10-Q 1 d56276_10-q.txt FORM 10-Q Document is copied. 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.) 4055 Ste Catherine st. suite 142, Montreal, Quebec H3Z 3J8 (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 May 31, 2003 Issuer had 40,701,277 outstanding shares of Common Stock. INDEX PART I: FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheet (Unaudited) at May 31, 2003. Consolidated Statement of operations (Unaudited) for the three and six months ended May 31, 2003 and May 31, 2002 and from inception (December 24, 1997) to May 31, 2003. Consolidated Statements of cash flows (Unaudited) for the six months ended May 31, 2003 and May 31, 2002 and from inception (December 24, 1997) to May 31, 2003. Notes to the Financial Statements (Unaudited) Item 2. Plan of Operations PART II. Other Information Item 2. Sale of Unregistered Securities Item 6. Exhibits and Reports on Form SIGNATURES MILLENIA HOPE INC. (A COMPANY IN THE DEVELOPMENT STAGE) BALANCE SHEET AT MAY 31, 2003 (UNAUDITED) Assets Current Assets Cash and cash equivalents $ 15 Notes Receivable - Related Party 623,254 Other current assets 80,000 ----------- Total current assets 703,269 Property and equipment, net 4,690 Other Asset 1 ----------- Total assets 707,960 =========== Liabilities and Shareholder's Equity Current Liabilities Accounts payable and accrued liabilities 190,075 Notes payable (principally related parties) 3,068 ----------- Total current liabilities 193,143 Shareholder's Equity Common Stock, $.0001 par value; authorized 70,000,000 shares; issued and outstanding 40,701,277 4,070 Warrants 1,393,247 Paid in Capital 7,047,033 Cost of Treasury Shares 100 Deficit accumulated during the development stage (7,929,633) ----------- Total Shareholder's Equity 514,817 Total liabilities and shareholder's equity $ 707,960 =========== Read the accompanying significant notes to financial statements, which are an integral part of this financial statement. MILLENIA HOPE INC. (A COMPANY IN THE DEVELOPMENT STAGE) CONSOLIDTAED STATEMENT OF OPERATIONS FOR THE 3 MONTHS AND 6 MONTHS ENDED MAY 31, 2003 AND 2002 FROM INCEPTION (DECEMBER 24, 1997) THROUGH May 31, 2003 (UNAUDITED)

Read the accompanying notes to financial statements, which is an integral part of this financial statement. MILLENIA HOPE INC. (A COMPANY IN THE DEVELOPMENT STAGE) CONSOLIDTAED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED MAY 31, 2003 AND 2002 AND THE PERIOD FROM THE INCEPTION (DECEMBER 24, 1997) THROUGH May 31, 2003 (UNAUDITED)

Supplemental Schedule of noncash investing and financing activities: On February 28, 2000, the company issued 4,644,156 warrants to settle the following related party notes: Notes payable (principally related parties) (net of discount) 1,172,648 Long-term debt, less current portion (net of discount) 104,031 Current portion of long term debt (net of discount) 88,800 Current year interest expense 27,770 --------- 1,393,249 On May 29, 2000, the company issued 5,000,000 shares of common stock in exchange for 35,700,000 shares of Sword Comp-Soft Corp, a Delaware corporation which provides on-line interactive health services through the Internet. The transaction was recorded using the "purchase method" as the registrant acquired 76,54% of Sword Comp-Soft Inc's outstanding shares at May 29, 2000. The following assets were acquired through this transaction: Notes Receivable - 3rd Party 33,600 Notes Receivable - Related Party 34,233 Property and Equipment, net 23,221 The following liabilities were assumed through this transaction: Accounts payable and accrued liabilities 4,500 On April 30, 2000, the company's subsidiary issued 600,000 shares for Equipment valued at $15,000. On October 12, 2001 the company issued 7,000,000 common shares to acquire other assets valued at $2,294,541. On October 12, 2001 the company divested itself of 1,000,000 common shares that it owned of its subsidiary for other assets valued at $5,459. On March 5, 2003 the company divested itself of 30,700,000 common shares of its former subsidiary for a medical ASP and a $ 700,000 note receivable. MILLENIA HOPE INC. (A COMPANY IN THE DEVELOPMENT STAGE) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MAY 31, 2003 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 Article 10 of Regulation S-X. The financial statements reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are 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 financial statements should be read in conjunction with the audited financial statements and footnotes thereto included in Millenia Hope Inc.'s 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. The company currently recognizes revenue in the form of direct sales to the retail market and licensing fees, which are recorded over the life of the licensing agreement using the straight-line method. Currently the company has one agreement with a term of 5 years commencing on January , 1999. The company also recognizes revenue from its subsidiary, providing technology related services, such internet site hosting and software consulting. Revenue is recognized when the service is performed. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition," which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue and provide guidance for disclosures related to revenue recognition policies. Management believes that Millenia Hope Inc.'s revenue recognition practices are in conformity with the guidelines of SAB 101. NOTE 3 - NET LOSS PER SHARE Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Options and warrants are not considered since considering such items would have an antidilutive effect. NOTE 4 - GOING CONCERN The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The company reported a net income of $596,786 and $ 517,081 for the three months and six months ended May 31, 2003 as well as reporting net losses of $(7,929,633) from inception (December 24, 1997) to May 31, 2003. As reported on the statement of cash flows, the Company had negative cash flows from operating activities of $ 63,943 for the six months ended May 31, 2003 and has reported deficient cash flows from operating activities of $ 2,530,005 from inception (December 24, 1997). To date, these losses and cash flow deficiencies have been financed principally through the sale of common stock $ 1,023,864 and short term debt $ 1,371,245 which is principally 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 develop a management team, maintain reporting compliance and establish long term relationships with other major organizations to develop and distribute the product Malarex. Management anticipates generating revenue through the sales of Malarex(TM) during the next fiscal year. The major shareholder's of the organization have committed 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. NOTE 5 - ACQUISITION OF SWORD COMP-SOFT On May 29, 2000, the company issued 5,000,000 shares of common stock in exchange for 35,700,000 shares of Sword Comp-Soft, Corp., a Delaware corporation which provides on-line interactive health services through the internet. The transaction was recorded using the "purchase method" as the registrant acquired 76.45% of Sword Comp-Soft, Corp.'s outstanding shares at May 29, 2000. On March 5, 2003, the Company signed an agreement with its subsidiary company to sell to Sword all of the common shares that it held at that date, 30.7 million shares. The Company will receive from its subsidiary $700,000, due no later than March 5, 2004. A portion of this amount will be allocated to reduce the note payable to Sword. In addition, Sword will transfer all rights and ownership of the Application Service Provider in the E-Health Sector business to Millenia. NOTE 6 - STOCKHOLDER'S EQUITY Between December 5th, 2002 and February 28, 2003 the company sold 426,250 shares of common stock pursuant to Regulation S. Of these, 200,000 shares were in settlement of marketing expenses. Between March 24th 2003 and May 5th 2003 the company sold 1,130,332 shares of common stock pursuant to Regulation S. NOTE 7 - PATENT RIGHTS On May 31, 2001, Millenia Hope and Liquid Asset Corp signed a finalized purchase agreement that gives Millenia Hope the exclusive worldwide rights to oxygenate intravenous solutions until September 1, 2005 with an option to purchase these same rights for a further 5 years period. The purchase price for these rights to September 1, 2005, is $ 500,000 cash, 6 million Millenia Hope common shares and 2 million non-registered common shares of its subsidiary, Sword Comp-Soft Corp, that were owned by Millenia. NOTE 8 - OTHER ASSETS On October 9, 2001, Millenia Hope acquired a 68% interest in assets, comprised of land, plant and equipment located in Brazil to be used in the production of MalarexTM. The purchase price was $500,00 cash, 7 million Millenia Hope shares and 1 million non-registered common shares of its subsidiary, Sword Comp-Soft Corp, that were owned by Millenia. These assets were to have been transferred to a newly formed corporation to be owned 68% by the company by October 7, 2002. As this has not yet occurred and due to the fact that Millenia does not yet have legally registered ownership in the facility, the company has written down assets to $1. 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 and foremost is to establish MALAREX as an accepted control agent for the treatment and prevention of malaria throughout the world. Not only do we believe that MALAREX is an effective anti-malarial drug, it will also be made available at prices that are adapted to the realities of the third world market. The availability and pricing of MALAREX, we believe, will ensure its acceptability and use in the fight against malaria. To this end the company is involved with ongoing clinical trials of MALAREX. As of February 28, 2003, Millenia Hope had received 8 sales authorizations from West African nations, Congo (Brazzaville) and Guinea (Conakry), Togo, Burundi, Central African Republic, Benin, Gabon and Chad. We are awaiting sales authorizations from several other West African nations. Based on managements best estimates, Millenia hopes to sell up to 1 million treatments of Malarex or $7 million worth, by the end of fiscal 2003. Millenia has adopted an extremely conservative sales forecast. In the face of anti-malarial drug resistance, the need for more effective treatments will continue to intensify. Once a network of local manufacturers and distributors capable of producing and supplying MALAREX are in place, the demand for MALAREX should increase commensurately. It is estimated the demand for MALAREX will increase as it becomes one of the accepted choices in the fight against malaria. Millenia has chosen to remain conservative and has established a goal of capturing 2% ($200 million) of the marketplace in five years. According to the company's internal estimates, based upon it's knowledge of the industry, attaining this sales level will ensure the viability and profitability of the Company for its shareholders. No assurance can be given that the Company will meet its sales goals. Secondly, Millenia is committed to ongoing research and development to expand the efficacy of MALAREX and its derivatives in fighting infectious diseases. 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 need for viable and effective drugs, the Company believes that it will not have a problem generating sales thereby creating positive cash flow once further authorizations have been obtained. On May 29, 2000, the company acquired thirty five million seven hundred thousand (35,700,000) shares of SWORD COMP-SOFT CORP., this being 76.5% of SWORD's issued capital, at a cost of five million (5,000,000) common shares, and five million warrants (5,000,000), entitling the registered holder thereof to purchase at any time from that date for a period of three (3) years, one share of common stock at a price of two dollars ($2). SWORD COMP-SOFT CORP. was an (ASP) Application Service Provider incorporated in November 1998 specializing in the E-Healthcare sector. Application services, a rapidly growing segment of the Internet economy, are those that focus on a single topic or issue in a conversational manner. Essentially, the subscribers use application programs to create, store and transact medical data on the application server, for example, the interactive on-line health service will record similar data to that usually given to a primary health care worker, such as a doctor or a nurse,, and create an overall profile of individual health needs. Each application will relate to a specific disease, drug, or part of the human anatomy on a pay per use basis ( although this fee may be sponsored). On March 5, 2003, Millenia divested its entire holding in Sword Comp-Soft, this being 30.7 million common shares. The aforementioned shares were tendered back to Sword Comp-Soft. In exchange for said 30.7 million shares, Sword Comp-Soft paid Millenia Hope $700,000 U.S., due within 12 months from the date of its signing of the agreement and gave Millenia its Medico Center site, Medico Research, any other related Medico ASP work and all the attended backup documentation, computer line code etc., all is per the agreement signed on March 5, 2003. The acquisition of Sword`s medical ASP's and Medico Records accessible on the Internet, where 45% of all inquiries are health related, is highly beneficial, as Millenia's scientific advisory committee, comprised of M.D.s and P.H.D.s with a wide range of expertise, will lend valuable assistance as we strive to bring to the market medical ASPs. Further, their breadth of knowledge and varied specializations should help to generate ideas and data to aid in the production of other medical ASP's. On October 10, 2001 Millenia Hope and Cibecol Industrial Farmaceutica Ltda. Signed a purchase agreement via which Millenia will acquire 68% of the assets of Cibecol for $500,000 in cash, 7 million shares of Millenia Hope common shares and 1 million common shares of Sword Comp-Soft., a subsidiary of Millenia Hope, that are owned by Millenia. Cibecol, incorporated and headquartered in Brazil, operates a 20,000 square foot manufacturing facility and also owns 82 hectares of arable land, located, Porto Allegre, Brazil. Millenia will use the Brazilian facility for the production of Malarex. Cibecol, which has been in business for over 20 years, operates one of the largest phyto-pharmaceutical plants in southern Brazil. In addition to producing voacamine, the active agent in Malarex, Cibecol would continue to produce its own group of 61 natural medicines that are currently being Marketed in Brazil. This acquisition would be a key step forward toward Millenia's goal of becoming a vertically integrated producer and distributor of Malarex. Furthermore, Millenia, under the leadership of Dr. David Mulder, Millenia's Vice Chairman, and Dr. Rene Morel, a member of our scientific committee, expect to introduce a new concept which we call 02-IV, oxygenation of intravenous solutions. Intravenous solution recipients will now be able to derive a positive boost from the extra dose of oxygen delivered directly to their blood stream. The North American intravenous solution market, per estimates of Frost & Sullivan, is approximately $1.3 billion and the rest of the international market is about an additional $1.5 billion. On May 31, 2001, Millenia Hope and Liquid Asset Corp. signed a purchase agreement, the terms of which give Millenia the exclusive worldwide rights to oxygenate intravenous solutions until September 1, 2005 with an option to purchase these same rights for a further 5 year period. The purchase price for these rights to September 1, 2005 is $500,000 in cash, 6 million Millenia Hope common shares and 2 million non-registered common shares of Sword Comp-Soft Corp. that are owned by Millenia. Millenia has come to an agreement to utilize the services of Ropack, an FDA approved, HACCP and cGMP Compliant and ISO 9002 certified corporation, to perform quality control and all encapsulating of MALAREX(TM), confirming to U.S. and Canadian manufacturing standards. Assure the highest possible level of quality via product analysis and homogeneity testing for MALAREX(TM). This manufacturing facility, fully adhering to the highest quality standards of good manufacturing procedures, gives credence and assurance of the purity and safety of our final product. Ropack is accredited by both the U.S. and Canadian armies. Liquidity and cash flow needs of the company From December 1st, 2002 to May 31, 2003 the company and its subsidiary until March 5, 2003, incurred operating and interest expenses in the amount of $224,416 while recording net cash revenues of $47,630. from June 1st, 2003 to November 30th, 2003, the fiscal year end, the company anticipates that its net cash flow needs, will be $250,000 primarily to cover day today operating expenses. These funds will be covered by revenue received and any shortfalls will be met by the officers and certain shareholders as previously outlined. Part II other information Item 2: Sales of Unregistered securities Date of Title of Number Consideration Exemption from Sale Security Sold Received Registration claimed 12/05/2002 common shares 200,000 $14,000 Regulation S in settlement of marketing expenses 2/28/2003 common shares 226,250 $11,312 Regulation S 3/24/2003 common shares 861,335 $43,066 Regulation S 5/5/2003 common shares 268,997 $13,450 Regulation S (b) Reports on Form 8-K None 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 July 15, 2003 By: /s/ Leonard Stella Chief Operating officer

MILLENIA HOPE INC 10-Q