Millennium Sustainable Ventures Corp. - Quarter Report: 2007 June (Form 10-Q)

WWW.EXFILE.COM, INC. -- MILLENIUM INDIA ACQUISITION COMPANY INC. -- FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

S	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2007

*	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: 001-32931

MILLENNIUM INDIA ACQUISITION COMPANY INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	20-4531310
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)



330 East 38th Street, Suite 46C New York, New York 10016
(Address of Principal Executive Offices, Including Zip Code)



(212) 681-6763
(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 S No *

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

Large accelerated filer *

Accelerated filer *

Non-accelerated filer S

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

As of August 9, 2007, 9,062,500 shares of common stock, par value $0.0001 per share, were issued and outstanding.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

Millennium India Acquisition Company, Inc.

Condensed Balance Sheets

	June 30, 2007			December 31, 2006
	(unaudited)			(Note 2)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,241,933		$	443,516
U.S. Government Securities held in Trust Fund		57,161,795			57,004,924
Total current assets		58,403,728			57,448,440
Deferred acquisition costs		153,166			—
Other assets		13,110			14,314
Total assets	$	58,570,004		$	57,462,754

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable and accrued expenses	$	670,213		$	101,364
Accrued acquisition costs		116,546			—
Income taxes payable		339,090			194,000
Deferred underwriting fees		1,557,500			1,557,500
Total current liabilities		2,683,349			1,852,864
Common stock, subject to possible conversion to cash (1,449,275 shares at conversion value) (Note 4)		11,419,500			11,326,834
Value of private placement warrants, subject to possible rescission		2,250,000			2,250,000

Commitments

Stockholders’ Equity:
Preferred stock, par value $.0001 per share, 5,000 shares authorized, 0 shares issued		—			—
Common stock, par value $.0001 per share, 45,000,000 shares authorized, 7,613,225 shares issued and outstanding (excluding 1,449,275 shares subject to possible conversion)		761			761
Additional paid-in capital		44,278,499			44,371,165
Accumulated deficit		(2,062,105	)		(2,338,870	)
Total stockholders’ equity		42,217,155			42,033,056
Total liabilities and stockholders’ equity	$	58,570,004		$	57,462,754

See Accompanying Notes to Condensed Financial Statements

- 2 -

Millennium India Acquisition Company, Inc.

Condensed Statements of Operations

	For the three months ended June 30, 2007			For the three months ended June 30, 2006			For the six months ended June 30, 2007			From inception (March 15, 2006) to June 30, 2006
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenue:
Interest income	$	10,683		$	—		$	17,119		$	—
Interest income on Trust Fund		737,628			—			1,498,264			—
Total revenue		748,311			—			1,515,383			—

Operating expenses:
General and administrative expenses		314,461			—			1,093,528			—
Formation and operating costs		—			32,212			—			37,712
Charge related to sale of common stock		—			2,700,549			—			2,700,549
Total operating expenses		(314,461	)		(2,732,761	)		(1,093,528	)		(2,738,261	)

Income (Loss) before provision for income taxes		433,850			(2,732,761	)		421,855			(2,738,261	)

Provision for income taxes		145,090			—			145,090			—

Net income (loss)		288,760			(2,732,761	)		276,765			(2,738,261	)

Accretion of Trust Fund relating to common stock, subject to possible conversion to cash (Note 4)		(92,666	)		—			(92,666	)		—

Net income (loss) accorded to common stockholders	$	196,094		$	(2,732,761	)	$	184,099		$	(2,738,261	)

Weighted average number of shares outstanding
Basic		7,613,225			1,812,500			7,613,225			1,812,500
Diluted		9,498,117			1,812,500			9,498,117			1,812,500

Net income (loss) per share:
Basic	$	0.03		$	(1.51	)	$	0.02		$	(1.51	)
Diluted	$	0.02		$	(1.51	)	$	0.02		$	(1.51	)

Number of shares outstanding subject to possible conversion, basic and diluted		1,449,275			—			1,449,275			—

Net income per share subject to possible conversion, basic and diluted	$	0.06			—		$	0.06			—

See Accompanying Notes to Condensed Financial Statements

- 3 -

Millennium India Acquisition Company, Inc.

Condensed Statements of Cash Flows

	For the six months ended June 30, 2007			From inception (March 15, 2006) to June 30, 2006
	(unaudited)			(unaudited)
OPERATING ACTIVITIES
Net income (loss)	$	276,765		$	(2,738,261	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Charge related to sale of common stock		—			2,700,549
Changes in operating assets and liabilities:
Accrued interest income on Trust Fund		(156,871	)		—
Other assets		1,204			—
Deferred acquisition costs		(36,620	)		—
Accounts payable and accrued expenses		568,849			40,514
Income taxes payable		145,090			—
Net cash provided by operating activities		798,417			2,802

FINANCING ACTIVITIES
Proceeds from issuance of common stock to initial stockholders		—			29,000
Proceeds from notes payable to initial stockholders		—			144,000
Proceeds from sale of warrants		—			2,250,000
Payment of registration costs					(142,403	)
Net cash provided by financing activities		—			2,280,597

Net increase in cash and cash equivalents		798,417			2,283,399

Cash and Cash Equivalents
Beginning of period		443,516			—
End of period	$	1,241,933		$	2,283,399

Supplemental disclosure of non-cash activity:
Accrued acquisition costs	$	116,546		$	—
Accrued registration costs	$	—		$	356,462

See Accompanying Notes to Condensed Financial Statements

- 4 -

Millennium India Acquisition Company Inc.

Notes to Condensed Financial Statements

NOTE 1 — DISCUSSION OF THE COMPANY’S ACTIVITIES

Organization and activities– Millennium India Acquisition Company Inc. (the “Company”) was incorporated in Delaware on March 15, 2006 for the purpose of effecting a merger, capital stock exchange, asset acquisition or other similar transaction (a “Business Combination”) with an operating business or businesses that have operations primarily in India (a “Target Business”).

On May 12, 2007, the Company entered into two substantially identical share subscription agreements to acquire a 14.9% equity interest in each of SMC Global Securities Limited and SAM Global Securities Limited, that collectively comprise the SMC Group of Companies (“SMC”), for the aggregate fixed sum of INR 1,638,996,077, or approximately $40.57 million at an exchange rate of $1.00 = INR 40.40 as of August 9, 2007 using the Noon Buying Rate of the Federal Reserve Bank of New York. On June 6, 2007, the Company acquired options, exercisable within one month of the closing of the share acquisition transaction, to require SMC to initiate regulatory approval proceedings that would permit SMC to issue Global Depositary Shares, in which issuance the Company has the right to subscribe to such number of Global Depositary Receipts as would provide the Company, on conversion of the Global Depositary Shares into equity shares, at the same valuation, with an additional 6% equity interest in SMC.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements– The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the financial statements do not include all information and notes required by accounting principles generally accepted in the United States of America for complete annual financial statements. In the opinion of our management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the year ending December 31, 2007 or for any subsequent period. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements as of and for the year ended December 31, 2006 included in its annual report on Form 10-K filed with the SEC on March 30, 2007. The balance sheet data as of December 31, 2006 included in this Form 10-Q is derived from those audited financial statements.

Cash and Cash Equivalents– Cash and cash equivalents are deposits with financial institutions as well as short term money market instruments with maturities of three months or less when purchased.

Deferred Acquisition Costs– Costs related to proposed acquisitions are capitalized. In the event the acquisition does not occur, the costs are expensed.

- 5 -

Millennium India Acquisition Company Inc.

Notes to Condensed Financial Statements

Net Income (Loss) Per Share– Net income (loss) per share is computed based on the weighted average number of shares of common stock and common stock, subject to conversion outstanding.

Basic income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average common shares outstanding for the period. Basic net income (loss) per share is calculated by dividing net income (loss) attributable to common stockholders by their weighted average number of common shares outstanding during the period. Calculation of the weighted average common shares outstanding during the period is based on 2,125,000 initial shares outstanding throughout the period from March 15, 2006 (inception) to June 30, 2007, 312,500 initial shares cancelled by the Company on July 20, 2006 (retroactively restated to July 25, 2006) and 7,250,000 common shares outstanding after the completion of the Offering on July 25, 2006. Basic net income per share subject to possible conversion is calculated by dividing accretion of Trust Fund relating to common stock subject to possible conversion by 1,449,275 common shares subject to possible conversion. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Income Taxes– The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109 “Accounting for Income Taxes”. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

Reclassifications– Certain prior period amounts have been reclassified to conform to the current period presentation.

Use of Estimates– The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements– In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in an income tax return. FIN 48 also provides guidance in derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48 did not have an effect on the Company’s balance sheets, statements of operations or cash flows.

In September 2006, the FASB issued Statement No. 157 “Fair Value Measurements” (“SFAS No. 157”). This Statement provides guidance for using fair value to measure assets and liabilities. The standard also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS No. 157 is effective for financial statements issued in fiscal years beginning after November 15, 2007 and to

- 6 -

Millennium India Acquisition Company Inc.

Notes to Condensed Financial Statements

interim periods within those fiscal years. The Company does not believe the adoption of SFAS No. 157 will have a material impact, if any, on its financial statements.

In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 provides a “Fair Value Option” under which a company may irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and liabilities. SFAS No. 159 will be available on a contract-by-contract basis with changes in fair value recognized in earnings as those changes occur. SFAS No. 159 is effective for fiscal years after November 15, 2007. SFAS No. 159 also allows early adoption provided that the entity also adopts the requirements of SFAS No. 157. The Company does not believe the adoption of SFAS No. 159 will have a material impact, if any, on its financial statements.

NOTE 3 — INCOME TAXES

No provision for state and local income taxes has been made since the Company was formed as a vehicle to effect a Business Combination and, as a result, does not conduct operations and is not engaged in a trade or business in any state. The Company records a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions.

NOTE 4 — STOCKHOLDERS’ EQUITY

For the six months ended June 30, 2007, Trust Fund interest income accretion of $92,666 was allocated to common stock, subject to possible conversion to cash on the accompanying condensed balance sheets and a corresponding debit of $92,666 was recorded to additional paid-in capital.

- 7 -

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of our company, including, without limitation, statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates,” “estimates” or similar expressions. We believe it is important to communicate management’s expectations to our investors. However, there may be events in the future that we are not able to accurately predict or over which we have no control. The risk factors listed in our Annual Report on Form 10-K for the year ended December 31, 2006, as well as any other cautionary language in this quarterly report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of the events described in these risk factors and elsewhere in this quarterly report could have a material adverse effect on our business, operating results and financial condition. An example of these risks include general business conditions, economic uncertainty or slowdown, and the effects of governmental regulation that could adversely affect our future results of operations.

We do not undertake any obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date that this quarterly report is filed with the SEC or to reflect the occurrence of unanticipated events, except as required by law.

The following discussion should be read in conjunction with our condensed financial statements and footnotes thereto contained in this report.

Overview

We were formed on March 15, 2006 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business or businesses operating primarily in India.

On July 25, 2006, we completed our initial public offering of 7,250,000 units at a price of $8.00 per unit. We received proceeds of $52,855,000 from our initial public offering, which was net of $3,587,500 in underwriting fees and other expenses paid in cash at the closing and deferred underwriting fees and the representative’s non-accountable expense allowance of $1,557,500. The deferred portion of the underwriting fees and representative’s non-accountable expense allowance will be included in additional paid-in capital and will only be paid upon our consummation of a business combination. Each unit consists of one share of our common stock and one warrant. Additionally, on June 30, 2006, we sold 2,250,000 warrants, at a price of $1.00 per warrant, for an aggregate purchase price of $2,250,000 to our officers, certain of our directors, other persons who owned shares of our common stock prior to such sale, and, in some instances, to their respective affiliates. The aggregate net proceeds of $56,662,500 from our initial public offering and our private placement offering have been placed in a trust account.

- 8 -

For additional information concerning the proceeds generated in our initial public offering and a discussion of the intended use of such proceeds, we refer you to Note 1 of the financial statements included in our Annual Report on Form 10-K (File Number 001-32931) for the year ended December 31, 2006 filed with the SEC on March 30, 2007 (our “2006 Annual Report”).

Upon the closing of our initial public offering, we sold and issued an option, for $100, to the representative of the underwriters, to purchase up to 500,000 units, at an exercise price of $10.80 per unit. For a description of the representative’s purchase option, we refer you to note 7 of the financial statements included in our 2006 Annual Report.

We believe that we have sufficient available funds to complete our efforts to effect a business combination with an operating business.

On May 12, 2007, we entered into two substantially identical share subscription agreements to acquire a 14.9% equity interest in each of SMC Global Securities Limited and SAM Global Securities Limited, that collectively comprise the SMC Group of Companies (“SMC”), for the aggregate fixed sum of INR 1,638,996,077, or approximately $40.57 million at an exchange rate of $1.00 = INR 40.40 as of August 9, 2007 using the Noon Buying Rate of the Federal Reserve Bank of New York. On June 6, 2007, we acquired options, exercisable within one month of the closing of the share acquisition transaction, to require SMC to initiate regulatory approval proceedings that would permit SMC to issue Global Depositary Shares, in which issuance we would have the right to subscribe to such number of Global Depositary Receipts as would provide us, on conversion of the Global Depositary Shares into equity shares, at the same valuation, with an additional 6% interest in SMC.

Results of Operations

Net income for the three months ended June 30, 2007 of $288,760 consisted of interest income on the Trust Fund investment of $737,628 and interest on cash and cash equivalents of $10,683, offset by general and administrative expenses of $314,461, which includes professional fees of $76,854, travel and entertainment expenses of $154,577, rent and office expenses of $35,530, Delaware franchise tax of $18,200, and $29,300 related to other operating expenses.

For the three months ended June 30, 2006, we had a net loss of $2,732,761 which consisted of a charge related to the sale of common stock of $2,700,549, general and administrative expenses of $32,212, which includes professional fees of $27,500, Delaware franchise tax of $4,364, and $348 related to other operating expenses.

Net income for the six months ended June 30, 2007 of $276,765 consisted of interest income on the Trust Fund investment of $1,498,264 and interest on cash and cash equivalents of $17,119, offset by general and administrative expenses of $1,093,528, which includes professional fees of $663,619, travel and entertainment expenses of $273,374, rent and office expenses of $71,411, Delaware franchise tax of $36,000, and $49,124 related to other operating expenses.

For the period from inception (March 15, 2006) to June 30, 2006, we had a net loss of $2,738,261 which consisted of a charge related to the sale of common stock of $2,700,549,

- 9 -

general and administrative expenses of $37,712, which includes professional fees of $33,000, Delaware franchise tax of $4,364, and $348 related to other operating expenses.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. Our exposure to market risk is limited to interest income sensitivity with respect to the funds placed in the trust account. However, the funds held in our trust account have been invested only in U.S. “government securities,” defined as any Treasury Bill issued by the United States having a maturity of one hundred and eighty days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, so we are not deemed to be an investment company under the Investment Company Act. Thus, we are subject to market risk primarily through the effect of changes in interest rates on government securities. The effect of other changes, such as foreign exchange rates, commodity prices and/or equity prices, does not pose significant market risk to us.

Item 4.

Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2007.

There has not been any change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

- 10 -

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

We are not a party to any pending legal proceedings.

Item 1A.

Risk Factors

There have been no material changes to the risk factors previously disclosed in our annual report on Form 10-K for the year ended December 31, 2006.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

On July 25, 2006, we completed our initial public offering of 7,250,000 units at a price of $8.00 per unit. We received proceeds of $52,855,000 from our initial public offering, which was net of $3,587,500 in underwriting fees and other expenses paid in cash at the closing and deferred underwriting fees and the representative’s non-accountable expense allowance of $1,557,500. The deferred portion of the underwriting fees and representative’s non-accountable expense allowance is included in additional paid-in capital and will only be paid upon our consummation of a business combination. Each unit consists of one share of our common stock and one warrant to purchase one share of common stock. Additionally, on June 30, 2006, we sold 2,250,000 warrants, at a price of $1.00 per warrant, for an aggregate purchase price of $2,250,000 to our officers, certain of our directors, other persons who owned shares of our common stock prior to such sale, and, in some instances, to their respective affiliates. The aggregate net proceeds of $56,662,500 from our initial public offering and our private placement offering have been placed in a trust account. Up to an aggregate of $1,975,000 of the interest accrued on the amounts held in the trust account (net of taxes payable) is available to us to fund a portion of our working capital requirements. Ladenburg Thalmann & Co. Inc. acted as representative for the underwriters in connection with our initial public offering.

Our founders advanced an aggregate of $148,000 to us, which was used to pay a portion of the expenses of the initial public offering including SEC registration fee, NASD filing fee, the non-refundable portion of the American Stock Exchange listing fee, and a portion of the non-accountable expense allowance, legal and audit fees and expenses. The loans were repaid out of the proceeds of the initial offering that was not placed in the trust.

Item 3.

Defaults upon Senior Securities

Not applicable.

Item 4.

Submission of Matters to a Vote of the Security Holders

Not applicable.

Item 5.

Other Information

Not applicable.

- 11 -

Item 6.

Exhibits

(a)

Exhibits.

	Exhibit Number	Exhibit Description

	31.1	Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2	Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1	Certification by Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

- 12 -

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.

	MILLENNIUM INDIA ACQUISITION COMPANY INC.


	By:	/s/ F. Jacob Cherian
		F. Jacob Cherian
		President and Chief Executive Officer
		(Principal Executive Officer)



	By:	/s/ Suhel Kanuga
		Suhel Kanuga
		Executive Vice President, Chief Financial Officer, Treasurer and Secretary
		(Principal Financial Officer)

Date:

August 13, 2007

- 13 -