10-Q 1 grupo10q06302008.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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, ~~2007~~2008 & ~~2006~~2007, THE NINE MONTHS ENDED JUNE 30, ~~2007~~2008 & ~~2006~~2007 AND FOR THE PERIOD FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, ~~2007~~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, ~~2007~~2008 ~~2006~~ 2007 ~~2006~~2008 2007 2008 ---------- ---------- ---------- ---------- ----------- Expenses Patent fees -- 24,488 2124,~~510~~489 70,487 662,~~970 1~~045,~~992,830~~239 Research and development costs 4,~~981~~990 4,~~908~~981 1415,~~868~~012 14,~~638~~868 1,~~767~~787,~~366~~380 General and administrative 4,~~501~~680 4,~~680~~501 14,~~221~~040 14,~~040~~221 ~~769~~789,~~848~~122 Depreciation and amortization 156 4,034 454,~~062~~432 12,103 12228,~~187~~971 ~~170,504~~ Legal fees -- -- -- -- 1,500,028 Licensing fees -- -- -- -- 635,500 Loss ~~from~~on disposal of assets -- -- -- -- 30,195 ---------- ---------- ---------- ---------- ----------- 9,826 38,004 35107,~~160~~973 111,679 ~~107~~7,~~835 6~~016,~~866,271~~435 ---------- ---------- ---------- ---------- ----------- Loss from operations (9,826) (38,004) (35107,~~160~~973) (111,679) (~~107~~7,~~835) (6~~016,~~866,271~~435) ---------- ---------- ---------- ---------- ----------- Other Income (Expense) Other expenses -- -- -- -- (261,162) --Other Income -- -- 566,005 -- 3569,~~774~~779 ---------- ---------- ---------- ---------- ----------- -- -- -- -- ~~(257~~308,~~388)~~617 ---------- ---------- ---------- ---------- ----------- Loss from continuing operations (389,~~004~~826) (3538,~~160~~004) 458,032 (111,679) (~~107~~6,~~835) (7~~707,~~133,659~~818) Loss from Discontinued Operations -- -- -- -- (432,181) ---------- ---------- ---------- ---------- ----------- Net loss (389,~~004~~826) (3538,~~160~~004) 458,032 (111,679) (~~107,835) (~~7,~~555~~139,~~840~~999) ========== ========== ========== ========== =========== Foreign Currency Translation Adjustment (--) (13,312) ~~(20~~1,~~826)~~974 (38,255) (25105,~~989~~362) ~~(96,521)~~ Comprehensive Loss (9,826) (51,216) (55460,~~986~~006) (149,934) (~~133,824) (~~7,~~662~~245,361) ========== ========== ========== ========== =========== Loss per weighted average share of common stock outstanding - basic and diluted $ (0.0100) $ (0.0100) $ (0.0205) $ (0.0102) ========== ========== ========== ========== 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, ~~2007~~2008 AND ~~2006~~2007 AND FOR THE PERIOD FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, ~~2007~~2008 (UNAUDITED) Period from January 10, 1997 (Inception) For the Nine Months Ended to -------------------------- June 30, June 30, June 30, ~~2007~~2008 2008 2007 ~~2006~~ ----------- ----------- ----------- Cash Flows From Operating Activities: Net loss $(7,~~555~~139,~~840~~999) 458,032 (111,679) ~~(107,835)~~ Adjustments to reconcile net loss to net cash used in operating activities: Amortization and depreciation ~~170~~175,~~505~~009 470 12,104 ~~12,187~~ 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 ~~(48~~-- 24,~~976)~~489 (27,467) Gain on forgiveness of debt (19566,~~070~~005) (566,005) -- (Decrease) in notes payable (140,000) ~~Increase~~-- in-- ~~payables~~Write-down ~~and~~of intangible asset 53,963 53,963 -- Increase in current liabilities ~~786~~722,~~320~~586 28,503 126,343 ~~50,000~~ ----------- ----------- ----------- Net Cash Used in Operating Activities (1,~~601~~708,~~928~~383) (~~699~~548) (~~64,718~~699) ----------- ----------- ----------- 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 ~~431~~538,~~783~~238 539 719 ~~64,726~~ 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,~~616~~722,~~016~~471 539 719 ~~64,726~~ ----------- ----------- ----------- Net increase (decrease) in cash 944 20 (8) 20 Cash and equivalents at beginning of period -- 952 924 ~~906~~ ----------- ----------- ----------- Cash and equivalents at end of period $ 944 $ 944 $ ~~914~~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, ~~2007~~2008 AND ~~2006~~2007 AND FOR THE PERIOD FROM JANUARY 10, 1997 (INCEPTION) TO JUNE 30, ~~2007~~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,~~727~~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. 13 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. 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. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 15 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be Signed on its behalf by the undersigned, thereunto duly authorized, this 30th day of September 2011. HIV-VAC, INC. /s/ Kevin W. Murray ------------------------------- Kevin W. Murray President and CEO 16

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