10QSB 1 form10qsb.htm Filed by Automated Filing Services Inc. (604) 609-0244 - Clyvia Inc. - Form 10-QSB

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)

[X]   Quarterly Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the quarterly period ended July 31, 2007

[   ]  Transition Report Under Section 13 Or 15(d) Of The Exchange Act

For the transition period from ________ to ________

COMMISSION FILE NUMBER 000-50930

CLYVIA INC.
(Exact name of small business issuer as specified in its charter)

NEVADA 98-0415276
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

1480 Gulf Road, #204
Point Roberts, WA 98281
(Address of principal executive offices)

(360) 306-1133
(Issuer's telephone number)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 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 shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes [   ]   No [X]

State the number of shares outstanding of each of the issuer's classes of common equity, as of the
latest practicable date: As of September 13, 2007, the Issuer had 102,351,779 Shares of Common
Stock outstanding.

Transitional Small Business Disclosure Format (check one): Yes [   ]   No [X]


PART I - FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS.

2


 

 

 

 

CLYVIA INC.

(formerly Rapa Mining Inc.)

(A Development Stage Company)

 

CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

 

July 31, 2007
(Unaudited)


CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. Dollars)
(Unaudited)

    July 31,  
    2007  
       
ASSETS      
       
Current Assets      
     Other receivables $  97,528  
     Other receivables –related parties (Note 7)   4,286  
     Prepaid expenses   11,822  
     Deferred tax asset, less valuation allowance $936,250   -  
Total Current Assets   113,636  
       
     Property, plant and equipment (Note 4)   3,272,854  
       
Total Assets $  3,386,490  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
       
Current Liabilities      
     Bank indebtedness $  10,036  
     Accounts payable and accrued liabilities   289,404  
     Accounts payable and accrued liabilities –related parties (Note 7)   124,574  
     Deposit –unearned revenue   20,481  
Total Current Liabilities   444,495  
       
     Loans payable (Note 5)   751,613  
       
Total Liabilities   1,196,108  
       
Commitments (Note 11)      
       
Stockholders’ Equity      
     Common stock (Note 8)      
         Authorized      
               525,000,000 common shares, par value $0.001      
         Issued and outstanding      
               102,351,779 common shares   102,352  
     Additional paid-in capital   14,231,240  
     Accumulated other comprehensive income:      
           Foreign currency cumulative translation adjustment   574,420  
     Deficit accumulated during the development stage   (12,717,630 )
       
Total Stockholders’ Equity   2,190,382  
       
Total Liabilities and Stockholders’ Equity $  3,386,490  

The accompanying notes are an integral part of these consolidated financial statements.

F-2


CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars)
(Unaudited)

    Cumulative                          
    Amounts     Six     Six     Three     Three  
    From Inception     Months     Months     Months     Months  
    (December 21,     Ended     Ended     Ended     Ended  
    2004) to July 31,     July 31,     July 31,     July 31,     July 31,  
    2007     2007     2006     2007     2006  
                               
REVENUE $  13,136   $  13,136   $  -   $  2,845   $  -  
                               
EXPENSES                              
                               
     Amortization   122,264     81,098     11,445     67,174     7,182  
     Management fees   476,489     137,121     126,661     69,646     64,883  
     Professional fees   907,673     232,021     134,829     165,645     61,550  
     Other operating expenses   1,025,692     295,839     216,730     130,437     131,747  
     Stock-based compensation   9,963,954     577,156     -     577,156     -  
     Foreign currency loss   258,502     950     1,465     56     932  
                               
    12,754,574     1,324,185     491,130     1,010,114     266,294  
                               
LOSS BEFORE OTHER ITEMS                              
AND INCOME TAXES   (12,741,438 )   (1,311,049 )   (491,130 )   (1,007,269 )   (266,294 )
                               
OTHER ITEMS                              
     Interest expense   (23,155 )   (14,951 )   -     (11,245 )   -  
     Interest income   23,176     1,309     12,741     380     6,544  
     Miscellaneous income   23,787     13,267     5,498     -     5,434  
                               
LOSS BEFORE INCOME TAXES   (12,717,630 )   (1,311,424 )   (472,891 )   (1,018,134 )   (254,316 )
                               
     Provision for income taxes   -     -     -     -     -  
                               
NET LOSS   (12,717,630 )   (1,311,424 )   (472,891 )   (1,018,134 )   (254,316 )
                               
OTHER COMPREHENSIVE INCOME (LOSS)                              
     Foreign currency translation adjustment   574,420     146,119     39,694     (1,508 )   11,243  
                               
COMPREHENSIVE LOSS $  (12,143,210 ) $  (1,165,305 ) $  (433,197 ) $  (1,019,642 ) $  (243,073 )
                               
                               
BASIC AND DILUTED NET LOSS PER SHARE       $  (0.01 ) $  (0.00 ) $  (0.01 ) $  (0.00 )
                               
WEIGHTED AVERAGE NUMBER OF COMMON                              
SHARES OUTSTANDING         102,351,779     100,700,437     102,351,779     101,071,255  

The accompanying notes are an integral part of these consolidated financial statements.

F-3


CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(Unaudited)

    Cumulative              
    Amounts     Six     Six  
    From Inception     Months     Months  
    (December 21,     Ended     Ended  
    2004) to July 31,     July 31,     July 31,  
    2007     2007     2006  
                   
                   
CASH FLOWS FROM OPERATING ACTIVITIES                  
Net loss for the period $  (12,717,630 ) $  (1,311,424 ) $  (472,891 )
Adjustments to reconcile net loss to cash used in operating activities:                  
     Stock-based compensation   9,963,954     577,156     -  
     Amortization   121,721     80,555     10,011  
Change in operating assets and liabilities                  
     Increase in other receivables   (97,135 )   (61,225 )   (101,288 )
     Increase in other receivables –related parties   (4,209 )   (4,209 )   -  
     Decrease (increase) in prepaid expenses   (7,257 )   29,387     (6,405 )
     Increase in accounts payable and accrued liabilities   501,137     225,741     105,581  
     Increase in accounts payable and accrued liabilities –related parties   123,289     123,289     -  
     Increase in deposit –unearned revenue   20,112     20,112     -  
     Increase in accrued interest payable   22,175     13,970     541  
                   
     Net cash used in operating activities   (2,073,843 )   (306,648 )   (464,451 )
                   
CASH FLOWS FROM INVESTING ACTIVITIES                  
                   
     Acquisition of capital assets   (3,419,162 )   (229,713 )   (2,267,920 )
                   
     Net cash used in investing activities   (3,419,162 )   (229,713 )   (2,267,920 )
                   
CASH FLOWS FROM FINANCING ACTIVITIES                  
                   
     Bank indebtedness   9,855     9,855     -  
     Cash acquired from Clyvia Inc.   7,654     -     -  
     Advances to related parties, net of repayments   -     -     24,686  
     Issuance of common stock for cash   4,383,267     -     1,000,000  
     Proceeds from loans payable   438,052     248,052     190,000  
                   
     Net cash provided by financing activities   4,838,828     257,907     1,214,686  
                   
EFFECT OF FOREIGN CURRENCY TRANSLATION ON                  
CASH DURING THE PERIOD   654,177     6,594     59,183  
                   
NET DECREASE IN CASH   -     (271,860 )   (1,458,502 )
                   
CASH, BEGINNING OF PERIOD   -     271,860     2,089,518  
                   
CASH, END OF PERIOD $  -   $  -   $  631,016  

The accompanying notes are an integral part of these consolidated financial statements.

F-4



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

1.

HISTORY AND ORGANIZATION OF THE COMPANY

   

Clyvia Inc. (formerly Rapa Mining Inc.) (the “Company”) was incorporated on December 11, 2003, under the Laws of the State of Nevada and was in the business of exploring mineral properties. Effective June 16, 2005, the Company acquired 100% of the issued and outstanding shares of Clyvia Technology GmbH (“Clyvia Technology”), a company engaged in the development of a process known as catalytic depolymerization to produce fuel from various forms of waste materials including plastics. The Company has abandoned its mineral property acquisition and exploration business in order to focus its resources on the development of Clyvia Technology’s proprietary technology. The Company is considered to be a development stage company, as it has not generated significant revenues from operations.

   

Effective June 16, 2005, the Company acquired 100% of the issued and outstanding shares of Clyvia Technology from Clyvia Capital Holding GmbH (“Clyvia Capital”) in exchange for an aggregate of 55,000,000 shares of the Company’s common stock. In addition, Brian Cheston transferred 14,000,000 shares of the Company’s common stock already issued and outstanding prior to the transaction to Clyvia Capital in exchange for $10,000. Completion of the acquisition resulted in the former sole shareholder of Clyvia Technology holding the majority of the Company’s issued and outstanding common stock. As a result, the transaction was accounted for as a recapitalization of Clyvia Technology.

   

The unaudited consolidated statements of operations and cash flows of the Company prior to June 16, 2005, are those of Clyvia Technology. The Company’s date of incorporation is considered to be December 21, 2004, the date of inception of Clyvia Technology. Effective September 1, 2005, the Company changed its name from Rapa Mining Inc. to Clyvia Inc.

   

These financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America for interim financial information. The accompanying consolidated financial statements do not include all information and footnote disclosures required by the accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation of financial position, results of operations and cash flows as at July 31, 2007 and for all periods presented, have been included. Interim results for the period ended July 31, 2007 are not necessarily indicative of the results that may be expected for the fiscal year as a whole.

   
2.

GOING CONCERN

   

These consolidated financial statements have been prepared with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions noted below raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

F-5



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

2.

GOING CONCERN (continued)

     

The operations of the Company have primarily been funded by the sale of common stock and loans received. Continued operations of the Company are dependent on the Company’s ability to complete equity financings or generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on reasonable terms to the Company.

     
3.

SIGNIFICANT ACCOUNTING POLICIES

     

The financial statements of the Company have been prepared in conformity with generally accepted accounting principles in the United States of America and are stated in U.S. dollars. The significant accounting policies adopted by the Company are as follows:

     
(a)

Use of estimates

     

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

     
(b)

Foreign currency translation

     

The functional currency of the Company is the U.S. dollar. The Company’s subsidiary, Clyvia Technology, uses the Euro as its functional currency. Accordingly, monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date while non-monetary assets and liabilities are translated at historical rates. Revenue and expense items denominated in a foreign currency are translated at exchange rates prevailing when such items are recognized in the statement of operations. Exchange gains and losses arising on translation of foreign currency items are included in the statement of operations.

     

The Company follows the current rate method of translation with respect to its foreign subsidiary. Accordingly, assets and liabilities are translated into U.S. dollars at the period-end exchange rates while revenue and expenses are translated at the average exchange rates during the period. Related exchange gains and losses are included in a separate component of stockholders’ equity as accumulated other comprehensive income.

     
(c)

Cash and cash equivalents

     

The Company considers cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents.

F-6



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

3.

SIGNIFICANT ACCOUNTING POLICIES (continued)

     
(d)

Prepaid expenses

     

Prepaid expenses consist primarily of prepaid rent and insurance.

     
(e)

Other receivables

     

Other receivables consist primarily of Value Added Tax in Germany.

     
(f)

Property, plant and equipment

     

Property, plant and equipment is recorded at cost. Depreciation is calculated using the straight-line method over the useful lives of the assets. Maintenance and repairs are expensed as incurred while betterments or renewals are capitalized.

     

The Company provides for depreciation over the estimated life of each asset on a straight-line basis over the following periods:


Office equipment 3-13 years
Plant equipment 10-13 years
Laboratory equipment 14 years
Building 33.33 years

(g)      Accounting for the impairment of long-lived assets and long-lived assets to be disposed of

The Company reviews all long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

(h)      Income taxes

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expenses (benefit) result from the net change during the period of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

F-7



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

3.

SIGNIFICANT ACCOUNTING POLICIES (continued)

     
(i)

Fair value of financial instruments

     

The Company's financial instruments consist of cash, other receivables, accounts payable and accrued liabilities and loans payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.

     
(j)

Revenue recognition

     

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Revenue from processing waste is recognized when title passes to the customer and all revenue recognition criteria specified above is met.

     
(k)

Stock-based compensation

     

Effective January 1, 2006, the Company accounts for stock-based compensation issued to employees in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) 123R, “Share- Based Payment.” which superseded Accounting Principles Board (“APB”) Opinion 25, “Accounting for Stock Issued to Employees.

   

The Company accounts for stock-based compensation issued to non-employees in accordance with the provisions of SFAS 123, “Accounting for Stock-Based Compensation,” and the consensus in Emerging Issues Task Force (“EITF”) No. 96-18, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services.”

     
(l)

Net loss per share

     

Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share takes into consideration shares of common stock outstanding (computed under basic earnings per share) and potentially dilutive shares of common stock. As of July 31, 2007 and 2006, the 9,870,000 and 6,050,000 options outstanding respectively, have been excluded from diluted loss per share as they were anti-dilutive.

     
(m)

Comprehensive income (loss)

     

The Company has adopted SFAS 130, “Reporting of Comprehensive Income,” which establishes guidelines for the reporting and display of comprehensive income (loss) and its components in financial statements. Comprehensive income (loss) includes foreign currency translation adjustments.

F-8



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

3.

SIGNIFICANT ACCOUNTING POLICIES (continued)

     
(n)

Development stage

     

The Company is a development stage company as defined in SFAS 7, “Accounting and Reporting by Development Stage Enterprises,” as it is devoting substantially all of its efforts to establish a new business and planned principal operations have not yet commenced.

     
(o)

Concentration of credit risk

     

Cash is the only financial instrument that potentially subjects the Company to concentration of credit risk. The Company maintains cash in bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

     
(p)

Recent accounting pronouncements

     

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes.” FIN 48 clarifies the accounting and reporting for uncertainties in income tax law. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. FIN 48 is effective for fiscal years beginning after December 15, 2006.

     

In September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”. SAB No. 108 provides guidance on how prior year misstatements should be taken into consideration when quantifying misstatements in current year financial statements for purposes of determining whether the current year’s financial statements are materially misstated. SAB No. 108 is effective for fiscal years ending on or after November 15, 2006.

     

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements. SFAS No. 157 establishes a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards which permit, or in some cases require, estimates of fair market value. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year.

F-9



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

3.

SIGNIFICANT ACCOUNTING POLICIES (continued)

     
(p)

Recent accounting pronouncements

     

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” applies to all entities with available- for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, “Fair Value Measurements”.

     

The Company does not expect that the adoption of these new accounting pronouncements will have a significant effect on its financial statements.

     
(q)

Reclassifications

     

Certain amounts reported in the prior periods have been reclassified to conform to the current period’s presentation.

F-10



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

4.

PROPERTY, PLANT AND EQUIPMENT


    July 31,  
    2007  
       
Office equipment $  93,069  
Plant equipment   2,130,529  
Laboratory equipment   27,190  
Building   972,562  
Land   171,768  
       
    3,395,118  
Accumulated depreciation   (122,264 )
       
Net book value $  3,272,854  

In the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable and an estimate of future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss will be recognized. Management's estimates of revenues, operating expenses, and operating capital are subject to certain risks and uncertainties which may affect the recoverability of the Company's investments in its assets. Although management has made its best estimate of these factors based on current conditions, it is possible that changes could occur which could adversely affect management's estimate of the net cash flow expected to be generated from its operations.

   
5.

LOANS PAYABLE

   

During the six months ended July 31, 2007, a loan was granted from a third party company for Euro 35,000 (US -$47,788). The loan bears interest at 8.5% per annum and is due September 30, 2007. Interest expense accrued for the six and three months ended July 31, 2007 totaled Euro 0 (US -$0) and Euro 0 (US -$0), respectively.

   

During the six months ended July 31, 2007, a loan was granted from a third party company for Euro 150,000 (US -$204,805). In addition, the same third party company agreed to reclassify Euro 210,000 (US -$286,728) of accounts payable to loans payable. The loans bear interest at 8.5% per annum and were due August 31, 2007. Subsequent to July 31, 2007, the loans were extended to December 31, 2007. Interest expense accrued for the six and three months ended July 31, 2007 totaled Euro 4,765 (US -$6,455) and Euro 4,765 (US - $6,455), respectively.

   

During the year ended January 31, 2007, a loan was granted from a third party company for $190,000. The loan bears interest at 8% per annum, compounded annually, and is due July 18, 2008. Interest expense accrued for the six and three months ended July 31, 2007 totaled $7,581 and 3,875, respectively.

F-11



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

6.

LICENSING AGREEMENT

   

Pursuant to a license agreement dated December 23, 2004, Clyvia Technology was granted an exclusive worldwide license with respect to certain German patents related to catalytic depolymerization. In consideration of the grant, Clyvia Technology is required to pay a declining royalty based on the level of sales generated. The royalties are between 6% and 10%. The agreement has a twelve-month termination notice period with the earliest date of termination being December 31, 2009. The licensor or the licensee may terminate the agreement.

   

In March 2005, Clyvia Technology and the licensor amended the license agreement dated December 23, 2004, to extend the earliest date of termination of the license agreement to December 31, 2017.

   

In May 2006, Clyvia Technology and the licensor mutually agreed to cancel the terms of their amended license agreement.

   
7.

RELATED PARTY TRANSACTIONS

   

At July 31, 2007, included in other receivables –related parties is Euro 3,139 (US -$4,286) owed from a company with common directors and officers of Clyvia Technology for vehicle maintenance. Net Vehicle costs paid for the six and three months ended July 31, 2007 totaled Euro 5,610 (US -$7,528) and Euro 3,033 (US -$4,109), respectively.

   

At July 31, 2007, included in accounts payable is Euro 46,634 (US -$63,672) owed to a company related to a managing director of Clyvia Technology for the purchase of plant equipment.

   

At July 31, 2007, included in accounts payable and accrued liabilities –related parties is Euro 5,669 (US - $7,740) owed to an individual related to a managing director of Clyvia Technology for scientific consulting services.

   

At July 31, 2007, included in accounts payable is CAD $95 (US -$90) owed to a former officer and director of the Company.

   

At July 31, 2007, included in accounts payable is Euro 38,870 (US -$53,072) owed to a director and officer of the Company for management fees and reimbursement of expenses.

   

Management fees paid to an officer and director of the Company for the six and three months ended July 31, 2007 totaled Euro 45,000 (US -$60,732) and Euro 22,500 (US $31,084), respectively. Consulting fees paid to an officer of the Company for the six and three months ended July 31, 2007 totaled $6,000 and $3,000, respectively. Wages paid to officers and directors of Clyvia Technology for the six and three months ended July 31, 2007 totaled Euro 52,500 (US -$70,389) and Euro 26,250 (US -$35,562). Amounts due to and from officers and directors are unsecured, non-interest bearing and due on demand.

F-12



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

7.

RELATED PARTY TRANSACTIONS (continued)

   

Lease fees paid to a company related to a managing director of Clyvia Technology for the six and three months ended July 31, 2007 totaled Euro 3,702 (US -$4,966) and Euro 1,931 (US $2,616).

   
8.

COMMON STOCK

   

The Company’s articles of incorporation allow it to issue up to 525,000,000 shares of common stock, par value $0.001. Effective February 18, 2005, the Company effected a stock split of its common stock by issuing seven new shares for every one old share. Except as otherwise stated to the contrary in these financial statements, all references to shares and prices per share have been adjusted to give retroactive effect to the stock split.

   

On December 21, 2004, the Company issued 42,805,000 shares of common stock for total proceeds of $33,467 (25,000 Euro).

   

On June 16, 2005, the Company acquired all the issued and outstanding stock of Clyvia Technology, which was accounted for as a recapitalization of the Clyvia Technology (Note 1) in exchange for 55,000,000 shares of common stock. The issued number of shares of common stock is that of the Company with adjustments made for differences in par value between the Company and Clyvia Technology.

   

On June 28, 2005, the Company issued 305,555 units at a price of $1.08 per unit in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant for total proceeds of $330,000. Each warrant will entitle the holder to purchase an additional share of the Company’s common stock at a price of $1.08 for a period of two years from the date of issuance of the units.

   

On July 27, 2005, the Company issued 404,762 units at a price of $1.05 per unit in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant for total proceeds of $425,000. Each warrant will entitle the holder to purchase an additional share of the Company’s common stock at a price of $1.05 for a period of two years from the date of issuance of the units.

   

On December 15, 2005, the Company issued 1,801,802 units at a price of $1.11 per unit in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant for total proceeds of $2,000,000. Each warrant will entitle the holder to purchase an additional share of the Company’s common stock at a price of $1.35 for a period of two years from the date of issuance of the units.

   

On May 4, 2006, the Company issued 442,478 units at a price of $1.13 per unit in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant for total proceeds of $500,000. Each warrant entitles the holder to purchase an additional share of the Company’s common stock at a price of $1.13 per share for a period of two years from the date of closing.

F-13



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

8.

COMMON STOCK (continued)

   

On May 5, 2006, the Company issued 217,391 units at a price of $1.15 per unit in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant for total proceeds of $250,000. Each warrant entitles the holder to purchase an additional share of the Company’s common stock at a price of $1.15 per share for a period of two years from the date of closing.

   

On June 12, 2006, the Company issued 217,391 units at a price of $1.15 per unit in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant for total proceeds of $250,000. Each warrant entitles the holder to purchase an additional share of the Company’s common stock at a price of $1.15 per share for a period of two years from the date of closing.

   

On December 6, 2006, the Company issued 1,157,400 units at a price of Euro 0.432 (US -$0.57) per unit in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant for total proceeds of Euro 500,000 (US $661,250). Each warrant entitles the holder to purchase an additional share of the Company’s common stock at a price of Euro 0.44 (US -$0.57) per share for a period of one year from the date of closing. A finder’s fee of Euro 50,000 (US -$66,450) equal to 10% of the proceeds of the private placement was paid on December 12, 2006 to a company in consideration for its efforts in arranging the private placement.

   
9.

STOCK OPTIONS AND WARRANTS

   

Stock Options

   

On May 17, 2005, the Company adopted a stock incentive plan (the “2005 Stock Option Plan”) to provide incentives to employees, directors, officers and consultants. The 2005 Stock Option Plan provides for the issuance of up to 6,420,750 options with a maximum term of five years. The maximum aggregate number of shares that may be optioned under the 2005 Stock Option Plan will be increased effective the first day of each of the Company’s fiscal quarters, beginning with the fiscal quarter commencing May 1, 2005, up to a maximum of 15% of the outstanding shares on the first day of the applicable quarter. The plan administrator has sole discretion to establish, waive or modify the vesting terms of the options.

   

On August 16, 2006, the Company adopted a second stock incentive plan (the “2006 Stock Option Plan”) to provide incentives to employees, directors, officers and consultants. The 2006 Stock Option Plan provides for the issuance of up to 6,000,000 options with a maximum term of five years. The maximum aggregate number of shares that may be optioned under the 2006 Stock Option Plan will be increased effective the first day of each of the Company’s fiscal quarters, beginning with the fiscal quarter commencing November 1, 2006, up to a maximum of 10% of the outstanding shares on the first day of the applicable quarter. The plan administrator has sole discretion to establish, waive or modify the vesting terms of the options.

F-14



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

9.

STOCK OPTIONS AND WARRANTS (continued)

Stock Options (continued)


      Weighted Average
    Number Exercise Price
       
  Options outstanding, beginning of the period 8,650,000 $          1.06
                       Granted 1,220,000 0.40
                       Exercised - -
                       Expired - -
  Options outstanding, July 31, 2007 9,870,000 $          0.98

On July 11, 2005, the Company granted stock options to directors, officers and consultants under the 2005 Stock Option Plan, to acquire a total of 6,050,000 shares of common stock exercisable at a price of $1.09 per share up to July 11, 2010.

On August 16, 2006, the Company granted stock options to a consultant under the 2005 Stock Option Plan, to acquire a total of 100,000 shares of common stock exercisable at a price of $1.00 per share up to August 16, 2011.

On August 16, 2006, the Company granted stock options to officers and directors under the 2006 Stock Option Plan, to acquire a total of 2,500,000 shares of common stock exercisable at a price of $1.00 per share up to August 16, 2011.

On July 12, 2007, the Company granted stock options to officers and directors and consultants under the 2006 Stock Option Plan, to acquire a total of 1,220,000 shares of common stock exercisable at a price of $0.40 per share up to July 12, 2007.

A summary of stock options outstanding at July 31, 2007, is as follows:

    Outstanding Options Exercisable Options
      Weighted      
      Average Weighted   Weighted
      Remaining Average   Average
  Exercise Price Number Contractual Life Exercise Price Number Exercise Price
             
  2005 Stock Option Plan          
               $ 1.09 6,050,000 2.94          $ 1.09 6,050,000 $ 1.09
               $ 1.00 100,000 4.04          $ 1.00 100,000 $ 1.00
  2006 Stock Option Plan          
               $ 1.00 2,500,000 4.04          $ 1.00 1,000,000 $ 1.00
               $ 0.40 1,220,000 4.95          $ 0.40 1,000,000 $ 0.40

F-15



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

9.

STOCK OPTIONS AND WARRANTS (continued)

   

Stock Options (continued)

   

On July 11, 2005, the Company used the Black-Scholes option pricing model to compute estimated fair value, based on the following assumptions:


  Risk-free interest rate 3.91%  
  Dividend yield rate 0.00%  
  Price volatility 117.00%  
  Weighted average expected life of options 4.95 years  

On August 16, 2006, the Company used the Black-Scholes option pricing model to compute estimated fair value, based on the following assumptions:

  Risk-free interest rate 4.81%  
  Dividend yield rate 0.00%  
  Price volatility 76.47%  
  Weighted average expected life of options 5.0 years  

On July 12, 2007, the Company used the Black-Scholes option pricing model to compute estimated fair value, based on the following assumptions:

  Risk-free interest rate 5.03%  
  Dividend yield rate 0.00%  
  Price volatility 101.45%  
  Weighted average expected life of options 5.0 years  

The Company recognized stock-based compensation of $577,156 during the three months ended July 31, 2007.

Warrants

            Weighted Average  
      Number     Exercise Price  
               
  Warrants outstanding, beginning of the period   4,546,779   $  1.07  
                       Granted   -     -  
                       Exercised   -     -  
                       Expired   710,317     1.06  
  Warrants outstanding, July 31, 2007   3,836,462   $  1.07  

F-16



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

9.

STOCK OPTIONS AND WARRANTS (continued)

Warrants (continued)

   

A summary of warrants outstanding at July 31, 2007, is as follows:


Date Issued Outstanding Exercise Price Expiry Date
         
December 15, 2005 1,801,802 1,801,802 $ 1.35 December 15, 2007
May 4, 2006 442,478 442,478 $ 1.13 May 4, 2008
May 5, 2006 217,391 217,391 $ 1.15 May 5, 2008
June 12, 2006 217,391 217,391 $ 1.15 June 12, 2008
December 6, 2006 1,157,400 1,157,400 Euro 0.44 (US $0.57) December 6, 2007

10.

SEGMENT INFORMATION

   

The Company’s operations following the acquisition of Clyvia Technology were conducted in one reportable segment, being the development and commercialization of the process known as catalytic depolymerization, in Germany. All of the Company’s property, plant and equipment are located in Germany.

   
11.

COMMITMENTS

   

On July 1, 2005, the Company entered into a management services contract with a director and officer of the Company effective July 1, 2005, to pay monthly management fees of 5,000 Euro (US -$6,827). The agreement also specifies a grant of options to purchase 250,000 shares of the Company’s common stock pursuant to the Company’s 2005 Stock Option Plan at an exercise price of $1.09 per share for a period of five years from the date of issuance. The stock options were granted July 11, 2005. The agreement is for a one- year term and shall automatically extend for additional one year terms on the anniversary date unless notice is given by the Company at least 90 days prior to renewal. On November 23, 2005, Clyvia Technology increased the monthly management fee to 7,500 Euro (US -$10,240) effective January 1, 2006.

   

On July 1, 2005, Clyvia Technology entered into an employment contract with a director and officer of Clyvia Technology effective July 1, 2005, to pay monthly management fees of 2,300 Euro (US -$3,140) and a management bonus of 1.5% of the selling price for each system sold for an indefinite term. The contract may be terminated at the end of each calendar year by giving written notice of one year. On November 23, 2005, Clyvia Technology increased the monthly management fee to 5,000 Euro (US -$6,827) effective January 1, 2006. On August 16, 2006, the management bonus of 1.5% of the selling price for each system sold was cancelled in exchange for 1,000,000 stock options (Note 9).

F-17



CLYVIA INC.
(formerly Rapa Mining Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
July 31, 2007
 
 

11.

COMMITMENTS (continued)

   

On September 1, 2005, Clyvia Technology entered into a lease agreement for tenancy of office space with a company related to a managing director of Clyvia Technology for a term of five years expiring September 1, 2010. The lease may be terminated by either party by providing twelve months notice. The lease agreement requires monthly lease payments of Euro 590 (US -$806) plus taxes.

   

On November 24, 2005, Clyvia Technology entered into an employment contract with a director and officer of Clyvia Technology effective January 1, 2006, to pay monthly management fees of 3,750 Euro (US -$5,120) and a management bonus of 1.5% of the selling price for each system sold for an indefinite term. The contract period is indefinite, may be terminated with one year notice and terminates at the age of 65. On August 16, 2006, the management bonus of 1.5% of the selling price for each system sold was cancelled in exchange for 1,000,000 stock options (Note 9).

   
12.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS


      Cumulative              
      Amounts from              
      Inception              
      (December 21,     Six Months     Six Months  
      2004) to   Ended     Ended  
      July 31,     July 31,     July 31,  
      2007     2007     2006  
                     
  Cash paid for:                  
       Interest $  916   $  916   $  -  
       Income taxes $  -   $  -   $  -  

13.

SUBSEQUENT EVENT

   

On August 29, 2007, a loan was granted from a third party company for Euro 35,000 (US -$47,788). The loan bears interest at 8% per annum and is due by either party providing one month’s notice at the end of a given month beginning December 31, 2007.

F-18


ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report constitute "forward-looking statements.” These statements, identified by words such as “plan,” "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Management's Discussion and Analysis or Plan of Operation" and elsewhere in this Quarterly Report. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our Annual Reports on Form 10-KSB and our Current Reports on Form 8-K.

As used in this Quarterly Report, the terms "we,” "us,” "our,” and “Clyvia” mean Clyvia Inc. and its subsidiaries unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.

INTRODUCTION

The following discussion and analysis summarizes our plan of operation for the next twelve months, our results of operations for the six month period ended July 31, 2007 and changes in our financial condition from our fiscal year ended January 31, 2007. This discussion should be read in conjunction with the Management’s Discussion and Analysis or Plan of Operation included in our Annual Report on Form 10-KSB for the year ended January 31, 2007.

Through our wholly owned German subsidiary, Clyvia Technology GmbH (“Clyvia GmbH”), we are in the process of developing, marketing and selling a proprietary technology that utilizes a process known as fractional depolymerization to produce diesel fuel and heating oil from various types of recyclable waste materials (the “Fuel Technology”). We plan to earn revenues from the sale and construction of recycling/processing plants and from the sale of diesel fuel and heating oil produced at Clyvia GmbH’s pilot plant located in Wegberg-Wildenrath, Germany.

RECENT CORPORATE DEVELOPMENTS

The following corporate developments occurred subsequent to our fiscal quarter ended April 30, 2007:

1.

In May, 2007, we conducted a demonstration run at our pilot plant in Wegberg-Wildenrath, Germany, for representatives from the TÜV Rheinland Group (“TÜV”), an independent testing service hired by Clyvia GmbH to examine and confirm our claims with respect to the pilot plant’s functionality. The purpose of the TÜV examination was to confirm the input and product output claims made by us with respect to our fractional depolymerization system when using waste oil as the input product. The demonstration run was conducted using waste oil as the input product. The output fuel produced from the demonstration run was sent to independent laboratories to confirm that it met the necessary specifications for use as heating oil and diesel fuel. In late May, 2007, we received confirmation that the output fuel meets all of the necessary specifications for heating oil. Utilizing a specialized sodium emulsion, we were able

3



to lower the sulphur content of the output fuel even further, such that, in June, 2007, independent laboratory tests reported that the output fuel was well below the 50 ppm limit set by European diesel norm DIN EN 590, thus confirming that the output fuel meets all of the requirements for use as diesel fuel. In late July, 2007, TÜV certified all aspects of our process for converting waste oil into heating oil or diesel fuel. We are now working to obtain certification from TÜV with respect to our process for converting waste plastics into heating oil and diesel fuel.

   
2.

On July 12, 2007, our board of directors approved the grant of an aggregate of 1,220,000 options pursuant to our 2006 Stock Option Plan. The options granted are fully vested, have an exercise price of $0.40 per share and expire on July 12, 2012. The options were granted to certain officers and consultants.

   
3.

In August 2007, Clyvia GmbH applied to the European Patent Office to patent a chemical process used to stabilize unsaturated hydrocarbons in processed diesel and heating oil. We developed this process to prevent the output diesel and heating oil from turning black upon being exposed to oxygen. It is common for oil refineries to resolve this problem by artificially saturating the unsaturated hydrocarbons with hydrogen molecules using a process known as hydrogenation. However, this process is expensive. Our process involves feeding the diesel fuel and heating oil produced from our fractional depolymerization process into a secondary distillation facility that stabilizes the unsaturated hydrocarbons.

   
4.

In August 2007, Clyvia GmbH entered into a contract (the “Oeko Contract”) with Oeko + Bio Technologies AG (“Oeko Bio”) pursuant to which Clyvia GmbH agreed to produce 5 CL 500 processing installations to be based on its fractional depolymerization technology. The CL 500 plants are to be designed for the purpose of processing used bilge oils produced by shipping boats on the Rhine River, and other forms of waste oil, into diesel fuel and heating oil. The Oeko Contract calls for Clyvia GmbH to be paid EUR 14,250,000 ($19,522,500) for the 5 CL 500 plants and for the preparation of documents necessary to obtain operating permits for the plants. The purchase price for the CL 500 plants is to be placed by Oeko Bio into a trust account, and released to Clyvia GmbH upon Clyvia GmbH demonstrating that it has achieved certain milestones. The exact timing for the delivery of the CL 500 plants has not yet been determined, however, Clyvia GmbH expects to receive a test batch of the bilge oils to be processed in late September, 2007. Oeko Bio is a company based in Stuttgart, Germany that focuses on environmentally friendly energy technologies. Oeko Bio is currently in the process of setting up an investment fund that will finance the purchase price. Readers are cautioned that Oeko Bio’s ability to pay the purchase price for the CL 500 plants ordered is contingent upon it raising sufficient financing. There are no assurances that Oeko Bio will be able to obtain financing in an amount sufficient to enable it to purchase the ordered CL 500 plants.

   
5.

In late August, 2007, we conducted a demonstration run at our pilot plant for representatives from TÜV in order to obtain to their certification regarding the functionality of our pilot plant when using plastics such as polyethylene or polypropylene as the input material. The output fuel produced in the demonstration run was sent to an independent laboratory to confirm that it meets the necessary requirements for use as heating oil and diesel fuel.

   
6.

On August 27, 2007, we terminated our agreement with Energie Optimal GmbH. The agreement, signed in April, 2007, had provided Energie Optimal with the right to become Clyvia GmbH’s exclusive worldwide distributor provided that it paid Clyvia GmbH a deposit of approximately EUR 36,750,000. We terminated our agreement with Energie Optimal for failing to provide the deposit within the required time frame.

4


PLAN OF OPERATION

We have completed the construction, principal testing and commissioning of our fractional depolymerization pilot plant. In addition, we have completed large scale test runs of the pilot plant and have made minor technical adjustments to optimize the pilot plant’s fractional depolymerization process. We have obtained a report from TÜV Rheinland Group (“TÜV”), an independent testing service, confirming that our pilot plant functions as claimed when waste oil is used as the input substance. We are currently working to obtain TÜV certification of our pilot plants functionality when using plastics as the input product. We expect to receive TÜV’s final report sometime in September or October of 2007.

During the next twelve months, we intend to work on the following projects in order to improve the Fuel Technology by improving the quality of the output fuel produced by our fractional depolymerization process and increasing the types of input waste materials that can be processed by our fractional depolymerization process:

1.

Modifying the system so that it is able to produce diesel fuel or heating oil from bituminous substances, rubber and organic materials such as garden cuttings and wood. To date, no depolymerization process has been able to process these materials into usable oil. Clyvia GmbH has not yet been able to successfully depolymerize these materials; however, it believes that it should be chemically possible to process these materials into diesel fuel or heating oil. In order to do this, Clyvia GmbH intends to use a pyrolysis process to breakdown the input materials and then feeding the resulting oils through its fractional depolymerization system.

   
2.

Modifying the system to enable it to capture chlorine gas byproducts given off when input materials containing chlorine (such as PVC’s) are processed. In order to solve the problem of toxic gas outputs, Clyvia GmbH is exploring the use of reagent materials to bind the chlorine as a common salt within the reactor system, allowing it to be disposed of in an environmentally friendly manner. Over the next three months, Clyvia intends to carry out tests to demonstrate this process.

In addition, we expect to work on making minor improvements and modifications to the Fuel Technology on an ongoing basis in order to increase its marketability.

We have also begun focusing on marketing and selling the Fuel Technology. Our marketing and sales program involves the following:

(a)

We will conduct tests/demonstrations for potential purchasers of recycling/processing systems based on our Fuel Technology. It is expected that potential customers will provide us with samples of the input materials that they intend to use in systems purchased from us. We will then use these sample materials in our pilot plant to conduct a test run to determine the quality and amount of diesel fuel produced. The results of these tests will be used to formulate modifications/specifications for potential recycling/processing systems to be sold to the potential customer. We intend to charge potential customers for conducting the test runs.

   
(b)

When not using the pilot plant to conduct test runs, we may use the pilot plant to process used oil, bilge oil and/or other materials to produce diesel fuel or heating oil that we will sell directly to small oil companies and other potential buyers. The pilot plant contains two bulk storage tanks that can be used to store used oil or other input materials that we may use.

5


In addition, throughout the next twelve months, we will invite representatives from the waste management and energy production industries to our facilities in order to conduct demonstrations of the Fuel Technology and our recycling/processing plants.

We anticipate spending approximately EUR 2,000,000 (approximately $2,740,000) in pursuing the above plan of operation over the next twelve months. We currently do not have sufficient working capital to meet our anticipated needs for the next twelve months. We have not earned any significant revenues to date and there are no assurances that we will be able to do so in the future. In addition, we can not provide any assurances that our actual working capital needs for the next twelve months will not exceed the amounts that we have estimated. If we require additional financing, it is anticipated that such additional financing will likely be in the form of equity financing, as we do not expect there to be substantial debt financing available to us at this stage of our business.

Currently, we do not have any additional financing arrangements in place and there are no assurances that we will be able to obtain sufficient additional financing if needed. If we are not able to obtain sufficient financing, we may scale down our proposed plan of operation as necessary.

RESULTS OF OPERATIONS

Second Quarter and Six Months Summary

  Second Second          
  Quarter Quarter Percentage   Six Months Six Months Percentage
  Ended July Ended July Increase /   Ended July Ended July Increase /
  31, 2007 31, 2006 (Decrease)   31, 2007 31, 2006 (Decrease)
Revenue $2,845 $-- n/a   $13,136 $-- n/a
Expenses (1,010,114) (266,294) 279.3%   (1,324,185) (491,130) 169.6%
Other Items (10,865) 11,978 (190.7)%   375 18,239 (97.9)%
Net Loss Before Taxes $(1,018,134) $(254,316) 300.3%   $(1,311,424) $(472,891) 177.3%

Revenue

During the six months ended July 31, 2007, we earned revenues of $13,136. These revenues were earned by us from the sale of heating oil to Heitzer Tankschutz & Mineralole (“Heitzer Tankschutz”) under the terms of our waste oil processing agreement with them. In addition to these amounts, we earned miscellaneous income of $13,267 during the six months ended July 31, 2007 for amounts charged by us for preparing a quote for Clyvia plants.

We are presently still in the development stage of our business. We have begun to sell heating oil under our processing agreement with Heitzer Tankschutz; however, our revenues from those sales have been nominal thus far. In addition, although we have earned some income from test runs conducted through our pilot plant of sample materials provided by prospective purchasers of our recycling/processing system, we have not completed the sale of any recycling/processing systems and there are no assurances that we will be able to do so in the future. Although we have entered into a number of distribution agreements for recycling/processing plants based on our Fuel Technology, there are no assurances that these agreements will result in any sales of our products or that we will be able to otherwise earn any significant revenues.

6


Operating Expenses

Our operating expenses for the three and six month periods ended July 31, 2007 and 2006 consisted of the following:

            Six  
  Second Second       Months  
  Quarter Quarter Percentage   Six Months Ended Percentage
  Ended July Ended July Increase /   Ended July July 31, Increase /
  31, 2007 31, 2006 (Decrease)   31, 2007 2006 (Decrease)
Amortization $67,174 $7,182 835.3%   $81,098 $11,445 608.6%
               
Management Fees 69,646 64,883 7.3%   137,121 126,661 8.3%
               
Professional Fees 165,645 61,550 169.1%   232,021 134,829 72.1%
               
Other Operating 130,437 131,747 (1.0)%   295,839 216,730 36.5%
Expenses              
Stock Based 577,156 -- n/a   577,156 -- n/a
Compensation              
Foreign Exchange 56 932 (94.0)%   950 1,465 (35.2)%
Loss              
Total Operating Expenses $1,010,114 $266,294 279.3%   1,324,185 $491,130 169.6%

Management fees represent amounts paid as compensation to our executive officers and the executive officers of Clyvia GmbH during the respective three and six month periods ended July 31, 2007 and 2006. The slight increase in management fees in the three and six month periods ended July 31, 2007 from the three and six month periods ended July 31, 2006 was primarily the result of changes in foreign exchange rates.

Professional fees consist primarily of amounts incurred for certain investor relations services and for legal and accounting services provided in connection with meeting our ongoing reporting obligations under the Securities Exchange Act of 1934.

Other operating expenses consist primarily of amounts spent on salaries and wages, advertising, and travel, as well as other miscellaneous office expenses. The increased other operating expenses during the six months ended July 31, 2007 relate to additional marketing and business development activities undertaken during the period.

Stock based compensation represents the fair value of options granted during the period. During the three months ended July 31, 2007, we issued options to purchase up to 1,220,000 shares of our common stock at an exercise price of $0.40 per share.

LIQUIDITY AND FINANCIAL CONDITION

Working Capital      
      Percentage
  At July 31, 2007 At January 31, 2007 Increase / (Decrease)
Current Assets $113,636 $344,881 (67.1)%
Current Liabilities (444,495) (330,560) 34.5%
Working Capital Surplus (Deficiency) $(330,859) $14,321 (2,410.3)%

7


As at July 31, 2007, we had bank indebtedness in the amount of $10,036. Included in current liabilities are approximately $124,574 due to related parties primarily on account of amounts owed for the purchase of plant and equipment and unpaid management fees and reimbursable expenses. The decrease in our working capital from our year ended January 31, 2007 is largely attributable to the fact that we had only limited sources of financing and only nominal revenues during the period with which to pay for our expenses.

Cash Flows    
  Six Months Ended Six Months Ended
  July 31, 2007 July 31, 2006
Cash Flows used in Operating Activities $(306,648) $(464,451)
Cash Flows used in Investing Activities (229,713) (2,267,920)
Cash Flows from Financing Activities 257,907 1,214,686
Effect of Foreign Currency Translation 6,594 59,183
Net Decrease in Cash During Period $(271,860) $(1,458,502)

Financing Requirements

We anticipate that we will continue to incur losses for the foreseeable future, as we expect to incur substantial product development, marketing and/or operating expenses in implementing our plan of operation. Our future financial results are uncertain due to a number of factors, many of which are outside of our control. These factors include, but are not limited to:

(a)

our ability to develop commercially marketable products based on the Fuel Technology;

   
(b)

our ability to raise additional capital necessary to implement our business strategy and plan of operation;

   
(c)

our ability to compete with other existing technologies; and

   
(d)

the success of any marketing and promotional campaign which we conduct for our products once development is complete.

The financial statements accompanying this Quarterly Report contemplate our continuation as a going concern. However, we have sustained substantial losses, have a limited operating history and are still in the development stage of our business. In the past, our principal source of financing has been sales of our equity securities made in private placement transactions and short-term debt financing. During the six months ended July 31, 2007, our sole sources of financing were short-term bank loans and short-term loans from third parties.

We currently do not have sufficient working capital to meet our anticipated needs for the next twelve months. We have not earned any significant revenues to date and there are no assurances that we will be able to do so in the future. In addition, we can not provide any assurances that our actual working capital needs for the next twelve months will not exceed the amounts that we have estimated.

During the next twelve months, we anticipate that we will continue to seek financing through private placement sales of our equity securities as we do not expect to be able to meet all of our financial needs through other methods of financing. Additional sales of our equity securities, if needed, will dilute the interests of existing shareholders.

8


OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

Our significant accounting policies are disclosed in Note 3 to the financial statements included in this Quarterly Report.

RISKS AND UNCERTAINTIES

Need For Financing

We currently do not have sufficient working capital to meet our anticipated needs during the next twelve months. We have not earned any significant revenues to date and there are no assurances that we will be able to do so in the future. In addition, there are no assurances that our actual working capital needs for the next twelve months will not exceed our estimates of those needs. If our actual working capital requirements are substantially greater than we have anticipated and/or we are not able to earn significant revenues, then we may be required to seek additional financing. We currently do not have any financing arrangements in place and there is no assurance that we will be able to acquire sufficient financing on terms acceptable to us or at all. If sufficient financing is not available or obtainable when and if required, our ability to meet our financial obligations and pursue our plan of operation will be substantially limited and investors may lose a substantial portion or all of their investment.

We Are Still Testing And Refining The Fuel Technology And The Pilot Plant

Although we have completed the construction of our pilot plant and we have entered into agreements granting certain distribution rights and sales licenses for recycling/processing systems based on our Fuel Technology, we are still in the process of refining of the pilot plant and the Fuel Technology. We have engaged the services of an independent testing service to assess whether our pilot plant and the Fuel Technology function as claimed. There are no assurances that the results of their investigation will be positive. If we are unable to obtain independent confirmation of our claims with respect to the pilot plant and the Fuel Technology, this may adversely affect our ability to sell recycling/processing plants based on that technology.

9


Although We Have Entered Into Distribution Contracts For The Sale Of Fractional Depolymerization Plants. Based On Our Fuel Technology, We Have Not Yet Completed Any Sales Of Such Plants And There Are No Assurances That We Will Be Able To Do So In The Future

Our distributors do not have a binding obligation to purchase our fractional depolymerization plants, although their agreements provide that they will lose their distribution rights if they fail to sell any such systems. There are no assurances that our distribution agreements will lead to any future sales of our fractional depolymerization systems.

Oeko Bio does not currently have sufficient financial resources to pay the purchase price for the ordered CL 500 plants as set out in the Oeko Contract. Oeko Bio has informed Clyvia GmbH that they are seeking to obtain financing sufficient to allow them to meet their obligations under the Oeko Contract. However, there are no assurances that Oeko Bio will be able to obtain sufficient financing and there are no assurances that we will receive the purchase price or any other payments from Oeko Bio.

Limited Operating History, Risks Of A New Business Venture

Clyvia GmbH was formed on December 21, 2004, and as such, does not have a lengthy operating history upon which future performance may be assessed.

Potential investors should be aware of the difficulties normally encountered by a new enterprise and the high rate of failure of such enterprises. The potential for future success must be considered in light of the problems, expenses, difficulties complications and delays encountered in connection with the development of a business in the area in which we intend to operate and in connection with the formation and commencement of operations of a new business in general. These include, but are not limited to, unanticipated problems relating to research and development programs, marketing, approvals by government agencies, competition and additional costs and expenses that may exceed current estimates. There is no history upon which to base any assumption as to the likelihood that our business will prove to be successful, and there can be no assurance that we will generate any significant operating revenues or ever achieve profitable operations.

Our Operations May Be Subject To Extensive Government Regulations

Our operations are carried out through our wholly owned subsidiary, Clyvia GmbH. Clyvia GmbH is based in Germany and its operations may be subject to extensive government regulations in Europe or any other jurisdiction in which products based on the Fuel Technology are marketed. Municipal solid waste management and the production of diesel fuels and heating oils are highly regulated industries and we may have to satisfy numerous mandatory procedures, regulations, and safety standards established by federal and state regulatory agencies in order to develop and market the Fuel Technology. The extent to which these regulations may apply to us is not yet fully known and there can be no assurance that we can successfully comply with all present or future government regulations.

Rapid Technological Changes In The Alternative Fuels Industry Could Make Our Products Obsolete

The alternative fuels industry in which we intend to compete is characterized by rapid technological change and intense competition. New technologies, products and industry standards will develop at a rapid pace which could make our planned products obsolete. Our future success will depend upon our ability to rapidly develop a working prototype of the Fuel Technology and to commercialize and market products based on the Fuel Technology. In addition, we will be required to introduce product enhancements to address the needs of our customers. Delays in our ability to develop the Fuel

10


Technology and products based on the Fuel Technology may allow competitors to obtain a significant advantage over us and may make it more difficult for us to develop our business.

Asserting And Defending Intellectual Property Rights May Impact Results Of Operations

The success of our business may depend on our ability to protect our proprietary process and technology from competitors. Our pilot plant and the recycling/processing plants that we will attempt to sell are based on our own technology, for which we have been granted a patent from the German Patent and Trademark Office. Although we have been granted a patent for our Fuel Technology, we may be required to defend those intellectual property rights through litigation. The financial cost of such litigation could have a material impact on our financial condition even if we are successful in developing and marketing products and in defending any of our intellectual property rights, of which there is no assurance. Furthermore, an adverse outcome in any litigation or interference proceeding could subject us to significant liabilities to third parties and require us to cease using the technology that is at issue or to license the technology from third parties. In addition, a finding that any of our intellectual property rights are invalid could allow competitors to more easily and cost-effectively compete. Thus, an unfavorable outcome in any patent litigation or interference proceeding could have a material adverse effect on our business, financial condition and results of operations.

We Intend To Operate In A Highly Competitive Industry

The alternative energy market is an emerging market and is constantly evolving. No single alternative source of diesel fuel or heating oil has gained wide spread acceptance; however, a number of companies world wide are attempting to develop alternative sources of energy and the market is highly competitive. Our future success is dependent upon our ability to develop the Fuel Technology as an effective, efficient and economical source of energy and our ability to effectively market the Fuel Technology. There is no assurance that we will be able to successfully do either of these things.

Even if we are successful in developing the Fuel Technology, the Fuel Technology will compete direct with existing sources of oil such as fossil fuels and with existing forms of municipal solid waste management. The fossil fuel industry and the solid waste management industry are both well established and dominated by companies with abundant technical, financial, marketing, sales and other resources. If we are to succeed, we will need to differentiate the benefits of the Fuel Technology from those marketed by existing sources of oil and waste management processes. Even if we are able to successfully differentiate the Fuel Technology, there is no assurance that the Fuel Technology will be able to gain acceptance in the marketplace.

Dependence On Key Personnel

Our success will largely depend on the performance of our management and on the management of Clyvia GmbH. We are currently dependent upon a limited number of employees and consultants. As such, our success will also depend on our ability to attract and retain highly skilled technical, research, management, regulatory compliance, sales and marketing personnel. Competition for such personnel is intense. The loss of the services of such personnel or the inability to attract and retain other key personnel could impair the development of our business, operating results and financial condition.

11


ITEM 3.           CONTROLS AND PROCEDURES.

Evaluation Of Disclosure Controls And Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our principal executive officer and principal financial officer has concluded that these disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

12


PART II - OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS.

None.

ITEM 2.           UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5.           OTHER INFORMATION.

Except as otherwise disclosed elsewhere in this Quarterly Report, all information required to be disclosed in a Current Report on Form 8-K during the period covered by this Quarterly Report has been previously disclosed by the filing of such reports on Form 8-K.

ITEM 6.           EXHIBITS.

Exhibit  

Number  

Description of Exhibit

   

 

3.1  

Articles of Incorporation.(1)

   

 

3.2  

Certificate of Change.(5)

   

 

3.3  

Articles of Amendment changing name from Rapa Mining Inc. to Clyvia Inc. (9)

   

 

3.4  

By-Laws.(1)

   

 

10.1  

Mineral Property Option Agreement.(1)

   

 

10.2  

Amendment Agreement to Mineral Property Option Agreement.(4)

   

 

10.3  

Escrow Agreement.(2)

   

 

10.4  

Amended Escrow Agreement.(3)

   

 

10.5

Share Purchase Agreement between Clyvia Capital Holding GmbH, Rapa Mining Inc., Clyvia Technology GmbH and Brian Cheston, dated for reference the 7th day of April, 2005.(7)

   

 

10.6

License Agreement between ECO Impact GmbH and Clyvia Technology GmbH (translated from German to English).(9)

   

 

10.7

Management Services Agreement between Walter P.W. Notter and Clyvia Inc. (formerly “Rapa Mining Inc.”) dated effective as of June 30, 2005.(9)

13



Exhibit    
Number   Description of Exhibit
     
10.8

Amendment to Management Services Agreement between Walter P.W. Notter and Clyvia Inc. (formerly “Rapa Mining Inc.”) dated effective as of July 11, 2005.(9)

     
10.9

Memorandum of Understanding Between Clyvia Technology GmbH and Wong Chee Wah.(10)

     
10.10

Property Purchase Agreement between Clyvia Technology GmbH (German subsidiary of Clyvia) and Stadtentwicklungsgesellschaft der Stadt Wegberg mbH (translated from German to English). (11)

     
10.11

Agreement between Clyvia Technology GmbH and HII GmbH Industrieanlagen Bau und Beratung (translated from German to English).(12)

     
10.12

Letter dated May 2, 2006 from Clyvia Technology GmbH to HII GmbH (translated from German to English). (12)

     
10.13

Exclusive Distribution Contract between Clyvia Technology GmbH and Bureau Wiebes & Partners Ltd. (translated from German to English). (12)

     
10.14

Exclusive Distribution Contract between Clyvia Technology GmbH and Energy Recycling Systems Sarl (translated from German to English). (12)

     
10.15

Exclusive Distribution Contract between Clyvia Technology GmbH and Grundstuecksgesellschaft FOCUS mbH & Co. Bau und Boden KG (translated from German to English). (12)

     
10.16

Letter Agreement amending the scope of non-exclusive distribution rights granted to Energy Recycling Systems Sarl (translated from German to English). (12)

     
10.17

Amended License Agreement between ECO Impact GmbH and Clyvia Technology GmbH (translated from German to English). (12)

     
10.18  

2005 Stock Option Plan.(8)

     
10.19  

2006 Stock Option Plan.(13)

     
10.20

Non-Qualified Stock Option Agreement between Clyvia Inc. and Walter Notter dated effective as of August 16, 2006.(13)

     
10.21

Non-Qualified Stock Option Agreement between Clyvia Inc. and Manfred Sappok dated effective as of August 16, 2006.(13)

     
10.22

Non-Qualified Stock Option Agreement between Clyvia Inc. and Dieter Wagels dated effective as of August 16, 2006.(13)

     
10.23

Employment Contract between Clyvia Technology GmbH and Manfred Sappok (translated from German to English).(13)

     
10.24

Letter from Clyvia Technology GmbH to Manfred Sappok – Salary Increase (translated from German to English). (14)

     
10.25

Amendment Agreement to Employment Contract between Clyvia Technology GmbH, Manfred Sappok and Clyvia Inc. (14)

     
10.26

Employment Contract between Clyvia Technology GmbH and Dieter Wagels (translated from German to English).(13)

     
10.27

Amendment Agreement to Employment Contract between Clyvia Technology GmbH, Dieter Wagels and Clyvia Inc.(14)

     
10.28

Exclusive Distribution Agreement between Clyvia Technology GmbH and Energie Optimal GmbH (translated from German to English).(15)

     
10.29  

Non-Qualified Stock Option Agreement between Clyvia Inc. and Walter P.W.

14



Exhibit  

Number  

Description of Exhibit

   

 

   

Notter dated effective as of July 12, 2007.(16)

   

 

10.30

Non-Qualified Stock Option Agreement between Clyvia Inc. and John Boschert dated effective as of July 12, 2007.(16)

   

 

14.1  

Code of Ethics.(6)

   

 

21.1  

List of Subsidiaries.(12)

   

 

31.1

Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

   

 

32.1

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


(1)

Filed with the SEC as an exhibit to our Registration Statement on Form SB-2 originally filed on March 16, 2004.

(2)

Filed with the SEC as an exhibit to Amendment No. 3 to our Registration Statement on Form SB-2/A filed on July 19, 2004.

(3)

Filed with the SEC as an exhibit to Amendment No. 4 to our Registration Statement on Form SB-2/A filed on August 10, 2004.

(4)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on September 30, 2004.

(5)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on February 18, 2005.

(6)

Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on May 2, 2005.

(7)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on April 18, 2005.

(8)

Filed with the SEC as an exhibit to our Registration Statement on Form S-8 filed on August 25, 2005.

(9)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on September 23, 2005.

(10)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on December 23, 2005.

(11)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on March 1, 2006.

(12)

Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on May 16, 2006.

(13)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on August 28, 2006.

(14)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on September 14, 2006.

(15)

Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on May 16, 2007.

(16)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on July 18, 2007.

15


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.

 

      CLYVIA INC.
       
       
       
Date: September 19, 2007 By: /s/ Walter P.W. Notter
      WALTER P.W. NOTTER
      President, Treasurer,
      Chief Executive Officer and Chief Financial Officer
      Director
      (Principal Executive Officer
      and Principal Accounting Officer)