Millennium Prime, Inc. - Quarter Report: 2009 December (Form 10-Q)

Unassociated Document

UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED: December 31, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-28459

Millennium Prime, Inc.

(Exact name of Registrant as specified in its charter)

Delaware		22-3360133
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

6538 Collins Ave, Suite 262, Miami Beach, FL 33141

(Address of principal executive offices) (Zip Code)

786-347-9309

(Registrant's telephone number)

400 Garden City Plaza, Garden City, NY 11530

(Former Name, Former Address and Former Fiscal Year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

(Do not check if a smaller

reporting company)

Smaller reporting

company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of the registrant's shares of common stock outstanding was 28,051,284 as of February 12, 2010.

MILLENNIUM PRIME, INC.

FORM 10-Q

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements

	Consolidated Balance Sheets as of December 31, 2009 (unaudited) and September 30, 2009 (audited)		3

	Consolidated Statements of Operations for the three months ended December 31, 2009 and 2008 (unaudited)		4

	Consolidated Statements of Cash Flows for the three months ended December 31, 2009 and 2008 (unaudited)		5

	Notes to the Unaudited Consolidated Financial Statements		6

Item 2.	Management's Discussion and Analysis or Plan of Operation		12

Item 3.	Management's Quantitative and Qualitative Disclosures About Market Risk

Item 4T.	Controls and Procedures		13

PART II. OTHER INFORMATION

Item 1A.	Risk Factors		14

Item 6.	Exhibits		14

Signatures			15

FORWARD-LOOKING STATEMENTS

Certain statements made in this Quarterly Report on Form 10-Q are "forward-looking statements" regarding the plans and objectives of management for future operations and market trends and expectations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the continued expansion of our business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. The terms "we", "our", "us", or any derivative thereof, as used herein refer to Millennium Prime, Inc., a Delaware corporation, and its predecessors.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MILLENNIUM PRIME, INC. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

	December 31, 2009			September 30, 2009
CURRENT ASSETS

CURRENT ASSETS
Cash	$	333,864		$	416,622
Notes receivable and accrued interest receivable, net of allowance		0			0
TOTAL ASSETS (all current)	$	333,864		$	416,622

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expense	$	703,450		$	770,950
Interest payable on convertible debentures		269,401			1,333,108
8% Convertible debenture - in default		306,250			2,066,250
8% Convertible debenture - newly issued		875,000			775,000
Other liabilities		278,809			0
Advances and note payable, shareholders		0			389,335
Line of credit payable		150,000			150,000
Total current liabilities		2,582,910			5,484,643

COMMITMENTS and CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
Preferred stock, $1.00 par value, 10,000,000 shares authorized,
Series A Preferred 1,000,000 shares issued and outstanding		1,000,000			0
Common stock - par value $.0001, per share; authorized,
250,000,000 shares; 28,051,284 and 51,284 shares issued and outstanding, respectively		2,805			5
Additional paid in capital		18,143,874			15,595,045
Accumulated deficit		(21,395,725	)		(20,663,071	)

Total Stockholders’ deficiency		(2,249,046	)		(5,068,021	)

TOTAL LIABILITIES and STOCKHOLDERS’ DEFICIENCY	$	333,864		$	416,622

The accompanying notes are an integral part of this statement.

MILLENNIUM PRIME, INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended			Three months ended
	December 31, 2009			December 31, 2008

Net sales	$	0		$	0
Cost of sales		0			0

Gross profit		0			0

General and administrative expenses		610,156			10,000

Loss from operations		(610,156	)		(10,000	)

Other income and (expense)
Interest income		6,255			0
Valuation allowance		(46,255	)		0
Interest and penalties expense		(82,498	)		(70,846	)

Loss before provision for income taxes		(732,654	)		(80,846	)
Provision for income taxes		0			0

NET LOSS	$	(732,654	)	$	(80,846	)

Basic and diluted earnings (loss) per share	$	(2 ,028	)	$	(2,904	)

Weighted-average shares outstanding- basic and diluted		361,215			27,841

The accompanying notes are an integral part of this statement.

MILLENNIUM PRIME, INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three months ended			Three months ended
	December 31, 2009			December 31, 2008
Cash flows from operating activities
Net loss	$	(732,654	)	$	(80,846	)
Valuation allowance		46,255			0
Shares issued for services		505,000			0
Changes in assets and liabilities
Accounts payable and accrued expense		38,641			80,846
Net cash used in operating activities		(142,758	)		0

Cash flows from investing activities
Increase in notes receivable		(40,000	)
Net cash used in investing activities		(40,000	)		0

Cash flows from financing activities
Issuance of convertible debentures		100,000			0
Net cash provided by financing activities		100,000			0

NET INCREASE (DECREASE) IN CASH		(82,758	)		0
Cash at beginning of period		416,622			0

Cash at end of period	$	333,864		$	0

Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest		0			0
Taxes		0			0
Noncash investing and financing transactions:
Equity issued for services and debt	$	505,000			0
Debt converted to equity	$	3,046,629			0

The accompanying notes are an integral part of this statement.

MILLENNIUM PRIME, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Millennium Prime, Inc. (the "Company") included herein have been prepared in accordance with generally accepted accounting principles for interim period reporting in conjunction with the instructions to Form 10-Q. Accordingly, these statements do not include all of the information required by generally accepted accounting principles for annual financial statements, and are subject to year-end adjustments. In the opinion of management, all known adjustments (consisting of normal recurring accruals and reserves) necessary to present fairly the financial position, results of operations and cash flows for the three month period ended December 31, 2009 have been included. The interim statements should be read in conjunction with the financial statements and related notes included in the Company's annual report on Form 10-K for the year ended September 30, 2009.

The financial statements set forth herein represent the operations of Millennium Prime, Inc. and its subsidiaries for the three month period ending December 31, 2009. The operating results for the three months ended December 31,2009 are not necessarily indicative of the results to be expected for the full year.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Primarily due to the lack of financing, Millennium Prime, Inc. (formerly known as Genio Group, Inc. and subsidiaries) referred to herein as "Millennium" or the "Company" has closed all operations and terminated all of its employees.

We are a developmental corporation that is developing innovative lifestyle brands for the Generation-Y demographic. Our focus is on marketing products for the beverage, apparel and general merchandise categories where we can achieve a clear and authentic market position. We target consumers who live a lifestyle filled with high style, artistic edge and a demand for the best and participate in current trends through premium products that embody the values and aspirations of the Millennial generation & beyond. In addition to organic growth, we will grow via acquisition of new brands, or partnership with existing brands, to bolster our beverage, apparel and lifestyle merchandise business lines serving our Millennial trendsetter focused strategies.

One of our product companies, EntMark Partners, assist the entertainment industry in marketing specific projects and events. EntMark Partners mission is to empower small and large artists and companies with the ability to optimize the revenue they make from individual events through interaction via cellphone messaging. By utilizing their Cell Phone Text Based Contest Program, we can enable artists and event organizers to reach their fan base daily on a broader and yet more focused basis.

MILLENNIUM PRIME, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company had a net working capital deficiency of $2.2 million and a stockholders' deficiency of $2.2 million at December 31, 2009 and negative cash flow from operations for the three months ended December 31, 2009. The Company is in default under its line of credit. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management expects to incur additional losses in the foreseeable future and recognizes the need to raise capital to remain viable. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

STOCK OPTIONS AND WARRANTS

The Company adopted the accounting guidance for Share-Based Payments. Under this application, the Company is required to record compensation expense using a fair-value-based measurement method for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. Per the provisions of this accounting guidance, the Company has adopted the policy to recognize compensation expense on a straight-line attribution method.

The Company had no issuances of stock options or warrants in the past two years, nor have any such prior issued options or warrants vest in the past two years.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value measurement provision defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is a relevant measurement attribute.

Valuation techniques for fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our best estimate, considering all relevant information. These valuation techniques involve some level of management estimation and judgment. The valuation process to determine fair value also includes making appropriate adjustments to the valuation model outputs to consider risk factors.

The fair value hierarchy of our inputs used in the determination of fair value for assets and liabilities during the current period consists of three levels. Level 1 inputs are comprised of unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs incorporate our own best estimate of what market participants would use in pricing the asset or liability at the measurement date where consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. If inputs used to measure an asset or liability fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the asset or liability. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

We are unable to determine the fair value of the legacy accounts payables, debentures in default and the line of credit payable. We have significant legacy accounts payable balances that are at least four years old and that we believe will never require a financial payment for a variety of reasons. Management is currently assessing the fair value of these payables.

The carrying value of our cash and cash equivalents, accounts payable and other current liabilities approximate fair value because of their short-term maturity. All of our other significant financial assets, financial liabilities and equity instruments are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions which affect the reporting of assets and liabilities as of the dates of the financial statements and revenues and expenses during the reporting period. These estimates primarily relate to the deferred tax asset and debt valuations. Actual results could differ from these estimates.

MILLENNIUM PRIME, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

REVERSE STOCK SPLIT

The Company effectuate a 2000 for 1 reverse stock split on December 31, 2009. All per share and share data have been retroactively presented as if this reverse stock split occurred at the beginning of the periods presented.

NEW ACCOUNTING PRONOUNCEMENTS

Revenue Recognition – Multiple Deliverable Revenue Arrangements

In October 2009, the FASB issued guidance for Revenue Recognition – Multiple Deliverable Revenue Arrangements ( Subtopic 605-25 ) “Subtopic”. This accounting standards update establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue – generating activities. Vendors often provide multiple products or services to their customers. Those deliverables often are provided at different points in time or over different time periods. Specifically, this Subtopic addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. The amendments in this guidance will affect the accounting and reporting for all vendors that enter into multiple-deliverable arrangements with their customers when those arrangements are within the scope of this Subtopic.

This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after June 15, 2010. Earlier adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity’s fiscal year, the entity will apply the amendments under this Subtopic retrospectively from the beginning of the entity’s fiscal year. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. Management believes this Statement will have no impact on the financial statements of the Company once adopted.

All other issued accounting pronouncement but not yet effective have been reviewed and are not deemed to have a material financial impact on the Company once adopted.

MILLENNIUM PRIME, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – NOTES RECEIVABLE

The Company made a number of short term loans to Bong Spirit Imports, LLC. Approximately $288,000 of the loans have an interest rate of 10% per annum and mature on March 1 2010. These loans are secured by a security agreement in the equipment, fixtures, inventory and accounts receivable of Bong Spirit Imports, LLC. Due to uncertainty concerning the priority of the security interest, the Company has fully reserved these notes as of December 31, 2009.

NOTE 4 - CONVERTIBLE DEBENTURES AND OTHER - SUBSTANTIALLY ALL SUCH DEBT IS IN DEFAULT AS OF JANUARY 1, 2007.

The Company had authorized and sold $2,300,000 of 8% convertible debenture due December 31, 2006 (debentures). Interest is payable quarterly in arrears, at the Company's option, in cash or shares of Company common stock. The Company is required to provide the debenture holders with 20 days prior written notice of the Company's election to issue common stock in lieu of cash. Interest to date has never been paid and the liability has been accrued. There was a late fee of 18% on the unpaid interest.

The debentures are convertible into shares of Company common stock at a fixed conversion price of $15.00 per share except for $100,000, which is convertible into shares of the Company's common stock at $500.00 per share. The terms of the debentures prohibit conversion if it would result in the holder, together with its affiliates, beneficially owning in excess of 9.99% of outstanding shares of the Company's common stock. A holder may waive the 9.99% limitation upon 61 days prior written notice to the Company.

The debentures provide for a prepayment penalty in the amount of 120% of principal.

One debenture holder has the right to appoint such number of directors of the Company as will constitute a majority of the Board of Directors. This right expires when the outstanding debentures have been fully converted or paid in full.

In conjunction with the sale of the debentures, certain warrants were issued to purchase shares of common stock of the Company, but have since been cancelled in the year ended September 30, 2009.

The Company has granted registration rights to the debenture holders which require the Company to file a registration statement with the Securities and Exchange Commission covering the shares of common stock issuable upon conversion of the debentures and exercise of the warrants. The registration of the securities is to coincide with the date of the conversion of the debentures and the exercise of the warrants.

Conversion of the debentures are subject to the ownership limitation.

During the year ended September 30, 2009, certain debenture holders converted $333,750 of such debentures for 22,250 shares of common stock, which was the fair value of such shares issued.

During the period ended December 31, 2009, certain debenture holders converted $1,760,000 of such debentures together with accrued interest penalties and advances for 500,000 shares of common stock, which was the fair value of such shares issue

The conversion of all of the remaining debentures excluding interest and exercise of all of the warrants would result in the issuance of approximately an additional 21,000 shares of common stock.

MILLENNIUM PRIME, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

LINE OF CREDIT

On May 4, 2004 the Company entered into a loan and security agreement with IIG Capital, LLC, as agent for IIG Trade Opportunities Fund N.V., as lender. The negotiated outstanding balance under the line of credit at March 31, 2008 was $150,000.

The Company is in default under this agreement. In December 2005, the Company agreed to settled its debt to IIG by the immediate payment of $50,000 in cash, the issuance of a $25,000 note due on March 31, 2006 and the conversion of approximately $125,000 of past due fees and interest into a convertible debenture on terms similar to those of the Company's other convertible debentures. As of December 31, 2009, the note and the debentures have not been issued.

NOTE 5 - CONVERTIBLE DEBENTURES – NEWLY ISSUED

The Company issued $875,000.00 of Series A 8% convertible debentures. The Series A debentures are due and payable on the earlier of (a) six months from the date of issuance or (b) when such amounts are declared due and payable by the holder or automatically due and payable upon or after an event of default (as defined in the debenture). Each debenture is convertible into a number of shares of Company common stock equal to the amount of debenture divided by the conversion price of $1,500, subject to adjustment in the event of a stock split or subdivision.

NOTE 6 – EQUITY TRANSACTIONS

During December 2009, Convertible debenture holders converted principal plus accrued interest, advances and penalties in the amount of $3,046,629, for 500,000 shares of common stock.

On October 29, 2009, the Company filed an amendment to its Certificate of Incorporation to (i) change its name to Millennium Prime, Inc.; (ii) effect a reverse split of all of the outstanding shares of its Common Stock at a ratio of one-for-two thousand (1 for 2000); increase our authorized Common Stock from Two Hundred Million (200,000,000) shares, par value $.0001 to Two Hundred Fifty Million (250,000,000) shares, par value $.0001; and (iv) authorize Ten Million (10,000,000) shares of Preferred Stock, par value $1.00 per share, with such designation rights and preferences as may be determined from time to time by our Board of Directors. Concurrently, with the foregoing, the Board of Directors approved the creation of One Million (1,000,000) shares of Series A Preferred Stock with the rights and preferences defined in the amendment to our Certificate of Incorporation including the right of each issued and outstanding share of Series A Preferred Stock to have the number of votes equal to the result of: (a) the number of shares of our Common Stock issued and outstanding at the time of such vote multiplied by 2.33334; and divided by (b) the total number of Series A Preferred shares issued and outstanding at the time of the vote.

As a result of the 1 for 2000 reverse stock split the number of issued and outstanding shares of our Common Stock was decreased from 99,981,787 to 51,284, after issuing one (1) share of our Common Stock to stockholders who would be entitled to a fractional share as a result of the reverse stock split.

On December 31, 2009, the Company executed a Restated and Amended Asset Purchase Agreement (“Amended Agreement”), that amended the original Asset Purchase Agreement dated June 21, 2009 by and among the Company, Millennium Prime Nevada and the shareholders of Millennium Prime Nevada. The Amended Agreement provided for an increase in the number of common shares issuable to the Millennium Prime shareholders. As a result of the Amended Agreement the Company acquires certain assets from Millennium Prime in exchange for: (i) an aggregate of One Million (1,000,000) restricted shares of the Company’s Series A Preferred Stock, $1.00 par value per share (the “Series A Preferred Stock”); and (ii) an aggregate of Twenty-Seven Million (27,000,000) restricted shares of the Company’s common stock $0.0001 par value per share. This transaction, together with the 2001 reverse stock split discussed above and the conversion of convertible debt discussed below have been accounted for as a recapitalization of the Company at December 31, 2009.

The Company completed the acquisition on December 31, 2009, at which time each of the current officers and directors of the Company resigned and John F. Marchese the President of Millennium Prime Nevada was elected to the Company’s board of directors and was appointed the Company’s President and Chief Executive Officer.

On December 31, 2009, the Company issued an aggregate of 500,000 shares of its Common Stock to Steven A. Horowitz, the Company’s former sole officer and director, and his designees and assigns. The shares were issued in consideration of Mr. Horowitz’ efforts in settling some of the Company’s indebtedness and for his General Release, releasing the Company from any and all past, present and future obligations.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following contains forward-looking statements based on current expectations, estimates and projections about our industry, management's beliefs, and assumptions made by management. All statements, trends, analyses and other information contained in this report relative to trends in our financial condition and liquidity, as well as other statements, including, but not limited to, words such as "anticipate," "believe," "plan," "intend," "expect," "predict," and other similar expressions constitute those statements. These statements are not guarantees of future performance and are subject to risks and uncertainties that are difficult to predict. Accordingly, actual results may differ materially from those anticipated or expressed in the statements.

OVERVIEW

During the month of January 2005 our Board of Directors determined to wind down the company's operations as conducted. At that time, we released all of our employees other than our Chief Executive Officer. We are currently in the process of finalizing our merger with Millennium Prime, Inc .

The current focus of the Company is as a developmental corporation that is developing innovative lifestyle brands for the Generation-Y demographic. Our focus is on marketing products for the beverage, apparel and general merchandise categories where we can achieve a clear and authentic market position. We target consumers who live a lifestyle filled with high style, artistic edge and a demand for the best and participate in current trends through premium products that embody the values and aspirations of the Millennial generation & beyond. In addition to organic growth, we will grow via acquisition of new brands, or partnership with existing brands, to bolster our beverage, apparel and lifestyle merchandise business lines serving our Millennial trendsetter focused strategies.

We intend to create a cultural connection with our customers and offer lifestyle participation to our consumers and our brands via the physical as well as the virtual world (internet, web, facebook, twitter, mobile, etc).

RESULTS OF OPERATIONS

Because we have not had any material business operations, other then the financing of Bong Spirit Imports, LLC. , since the quarter ended December 31, 2004, we did not have any revenues during the three month periods ended December 31, 2009 and 2008.

General and administrative expenses for the three months ended December 31, 2009 and 2008 were $610,156 and $10,000, respectively consisting of general and administrative expense and interest expense. Included in general and administrative expenses for the three months ended December 31, 2009 was $505,000 of expenses related to the issuance of 500,000 shares of common stock to our former Chairmen and CEO for services and other consideration. Interest expense for the three months ended Decemeber 31, 2009 and 2008 was $82,498 and $70,846, respectively, related to the convertible debentures. Due to uncertainty concerning the priority of the security interest in the Bong Spirit Imports LLC, the Company has fully reserved these notes as of December 31, 2009.

LIQUIDITY AND CAPITAL RESOURCES

Convertible debt in the amount of $306,250 is in default as of January 1, 2007. As of December 31, 2009, we had $333,864 in cash and cash equivalents. Net cash used in operations for the three months ended December 31, 2009 was $142,758 consisting of a net loss of ($732,654) offset by non cash items and a decrease in accounts payable and accrued expenses of $38,641. The Company issued $100,000. in Series A 8% convertible debentures during the period ended December 31, 2009. The Company invested $40,000 in notes receivable during the period ended December 31, 2009.

At December 31, 2009 we had total assets of $333,864 and an accumulated deficit of $21,395,725 and the report from our independent registered public accounting firm on our audited financial statements at September 30, 2009 contains an explanatory paragraph regarding doubt as to our ability to continue as a going concern as a result of our significant recurring losses from operations since inception. As discussed earlier in this report, in the beginning of fiscal year 2005 we terminated our business operations and are now seeking to acquire assets or shares of an entity actively engaged in a business which generates revenues, or has the potential to generate revenues, in exchange for our securities. We cannot predict when, if ever, we will be successful in implementing this plan and, accordingly, we may be required to cease operations at any time. We do not have sufficient working capital to pay our operating costs for the next 12 months. We will require additional funds to pay our legal, accounting and other fees associated with the company and our filing obligations under federal securities laws, as well as to pay our other accounts payable generated in the ordinary course of our business. We will also need funds to satisfy the approximate $2.6 million of obligations on our balance sheet at December 31, 2009. We have no commitments from any party to provide such funds to us except for the convertible debentures. If we are unable to obtain additional capital as necessary, until such time as we are able to conclude a business combination, we will be unable to satisfy our obligations and otherwise continue to meet our reporting obligations under federal securities laws. In that event, our stock would no longer be quoted on the OTC Bulletin Board and our ability to consummate a business combination upon terms and conditions which would be beneficial to our existing stockholders would be adversely affected.

OFF-BALANCE SHEET ARRANGEMENTS

We had no off-balance sheet arrangements as of December 31, 2009.

ITEM 4 . CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Our sole Chief Executive Officer and Chief Financial Officer who serves as our principal financial and accounting officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, and as discussed in greater detail below, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective:

• to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and

• to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our CEO and our Treasurer, to allow timely decisions regarding required disclosure.

During the analysis of our internal controls at December 31, 2009 in connection with our implementation of Section 404 of the Sarbanes-Oxley Act of 2002, we identified a number of controls, the adoption of which are material to our internal control environment and critical to providing reasonable assurance that any potential errors could be detected. Our analysis identified control deficiencies related to the start up of a new business venture or one time or first time transactions. While we have taken certain remedial steps the recent three months ended December 31, 2009 to correct these control deficiencies, we have an inadequate number of personnel with the requisite expertise in generally accepted accounting principles to ensure the proper application thereof. Due to the nature of these material weaknesses in our internal control over financial reporting, there is more than a remote likelihood that misstatements which could be material to our annual or interim financial statements could occur that would not be prevented or detected.

Changes in Internal Control over Financial Reporting. There no other changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed under the caption “Risk Factors” in Part I, "Item 1. Description of Business" in our Annual Report on Form 10-KSB for the year ended September 30, 2009 which could materially affect our business prospects, financial condition or future results. There have been no other material changes during the three months ended December 31, 2009 to the risk factors discussed in the periodic report noted above.

ITEM 6. EXHIBITS

Exhibits:

Exhibit No.

Description

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of the Chief Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Millennium Prime, Inc.
		(Registrant)

Date: February 16, 2010		/s/ John Marchese

	Chief Executive and Financial Officer (principal executive and accounting officer)