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EX-32.2 - SECTION 906 CERTIFICATION OF CHIEF FINANCIAL OFFICER - HIV VAC INCgrupo10q06302006ex322.txt
EX-31.2 - SECTION 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER - HIV VAC INCgrupo10q06302006ex312.txt
EX-31.1 - SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - HIV VAC INCgrupo10q06302006ex311.txt
EX-32.1 - SECTION 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - HIV VAC INCgrupo10q06302006ex321.txt


                                  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 June 30, 2006
                                       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

                                  HIV-VAC, INC.
             (Exact name of registrant as specified in its charter)

            Nevada                                        86-0876846
            ------                                        ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)
                                 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 and 300,000
Preferred "B" stock as of September 30, 2011.


HIV-VAC, 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 JUNE 30, 2006 (UNAUDITED) 3 CONDENSED STATEMENTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2006 AND 2005 AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 AND PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO JUNE 30, 2006 (UNAUDITED) 4 CONDENSED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2006 AND 2005 AND PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO JUNE 30, 2006 (UNAUDITED) 5-6 NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 7-11 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 12 AND RESULTS OF OPERATIONS ITEM 3. QUANTATIVE AND QUALATIVE DISCLOSURE ABOUT MARKET RISK 14 ITEM 4. CONTROLS AND PROCEDURES 14 PART II-- OTHER INFORMATION 15 ITEM 1. LEGAL PROCEEDINGS 15 ITEM 1A RISK FACTORS 15 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 15 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15 ITEM 4. REMOVED OR RESERVED 15 ITEM 5. OTHER INFORMATION 15 ITEM 6. EXHIBITS 15 Exhibit 31.1 Exhibit 32.1 2
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HIV-VAC, INC. (A Development Stage Company) BALANCE SHEET (Unaudited) ASSETS June 30, September 30, 2006 2005 ------------ ------------ Current Assets Cash and equivalents $ 914 $ 906 Prepaid expenditure & Sundry Assets 43,020 23,950 ------------ ------------ Total current assets 43,934 24,856 ------------ ------------ Furniture and Equipment, Net (Note 3) 5,846 6,471 ------------ ------------ Other Assets Intangible assets, net (Note 4) 73,234 84,795 ------------ ------------ Total assets $ 123,014 $ 116,122 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts Payable 495,273 454,073 Accrued Liabilities 106,471 80,971 Related Parties (Note 8) 535,583 470,857 ------------ ------------ Total Current Liabilities 1,137,327 1,005,901 ------------ ------------ Stockholders' Deficit Preferred stock, $0.01 par value; 10,000,000 shares authorized Series A, non-preferential; 10,000 issued and outstanding 100 100 Series B, convertible, non-preferential; 1,000,000 and 1,000.000 shares issued and outstanding, respectively 3,000 3,000 Common stock, $0.001 par value; 500,000,000 shares authorized; 9,830,652 shares issued and outstanding, respectively 9,831 9,831 Additional paid in capital 6,434,159 6,434,160 Deficit accumulated during the development stage (7,418,520) (7,310,685) Accumulated other comprehensive loss (42,883) (26,185) ------------ ------------ Total stockholders' deficit (1,014,313) (889,779) ------------ ------------ Total liabilities and stockholders' deficit $ 123,014 $ 116,122 ============ ============ See accompanying notes to unaudited condensed financial statements. 3
HIV-VAC, INC. (A Development Stage Company) STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2006 & 2005, THE NINE MONTHS ENDED JUNE 30, 2006 & 2005 AND FOR THE PERIOD FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, 2006 (UNAUDITED) Period from January 10, 1997 Three Months Ended Nine Months Ending (Inception) ------------------------ ------------------------ to June 30, June 30, June 30, June 30, June 30, 2006 2005 2006 2005 2006 ---------- ---------- ---------- ---------- ----------- Expenses Patent fees 21,510 22,105 66,970 68,160 1,900,833 Research and development costs 4,908 5,900 14,638 17,784 1,747,590 General and administrative 4,680 6,810 14,040 20,916 750,467 Depreciation and amortization 4,062 4,094 12,187 12,284 154,338 Legal fees -- -- -- -- 1,500,028 Licensing fees -- -- -- -- 635,500 Loss from disposal of assets -- -- -- -- 30,195 ---------- ---------- ---------- ---------- ----------- 35,160 38,909 107,835 119,144 6,718,951 ---------- ---------- ---------- ---------- ----------- Loss from operations (35,160) (38,909) (107,835) (119,144) (6,718,951) ---------- ---------- ---------- ---------- ----------- Other Income (Expense) Other expenses -- -- -- -- (261,162) Interest income -- -- -- -- 3,774 ---------- ---------- ---------- ---------- ----------- Total other income (expense) -- -- -- -- (257,388) ---------- ---------- ---------- ---------- ----------- Loss from continuing operations (35,160) (38,909) (107,835) (119,144) (6,986,338) Loss from Discontinued Operations -- -- -- -- (432,181) ---------- ---------- ---------- ---------- ----------- Net loss (35,160) (38,909) (107,835) (119,144) (7,408,520) ========== ========== ========== ========== =========== Foreign Currency Translation Adjustment (20,826) (20,927) (25,989) 8,046 (42,883) Comprehensive Loss (55,986) (59,836) (133,824) (127,190) (7,461,403) ========== ========== ========== ========== =========== Loss per weighted average share of common stock outstanding - basic and diluted $ (0.01) $ (0.01) $ (0.01) $ (0.01) ========== ========== ========== ========== Weighted average number of common shares outstanding during period - basic and diluted 9,830,652 9,830,652 9,830,652 9,830,652 ========== ========== ========== ========== See accompanying notes to unaudited condensed financial statements. 4
HIV-VAC, INC. (A Development Stage Company) CONDENSED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 2006 AND 2005 AND FOR THE PERIOD FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, 2006 (UNAUDITED) Period from January 10, 1997 (Inception) For the Nine Months Ended to -------------------------- June 30, June 30, June 30, 2006 2006 2005 ----------- ----------- ----------- Cash Flows From Operating Activities: Net loss $(7,408,520) (107,834) (119,144) Adjustments to reconcile net loss to net cash used in operating activities: Amortization and depreciation 154,338 12,187 12,284 Officers' compensation capitalized 100,000 -- -- Other expenses relating to Noveaux acquisition 261,163 -- -- Issuance of stock for services 2,439,300 -- -- Issuance of stock for licensing fees 2,135,500 -- -- Issuance of stock for directors and officers compensation 110,100 -- -- Issuance of option for note payable 140,000 -- -- Increase in prepaid expenditure (43,019) (19,070) (27,640) (Decrease) in notes payable (140,000) -- -- Increase in payable and current liabilities 585,173 50,001 114,390 ----------- ----------- ----------- Net Cash Used in Operating Activities (1,665,965) (64,718) (20,110) ----------- ----------- ----------- Cash Flow From Investing Activities: Purchase of patent 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 advances from related parties 533,504 64,726 18,410 Proceeds from sale of treasury stock and warrants 15,000 -- -- Payment of stockholder's loan (272) -- -- Proceeds from additional paid in capital 342,108 -- -- ----------- ----------- ----------- Net Cash Provided by Financing Activities 1,680,023 64,726 18,410 ----------- ----------- ----------- Net increase (decrease) in cash 914 8 (1,700) Cash and equivalents at beginning of period -- 906 2,609 ----------- ----------- ----------- Cash and equivalents at end of period $ 914 914 909 =========== =========== =========== See accompanying notes to unaudited condensed financial statements. 5
HIV-VAC, INC. (A Development Stage Company) CONDENSED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 2006 AND 2005 AND FOR THE PERIOD FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, 2006 (UNAUDITED) Period from January 10, 1997 (Inception) For the Nine Months Ended to -------------------------- June 30, June 30, June 30, 2006 2006 2005 ----------- ----------- ----------- Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: 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) $ -- $ -- =========== =========== =========== See accompanying notes to unaudited condensed financial statements. 6
HIV-VAC, INC. (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO CONDENSED FINANCIAL STATEMENTS JUNE 30, 2005. (UNAUDITED) The unaudited condensed financial statements of HIV-VAC, Inc. included herein have been prepared by HIV-VAC pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of HIV-VAC's management, the accompanying unaudited condensed financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial information included herein. These financial statements should be read in conjunction with HIV-VAC's audited financial statements contained in its Annual Report on Form 10-K for the year ended September 30, 2005. NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. Development Stage Enterprise: HIV-VAC 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. For the years ended September 30, 2005 and 2004, the Company experienced a net loss of $157,621 and $282,182 respectively. 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. 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. Furniture and Equipment: Furniture and Equipment 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 using the diminishing balance method, using 15% for office equipment and 10% for office furniture. Intangible Assets: Intangible assets consist of licensing rights. The licensing rights are being amortized using the straight-line method over the remaining estimated economic useful life of 12 years commencing April 1999. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized 7
HIV-VAC, INC. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Cash and Cash Equivalents: For purposes of the cash flow statement, the Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents Fair Value of Financial Instruments: The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. Income Taxes: The Company accounts for income taxes under Financial Accounting Standards Board of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. No current or deferred income tax expense or benefit were recognized due to the Company not having any material operations for the years ended September 30, 2005 and 2004. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates of assets and liabilities and disclosure of contingent assets and liabilities at the date of the finical statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Net Loss Per Common Share: Basic and diluted net loss per common share for the periods ended June 2006 and 2005 are computed based on the weighted average common shares outstanding as defined by Statement of Financial Accounting Standards No. 128, "Earnings per Share". Common stock equivalents have not been included in the computation of diluted loss per share since the effect would be anti-dilutive. Foreign Currency Translation: Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Translation adjustments resulting from this process are charged or credited to other comprehensive income. Revenue and expenses are translated at average rates of exchange prevailing during the year. Gains and losses on foreign currency transactions are included in other expenses. Recent Accounting Announcements: The Company has reviewed the recent accounting pronouncements and has determined that there are no recent accounting pronouncements that will have a material effect on the Company's financial statements. 8
HIV-VAC, INC. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 2 - FIXED ASSETS Fixed Assets consisted of the following: June 30, September 30, 2006 2005 ------------- ------------- Furniture $ 936 $ 936 Equipment 47,480 47,480 ------------- ------------- 48,416 48,416 Less accumulated depreciation (42,570) (41,945) ------------- ------------- Net $ 5,846 $ 6,471 ============= ============= Depreciation expense for the nine months ended June 30, 2006 and the year ended September 30, 2005, was $625 and $962 respectively NOTE 3 - INTANGIBLE ASSETS Intangible Assets consisted of the following: June 30, September 30, 2006 2005 ------------- ------------- Licensing Rights $ 185,000 $ 185,000 Less accumulated amortization (111,766) (100,205) ------------- ------------- Net $ 73,234 $ 84,795 ============= ============= Amortization expense for the nine months ended June 30, 2006 and the year ended September 30, 2005, was $11,562 and $15,416 respectively. NOTE 4 - STOCKHOLDERS' DEFICIT No shares were issued during the period. 9
HIV-VAC, INC. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 5 - COMMINTMENTS AND CONTINGENCIES. a) On May 1, 2005, the Company entered into a lease agreement for office facility expiring on April 30, 2006. The lease for the premises is now on a month to month basis . The future minimum lease payments required under the lease is $900 per quarter. b) Stock Options. On August 7, 2001, upon determining that the Company had breached the Intracell license agreement, the Company granted Intracell 3,000,000 shares of common stock at a market value of $1.5 million, the option to acquire: i 2,500,000 shares of common stock at $0.50 per share when Phase I human trials begin, ii 2,500,000 shares of common stock at $1.00 per share when Phase III human trials begin, iii 2,500,000 shares of common stock at $2.00 per share when the Company receives a product license for the HIV vaccine from any recognized government. None of the contingencies had been met at June 30, 2006. The options expire on December 1, 2007 c) Royalty Payments under Licensing Agreement - The Company has commited to make minimum royalty payments of (pound)50,000 ($80,500) per annum, in advance to the University of Birmingham Research and Development Limited, commencing January 1, 2002. The minimum payments will remain in effect for the duration of the utilization of the patents. As of the the date if this report, the Company had not made any of the above payments. NOTE 7 - INCOME TAXES Due to net operating losses and the uncertainty of realization, no tax benefit has been recognized for operating losses. At June 30, 2005, net operating losses of approximately $6,000,000 are available for carry forward against future years' taxable income and begin expiring in the year 2014. The Company's ability to utilize its net operating loss carry forwards is uncertain and thus no valuation reserve has been provided against the Company's net deferred tax assets. 10
HIV-VAC, INC. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 8 - RELATED PARTY TRANSACTIONS The Company accrued consulting fees to certain controlling stockholders in the amounts of $24,000 for the nine month periods ended June 30, 2006 and $15,000 for the nine months ended June 30, 2005. As of June 30, 2006 and September 30, 2005, the balance due to related party stockholders arising from the normal course of business was $535,583 and $570,857 respectively. The advances were non-interest bearing and due on demand. NOTE 9 - SUBSEQUENT EVENTS a) The License Agreement was terminated effective December 1, 2007. Under the termination agreement, the $566,005 in outstanding royalty payments were forgiven. b) 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, at Closing, there will be 10,421,916 common shares and 300,000 Preferred "B" shares outstanding. Thus, the Company has agreed to reduce their common shares by 8,736 shares. c) The Company changed its name to Grupo International Inc. on September 2, 2010. 11
ITEM 2. MANAGAMENT 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 have only recently begun 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 continuing our research. Research and development costs for the three months ended June 30, 2006 decreased by $992 from $5,900 for the three months ended June 30, 2005 to $4,908 for the three months ended June 30, 2006. The reduction in costs was a result of a decrease in consulting fees due to a reduction in activities in order to conserve cash. Administrative expenditure decreased $2,130 from $6,810 for the quarter ended June 30, 2005 to $4,680 for the quarter ended June 30, 2006. The increase in expenditure was mainly due to an increase in accounting costs. Patent fees reduced by $595 from $22,105 for the quarter ended June 30, 2005 to $21,510 for the quarter ended June 30,2006. The reduction was due to a foreign exchange difference. We received no interest income during the quarters ended June 30, 2006 and June 30, 2005. We incurred a net loss of $35,160 or $(0.01) per share based on 9,830,652 weighted average shares outstanding for the quarter ended June 30, 2006 compared to $38,909 or $(0.01) per share based on 9,830,652 weighted average shares outstanding for the quarter ended June 30, 2005. Research and development costs for the nine months ended June 30, 2006 reduced by $3,146 from $17,784 for the nine months ended June 30, 2005 to $ 14,638 for the nine months ended June 30, 2006. The reduction of expenditure was a result of the company conserving cash and the reduction in consulting fees paid to Intracell Vaccines Ltd. General and Administration expenditure decreased by $6,876 from $20,916 for the nine months ended June 30, 2005 to $14,040 for the nine months ended June 30, 2006. The decrease in expenditure was mainly due to a decrease in consulting fees. Patent fees increased by $1,190 from $68,160 for the quarter ended June 30, 2005 to $66,970 for the quarter ended June 30,2006. The increase was due to a foreign exchange difference. We incurred a net loss of $107,835 or $(0.01) per share based on 9,830,652 weighted average shares outstanding for the nine months ended June 30, 2006 compared to a loss of $119,144 or $(0.01) per share based on 9,830,652 weighted average shares outstanding for the nine months ended June 30, 2005. We terminated our license agreement with the University in 2007 as we did not believe that we would be able to commercialize the vaccine prior to the expiration of the patents in 2011. We plan to continue development of the vaccine and believe that it may be possible to establish new patents, depending on the outcome of our research. We did not conduct any operations of a commercial nature during the period from January 10, 1997 (date of inception) to June 30, 2006. We have relied on advances of approximately $535,583 from our principal stockholders, trade payables of approximately $478,702, proceeds of $1,196,272 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 June 30, 2006, we had $902 of cash and cash equivalents. Operations for the nine months ended June 30, 2006 have been financed through a loan from Intracell Vaccines Limited. We seek additional equity or debt financing of up to $7 million which we plan 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 will 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). 12
Subject to financing, our business plan for the next year will consist of implementing 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 is currently evaluating various different manufacturers in Russia, the UK and the USA. 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 is currently evaluating various different manufacturers in Russia, the UK and the USA. We also plan, subject to financing, in the future, to initiate further trials in Russia, in conjunction with The Russia Federal Aids Center, a department of The Central Institute of Epidemiology, Moscow, Russia. 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. We expect the regulatory approval process to take up to six months to complete. The proposed vaccine will be manufactured in Russia, under the supervision and quality control of various parties within and without Russia, including the Federal Russia AIDS Centre in Moscow and laboratories in Birmingham and London, U.K. 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. The results of future trials in Russia and/or Africa and the UK cannot be predicted. We estimate that we will require approximately $6 million to $7 million to conduct our vaccine development activities over the next 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 which might assist in financing. 13
If we are unable to raise $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 in the next two years 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 next five years. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable for a smaller reporting company. Item 4. Controls and Procedures. During the nine months ended June 30, 2006, 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 June, 2006. 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 June 30, 2006, 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. 14
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 June 30, 2006. 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. 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. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 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, this 30th day of September 2011. HIV-VAC, INC. /s/ Kevin W. Murray ------------------------------- Kevin W. Murray President and CEO 1