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, 2010
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|
There are 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 MARCH 31, 2010 (UNAUDITED) 3
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2010 AND 2009 AND
SIX MONTHS ENDED MARCH 31, 2010 AND 2009 AND
PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO
MARCH 31, 2010 (UNAUDITED) 4
CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2010 AND 2009 AND
PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO
MARCH 31, 2010 (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 13
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 SHEETS (Unaudited)
ASSETS
March 31, September 30,
2010 2009
------------- -------------
Current Assets
Cash and equivalents $ 796 $ 847
Total current assets -- 847
------------- -------------
Furniture and equipment, net 3,510 3,746
------------- -------------
Total assets $ 4,306 $ 4,593
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accrued liabilities:
Accounts payable 80,815 87,356
Accrued Liabilities 241,971 222,971
Related parties (Note 4) 83,193 540,129
------------- -------------
Total Current Liabilities 405,979 $ 850,456
------------- -------------
Stockholders' Equity (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 -0- shares issued and
outstanding, respectively 3,000 3,000
Common stock, $0.001 par value;
500,000,000 shares authorized;
9,830,652 and 9,830,652 shares issued
and outstanding, respectively 9,831 9,831
Additional paid in capital 6,891,564 6,434,160
Deficit accumulated during the
development stage (7,226,886) (7,205,576)
Accumulated other comprehensive loss (79,282) (87,378)
------------- -------------
Total stockholders' equity (deficit) (401,673) (845,863)
------------- -------------
Total liabilities and
stockholders' equity (deficit) $ 4,306 $ 4,593
============= =============
See accompanying notes to unaudited condensed financial statements.
3
HIV-VAC, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Period from
January 10,
1997
Three Months Ended Six Months Ending (Inception)
------------------------ ------------------------ to
March 31, March 31, March 31, March 31, March 31,
2010 2009 2010 2009 2010
---------- ---------- ---------- ---------- -----------
Expenses
General and administrative 5,308 5,181 10,506 10,361 827,537
Research and development costs 5,257 5,215 10,568 10,445 1,824,916
Depreciation and amortization 118 135 236 271 175,944
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
---------- ---------- ---------- ---------- -----------
10,683 10,531 21,310 21,076 7,093,322
---------- ---------- ---------- ---------- -----------
Loss from operations (10,683) (10,531) 21,310 (21,076) (7,093,322)
---------- ---------- ---------- ---------- -----------
Other Income (Expense)
Other expenses -- -- -- -- (261,162)
Other Income -- -- -- -- 569,779
---------- ---------- ---------- ---------- -----------
Total other income (expense) -- -- -- -- 308,617
---------- ---------- ---------- ---------- -----------
Loss from continuing operations (10,682) (10,531) (21,310) (21,077) (6,784,705)
Loss from Discontinued Operations -- -- -- -- (432,181)
---------- ---------- ---------- ---------- -----------
Net loss (10,682) (10,531) (21,310) (21,077) (7,216,886)
========== ========== ========== ========== ===========
Foreign Currency
Translation Adjustment 5,868 1,699 8,096 20,275 (79,282)
---------- ---------- ---------- ---------- -----------
Comprehensive Loss (4,814) (8,832) (13,214) (802) (7,296,168)
========== ========== ========== ========== ===========
Loss per weighted average number of
Shares outstanding - basic
and diluted (0.00) (0.00) (0.00) (0.00)
---------- ---------- ---------- ----------
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 STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2010 AND 2009 AND FOR THE PERIOD
FROM JANUARY 10, 1997 (INCEPTION) TO MARCH 31, 2010 (UNAUDITED)
Period from
January 10,
1997
(Inception) For the Six Months Ended
to --------------------------
March 31, March 31, March 31,
2010 2010 2009
----------- ----------- -----------
Cash Flows From Operating Activities:
Net profit (loss) $(7,216,886) $ (21,310) $ (21,076)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization and depreciation 175,944 236 271
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 stock for note payable 140,000 -- --
Gain on forgiveness of debt (566,005) -- --
Write down of intangible asset 53,963 -- --
(Decrease) in notes payable (140,000) -- --
Increase in payable & accrued liabilities 796,028 20,553 20,386
----------- ----------- -----------
Net Cash Used in Operating Activities (1,710,891) (520) (419)
----------- ----------- -----------
Cash Flow From Investing Activities:
Purchase of patent rights (85,000) -- --
Purchase of furniture and equipment (48,416) -- --
Purchase of treasury stock (11,767) -- --
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 540,598 469 359
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 1,724,831 469 359
----------- ----------- -----------
Net increase (decrease) in cash 796 (51) (60)
Cash and equivalents at beginning of period -- 847 897
----------- ----------- -----------
Cash and equivalents at end of period $ 796 $ 796 $ 837
=========== =========== ===========
See accompanying notes to unaudited condensed financial statements.
5
HIV-VAC, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2010 AND 2009 AND FOR THE PERIOD
FROM JANUARY 10, 1997 (INCEPTION) TO MARCH 31, 2010 (UNAUDITED)
Period from
January 10,
1997
(Inception) For the Six Months Ended
to --------------------------
March 31, March 31, March 31,
2010 2010 2009
----------- ----------- -----------
Supplemental Disclosure of Cash Flow Information:
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
MARCH 31, 2005.
(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, 2009.
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 year ended September 30, 2009 , the Company
experienced a net loss of $43,350, For the year ended September 30, 2008, the
Company recorded a gain of $455,805 after accounting for a gain on the
forgiveness of debt amounting to $566,005. 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
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 March 31, 2010, and 2009 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:
March 31, September 30,
2010 2009
------------- -------------
Furniture $ 936 $ 936
Equipment 47,480 47,480
------------- -------------
48,416 48,416
Less accumulated depreciation (44,906) (44,670)
------------- -------------
Net $ 3,510 $ 3,746
============= =============
Depreciation expense for the six months ended March 31, 2010 and the year ended
September 30, 2010, was $236 and $543 respectively
NOTE 3 - STOCKHOLDERS' EQUITY
No stock was issued during the reporting period.
NOTE 4 - ADVANCES FROM RELATED PARTIES
Mar 31, Sept 30,
2010 2009
------------- -------------
Intracell Vacinnes Limited ("Intracell") $ -- $ 457,406
Directors and officers of the Company 83,193 82,723
------------- -------------
$ 83,193 $ 540,129
============= =============
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:
Mar 31, Mar 31,
2010 2009
------------- -------------
Directors and officers compensation $ 18,000 $ 18,000
============= =============
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 $796 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 $80,815,
accrued liabilities of $241,971 and advances from related parties of
$83,1933 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 (2009 - 7% of
expenses). As at March 31, 2010, 19% of liabilities are originally
denominated in U.K. pound (2009 - 9% 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
Mar 31, Sept 30,
2010 2009
------------- -------------
Temporary differences $ 14,811 $ 14,741
Loss carryforwards 2,074,027 2,064,483
Allowance for valuation (2,088,838) (2,079,224)
------------- -------------
$ -- $ --
============= =============
Potential benefits of net operating losses have not been recognized in
these financial statements because the Company cannot 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 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, 2010 increased by $42 from $5,215 for the
three months ended March 31, 2009 to $5,257 for the three months ended March 31,
2010. Administrative expenditure increased by $126 from $5,181 for the quarter
ended March 31, 2009 to $5,308 for the quarter ended March 31, 2010. The Company
received no interest income during the quarters ended March 31, 2010 and March
31, 2009. We incurred a net loss of $10,683 or $(0.00) per share based on
9,830,652 weighted average shares outstanding for the quarter ended March 31,
2010 compared to a loss of $10,531 or $(0.00) per share based on 9,830,652
weighted average shares outstanding for the quarter ended March 31, 2009.
Research and development costs for the six months ended March 31, 2010 increased
by $123 from $10,445 for the six months ended March 31, 2009 to $10,568 for the
six months ended March 31, 2010. The increase in expenditure was a result of
increased premises costs due a weaker dollar. General and Administration
expenditure for the six months ended March 31, 2010 increased by $145 from
$10,361 for the six months ended March 31, 2009 to $10,506 for the six months
ended March 31, 2010. We incurred a net loss of $21,310 or $(0.00) per share
based on 9,830,652 weighted average shares outstanding for the quarter ended
March 31, 2010 compared to a loss of $21,076 or $(0.00) per share based on
9,830,652 weighted average shares outstanding for the quarter ended March 31,
2009.
We did not conduct any operations of a commercial nature during the
period from January 10, 1997 (date of inception) to March 31, 2010. We have
relied on advances of approximately $83,193 from our principal stockholders,
trade payables of approximately $554,057, 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 March 31, 2010, we had
approximately $796 of cash and cash equivalents. Operations for the six months
ended March 31, 2010 have been financed through a 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).
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. 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.
12
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 $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.
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, 2009, 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.
13
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, 2010. 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,
2010, 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, 2010. 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.
14
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 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, CEO & CFO
16
