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 June 30, 2009
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.
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(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|
There were 10,430,652 shares of common stock outstanding, and 300,000 shares of
preferred series "B" stock outstanding 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 2009 (UNAUDITED) 3
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2009 AND 2008
PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO
JUNE 30, 2009(UNAUDITED) 4
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 2009 AND 2008 AND
PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO
JUNE 30, 2009 (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 4. CONTROLS AND PROCEDURES 13
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,
2009 2008
------------ ------------
Current Assets
Cash and equivalents $ 872 $ 897
------------ ------------
Total current assets 872 897
------------ ------------
Furniture and Equipment, Net (Note 3) 3,882 4,289
------------ ------------
Total assets $ 4,754 $ 5,186
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable 86,796 92,508
Accrued Liabilities 213,471 184,971
Related Parties (Note 8) 539,467 538,899
------------ ------------
Total Current Liabilities 839,734 $ 816,378
------------ ------------
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;
9,831,652 shares issued and
outstanding, respectively 9,831 9,831
Additional paid in capital 6,434,160 6,434,160
Deficit accumulated during the
development stage (7,193,977) (7,162,226)
Accumulated other comprehensive loss (88,094) (96,057)
------------ ------------
Total stockholders' deficit (834,980) (811,192)
------------ ------------
Total liabilities and
stockholders' deficit $ 4,754 $ 5,186
============ ============
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, 2009 & 2008, THE NINE MONTHS ENDED JUNE 30,
2009 & 2008 AND FOR THE PERIOD FROM
JANUARY 10, 1997 (INCEPTION) TO JUNE 30, 2009
(UNAUDITED)
Period from
January 10,
1997
Three Months Ended Nine Months Ending (Inception)
------------------------ ------------------------ to
June 30, June 30, June 30, June 30, June 30,
2009 2008 2009 2008 2009
---------- ---------- ---------- ---------- -----------
Expenses
Research and development costs 5,329 4,990 15,774 15,012 1,799,043
General and administrative 5,210 4,680 15,570 14,040 830,873
Legal fees -- -- -- -- 1,500,028
Licensing fees -- -- -- -- 635,500
Patent fees -- -- -- 24,489 2,045,239
Loss on disposal of assets -- -- -- -- 30,195
Depreciation and amortiszation 135 156 407 54,432 175,572
Write down of intangible assets -- -- -- -- 53,963
Gain on forgiveness of debt -- -- -- (566,005) (566,005)
---------- ---------- ---------- ---------- -----------
10,674 9,826 31,751 (458,032) 6,504,408
---------- ---------- ---------- ---------- -----------
Loss from operations (10,674) (9,826) (31,751) 458,032 (6,504,408)
---------- ---------- ---------- ---------- -----------
Other Income (Expense)
Other expenses -- -- -- -- (261,162)
-- -- -- -- 3,774
---------- ---------- ---------- ---------- -----------
-- -- -- -- (257,388)
---------- ---------- ---------- ---------- -----------
Loss from continuing operations (10,674) (9,826) (31,751) 458,032 (6,761,796)
Loss from Discontinued Operations -- -- -- -- (432,181)
---------- ---------- ---------- ---------- -----------
Net loss (10,674) (9,826) (31,751) 458,032 (7,193,977)
========== ========== ========== ========== ===========
Foreign Currency Translation
Adjustment (12,170) (0) 7,963 1,974 (88,093)
Comprehensive Loss (22,844) (9,826) (23,788) 460,006 (7,282,070)
========== ========== ========== ========== ===========
Loss per weighted average share
of common stock outstanding
- basic and diluted $ (0.00) $ (0.00) $ (0.00) $ 0.05
========== ========== ========== ==========
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, 2009 AND 2008 AND FOR THE PERIOD
FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, 2009 (UNAUDITED)
Period from
January 10,
1997
(Inception) For the Nine Months Ended
to --------------------------
June 30, June 30, June 30,
2009 2009 2008
----------- ----------- -----------
Cash Flows From Operating Activities:
Net loss $(7,183,977) (31,751) 458,032
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization and depreciation 175,572 407 469
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 -- -- 24,489
Gain on forgiveness of debt (566,005) -- (566,005)
(Decrease) in notes payable (140,000) -- --
Write-down of intangible asset 53,963 -- 53,963
Increase in current liabilities 764,700 30,751 28,505
----------- ----------- -----------
Net Cash Used in Operating Activities (1,709,684) (593) (547)
----------- ----------- -----------
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 539,467 568 539
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 1,723,700 568 539
----------- ----------- -----------
Net increase (decrease) in cash 872 (25) (8)
Cash and equivalents at beginning of period -- 897 952
----------- ----------- -----------
Cash and equivalents at end of period $ 872 $ 872 $ 944
=========== =========== ===========
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, 2009 AND 2008 AND FOR THE PERIOD
FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, 2009 (UNAUDITED)
Period from
January 10,
1997
(Inception) For the Nine Months Ended
to --------------------------
June 30, June 30, June 30,
2009 2009 2008
----------- ----------- -----------
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, 2009.
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, 2008.
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. The Company changed its name to Grupo International Inc on
September 30, 2010.
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, 2008 , the Company
experienced a net gain of $445,805, after accounting for a gain on the
forgiveness of debt amounting to $566,005. For the year ended September 30,
2008, the Company recorded a loss of $153,870 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.
Fixed Assets: 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 using the diminishing balance method using 15%pa for office equipment
and 10% pa for office furniture.
7
HIV-VAC, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Intangible Assets: Intangible assets consisted of licensing rights. 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 when estimated future cash
flows expected to result from the use of the asset and its eventual disposition
are less than its carrying amount. The licensing rights were returned to the
license holder effective December 1, 2007. The Company recognized an impairment
loss for the book value of the intangible asset at that time.
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: 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.
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 30, 2009, and 2008 are computed based on the weighted average
common shares outstanding. Common stock equivalents have not been included in
the computation of diluted loss per share since the effect would be
anti-dilutive.
Foreign Currency: Assets and liabilities recorded in foreign currencies are
translated at the exchange rate on the balance sheet date. Revenue and expenses
are translated at average rates of exchange prevailing during the year.
Translation adjustments resulting from this process are charged or credited to
other comprehensive income.
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.
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.
Stock Issued For Services: The company enters into transactions in which goods
or services are the consideration received for the issue 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 services,
whichever is more reliably measurable. The services are expensed in the periods
that they are rendered.
8
HIV-VAC, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - FIXED ASSETS
Fixed Assets consisted of the following:
June 30, September 30,
2009 2008
------------- -------------
Furniture $ 936 $ 936
Equipment 47,480 47,480
------------- -------------
48,416 48,416
Less accumulated depreciation (44,534) (44,127)
------------- -------------
Net $ 3,882 $ 4,289
============= =============
Depreciation expense for the nine months ended June 30, 2009 and the year ended
September 30, 2008, was $407 and $626 respectively
NOTE 3 - STOCKHOLDERS' EQUITY
No stock was issued during the reporting period.
NOTE 4 - ADVANCES FROM RELATED PARTIES
June 30, Sept 30,
2009 2008
------------- -------------
Intracell Vacinnes Limited ("Intracell") $ 457,406 $ 457,406
Directors and officers of the Company 82,061 81,493
------------- -------------
$ 539,467 $ 538,899
============= =============
Intracell is a related party to the Company by virtue of the Company's
controlling shareholders owning Intracell.
These advances are non-interest bearing, unsecured and have no specified terms
for repayment.
NOTE 5 - 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:
June 30, June 30,
2009 2008
------------- -------------
Directors and officers compensation $ 27,000 $ 24,000
============= =============
9
HIV-VAC, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - FINANCIAL INSTRUMENTS
a) Fair Value
The carrying amount of cash, accounts payable, accrued liabilities,
and advances from related parties approximate fair values due to the
short term nature of these items.
The financial instruments of the Company have been classified into
levels using a fair value hierarchy.
Level 1 valuation is determined by unadjusted quoted prices in
active markets for identical assets and liabilities. The Company's
cash of $872 is classified into Level 1.
Level 2 valuation is based upon inputs other than quoted prices
included in level 1 that are observable for the instrument either
directly or indirectly. The Company's accounts payable of $86,796,
accrued liabilities of $213,471 and advances from related parties of
$539,467 are classified into level 2.
Level 3 valuation is for assets or liabilities that are not based on
observable market data.
b) Currency Risk
While the reporting currency is in the U.S. Dollar, 7% of expenses
for the period ended are denominated in U.K. pound (2008 - 24% of
expenses). As at March 31, 2009, 10% of liabilities are originally
denominated in U.K. pound (2008 - 11% of liabilities). The Company
is exposed to foreign exchange risk as the results of operations may
be affected by fluctuations in the exchange rates between U.S.
dollar and U.K. pound.
NOTE 7 - INCOME TAXES
June 30, Sept 30,
2009 2008
------------- -------------
Temporary differences $ 14,876 $ 14,562
Loss carryforwards 2,070,603 1,885,254
Allowance for valuation (2,085,479) (1,899,816)
------------- -------------
$ -- $ --
============= =============
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.
10
HIV-VAC, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - SUBSEQUENT EVENTS
a) 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 the number of common
shares by 8,736
b) 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, 2009 increased by $339 from $,4,990 for the
three months ended June 30, 2008 to $5,329 for the three months ended June 30,
2009. The reduction in costs was a result of a increase in accrued director
costs. Administrative expenditure increased $530 from $4,680 for the quarter
ended June 30, 2008 to $5,210 for the quarter ended June 30, 2009. The increase
in expenditure was mainly due to an increase in subscription costs. We received
no interest income during the quarters ended June 30, 2009 and June 30, 2008.
We incurred a net loss of $10,674 or $(0.01) per share based on
9,830,653 weighted average shares outstanding for the quarter ended June 30,
2009 compared to $9,826 or $(0.01) per share based on 9,830,653 weighted average
shares outstanding for the quarter ended June 30, 2008.
Research and development costs for the nine months ended June 30, 2009
increased by $762 from $15,012 for the nine months ended June 30, 2008 to $
15,774 for the nine months ended June 30, 2009. The increase in expenditure is a
result of an increased accred director fees offset by a reduction in premesis
costs. General and Administration expenditure increased by $1,530 from $14,040
for the nine months ended June 30, 2008 to $15,570 for the nine months ended
June 30, 2009. Patent fees expense reduced by $24,489 from $24,489 for the nine
months ended June 30, 2009 to $nil for the quarter ended June 30,2008. The
reduction in patent fees was due to the Company returning the licensing rights
to the licensor in December 01, 2007. The gain on the forgiveness of debt for
the nine months ended June 30, 2008 resulted from the Company returning the
licensing rights, and the lincensor waivig outstanding royalty paymets. We
incurred a loss of $31,151 or $(0.01) per share based on 9,830,653 weighted
average shares outstanding for the nine months ended June 30, 2007 compared to a
gains of $458,032 or $(0.04) per share based on 9,830,653 weighted average
shares outstanding for the nine months ended June 30, 2008.
We did not conduct any operations of a commercial nature during the
period from January 10, 1997 (date of inception) to June 30, 2009. We have
relied on advances of approximately $539,467 from our principal stockholders,
trade payables of approximately $551,229, proceeds of $1,196,000 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, 2009, we had
$872 of cash and cash equivalents.
Operations for the nine months ended June 30, 2009 have been financed
through payables, and 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).
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.
12
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.
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.
13
Item 3. Controls and Procedures.
(a) Disclosure controls and procedures . Within 90 days before filing this
report, the Company evaluated the effectiveness of the design and operation of
its disclosure controls and procedures. The Company's disclosure controls and
procedures are the controls and other procedures that it designed to ensure that
it records, processes, summarizes and reports in a timely manner the information
it must disclose in reports that it files with or submits to the Securities and
Exchange Commission. Mr Murray, the Company's Chief Executive Officer and Chief
Financial Officer, supervised and participated in this evaluation. Based on this
evaluation, Mr Murray concluded that, as of the date of their evaluation, the
Company's disclosure controls and procedures were effective.
(b) Internal controls. Since the date of the evaluation described above, there
have not been any significant changes in the Company's internal accounting
controls or in other factors that could significantly affect those controls.
14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently subject to any legal proceedings or claims.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits: Exhibits required to be attached by Item 601 of Regulation S-B
are listed below:
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.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the period
covered by this Form 10Q-SB
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
