts of an outstanding team of scientific
investigators, over 5 year period, to discover and develop new therapeutics
targeting a novel HIV-target, Rt-associated Rnase H.
The Millenia " Hope Village" project, an original concept of Millenia Hope in
lock step with the objectives of the UN's Millenium Development Goals, commenced
with a June 2006 meeting, in Geneva, between Millenia's CEO, Leonard Stella, and
the African co-ordinator of our project. Preliminary criteria and parameters are
being defined, by our African -foundation partners, and we are awaiting a
further concretizing of the details timetable. As stated on the U.N. Millenia
Project's website, "The underlying principal for each Millenia Village is that
community empowerment, participation and leadership are key to designing and
implementing the solutions."
Each pre-selected African Village will implement as Home Based Treatment (HBT)
anti-malaria program, since 80% of all deaths occur at home. HBT specifically
targets women and children, as they are the segment of the population at the
greatest risk. The programs will include: education effective anti-malaria
treatments for the entire village consisting of MALAREX/MMH(TM)18, attention to
the environmental factors inherent in the spread of malaria i.e. stagnant water
etc. and the promotion of co-operation between private individuals and public
sector institutions in this initiative.
Taking the aforementioned into account, as of September 24, 2007, Millenia Hope
had received 19 sales authorizations from West African nations, Congo
(Brazzaville) and Guinea (Conakry), Togo, Burundi, Central African Republic,
Benin, Gabon, Chad, Niger, Mali, Senegal, Democratic Republic of Congo, Guinea
(Equatorial), Cameroon, Ghana, Sierra Leone, Mauritania, Burkina Faso, and
Liberia, and one from the Caribbean nation of the Dominican Republic. These
authorizations mean that we have the right currently, without doing any further
testing or receiving any further approval, to sell MALAREX/MMH(TM)18 to any
individual, group, company or NGO or Governmental Agency in those countries. We
are also awaiting sales authorizations from several other African nations. In
fact, as of September 2005 Millenia had 2 MALAREX/MMH(TM)18 sales, one in Guinea
Conakry and one in Mali. We are actively working with other groups and
individuals to conclude further sales of MALAREX/MMH(TM)18. The only cost to
concluding future sales is the normal day-to-day operating costs of our
business. Based on management's best estimates, Millenia hopes to conclude
orders for MALAREX/MMH(TM)18 during fiscal 2007. We concluded an intensive
marketing effort in Africa led by our CEO, in Spring - Summer 2006. Helping us
coordinate our effort in this area, as well as in other strategic areas, is the
firm of Heenan, Blaikie. Heenan Blaikie's knowledge of the international markets
will continue to give Millenia a great lead to future sales and opportunities.
In the face of anti-malarial drug resistance in the case of quinine-based
treatments and neuro-toxicity for artimisinin products, the need for effective
treatments will continue to intensify. Millenia commenced building a network of
local distributors and expects that the demand for MALAREX/MMH(TM)18 should
progressively increase over time.
8
Millenia has chosen to remain conservative and has established a goal of
capturing 1 1/2% - 2% ($150 - $200 million) of the marketplace by 2011.
According to the company's estimates, attaining this sales level will ensure the
viability and solid profitability of the Company for its shareholders. No
assurance can be given that the Company will meet its sales goals.
Millenia continues to have regular commercial access to Voacmine processed by
producers in Southern Brazil and does not foresee any supply shortages in the
near future. Millenia utilizes the services of Ropack, an FDA approved, HACCP,
cGMP and ISO 9002 certified corporation, as well as other providers, to perform
quality control and encapsulating of MALAREX/MMH(TM)18, conforming to the
lightest level of U.S. and Canadian manufacturing standards.
In August 2006 Millenia co-sponsored the business- evening entitled "Africa,
Open for Business" as well as the "Coupe de la Prix" cycling race. Both events
helped raise the public of the Company, as well as garnering much sought after
corporate contacts. Also, the former event gave us further exposure for
MALAREX/MMH(TM)18 with the African and Canadian businessmen present at the
evening.
Secondly, Millenia is committed to ongoing research and development, to expand
the efficacy of MALAREX/MMH(TM)18 and its derivatives and other acquired or to
be acquired products, in fighting infectious diseases. Based on discoveries in
the development program, the Company has submitted a global patent covering a
profile of the active ingredients and the additional clinical properties of the
product, namely anti-parasite, anti-viral and antibacterial activities. A second
US patent application was filed in 2005 covering the treatment and prevention of
multi-drug resistant strains of malaria utilizing Millenia Hope's products. As
the company has not yet made any significant sales of its product, it is
difficult for management to evaluate the growth curve of product sales. However,
given the market size and the recognized need, by the world's premier
anti-malaria organizations (WHO, etc.) for new, viable and effective drugs, the
Company believes that it will not have a problem generating sales, thereby
creating positive cash flow, once it has attained its first large volume sales
of the product.
In furtherance of and in concert with Millenia's R&D efforts in the area of
infectious diseases, we have signed a partnering protocol with a leading Quebec
Research Institute, the Institute Armand-Frappier - INRS. This institute, a
member of the international network of Pasteur Institutes organization, will
collaborate with Millenia in the discovery and development of new
anti-infectious therapeutic products, specifically anti- bacterials.
On February 14, 2006 Millenia Hope Pharmaceuticals (Millenia Hope Biopharma or
MH-B), purchased intellectual property and research equipment from Avance
Pharma, an unrelated company, for $526,270.
MH-B is one of the world's leading bio-research firms in Phytomic Technology,
the commercialization of plant cell cultures. MH-B has spent over $25 million US
in creating its unique technology, including the world's largest collection of
highly purified phyto-chemical fractions to be utilized in the pharmaceutical,
cosmetic and nutraceutical industry and is commencing the initial
commercialization of several projects, with leading multi-national corporations,
in the cosmetic, pharmaceutical and nutraceutical industries.
MH-B has made great strides in its metamorphosis from pure plant-based drug
research and discovery. Commencing with the end of Q1 2006, MH-B signed a
plant-based product agreement, and received the initial payments, with the
world's largest cosmetics and health beauty products giant, France based
L'Oreal. A similar agreement was signed with the Pierre Fabre Group, a company
with $1.8 billion in revenue, from pharmaceuticals and cosmeceuticals. In Q1 of
2007 we signed a contract with Sederma S.A.S. of France, a large provider of
ingredients to the cosmetic industry. MH-B is, currently, in the midst of a 2
yr. contract to do research and analyses for Millenia Hope Inc. In June 2007, we
signed an initial contract with Senomyx, a U.S. Company.
9
These contracts have up - front payments, fees for services rendered and add-on
payments for reaching pre-agreed upon milestones. Furthermore, these agreements,
we anticipate, are just the inaugural step in long-term collaborative relations
with these French multi-nationals.
Taking the above report on our commercial activities into account, we continue
with our R&D and drug discovery efforts, in order to avail ourselves of new and
unique molecules and fractions to offer to our client base. As well, Millenia
Biopharma relocated to larger premises, with much expanded and advanced
facilities, at a better lease rate, in October 2006.
On December 11, 2006, the Company entered into an agreement with an unrelated
company to secure the rights for a method for treating hyper-cholesterol in all
indications and conditions. The Company issued 8,750,000 shares of its common
stock plus a note payable in the amount of $800,000 due in August 31, 2007,
bearing interest at 7% after the due date.
10
Three months ended August 31, 2007 compared to August 31, 2006.
In 2006 our subsidiary MH-B had revenue of $207,049, as payment for work for a
multi-national cosmetic and a pharmaceutical firm. We had income in 2007 of $
327,795 from various MH-B contracts and MMH Malarex/MMH(TM)18 sales of $22,709.
In 2007 we had $879,084 of operating expenses vs. $1,974,259 in 2006, broken
down as follows:
Comparative figures 3 months ended August 31, 2007 and 2006
2007
Stock Non-Stock
Compensation Expense Total
------------ ------- -----
Biotech Wages $ - $ 82,809 $ 82,809
Admin salaries $ 20,000 $ 12,396 $ 32,396
Consulting $ 30,300 $ 3,358 $ 33,658
Development $ - $ 155,559 $ 155,559
Marketing $ 22,000 $ 79,058 $ 99,058
Other S, G and A $ - $ 475,604 $ 475,604
---------- ---------- ----------
$ 72,300 $ 806,784 $ 879,084
========== ========== ==========
2006
Biotech Wages $ - $ 130,050 $ 130,050
Admin salaries 35,120 85,090 137,770
Consulting 62,000 38,658 100,658
Development 365,750 292,295 658,045
Marketing 26,493 206,115 232,608
Other S, G and A 220,020 495,108 715,128
---------- ---------- ----------
$ 726,943 $1,247,316 $1,974,259
========== ========== ==========
In 2006 we paid salaries to our scientists in our subsidiary of $137,770 and had
$263,999 of expenses in 2007 due to our increased staff in 2007. Against the
$263,999 we had R&D tax credits of $181,190.
In 2007, we paid the principal officers $32,396 in salaries and had salaries of
$137,770 in 2006. Higher salaries were paid in 2006 reflecting more available
cash flow than in 2007.
We had consulting fees of $33,658 in 2007 and $100,658 in 2006. The higher
expense in 2006 was a result of higher spending in 2006 to position the MH-B
subsidiary to garner further contracts..
We had marketing expenses of $99,058 in year 2007 and $232,068 in 2006. In the
third quarter of 2006 we concentrated our effort on the activities of our
subsidiary in its efforts to commercialize its library of purified fractions and
two trips to Africa pursuant to signing sales agreement for MMH MALAREX/ MMH
(TM)18. We spent less in 2007 on our African efforts and also had a smaller
expense for the subsidiary's business development.
11
We incurred development costs of $233,212 and an R&D tax credit against this of
$77,653 during the 2007 period, as compared to $658,045 for 2006. 2006
represented the expensing of deferred stock compensation in the amount of
$332,000 from 2005 work and $326,000 for other development costs in improving
the formulation of MALAREX/MMH(TM)18 and our subsidiary's on going R&D in plant
based discovery and development. 2007 represented further research and
development into MMH Malarex/MMH18. Our subsidiary does most of its development
via its biotech wages.
Other general and administrative expenses were $475,604 for 2007. We had a
decrease of $205,866 from $715,128 in 2006. This was attributable to the fact
that in 2006 we had Millenia Hope's $ 220,000 for business development costs and
for several new patent applications.
As a result of the foregoing we incurred an operating loss of $528,580 for the
quarter ended August 31, 2007, compared to a loss of $1,767,210 for the quarter
ended August 31, 2006.
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Nine months ended August 31, 2006 compared to August 31, 2007.
In 2006 our subsidiary MH-B had revenue of $438,834, as payment for work for a
multi-national cosmetic company and a pharmaceutical firm. We had income in 2007
of $22,209 from an MMHMalarex/MMH(TM) 18 sale and MH-B contracts from various
sources of $793,620.
In 2007 we had $3,629,670 of operating expenses vs. $5,341,634 in 2006, broken
down as follows:
Comparative figures 9 months ended August 31, 2006 and 2007
2007
Stock Non-Stock
Compensation Expense Total
------------ ------- -----
Biotech Wages $ - $ 237,526 $ 237,526
Admin salaries 47,225 23,400 70,625
Consulting 172 075 270,755 442,830
Development 515,490 952,086 1,467,576
Marketing 22,000 287,337 309,337
Other S, G and A 70,668 1,031,108 1,101,776
---------- ---------- ----------
$ 827,458 $2,802,212 $3,629,670
========== ========== ==========
2006
Biotech Wages $ - $ 295,952 $ 295,952
Admin salaries 148,650 249,551 398,231
Consulting 517,780 356,188 873,968
Development 1,458,232 644,364 2,102,596
Marketing 172,775 248,403 421,178
Other S, G and A 220,737 1,028,972 1,249,709
---------- ---------- ----------
$2,518,204 $2,823,430 $5,341,634
========== ========== ==========
In 2006 we paid salaries to our scientists in our subsidiary of $295,952 and had
$719,655 expenses in 2007 less R&D tax credits of $482,126.The increase is due
to more staff due to a greater number of projects in 2007.
In 2007, we paid the principal officers $70,625 in salaries and had salaries of
$398,231 in 2006. Higher salaries were paid in 2005 reflecting stronger cash
flow after paying operating expenses in 2006.
We had consulting fees of $442,830 in 2007 and $873,968 in 2006. The higher
expense in 2006 was a result of stock compensation paid to a business consultant
for their role in our acquiring the intellectual property and research equipment
for our subsidiary company.
We had marketing expenses of $309,337 in year 2007 and $421,178 in 2006. In 2006
we concentrated our effort on the activities of our subsidiary, Millenia Hope
Biopharma, to commercialize its library of purified fractions and had two trips
to Africa to garner MMHMalarex/MMH(TM)18 sales we spent less in 2007 on our
African sales and had smaller outlays for MH-B business development.
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We incurred development costs of $1,674,201 during the 2007 period and had
against this $206,625 of R&D tax credits as compared to $2,102,596 for 2006.
2006 represented the expensing of deferred stock compensation in the amount of
$996,000 from 2005 work and $1,106,000 for other development costs in improving
the formulation of MALAREX/MMH(TM)18 and our subsidiary's on going R&D in plant
based discovery and development.2007 represented $252,000 of deferred expenses
as well as the cost of the work to improve the formulation of
MMHMalarex/MMH(TM)18 and our subsidiary's ongoing work.
Other general and administrative expenses were $1,101,776 for 2007. This
represented a decrease of $147,933 from $1,249,709 in 2006. This was
attributable basically to the fact that in 2006 Millenia Hope Pharmaceuticals
paid $333,000 of rent, higher by $140,000 than in 2007.
As a result of the foregoing we incurred an operating loss of $2,813,841 for the
nine months in August 31, compared to a loss of $4,902,800 for 2006.
Liquidity and Capital Resources
At August 31, 2007 the Company had negative working capital of $2,977,986.
Additional capital and/or borrowings will be necessary. Management anticipates
generating revenue through the sales of Malarex/MMH(TM) 18 and Biopharma work
during this fiscal year. The officers and directors of the Company have
indicated their commitment to fund the operations of the organization during the
next fiscal year until the organization can generate sufficient cash flow from
operations to meet current operating expenses and overhead. Management
anticipates its consolidated net cash needs at $2,800,000 for the fiscal year
ending November 30, 2007.
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Item 3. CONTROLS AND PROCEDURES
QUARTERLY EVALUATION OF THE COMPANY'S DISCLOSURE CONTROLS AND INTERNAL CONTROLS.
As of the close of the period covered by this Quarterly Report on Form 10-QSB,
the Company evaluated the effectiveness of the design and operation of its
"disclosure controls and procedures" (Disclosure Controls) and its "internal
controls and procedures for financial reporting" (Internal Controls). This
evaluation (the Controls Evaluation) was done under the supervision and with the
participation of management, including our Chief Executive Officer (CEO). Rules
adopted by the SEC require that in this section of the Quarterly Report we
present the conclusion of the CEO about the effectiveness of our Disclosure
Controls and Internal Controls based on and as of the date of the Controls
Evaluation. Based upon that evaluation, the Chief Executive Officer and its
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company requires to be included in this Quarterly Report on form
10-QSB. There have been no changes in the Company's internal controls, or in
other factors, which could significantly affect internal controls subsequent to
the date the Company carried out its evaluation.
CEO and CFO CERTIFICATIONS
Appearing immediately following the Signatures section of this Quarterly Report
there are two separate Forms of "Certification" of the CEO and CFO. The first
form of Certification is required in accord with section 302 of the
Sarbanes-Oxley Act of 2002 (the Section 302 Certification). This section of the
Quarterly report which you are currently reading is the information concerning
the Controls Evaluation referred to in the Section 302 Certificate and this
information should be read in conjunction with the Section 302 Certification for
a more complete understanding of the topics presented.
DISCLOSURE CONTROLS AND INTERNAL CONTROLS
Disclosure Controls are procedures that are designed with the objective of
ensuring that information required to be disclosed in our reports foiled under
the Securities Exchange Act of 1934 (Exchange Act), such as this Quarterly
Report is recorded, processed, summarized and reported within the time period
specified.
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Part II other information
Item 2: Sales of Unregistered securities
Date of Title of Number Consideration Exemption from
Sale Security Sold Received Registration claimed
Dec 1, 2006 common stock 2,400,000 $ 31,680 Regulation S
Dec. 11, 2006 common stock 8,750,000 $262,500 Regulation S
in settlement of services
Dec. 11, 2006 common stock 8,352,000 $ 98,013 Regulation S
Jan. 3, 2007 common stock 1,350,000 $ 49,000 Regulation S
in settlement of services
Jan. 3, 2007 common stock 1,730,000 $ 25,560 Regulation S
Jan 12, 2007 common stock 500,000 $ 14,910 Regulation S
Jan. 17, 2007 common stock 250,000 $ 22,500 Regulation S
in settlement of services
Feb. 8, 2007 common stock 975,000 $ 97,500 Regulation S
in settlement of services
Feb. 8, 2007 common stock 4,587,539 $147,968 Regulation S
May 1, 2007 common stock 9,450,911 $153,995 Regulation S
June 13, 2007 common stock 2,515,000 $ 50,300 Regulation S
in settlement of services
June 13, 2007 common stock 900,000 $ 71,385 Regulation S
August 15, 2007 common stock 1,100,000 $ 22,000 Regulation S
((b) Reports on Form 8-K
Change in Certifying Accountant
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Millenia Hope Inc.
(Registrant)
Dated October 9, 2007 By: /s/ Leonard Stella
CEO
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