Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File No. 000-30603
GRUPO INTERNATIONAL INC.
------------------------
(Exact name of registrant as specified in its charter)
Nevada 86-0876846
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 Laurel Blvd,
Collingwood, Ontario Canada L9Y 5A8
-----------------------------------
(Address of principal executive offices, Including zip code)
(705) 446-7242
--------------
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 Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |_| No |X|
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section
232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes |_|
No |_|
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company, as
defined by Rule 12b-2 of the Exchange Act: (Check one):
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
Indicate by a check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act. Yes |_| No |X|
The number of shares of Common Stock outstanding was 10,430,652 as of July 29,
2011.
GRUPO INTENATIONAL INC.
(A Development Stage Company)
INDEX TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE
SHEET AS OF MARCH 31, 2011 (UNAUDITED) 3
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2011 AND 2010 AND
SIX MONTHS ENDED MARCH 31, 2011 AND 2010 AND
PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO
MARCH 31, 2011 (UNAUDITED) 4
CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2011 AND 2010 AND
PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO
MARCH 31, 2011 (UNAUDITED) 5-6
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 7-11
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 12-14
AND RESULTS OF OPERATIONS
ITEM 4. CONTROLS AND PROCEDURES 15
PART II-- OTHER INFORMATION 16
ITEM 1. LEGAL PROCEEDINGS 16
ITEM 1A RISK FACTORS 16
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 16
ITEM 4. REMOVED OR RESERVED 16
ITEM 5. OTHER INFORMATION 16
ITEM 6. EXHIBITS 16
Exhibit 31.1
Exhibit 32.1
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GRUPO INTERNATIONAL INC.
(A Development Stage Company)
BALANCE SHEETS (Unaudited)
ASSETS
March 31 September 30,
2011 2010
----------- -----------
Current Assets
Cash $ 1,911 $ 751
Prepaid and sundry assets 750 $ 1,500
----------- -----------
Total current assets 2,661 2,251
----------- -----------
Furniture and equipment, net 3,070 3,274
----------- -----------
Total assets $ 5,731 $ 5,525
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accrued liabilities:
Accounts payable 92,043 89,268
Accrued Liabilities 284,971 262,971
Advances from related parties 88,150 86,119
----------- -----------
Total Current Liabilities $ 465,164 $ 438,358
----------- -----------
Stockholders' Equity (Deficit)
Preferred stock, $0.01 par value; 10,000,000
shares authorized Series B, convertible,
non-preferential; 1,000,000 and -0-
shares issued and outstanding, respectively 3,000 3,000
Common stock, $0.001 par value; 500,000,000 shares
authorized; 10,430,653 and 9,830,653 shares issued
and outstanding, respectively 10,431 10,431
Additional paid in capital 6,901,063 6,901,066
Deficit accumulated during the development stage (7,286,581) (7,261,147)
Accumulated other comprehensive loss (87,346) (86,183)
----------- -----------
(459,433) (432,833)
----------- -----------
Total liabilities and stockholders' equity (deficit) $ 5,731 $ 5,525
=========== ===========
The accompanying notes are an integral part of these unaudited condensed
financial statements.
3
GRUPO INTERNATIONAL INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Period from
January 10,
Three Months Three Months Six Months Six Months 1997
Ended Ended ending ending (Inception)
March 31, March 31, March 31, March 31, March 31,
2011 2010 2011 2010 2011
------------ ------------ ------------ ------------ ------------
Expenses
General and administrative 6,759 5,308 13,622 10,506 863,640
Research and development costs 5,835 5,257 11,611 10,568 1,848,070
Depreciation and amortization 102 118 202 236 176,382
Royalty Fees -- -- -- -- 2,045,239
Legal fees -- -- -- -- 1,500,028
Licensing Fees -- -- -- -- 635,500
Write down of intangible asset -- -- -- -- 53,963
Loss on disposal of assets -- -- -- -- 30,195
------------ ------------ ------------ ------------ ------------
12,696 10,683 25,435 21,310 7,153,017
------------ ------------ ------------ ------------ ------------
Loss from operations (12,696) (10,683) (25,435) (21,310) (7,153,017)
------------ ------------ ------------ ------------ ------------
Other Income (Expense)
Other expenses -- -- -- -- (261,162)
Other Income -- -- -- -- 569,779
------------ ------------ ------------ ------------ ------------
Total other income -- -- -- -- 308,617
------------ ------------ ------------ ------------ ------------
Loss from continuing operations (12,696) (10,683) (25,435) (21,310) (6,844,400)
Loss from Discontinued Operations -- -- -- -- (432,181)
------------ ------------ ------------ ------------ ------------
Net loss (12,696) (10,683) (25,435) (21,310) (7,276,581)
------------ ------------ ------------ ------------ ------------
Foreign Currency
Translation Adjustment (3,116) 5,868 (1,163) 8,096 (87,346)
------------ ------------ ------------ ------------ ------------
Comprehensive Loss $ (15,812) $ (4,815) $ (26,598) $ (13,214) $ (7,361,308)
============ ============ ============ ============ ============
Profit (Loss) per weighted
average number of
Shares outstanding -
basic and diluted $ (0.01) $ (0.01) $ (0.01) $ 0.01
------------ ------------ ------------ ------------
Weighted average number of
common shares outstanding
during period -
basic and diluted 10,430,652 9,830,652 10,430,652 9,830,652
============ ============ ============ ============
The accompanying notes are an integral part of these unaudited condensed
financial statements.
4
GRUPO INTERNATIONAL, INC.
(FORMERLY HIV-VAC, INC.)
(A Development Stage Company)
Statements of Cash Flows
Periods Ended March 31, 2011 and 2010 and for the Period
from January 10, 1997 (Inception) to March 31, 2011
Cumulative
Jannuary 10,
For the six months Ended 1997
(Inception)
March 31 March 31 to March 31,
2010 2009 2011
----------- ----------- -----------
Cash Flows from Operating Activities
Net loss $ (25,435) $ (21,309) $(7,276,582)
Adjustments to reconcile net loss to net
cash used in operating activities
Amortization and depreciation 202 236 176,382
Officers' compensation capitalized -- -- 100,000
Other expenses relating to Noveaux and
Lifeplan acquisition -- -- 261,163
Issuance of stock for licensing fees -- -- 2,135,500
Issuance of stock to directors and
officers' compensation -- -- 110,100
Issuance of option for note payable, current -- -- 140,000
Issuance of stock for services -- -- 2,449,300
Gain on forgiveness of debt -- -- (566,005)
Decrease in notes payable -- -- (140,000)
Increase (Decrease) prepaid expenses 750 --
(750)
Increase in accounts payable 1,612 1,553 557,224
Increase in accrued liabilities 22,000 19,000 284,971
Write off of intangible asset -- -- 53,963
----------- ----------- -----------
Net Cash Used in Operating Activities (871) (520) (1,714,734)
----------- ----------- -----------
Cash Flows from Investing Activities
Purchase of license rights -- -- (85,000)
Purchase of furniture and equipment -- -- (48,416)
Cash acquired in acquisition -- -- 120,272
----------- ----------- -----------
Net Cash Used in Investing Activities -- -- (13,144)
----------- ----------- -----------
Cash Flows from Financing Activities
Proceeds from issue of preferred stock series B -- -- 10,000
Proceeds from issuance of common stock -- -- 689,164
Purchase of treasury stock -- -- (11,767)
Proceeds from notes payable -- -- 140,000
Proceeds from sale of treasury stock and warrants -- -- 15,000
Proceeds from advances from related parties 2,032 469 545,556
Payment of stockholder's loan -- -- (272)
Proceeds from additional paid in capital -- -- 342,108
----------- ----------- -----------
Net Cash Provided by Financing Activities 2,032 469 1,729,790
----------- ----------- -----------
Net (Decrease) Increase in Cash 1,161 (51) 1,911
Cash - Beginning of Year 750 847 --
----------- ----------- -----------
Cash - End of Year $ 1,911 $ 796 $ 1,911
The accompanying notes are an integral part of these unaudited condensed
financial statements.
5
GRUPO INTERNATIONAL, INC.
(FORMERLY HIV-VAC, INC.)
(A Development Stage Company)
Statements of Cash Flows
Periods Ended March 31, 2011 and 2010 and for the Period
from January 10, 1997 (Inception) to March 31, 2011
Supplemental Disclosure of Cash FlowInformation
Non Cash Transactions:
Issuance of common shares for Noveaux merger $ -- $ -- $ 106,525
=========== =========== ===========
Issuance of common shares for Lifeplan merger $ -- $ -- $ 50,000
=========== =========== ===========
Preferred B stock dividend $ -- $ -- $ 10,000
=========== =========== ===========
Forgiveness of stockholder debt $ -- $ -- $ 7,227
=========== =========== ===========
Cancellation of Treasury Stock $ -- $ -- $ (8,767)
=========== =========== ===========
Gain on forgiveness of Intracell Vacinnes
Limited debt $ -- $ -- $ (457,406)
=========== =========== ===========
The accompanying notes are an integral part of these unaudited condensed
financial statements.
6
GRUPO INTERNATIONAL INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011.
(UNAUDITED)
NOTE 1 - OPERATIONS AND GOING CONCERN
Basis of Presentation and Organization
--------------------------------------
The accompanying unaudited condensed consolidated financial statements are
presented in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and rules and
regulations of the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal occurring accruals)
considered necessary in order to make the financial statements not misleading,
have been included. Operating results for the six months ended March 31, 2011
are not necessarily indicative of results that may be expected for the year
ending September 30, 2011. The unaudited condensed consolidated financial
statements are presented on the accrual basis.
Organization and Operations: HIV-VAC, Inc. (the "Company"), formerly known as
Personna Records, Inc. (Personna) was incorporated on January 10,1997 in the
State of Nevada. Personna (originally known as Sonic Records, Inc.) was engaged
in the production and distribution of musical records. In April 1998, Personna
merged with Nouveaux Corporation whereby Personna became the surviving
corporation. The Company changed its name to Grupo International Inc on
September 2, 2010
Development Stage Enterprise: Grupo International Inc reverted to a development
stage enterprise when it disposed of its music recording assets (March 1999) and
commenced the research and development of its HIV vaccine. The Company's
principal activities since March 1999 have included defining and conducting
research programs, conducting animal clinical trials, raising capital and
researching ways to enhance the company's intellectual property. The Company has
not yet commenced human trials.
Going Concern: The Company's financial statements are presented on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The Company has experienced
recurring losses since inception and has negative net working capital and cash
flows from operations that raise substantial doubt as to its ability to continue
as a going concern. For the year ended September 30, 2010 the Company incurred
an operating loss of $57,071. For the year ended September 30, 2009, the Company
incurred a loss of $43,350. The Company's ability to continue as a going concern
is contingent upon its ability to secure additional financing, initiate sale of
its product, and attain profitable operations. Further, the Company has
inadequate working capital to maintain or develop its operations, and it is
dependent upon funds from and the support of certain stockholders.
Management is pursuing various sources of equity financing. Although the Company
plans to pursue additional financing, there can be no assurance that the Company
will be able to secure financing or obtain financing on terms beneficial to the
Company.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
7
GRUPO INTERNATIONAL INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011.
(UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
a) Use of Estimates
The preparation of the Company's financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the dates of the financial statements, and the reported
amounts of revenues and expenses during the reporting periods. These estimates
are based on management's best knowledge of current events and actions the
Company may undertake in the future. Significant areas requiring the use of
estimates relate to the estimated useful lives of furniture and equipment.
Actual results could differ from these estimates. These estimates are reviewed
periodically and as adjustments become necessary, they are reported in earnings
in the period which they become available.
b) Furniture and Equipment
Furniture and equipment are stated at cost. Major renewals and betterments are
capitalized while maintenance and repairs, which do not extend the lives of the
respective assets, are expensed when incurred. Depreciation is computed over the
estimated useful lives of the assets using accelerated methods.
Useful lives for furniture and equipment are as follows:
Office equipment 15% Declining balance
Furniture 10% Declining balance
The cost and accumulated depreciation for furniture and equipment sold, retired,
or otherwise disposed of are relieved from the accounts, and any resulting gains
or losses are reflected in income.
c) Long lived Assets
The Company reviews its long lived assets for impairment whenever events or
circumstances indicate that the related carrying amount of the assets may not be
recoverable. An impairment loss would be recognized when estimated future cash
flows expected to result from the use of the asset and its eventual disposition
are less than its carrying amount. As described in Note 2, the long-lived assets
have been valued on a going concern basis. However, substantial doubt exists as
to the ability of the Company to continue as a going concern. If the Company
ceases operations, the asset values may be materially impaired. Fixed assets are
stated at cost. Maintenance and repairs are expensed in the period incurred;
major renewals and betterments are capitalized. When items of property are sold
or retired, the related costs are removed from the accounts and any gain or loss
is included in income. Depreciation is computed over the estimated useful lives
of the assets using accelerated methods.
d) Financial Instruments
All the Company's financial instruments are initially recorded at their fair
value. The Company classifies all financial instruments as held-for-trading or
other financial liabilities. Financial liabilities are measured at amortized
cost. Instruments classified as held for trading are measured at fair value.
The Company has designated its cash as held for trading. Accounts payable,
accrued liabilities, and advances from related parties are classified as other
liabilities.
8
GRUPO INTERNATIONAL INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011.
(UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
e) Income Tax
Deferred tax assets and liabilities are recorded for differences between the
financial statement and tax basis of the asset and liabilities that will result
in taxable deductible amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are to be realized. Income
tax expense is recorded for the amount of income tax payable or refundable for
the period increased or decreased by the change in deferred tax assets and
liabilities during the period.
f) Translation of Foreign Currency
The activity of the Company's foreign offices are translated in accordance with
ASC Topic 830, "Foreign Currency Matters", which requires that foreign currency
assets and liabilities be translated using the exchange rates in effect at the
balance sheet date. Revenues and expenses are translated using the average
exchange rates prevailing throughout the year. Unrealized gains and losses from
foreign currency translations are included in other comprehensive income for the
period.
g) Loss Per Share
Basic loss per share, which does not include any dilutive securities, is
computed by dividing the loss available to common stockholders by the weighted
average number of common shares outstanding during the period. In contrast,
diluted loss per share considers the potential dilution that could occur from
other financial instruments that would increase the total number of outstanding
shares of common stock. Potentially dilutive securities, however, have not been
included in the diluted loss per share computation because their effect is
anti-dilutive.
h) Comprehensive loss
The Company accounts for comprehensive loss in accordance with ASC 220,
"Comprehensive Income", which establishes standards for reporting and
presentation of comprehensive loss and its components. Comprehensive loss is
presented in the statements of shareholders' equity, and consists of net loss
and foreign currency translation adjustment.
i) Stock Based Compensation
The Company enters into transactions in which goods or services are the
consideration received for the issuance of equity instruments. The value of
these transactions are measured and accounted for, based on the fair value of
the equity instrument issued or the value of the goods or services received,
whichever is more reliably measurable. The services are expensed in the periods
that the services are rendered.
9
GRUPO INTERNATIONAL INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011.
(UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
j) Segment Reporting
ASC Topic 280 "Segment Reporting" establishes standards for the manner in which
public enterprises report segment information about operating segments. The
Company has determined that its operations primarily involve one reportable
segment.
k) Recent Accounting Pronouncements
Recent accounting pronouncements that the Company has adopted or will be
required to adopt in the future are summarized below.
In January 2010, the Financial Accounting Standards Board ("FASB")
issued Accounting Standards Update ("ASU") 2010-06 ("ASU 2010-06"),
"Improving Disclosures about Fair Value Measurements". The standard
amends Accounting Standards Codification ("ASC") Topic 820, "Fair
Value Measurements and Disclosures" to require additional
disclosures related to transfers between levels in the hierarchy of
fair value measurements. ASU 2010-06 is effective for interim and
annual fiscal years beginning after December 15, 2009. The standard
does not change how fair values are measured, accordingly the
standard will no have an impact on the Company.
In April 2010, the FASB issued ASU 2010-13, "Compensation-Stock
Compensation: Effect of Denominating the Exercise Price of a
Share-Based Payment Award in the Currency of the Market in Which the
Underlying Equity Security Trades," ("ASU 2010-13"). This ASU
provides amendments to Topic 718 to clarify that an employee
share-based payment award with an exercise price denominated in
currency of a market in which a substantial portion of the entity's
equity securities trade should not be considered to contain a
condition that is not a market, performance, or service condition.
Therefore, an entity would not classify such an award as a liability
if it otherwise qualifies as equity. The amendments in this ASU are
effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2010. The Company is
currently in the process of determining the impact, if any, of
adoption of the provisions of ASU 2010-13.
The FASB issues ASUs to amend the authoritative literature in ASC. There have
been a number of ASUs to date that amend the original text of ASC. Those ASUs
issued to date either (i) provide supplemental guidance, (ii) are technical
corrections, (iii) are not applicable to the Company or (iv) are not expected to
have a significant impact on the Company.
10
GRUPO INTERNATIONAL INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011.
(UNAUDITED)
NOTE 3 - FIXED ASSETS Fixed Assets consisted of the following:
March 31, September 30,
2011 2010
------------- -------------
Furniture $ 936 $ 936
Equipment 47,480 47,480
------------- -------------
48,416 48,416
Less accumulated depreciation (45,346) (45,142)
------------- -------------
Net $ 3,070 $ 3,274
============= =============
Depreciation expense for the six months ended March 31, 2011 and the year ended
September 30, 2010, was $202 and $471 respectively
NOTE 4. Advances from Related Parties
2011 2010
------------- -------------
Directors and officers of the Company 88,150 86,119
------------- -------------
$ 88,150 $ 86,119
============= =============
These advances are non-interest bearing, unsecured and have no specified terms
for repayment.
NOTE 5 - STOCKHOLDERS' EQUITY
No stock was issued during the reporting period.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
On August 23, 2010, the Company entered into an irrevocable agreement to acquire
80% of the issued and outstanding share capital of Richard Y Lange, a Mexican
corporation, through the issue of 8,000,000 of the Company's common shares
valued at $0.25 per common share. Under the agreement, Richard Y Lange warrants
that shareholders equity in Richard Y Lange will not be less than 70,000,000
pesos ($5,995,000). Richard Y Lange is involved in construction, property
development and product distribution. It also owns a block plant and a sand pit.
The agreement will close as soon as Richard Y Lange has verified its assets
through audit or as agreed to by the parties. The Company represents, that prior
to Closing, there will be 10,430,652 common shares and 300,000 Preferred "B"
shares outstanding.
11
GRUPO INTERNATIONAL INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011.
(UNAUDITED)
NOTE 7 - INCOME TAXES
2011 2010
------------- -------------
Temporary differences $ 6,816 $ 5,711
------------- -------------
Loss carryforwards 2,066,258 2,060,547
Allowance for valuation (2,070,074) (2,066,258)
------------- -------------
$ -- $ --
============= =============
Potential benefits of net operating losses have not been recognized in
these financial statements because the Company can not be assured it is
more likely than not it will utilize the net operating losses carried
forward in future years.
The Company's tax returns have not yet been filed and when they are filed
will be subject to audits and potential penalties and reassessments by
taxation authorities. The outcome of audits can not be reasonably
determined and the potential impact on the financial statements is not
determinable.
NOTE 8 - RELATED PARTY TRANSACTIONS
The following table summarizes the Company's related party transactions,
that occurred in the normal course of operations for the year, which are
measured at the exchange amount agreed to by the related parties:
2011 2010
------------- -------------
Directors and officers compensation $ 20,000 $ 18,000
============= =============
12
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
We were incorporated in January of 1997, and do not have any significant
operating history or financial results. We began our vaccine development and
marketing operations, including the pre-clinical testing in Russia of our
proposed vaccine designed to combat HIV/AIDS, building an infrastructure and
researching our proposed vaccine. We have been unable to raise sufficient
working capital to commence trials. As a result, research and development costs
for the three months ended March 31, 2011 increased by $578 from $5,257 for the
three months ended March 31, 2010 to $5,835 for the three months ended March 31,
2011. The increase in expenses was a result of increased accrued directors
expense, offset by lower premises costs due to a lower US dollar.
Administrative expenditure increased by $1,452 from $5,308 for the quarter ended
March 31, 2010 to $6,759 for the quarter ended March 31, 2011.The increase in
administrative costs was due to increased accrued director costs and
subscription costs. The Company received no interest income during the quarters
ended March 31, 2011 and March 31, 2010. We incurred a net loss of $12,696 or
$(0.01) per share based on 10,430,652 weighted average shares outstanding for
the quarter ended March 31, 2011 compared to a loss of $10,683 or $(0.01) per
share based on 9,830,652 weighted average shares outstanding for the quarter
ended March 31, 2010.
Research and development costs for the six months ended March 31, 2010 increased
by $1,043 from $10,568 for the six months ended March 31, 2011 to $11,611 for
the six months ended March 31, 2011. The increase in expenditure was a result of
increased accrued director costs. General and Administration expenditure for the
six months ended March 31, 2011 increased by $3,116 from $10,506 for the six
months ended March 31, 2010 to $13,622 for the six months ended March 31, 2011.
The increase in expenses was due to an increase in directors accrued fees and an
increase in subscriptions. We did not conduct any operations of a commercial
nature during the period from January 10, 1997 (date of inception) to March 31,
2011. We have relied on advances of approximately $88,150 from our principal
stockholders, trade payables of approximately $377,014, proceeds of $1,196,292
from the sale of common stock and the issue of stock for fees and/or services in
the amount of $4,665,600 to support our limited operations. As of March 31,
2011, we had approximately $1,911 of cash and cash equivalents. Operations for
the six months ended March 31, 2011 have been financed through loans from
related parties, and an increase in payables. We seek additional equity or debt
financing of up to $7 million which we plan to use to use for working capital
and to continue implementing pre-clinical and Phase I/II testing of our proposed
vaccine. If we do not get sufficient financing, we may not be able to continue
as a going concern and we may have to curtail or terminate our operations and
liquidate our business (see Note 1 to financial statements).
Our business plan requires at least $6,000,000 to implement, and cannot
be implemented until funding for this amount has been achieved. When the funding
has been achieved, we plan, in the first year, to implement a PhaseI/II trial
with the Medical Control Agency in The United Kingdom through the application
for a CTX exemption to commence a Phase I/II trial. We plan to apply for a CTX
exemption using the Clade B strain of the virus as soon as a vaccine using the
local Clade B strain is made available. The manufacture of the vaccine will be
contracted out and the Company to a company or organization that specializes
manufacturer of vaccines. We have previously manufactured vaccine in Russia and
the UK.
We also plan, subject to financing, in the future, to initiate further
animal trials in either Russia, in conjunction with The Russia Federal Aids
Center, a department of The Central Institute of Epidemiology, Moscow, Russia,
or other European counties. We intend to institute studies of the efficacy of
the vaccine in non-human primates in parallel or preceding Phase I trials of the
vaccine in human subjects in Moscow, Russia.
13
In addition, and subject to financing, we anticipate initiating a Phase
I/II trial in Sub-Sahara Africa using the local African HIV sub-type. These
trials will be done in conjunction with local Government and would commence
after a satisfactory pre-clinical trial has completed the evaluation of toxicity
and immunogenicity of the local strain. However, we cannot initiate the
pre-clinical or Phase I/II trials until such time as we have raised at least $6
million, which is the minimum amount we anticipate we will need for these
trials. Furthermore, in addition to restrictions due to lack of funding, we also
need to manufacture a batch of the vaccine to initiate these trials. We cannot
manufacture a batch until we have an agreement in place with a country in Africa
that is prepared to work with us. It is estimated that these pre-clinical trials
would take approximately twelve months to complete once we have an agreement in
place. If these trials take place, we intend to invite the Division of AIDS of
National Institute of Allergy and Infectious Diseases to monitor the African
trials.
No trials are currently scheduled to take place in the United States.
However, it is our intention to invite the National Institute of Health (NIH)
through the offices of The Division of AIDS (DIADS) to assist in the planning
and execution of the trials and monitor the trials described above.
We estimate that we will require approximately $6 million to $7 million
to conduct our vaccine development activities through a period of two years.
This amount will be used to pay for vaccine manufacture, vaccine trial costs and
testing, equipment and corporate overhead. We are hoping to raise a minimum of
$6 million through one or more private offerings pursuant to Rule 506 or
Regulation D or through an offshore offering pursuant to Regulation S; however,
nothing in this quarterly report shall constitute an offer of any securities for
sale. Such shares if sold will not have been registered under the Act and may
not be offered or sold in the United States absent registration or an applicable
exemption from registration requirements. In addition we are looking at other
financing methods including finding joint venture partners who might provide
substantial funding to the project or the granting of sub-licenses on payment of
upfront fees with the payment of on-going royalties on sales. We are also
looking at the possibility of acquiring other technologies or business which
might assist in financing.
If we are unable to raise at least $6 million, we will most likely
cease all activity related to our vaccine development and marketing, or at the
very least, proceed on a reduced scale. We have to date relied on a small number
of investors to provide us with financing for the commencement of our
development program, including Intracell Vaccines Limited. Amounts owed to these
individuals are payable upon demand.
Subject to financing, we expect to purchase approximately $500,000 in
equipment to be used for research and expanding testing laboratories. In
addition, with available funding, we expect to hire an additional fifteen
employees for both research and administrative support over the duration of the
research.
On August 23, 2010, we entered into an irrevocable agreement for the purchase of
80% of Richard Y Lange, a Mexican corporation through the issue of 8,000,000
common shares at closing. Terms of the agreement provide that Richard Y Lange
verify its assets at not less than 70,000,000 pesos (approximately $5,000,000)
and that they provide audited financial statements prior to the closing of the
transaction.
Richard Y Lange is a Mexican corporation involved in contracting and
construction related activities. These activities include the supply of
engineering services, construction activities, the wholesale distribution of
hardware product and property development. The company also owns a non-operating
block plant and sand pit. The Company's plan is to operate Richard Y Lang as a
separate operating division. We expect the acquisition to close in the third
quarter of 2011.
14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
Item 4. Controls and Procedures.
During the six months ended March 31, 2011, there were no changes in our
internal controls over financial reporting (as defined in Rule 13a- 15(f) and
15d-15(f) under the Exchange Act) that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Evaluation of Disclosure Controls and Procedures:
Our chief executive officer and chief financial officer have concluded that the
disclosure controls and procedures were not effective as of March31, 2011. These
controls are meant to ensure that information required to be disclosed by the
issuer in the reports that it files or submits under the Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms and to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the Act is
accumulated and communicated to the issuer's management, including its principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.
The registrant has been delinquent in its SEC filing. Management has only
recently prepared the required reports for filing. Management intends to
implement internal controls to ensure that similar situations do not occur in
the future and that required SEC filings will be timely.
Management's Annual Report on Internal Control over Financial Reporting:
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control over financial reporting
is the process designed by and under the supervision of Kevin Murray, chief
financial officer, or the persons performing similar functions, to provide
reasonable assurance regarding the reliability of our financial reporting and
the preparation of our financial statements for external reporting in accordance
with accounting principles generally accepted in the United States of America.
Mr. Murray has evaluated the effectiveness of our internal control over
financial reporting using the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control over
Financial Reporting - Guidance for Smaller Public Companies.
The chief financial officer and chief executive officer has assessed the
effectiveness of our internal control over financial reporting as of March 31,
2011, and concluded that it is not effective for the reasons discussed above.
This annual report does not include an attestation report of the registrant's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the
registrant's registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission that permit the registrant to provide
only management's report in this annual report.
Evaluation of Changes in Internal Control over Financial Reporting:
Our chief executive officer and chief financial officer have evaluated changes
in our internal controls over financial reporting that occurred during the
period ended March 31, 2011. Based on that evaluation, our chief executive
officer and chief financial officer did not identify any change in our internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
Important Considerations:
The effectiveness of our disclosure controls and procedures and our internal
control over financial reporting is subject to various inherent limitations,
including cost limitations, judgments used in decision making, assumptions about
the likelihood of future events, the soundness of our systems, the possibility
of human error, and the risk of fraud. Moreover, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions and the risk that the degree
of compliance with policies or procedures may deteriorate over time. Because of
these limitations, there can be no assurance that any system of disclosure
controls and procedures or internal control over financial reporting will be
successful in preventing all errors or fraud or in making all material
information known in a timely manner to the appropriate levels of management.
15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently subject to any legal proceedings or claims.
Item 1A. Risk Factors
Not applicable for smaller reporting company
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. REMOVED AND RESERVED
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS.
Certification of the Principal Executive Officer and Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of the Principal Executive Officer and Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 29th day of July, 2011.
GRUPO INTERNATIONAL INC.
/s/ Ramon Richard
-------------------------------
Ramon Richard
President and Chief Executive Officer
/s/ Kevin Murray
-------------------------------
Kevin W. Murray
Chief Financial Officer
1
