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, 2008
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 issuer has two classes of stock with 10,430,652 common shares and 300,000
preferred "B" 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 30, 2008 (UNAUDITED) 3
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2008 AND 2007 AND
SIX MONTHS ENDED JUNE 30, 2008 AND 2007 AND
PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION)
TO JUNE 30, 2008 (UNAUDITED) 4
CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2008 AND 2007 AND
PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION)
TO JUNE 30, 2008 (UNAUDITED) 5-6
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 7-10
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 11
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 SHEET (Unaudited)
ASSETS
June 30, September 30,
2008 2007
------------ ------------
Current Assets
Cash and equivalents $ 944 $ 952
Prepaid expenditure & Sundry Assets -- 24,489
------------ ------------
Total current assets 944 25,441
------------ ------------
Furniture and Equipment, Net (Note 3) 4,447 4,915
------------ ------------
Other Assets
Intangible assets, net (Note 4) -- 53,963
------------ ------------
Total assets $ 5,391 $ 84,319
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable 100,952 665,925
Accrued Liabilities 174,471 148,971
Related Parties (Note 8) 538,238 537,699
------------ ------------
Total Current Liabilities $ 813,661 $ 1,352,596
------------ ------------
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 6,434,160 6,434,160
Deficit accumulated during the
development stage (7,149,999) (7,608,031)
Accumulated other comprehensive loss (105,362) (107,336)
------------ ------------
Total stockholders' deficit (808,270) (1,268,276)
------------ ------------
Total liabilities and stockholders' deficit $ 5,391 $ 84,320
============ ============
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, 2008 & 2007, THE NINE MONTHS ENDED
JUNE 30, 2008 & 2007 AND FOR THE PERIOD FROM
JANUARY 10, 1997 (INCEPTION) TO JUNE 30, 2008 (UNAUDITED)
Period from
January 10,
1997
Three Months Ended Nine Months Ending (Inception)
------------------------ ------------------------ to
June 30, June 30, June 30, June 30, June 30,
2008 2007 2008 2007 2008
---------- ---------- ---------- ---------- -----------
Expenses
Patent fees -- 24,488 24,489 70,487 2,045,239
Research and development costs 4,990 4,981 15,012 14,868 1,787,380
General and administrative 4,680 4,501 14,040 14,221 789,122
Depreciation and amortization 156 4,034 54,432 12,103 228,971
Legal fees -- -- -- -- 1,500,028
Licensing fees -- -- -- -- 635,500
Loss on disposal of assets -- -- -- -- 30,195
---------- ---------- ---------- ---------- -----------
9,826 38,004 107,973 111,679 7,016,435
---------- ---------- ---------- ---------- -----------
Loss from operations (9,826) (38,004) (107,973) (111,679) (7,016,435)
---------- ---------- ---------- ---------- -----------
Other Income (Expense)
Other expenses -- -- -- -- (261,162)
Other Income -- -- 566,005 -- 569,779
---------- ---------- ---------- ---------- -----------
-- -- -- -- 308,617
---------- ---------- ---------- ---------- -----------
Loss from continuing operations (9,826) (38,004) 458,032 (111,679) (6,707,818)
Loss from Discontinued Operations -- -- -- -- (432,181)
---------- ---------- ---------- ---------- -----------
Net loss (9,826) (38,004) 458,032 (111,679) (7,139,999)
========== ========== ========== ========== ===========
Foreign Currency Translation
Adjustment (--) (13,312) 1,974 (38,255) (105,362)
Comprehensive Loss (9,826) (51,216) (460,006) (149,934) (7,245,361)
========== ========== ========== ========== ===========
Loss per weighted average share
of common stock outstanding -
basic and diluted $ (0.00) $ (0.00) $ (0.05) $ (0.02)
========== ========== ========== ==========
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, 2008 AND 2007 AND FOR THE PERIOD
FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, 2008 (UNAUDITED)
Period from
January 10,
1997
(Inception) For the Nine Months Ended
to --------------------------
June 30, June 30, June 30,
2008 2008 2007
----------- ----------- -----------
Cash Flows From Operating Activities:
Net loss $(7,139,999) 458,032 (111,679)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization and depreciation 175,009 470 12,104
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 (27,467)
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 722,586 28,503 126,343
----------- ----------- -----------
Net Cash Used in Operating Activities (1,708,383) (548) (699)
----------- ----------- -----------
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 538,238 539 719
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 1,722,471 539 719
----------- ----------- -----------
Net increase (decrease) in cash 944 (8) 20
Cash and equivalents at beginning of period -- 952 924
----------- ----------- -----------
Cash and equivalents at end of period $ 944 $ 944 $ 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, 2008 AND 2007 AND FOR THE PERIOD
FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, 2008 (UNAUDITED)
Period from
January 10,
1997
(Inception) For the Nine Months Ended
to --------------------------
June 30, June 30, June 30,
2008 2008 2007
----------- ----------- -----------
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
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, 2007.
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 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, 2007 and 2006, the
Company experienced a net loss of $153,870 and $143,476 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, 2008 and 2007.
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 2008 and 2007 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,
2008 2007
------------- -------------
Furniture $ 936 $ 936
Equipment 47,480 47,480
------------- -------------
48,416 48,416
Less accumulated depreciation (43,969) (43,501)
------------- -------------
Net $ 4,447 $ 4,915
============= =============
Depreciation expense for the nine months ended June 30, 2008 and the year ended
September 30, 2007, was $469 and $722 respectively
NOTE 3 - INTANGIBLE ASSETS
Intangible Assets consisted of the following:
June 30, September 30,
2008 2007
------------- -------------
Licensing Rights $ 185,000 $ 185,000
Less accumulated amortization (185,000) (131,037)
------------- -------------
Net $ 0 $ 53,963
============= =============
Amortization expense for the nine months ended June 30, 2008 and the year ended
September 30, 2007, was $53,963 and $15,416 respectively.
NOTE 4 - STOCKHOLDERS' DEFICIT
No shares were issued during the period.
NOTE 5 - COMMINTMENTS AND CONTINGENCIES.
Royalty Payments under Licensing Agreement - The Company was committed 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. The license agreement was mutually
terminated on December 01, 2007. Under the termination agreement, the licence
holder agreed to waive past royalty payments outstanding in the amount of
$566,005. The Company is committed to pay the licensor a cancellation fee of
$47,741 when funds become available.
9
HIV-VAC, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
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, 2008, 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.
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, 2008 and $24,000
for the nine months ended June 30, 2007. As of June 30, 2008 and September 30,
2007, the balance due to related party stockholders arising from the normal
course of business was $538,238 and $537,669 respectively. The advances were
non-interest bearing and due on demand.
NOTE 9 - 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 their common shares by 8,736 shares.
b) The Company changed its name to Grupo International Inc. on September
2, 2010.
10
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, 2008 increased by $9 from $,4,981 for the
three months ended June 30, 2007 to $4,990 for the three months ended June 30,
2008. The reduction in costs was a result of a increase in premises costs.
Administrative expenditure increased $179 from $4,501 for the quarter ended June
30, 2007 to $4,680 for the quarter ended June 30, 2008. The increase in
expenditure was mainly due to an increase in subscription costs. Patent fees
reduced by $24,448 from $24,488 for the quarter ended June 30, 2007 to $nil for
the quarter ended June 30,2007. The decrease was due to the company returning
the patents to the holder. We received no interest income during the quarters
ended June 30, 2008 and June 30, 2007.
We incurred a net loss of $9,826 or $(0.00) per share based on
9,830,652 weighted average shares outstanding for the quarter ended June 30,
2008 compared to $38,004 or $(0.00) per share based on 9,830,652 weighted
average shares outstanding for the quarter ended June 30, 2007.
Research and development costs for the nine months ended June 30, 2007
increased by $144 from $14,868 for the nine months ended June 30, 2007 to $
15,012 for the nine months ended June 30, 2008. The increase in expenditure is a
result of an increase premises costs. General and Administration expenditure
decreased by $181 from $14,221 for the nine months ended June 30, 2007 to
$14,040 for the nine months ended June 30, 2008. Patent fees reduced by $45,988
from $70,487 for the quarter ended June 30, 2007 to $24,489 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. This
resulted in the Company amortizing the balance of the intangible asset. Under
the agreement, the licensor agreed to waive $566,005 in outstanding patent fees.
As a result, we incurred a gain of $458,032 or $(0.05) per share based on
9,830,652 weighted average shares outstanding for the nine months ended June 30,
2007 compared to a loss of $111,679 or $(0.01) per share based on 9,830,652
weighted average shares outstanding for the nine months ended June 30, 2007.
We did not conduct any operations of a commercial nature during the
period from January 10, 1997 (date of inception) to June 30, 2008. We have
relied on advances of approximately $538,238 from our principal stockholders,
trade payables of approximately $548,115, 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, 2008, we had
$944 of cash and cash equivalents.
Operations for the nine months ended June 30, 2008 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.
11
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 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.
12
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, 2008, 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, 2008. 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,
2008, 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.
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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, 2008. 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.
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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.
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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
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