10-Q 1 grupo10q12312010.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 December 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 grupo international 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 were 10,430,652 shares of common stock outstanding, and 300,000 shares of preferred series "B" stock outstanding as of September 30, 2011. GRUPO INTERNATIONAL 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 DECEMBER 2010 (UNAUDITED) 3 CONDENSED STATEMENTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 2010 AND 2009 PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO DECEMBER 31, 2010 (UNAUDITED) 4 CONDENSED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED DECEMBER 31, 2010 AND 2009 AND PERIOD FROM JANUARY 10, 1997 (DATE OF INCEPTION) TO DECEMBER 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 4. CONTROLS AND PROCEDURES 14 PART II-- OTHER INFORMATION 15 ITEM 1. LEGAL PROCEEDINGS 15 ITEM 1A RISK FACTORS 15 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 15 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15 ITEM 4. REMOVED OR RESERVED 15 ITEM 5. OTHER INFORMATION 15 ITEM 6. EXHIBITS 15 Exhibit 31.1 Exhibit 32.1 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GRUPO INTERNATIONAL INC. (A Development Stage Company) BALANCE SHEETS (Unaudited) ASSETS December 31, September 30, 2010 2010 ------------- ------------- Current Assets Cash and equivalents $ 1,995 $ 847 Prepaid Expenditure 1,125 1,500 ------------- ------------- Total current assets 3,120 2,251 ------------- ------------- Furniture and equipment, net 3,172 3,274 ------------- ------------- Total assets $ 6,292 $ 5,525 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accrued liabilities: Accounts payable 88,091 89,268 Accrued Liabilities 273,971 262,971 Related parties (Note 4) 87,849 86,119 ------------- ------------- Total Current Liabilities 449,911 $ 438,358 ------------- ------------- Stockholders' Equity (Deficit) 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; 10,431,652 and 10,431,652 shares issued and outstanding, respectively 10,431 10,431 Additional paid in capital 6,901,066 6,901,066 Deficit accumulated during the development stage (7,273,886) (7,261,147) Accumulated other comprehensive loss (84,230) (86,183) ------------- ------------- Total stockholders' equity (deficit) (443,619) (432,833) ------------- ------------- Total liabilities and stockholders' equity (deficit) $ 6,292 $ 5,525 ============= ============= See accompanying notes to unaudited condensed financial statements. 3 GRUPO INTERNATIONAL INC. (A Development Stage Company) STATEMENTS OF OPERATIONS FOR THE QUARTERS ENDED DECEMBER 31, 2010, 2009 AND FOR THE PERIOD FROM JANUARY 10, 1997 (INCEPTION) TO DECEMBER 31, 2009 Period from January 10, 1997 Quarter Quarter (Inception) Ended Ended to December 31, December 31, December 31, 2010 2009 2010 ------------ ------------ ------------ Expenses General and administrative 6,861 5,197 856,879 Research and development costs 5,776 5,311 1,842,236 Depreciation and amortization 102 118 176,282 Patent fees -- -- 2,045,239 Legal fees -- -- 1,500,028 Licensing fees -- -- 635,500 Write down of intangible asset -- -- 53,963 Loss from disposal of assets -- -- 30,195 ------------ ------------ ------------ 12,739 10,626 7,140,322 ------------ ------------ ------------ Loss from operations (12,739) (10,626) (7,140,322) ------------ ------------ ------------ Other Income (Expense) Other expenses -- -- (261,162) Interest income -- -- 569,774 ------------ ------------ ------------ Total other income (expense) -- -- 308,617 ------------ ------------ ------------ Profit (Loss) from continuing operations (12,739) (10,626) (6,831,705) Loss from discontinued operations -- -- (432,181) ------------ ------------ ------------ Net profit (loss) (12,739) (10,626) (7,263,886) ============ ============ ============ Foreign Currency Translation Adjustment 1,953 1,228 (84,230) ------------ ------------ ------------ Comprehensive Loss (10,786) (9,398) (7,348,216) ============ ============ ============ Profit(Loss) per weighted number of outstanding shares- basic and diluted $ (0.00) $ (0.00) ============ ============ Weighted average number of common shares outstanding during period - basic and diluted 10,430,652 9,830,653 ============ ============ See accompanying notes to unaudited condensed financial statements. 4

~~HIV-VAC,~~GRUPO INTERNATIONAL INC. (A Development Stage Company) CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 30, ~~2009~~2010 AND ~~2008~~2009 AND FOR THE PERIOD FROM JANUARY 10, 1997 (INCEPTION) TO DECEMBER 31, ~~2009~~2010 (UNAUDITED) Period from January 10, 1997 (Inception) For the Three Months Ended to ---------------------------- December 31, December 31, December 31, ~~2009~~2010 2010 2009 ~~2008~~ ------------ ------------ ------------ Cash Flows From Operating Activities: Net profit (loss) $ (7,~~206~~263,~~203~~886) $ (1012,~~626~~739) $ (10,~~545~~626) Adjustments to reconcile net loss to net cash used in operating activities: Amortization and depreciation ~~175~~176,~~826~~282 102 118 ~~135~~ Officers' compensation capitalized 100,000 -- -- Other expenses relating to Noveaux and LifePlan acquisitions 261,163 -- -- Issuance of stock for services 2,~~439~~449,300 -- -- 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) -- -- (Decrease) in notes payable (140,000) -- -- Increase (Decrease) in prepaid expense --(1,125) --375 -- Write-down of intangible asset 53,963 -- -- Increase ~~(decrease)~~payables and in accrued liabilities ~~785~~830,~~789~~359 11,776 10,313 ~~(8,259)~~ ------------ ------------ ------------ Net Cash Used in Operating Activities (1,~~710~~714,~~566~~349) (~~195~~486) (~~235~~195) ------------ ------------ ------------ 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 (2413,~~911~~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~~545,~~308~~245 ~~179~~1,730 179 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~~729,~~541~~488 ~~179~~1,730 179 ------------ ------------ ------------ Net increase (decrease) in cash ~~831~~1,995 1,244 (16) ~~(56)~~ Cash and equivalents at beginning of period -- 751 847 ~~897~~ ------------ ------------ ------------ Cash and equivalents at end of period $ ~~831~~1,995 $ ~~831~~1,995 $ ~~841~~831 ============ ============ ============ ~~See accompanying notes to unaudited condensed financial statements.~~ 5 ~~HIV-VAC,~~GRUPO INTERNATIONAL INC. (A Development Stage Company) CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 30, ~~2009~~2010 AND ~~2008~~2009 AND FOR THE PERIOD FROM JANUARY 10, 1997 (INCEPTION) TO DECEMBER 31, ~~2009~~2010 (UNAUDITED) Period from January 10, 1997 (Inception) For the Three Months Ended to ---------------------------- December 31, December 31, December 31, ~~2009~~2010 2010 2009 ~~2008~~ ------------ ------------ ------------ Supplemental Disclosure of Cash Flow Information: Non Cash Transactions: Issuance of common shares for Noveaux merger $ 106,525 $ -- $ -- ============ ============ ============ Issuance of common shares for LifePlan merger $ 50,000 $ -- $ -- ============ ============ ============ Preferred B stock dividend $ 10,000 $ -- $ -- ============ ============ ============ Issuance of stock to directors and officers $ 110,100 $ -- $ -- ============ ============ ============ Forgiveness of stockholder debt $ 7,227 $ -- $ -- ============ ============ ============ Cancellation of treasury stock $ (8,767) $ -- $ -- ============ ============ ============

See accompanying notes to unaudited condensed financial statements. 6 GRUPO INTERNATIONAL INC. (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO CONDENSED FINANCIAL STATEMENTS DECEMBER 31, 2010. (UNAUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The unaudited condensed financial statements of GRUPO INTERNATIONAL 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 GRUPO`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 GRUPO INTERNATIONAL INC`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: GRUPO INTERNATIONAL 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 HIV-VAC INC in 1998 and to Grupo International Inc on September 30, 2010. Development Stage Enterprise: GRUPO INTERNATIONAL 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, 2010 , the Company experienced a net loss of $55,571, For the year ended September 30, 2009, the Company recorded a loss of $43,350. 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 GRUPO INTERNATIONAL 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 December 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 GRUPO INTERNATIONAL INC. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 2 - FIXED ASSETS Fixed Assets consisted of the following: December 31, September 30, 2010 2010 ------------- ------------- Furniture $ 936 $ 936 Equipment 47,480 47,480 ------------- ------------- 48,416 48,416 Less accumulated depreciation (45,244) (45,172) ------------- ------------- Net $ 3,172 $ 3,274 ============= ============= Depreciation expense for the three months ended December 31, 2010 and the year ended September 30, 2010, was $102 and $472 respectively NOTE 3 - STOCKHOLDERS' EQUITY No stock was issued during the reporting period. NOTE 4 - ADVANCES FROM RELATED PARTIES Dec 31, Sept 30, 2010 2010 ------------- ------------- Directors and officers of the Company 87,849 86,119 ------------- ------------- $ 87,849 $ 86,119 ============= ============= 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: Dec 31, Dec 31, 2010 2009 ------------- ------------- Directors and officers compensation $ 10,000 $ 9,000 ============= ============= 9 GRUPO INTERNATIONAL 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 $1.995 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 $88,093, accrued liabilities of $273,971 and advances from related parties of $87,849 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, 6% of expenses for the period ended are denominated in U.K. pound (2009 - 7% of expenses). As at December 31, 2010, 19% of liabilities are originally denominated in U.K. pound (2009 - 21% 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 Dec 31, Sept 30, 2010 2010 ------------- ------------- Temporary differences $ 14,771 $ 14,741 Loss carryforwards 2,068,304 2,064,483 Allowance for valuation (2,083,075) (2,079,224) ------------- ------------- $ -- $ -- ============= ============= Potential benefits of net operating losses have not been recognized in these financial statements because the Company can not be assured it is more likely than not it will utilize the net operating losses carried forward in future years. The Company's tax returns have not yet been filed and when they are filed will be subject to audits and potential penalties and reassessments by taxation authorities. The outcome of audits can not be reasonably determined and the potential impact on the financial statements is not determinable. 10 GRUPO INTERNATIONAL INC. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 8 - COMMINTMENTS AND CONTINGENCIES 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. 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. In 2000 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 general research.. To date, we have been unable to obtain the funding that we need to move forward to a phase I trial. We returned the License that we held for the vaccine back to the licensor, as the license expires in 2011 and we did not believe that we would be able to commercialize the vaccine prior to the expiration of the patents. Under the termination agreement, the licensor agreed to forgo $566,005 in outstanding royalty payments, and the Company agreed to pay a cancelation fee of $38,359 when funds become available. Research and development costs for the three months ended December 31, 2010 increased by $465from $5,311 for the three months ended December 31, 2009 to $5,776 for the three months ended December 31, 2010. The increase in expenditure was due to an increase in director costs. Administrative expenditure increased by $1,664 from $5,197 for the three months ended December 31, 2009 to $6,861 for the three months ended 31 December 2010. The increase was due to an increase in salary and filing costs. For the quarter ended December 31, 2010, we incurred a loss of $12,739 or $(0.00) per share based on 10,430,652 weighted average shares outstanding for the quarter ended December 31, 2010 compared to a loss of $10,626 or $0.00 per share based on 9,830,652 weighted average shares outstanding for the quarter ended December 31, 2009. We did not conduct any operations of a commercial nature during the period from January 10, 1997 (date of inception) to December 31, 2010. Through December 31, 2010 we have relied on advances of approximately $545,245 from our principal stockholders, trade payables of approximately $556,388, 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 $4,594,800 to support our limited operations. As of December 31, 2010, we had $1,995 of cash and cash equivalents. Operations for the three months ended December 31, 2010 have been financed through a loan 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 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). Our business plan requires at least $6,000,000 to implement, and cannot be implemented until funding for this amount has been achieved. If the funding is 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. 12 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 could 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 the proposed 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 through 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 for grants from governments and organisations involved in HIV work. We are also looking at the possibility of acquiring other technologies which might assist in financing. If we are unable to raise $6 million, we will most likely cease all activity related to our vaccine development and marketing, or at the very least, proceed on a reduced scale. We have to date relied on a small number of investors to provide us with financing for the commencement of our development program, including Intracell Vaccines Limited. Amounts owed to these individuals are payable upon demand. Subject to financing, we expect to purchase approximately $500,000 in equipment in the next two years to be used for research and expanding testing laboratories. In addition, with available funding, we expect to hire an additional fifteen employees for both research and administrative support over the next five years. 13 Item 3. Controls and Procedures. (a) Disclosure controls and procedures. Within 90 days before filing this report, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company's disclosure controls and procedures are the controls and other procedures that it designed to ensure that it records, processes, summarizes and reports in a timely manner the information it must disclose in reports that it files with or submits to the Securities and Exchange Commission. Kevin W. Murray, the Company's Chief Executive Officer and Chief Financial Officer, supervised and participated in this evaluation. Based on this evaluation, Mr. Murray concluded that, as of the date of their evaluation, the Company's disclosure controls and procedures were effective. (b) Internal controls. Since the date of the evaluation described above, there have not been any significant changes in the Company's internal accounting controls or in other factors that could significantly affect those controls. 14 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are not currently subject to any legal proceedings or claims. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: Exhibits required to be attached by Item 601 of Regulation S-B are listed below: 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the period covered by this Form 10Q-SB 15 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this 30th day of September, 2011. HIV-VAC, INC. /s/ Kevin W. Murray ------------------------------- Kevin W. Murray President, CEO & CFO 16

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