UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 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
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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14 LAUREL BLVD COLLINGWOOD, ONTARIO, CANADA L9Y 5A8
(ADDRESS OF PRINCIPAL ADMINISTRATIVE OFFICES)
(705) 446 7242
(REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE SECURITIES
EXCHANGE ACT OF 1934:
COMMON STOCK ($.001 PAR VALUE)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [ ]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act Yes [ ] No [x]
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 Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.406
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [x]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant's most recently completed second fiscal
quarter, was $10,430,652.
The issuer has two classes of stock with 10,430,652 common shares and 300,000
preferred "B" outstanding as of September 30, 2011.
TABLE OF CONTENTS
PAGE
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PART I
Item 1. Business....................................................... 3
Item 2. Properties..................................................... 9
Item 3. Legal Proceedings.............................................. 9
Item 4. Submission of Matters to a Vote of Security-Holders............ 9
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters........................................... 10
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 10
Item 7. Financial Statements and Supplementary Data.................... F-1
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure........................... 14
PART III
Item 9. Directors and Executive Officers of the Registrant............. 14
Item 10. Executive Compensation......................................... 15
Item 11. Security Ownership of Certain Beneficial Owners and
Management.................................................... 16
Item 12. Certain Relationships and Related Transactions................. 17
PART IV
Item 13. Exhibits, Financial Statement Schedules and
Reports on Form 8-K........................................... 17
Item 14. Disclosure Controls and Procedure.............................. 17
SIGNATURES................................................................ 18
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2
Item 1. Business.
We were originally incorporated in Nevada in 1997. We were formerly
known as Persona Records Inc, ("Persona") a corporation involved in the
marketing and development of music recordings. In November 1998, we merged with
Nouveaux Corporation with Persona as the surviving corporation. We changed our
name to HIV-VAC Inc in March 2000 and to Grupo International Inc in September
2010.
Our business is the development and marketing of a proposed vaccine
designed to combat HIV/AIDS. This proposed vaccine, which is called NFU.Ac.HIV,
was developed by Dr. Gordon Skinner, our director of research, through the
University of Birmingham, in the U.K. The proposed vaccine was licensed to
Intracell Vaccines Limited from the University of Birmingham in November of
1998, and Intracell in turn entered into an assignment of the license agreement
with us in April of 1999. In addition to his position as our Chairman and
President, Kevin Murray was the managing Director of Intracell Vaccines Limited.
Further, our Director of Research, Dr. Gordon Skinner was a Director of
Intracell. Dr. Skinner, Kevin Murray and John Palethorpe, our Vice President,
each owned 33.33% of the outstanding shares of the common stock of Intracell
until 28 February 2006, at which time they each acquired one third of Intracell
Vaccines Ltd's shareholding in the Company. Intracell owned 6,683,244 or 67.97%
of the outstanding shares of our outstanding common stock and 10,000 or 100% of
our outstanding Series A preferred stock at that time. See security ownership of
Certain Beneficial Owners and Management.
The proposed vaccine was developed in Birmingham, UK, by Dr. Skinner.
The approach was based on twenty years experience of similar intracellular
vaccines, one of which has shown to modulate the pattern of herpes genitalis in
a multi center, placebo controlled trial in the United States and has been used
prophylactically and therapeutically on a named patient basis for two decades in
the UK.
By 1993, the underlying concept for the vaccine had been examined for
feasibility of preparation of the proposed vaccine under the guidance of Dr.
Skinner. The first experimental preparation was made using a B subtype of the
isolate HIV-1 or GB8 virus strain grown in a leukaemic T-lymphocyte cell line
from a young male known as JM cells and was manufactured at the Centre for
Applied Microbiological Research (CAMR), in Porton Down, UK. The proposed
vaccine was tested for antigenic content (protein on the surface of a cell or
bacterium that stimulates the production of antibody) at CAMR and for antigenic
content and immunogenicity (production of an immune response) in laboratories at
the Department of Infection, University of Birmingham. This work was financially
supported by the Vaccine Research Trust, a Charitable Trust registered in the UK
and chaired by Dr. Skinner. This led to the publication of a scientific paper
entitled "Early Studies on a candidate Intracellular Subunit Vaccine
NFU.AcHIV[JM] for prevention and/or modification of HIV related disease," in the
Journal Intervirolgy 1994;37:259-268.
Between 1993 and 1999 the proposed vaccine was the subject of a
research contract between Dr. Skinner, at the time a senior lecturer at the
University of Birmingham, and the Russian Federal AIDS center, Moscow, Russia.
The proposed vaccine underwent initial tests to establish optimum conditions of
preparation, antigenicity and immunogenicity in Russia, with additional tests
for antigenicity being carried out in the UK. The proposed vaccine remained the
property of the University of Birmingham during this time.
Preclinical trials were undertaken at the Russian Federal AIDS center,
Moscow, Russia during the period June 2000 through December 2001. The trials
were undertaken in small animals. Data from the trials indicate that the vaccine
appears to be safe. The vaccine was also shown to illicit an immune response in
small animals.
Our research activities since 2001 have been limited to small in-house
projects that have allowed us to maintain our ability to continue development in
the future.
We have been unable to secure funding for a phase one human trial. This
trial is estimated to require $6 million to complete and is required to
demonstrate the safety of the vaccine through the vaccination of approximately
20 healthy individuals. To date, we have had very limited success in raising
funds, and if we are unable to raise this amount, we will most likely cease all
activity related to our vaccine development and marketing.
We returned our rights to the vaccine back to the University of
Birmingham in December 2007, as the rights to the vaccine expire in 2011, and we
did not believe that we would be able to commercialize the vaccine prior to the
expiration of the patents.
3
We plan, subject to funding, to continue development of the vaccine,
and believe, that subject to further research, that it could be possible to
develop other patents, depending on the outcome of the research.
Functions of a Vaccine.
A vaccine is part of a process that stimulates the body to mount an
immune response to a harmless version of a micro-organism, or part of a
micro-organism, and from this to construct a type of immune memory which would
allow the immune system to mount a rapid response when and if the body is
invaded by a potent version of a micro-organism. This response, ideally, is
sufficiently rapid so that the micro-organism is not able to replicate to any
great extent before it is eliminated, and thus the individual vaccinated is
protected from disease. The immune memory induced by vaccination is usually
long-lived, and creates antibodies that neutralize invading micro-organisms, by
binding to them and preventing them from infecting cells, and lymphocytes, which
recognize cells infected by micro-organisms (ones the antibodies did not
destroy) and destroys them before other cells can be infected. A vaccine can
also be therapeutic because it can stimulate both the humoral and cell mediated
immunity over and above the existing immune status of a person and this is
particularly important in patients who are HIV positive because it is clearly
essential to initiate therapeutic strategy while there is residual functioning
of immune competence in these individuals. This is presently unproven but a
placebo controlled multicentre trial in the United States to look at the
therapeutic value of the herpes vaccine developed by Dr. Skinner has shown that
vaccination of patients who already had the infection modified the pattern of
genital herpes resulting in reduction in the number and severity of recurrences.
The HIV/AIDS Disease.
HIV/AIDS is a disease that has the effect of hindering the body's
immune response system, allowing for opportunistic infections and diseases, such
as tuberculosis, to overwhelm the body's immune response to disease. It does
this by infecting and killing the T-lymphocytes of the immune system, which is
consequently unable to deal with other infections, or proliferating cancer
cells. There are two variants of the disease, known as HIV-1 and HIV-2, which
share certain structural similarities, but differ greatly in certain types of
proteins that produce the effects of AIDS. HIV-1 has a shorter time between
infection and the onset of the symptoms of AIDS, and is more easily transmitted.
Transmission can occur through sexual contact, maternal transmission to infants
either in utero or through breastfeeding, or from receiving blood transfusion
from, or sharing hypodermic needles with, infected persons.
The HIV-1 virus particle has an outer envelope, which is studded with
projections of clusters of glycoprotein molecules, surrounding a dense conical
core containing the genomic material. Once received into the bloodstream (by any
of the means described above, for example), the virus essentially "docks" with a
lymphocyte cell and injects its viral core into the cell. The virus, in effect,
hijacks the cell's metabolism, using it to replicate itself so that thousands of
new particles are released into the bloodstream, and the cell dies. These
particles go on to infect other cells, in a kind of chain reaction. Cells can
also be infected by contact with infected cells, owing to certain proteins
transmitted by contact. Some virus particles can become trapped in the lymph
nodes, where they can remain for long periods and infect other cells.
Eventually, so many lymphocyte cells are infected and destroyed that the body's
immune system collapses.
The HIV-1 virus is variable, in that within HIV-1 exist 3 main groups
of HIV strains. According to the international AIDS charity known as AVERT, the
groups are the "major" group, M; the "outlier" group, O; and the "new" group, N.
Most HIV infections are part of the major or M group. Infections from the N
group are rare, and O group infections occur mostly in west-central Africa.
Group M has at least 9 different subtypes. The subtypes differ by slight
variations in the glycoproteins, which mean that any effective vaccine will have
to deal with all of these variations.
It is estimated by the AVERT, and aids awareness group, that 33 million
people are currently HIV /AIDS positive, 2.6 million were infected in 2009, and
1.2 million people died of HIV infection in 2009. It is estimated that 22.5
million of infected persons are located in sub-sahara Africa. It is estimated
that 1.5 million residents in North America are infected with the HIV/AIDS
virus. Due to all of these factors, HIV-1 has been the principal focus of
vaccine development and drug treatment.
4
Governmental Regulation of Vaccines.
Our proposed vaccine is subject to regulation by all countries. In the
United States, the vaccine is regulated by the federal government, principally
through the Food and Drug Administration under various federal laws. Regulations
promulgated by various federal, state and local governments govern or influence
the testing, manufacture, safety and efficacy requirements, labeling, storage,
record keeping, licensing, advertising, promotion, distribution and export of
our products. In general, similar regulations are found in all countries
throughout the world, though we may have to demonstrate different levels of
efficacy, depending on the regulatory requirements in each nation.
Before we can market our proposed vaccine in the United States, since
it is a biological drug product, we must take numerous steps, which include:
- pre-clinical laboratory and animal testing, to evaluate product
chemistry, formulation and stability, as well as the potential safety, purity
and potency of the proposed vaccine;
- submission to the FDA of an Investigational New Drug Application, which
includes the results of the pre-clinical laboratory and animal testing, and
which must become effective before clinical trials may commence;
- the conduct of well-controlled clinical trials, conducted in accordance
with FDA protocols (including review by an institutional review board) to
adequately establish the safety, potency and purity of the biological drug
product (i.e., our proposed vaccine), and trials to characterize how it behaves
in the human body;
- submission to the FDA of a biologics license application, and the FDA
review of same;
- completion of an FDA pre-approval inspection of the manufacturing
facilities; and
- FDA approval of the license application and all product labeling.
In addition to these steps, we are required to meet with the FDA and
its Vaccines and Related Biological Product Advisory Committee, which is
composed of outside experts who assist the FDA in product reviews, and provide
advice on various issues; in the case of our proposed vaccine, the advice would
typically relate to the clinical development program and clinical study designs
for our proposed vaccine. The recommendations of these committees are not
binding upon the FDA, but are commonly followed by the FDA. The FDA has broad
authority to suspend clinical trials, and all of the FDA's concerns must be
resolved before trials may recommence.
In general, the key element in the process is a demonstration by us
that our proposed vaccine has meaningful efficacy at a statistically significant
level, which means there must be an observed reduction in the incidence of HIV
in the group receiving our proposed vaccine, compared to the control group. As
noted above, the level of efficacy that we must demonstrate may vary from
country to country, depending on the prevailing regulations. Our initial testing
is planned to be performed in the UK and possibly Africa, there is no guarantee
that the FDA will accept the results of tests completed in these other
countries. If the FDA does not, this could cause substantial delays, by
essentially requiring similar tests in the United States in order to satisfy FDA
requirements.
It is also possible that a regulatory agency, in reviewing our proposed
vaccine's efficacy, might only approve the proposed vaccine for certain high
risk populations, thus limiting the market for our proposed vaccine by limiting
the customer base.
Even after approval of the proposed vaccine for use, the manufacture of
our proposed vaccine would be subject to a variety of laws relating to such
matters as safe working conditions, manufacturing practices, environmental
protections, fire hazard control and hazardous substance disposal, which could
incur substantial costs that we cannot predict at this time.
Our proposed vaccine's license would be subject to continual review,
and newly discovered or developed safety or efficacy data could result in
revocation of relevant licenses.
5
Our Proposed Vaccine.
General. Our proposed vaccine is designed to perform two functions. The
first function, which is typical of traditional vaccines, is to develop an
immune response in the vaccinated person in order to prevent HIV from infecting
the human body. The second is to provide therapeutic benefits, like those
described above, to people who are already infected by HIV.
Process of Manufacture. Our proposed vaccine is manufactured by
treating HIV-1 infected lymphocyctic cells with detergent, formaldehyde and
acetone treatments. What are called envelope proteins, [that is, the outer shell
of these cells] are then stripped from the newly formed viruses [within these
infected cells], virus proteins are collected, and the remaining virus
particulates are discarded. The virus proteins are then mixed with proteins
[from other, healthy cells]. This process ensures that the proposed vaccine is
inactivated (that is, the virus is not infective), but that it also contains the
vital HIV-1 glycoproteins, core proteins, regulatory and intermediate proteins
needed to produce the desired effects of the desired immunity and/or therapeutic
effects. Importantly, the method of manufacture allows us to customize a
proposed vaccine to a specific strain, including strains that may evolve over
the next few years.
We intend to rely on third parties to manufacture our proposed vaccine,
as we do not have the facilities for the large scale manufacture of the proposed
vaccine. The quality control will be carried out according to guidelines
recommended by the Medicines Control Agency in the UK which includes tests on
the antigenicity and immunogenicity of the preparation and safety testing in
animals.
The proposed vaccine was previously produced at the Russian Federal
AIDS Center. Although the Russian Federal AIDS Center is the most recent group
who have produced the proposed vaccine, we are not completely dependent upon
this group due to the fact that we feel that our proposed vaccine can be
produced elsewhere for nominal set-up costs.
We believe that our proposed vaccine differs from other vaccines
currently in development, in that it contains a wide spectrum of virus proteins
in their natural configuration with cell proteins, but does not contain virus
particles. By using this intracellular, multi-component approach, we include all
possible protective antigens and possible cross strain protective antigens. The
importance of this is that presentation of virus antigens in association with
cell proteins may preserve the immunogenicity of virus antigens and improve
their protective potential.
The manufacturing process allows slotting in of any virus strain
including new wild type virus strain or recombinant virus strain to the
preparative process. This will exclude a prolonged dead time which would be
inevitable in preparation of vaccines by more molecular methods to accommodate
new virus strains. This approach has been successfully used for many years to
manufacture the influenza vaccine where different strains may be involved in
different years.
Trials. Before any vaccine can be introduced into humans, it must be
rigorously tested under scientific conditions, in order to prove its
effectiveness and safety. This must be done before a country will allow a
vaccine to be sold and used.
Our proposed vaccine was first tested for safety, antigenicity and
immunogenicity at four different centers in the U.K., these being: the Centre
for Applied Microbiological Research in Porton Down, Wiltshire; the Medical
Research Council Mill Hill Laboratories, London; St. Bartholomew's Hospital,
London; and the Department of Infection of the University of Birmingham.
Vaccines then go through a three-stage trial process. Phase I tests for
safety and dosage in small groups of subjects. Phase II comprises larger scale
safety testing and, in the case of vaccines, whether they elicit an immune
response. Phase III comprises large scale, placebo controlled, double-blind
tests for efficacy of the preparation in subjects at high risk of infection.
As a standard industry practice, Phases I and II are often combined, or
run concurrently in the testing of vaccines, so that the first stage of tests
becomes a "Phase I/II trial."
6
We have completed initial pre- clinical trials in Russia, in
conjunction with The Russia Federal Aids Center, a department of The Central
Institute of Epidemiology, Moscow, Russia.
We intend, subject to financing, to continue pre-clinical trials in
order to establish data that will be required prior to the implementation of a
PhaseI/II trial. We plan to commence a Phase I/II trial as soon as funding
permits us to complete pre-clinical studies.
The Phase I/II trials will involve three volunteer groups, running
concurrently: a reactogenicity, safety and specific activity trial in a limited
group of healthy volunteers; an evaluation of clinical effect and safety in a
limited group of HIV-infected volunteers; and reactogenicity, safety and
specific activity trial in a limited group of volunteers who have a concurrent
illness or disease, but who are not in serious ill health. There is a specific
process, involving various entry criteria, used to screen volunteers and
determine their suitability for participation in the study. When the pool of
appropriate volunteers is complete, ten volunteers in each group will receive
four immunizations each of the proposed vaccine, at 30-day intervals, and each
volunteer will be followed up for a period of one year, with monitoring for
safety and immunological responses. Procedures exist for allowing volunteers to
voluntarily withdraw from the trail process, or withdraw mandatorily, if there
is a serious adverse effect. Subjects will be replaced until twenty subjects
have completed the trial. The trial will likely be undertaken in the United
Kingdom using the strain that is predominant in Europe. A separate trial using
the same criteria will be necessary to teat the stain that dominates Africa.
This trial would need to be undertaken in Africa after the UK trial.
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. If the
trials are successful, then we would hope to undertake a Phase I/II trial in the
United States, within two years of successfully completing trials in the UK.
There can be no assurance that we will be able to undertake such a trial in the
United States, nor can the results of the trials in the UK or Africa be
predicted.
Ultimate Market. The proposed vaccine is directed at the prominent
strain found in Russia, certain parts of Europe and the Americas, while the
proposed vaccine we anticipate preparing for Africa would be directed at the
strain prevalent in southern Africa and in India. The ability to
custom-manufacture different proposed vaccines for different strains (see the
caption above: Process of Manufacture) will enhance our ability to address the
worldwide market, by allowing us to design proposed vaccines targeting different
strains of the HIV virus present in different areas of the world.
Marketing. We intend to rely on third parties for the sales and
marketing of our proposed vaccine. To date, we have not entered into any
marketing agreements. We intend to enter into agreements for the marketing and
distribution of our proposed vaccine with partners, once we have established the
effectiveness of the proposed vaccine.
Competition. We estimate that approximately 30 other companies have
been engaged in research to produce an HIV vaccine. To our knowledge, most of
these efforts have not produced a viable vaccine. AIDSVAX, a product produced by
Vaxgen Inc, completed a phase 3 trial in both the United States and Thialand
during 2003, where results showed that the candidate vaccines were ineffective.
ALVAC, a vaccine produced by Adventis began a trial in Thialand in the Fall of
2003, but results where disappointing. In 2006, AIDSVAX was used in another
phase III trial in combination with ALVAC. The trial recruited 16,402 young
adults in Thailand, but 2007 results showed that 74 trial candidates who
received a placebo became infected compared to 51 who has received the vaccine
candidate. A phase II trial undertaken by Merck was halted pre-maturely in 2007
when it was determined that the vaccine was not effective. The International
AIDS Initiative data base shows that by July 2010, there were 2 phase II, three
Phase III and seventeen Phase I on-going trials of preventative HIV vaccine
candidates.
7
To our knowledge, our proposed vaccine is the only intracellular
multi-component vaccine in development. It also differs from other vaccines
presently in clinical trial, in that it contains a wide representation of virus
proteins in their natural configuration, but does not contain virus particles.
In addition, our proposed vaccine can be easily adapted to different virus
strains. It is our belief that these factors give our proposed vaccine more
potential for protection, therapy, and safety.
Patent Protection. We had previously acquired an assignment of license
agreement with Intracell Vaccines Limited, whereby we held exclusive rights to
patents owned by the University of Birmingham. For a description of our
obligations to the University of Birmingham under our assignment agreement see
the caption below License Agreement and Consulting Agreement. These patents
describe a method of manufacture of a HIV vaccine owned by the University of
Birmingham (see the caption above: Process of Manufacture). We had exclusive
rights to use the patents which are protected in Australia, the Netherlands,
Germany, Italy, France and Great Britain. In addition, we had the right to use
two United States patents owned by the University of Birmingham. The United
States patents relate to a method of manufacture of a herpes vaccine. We
believed that the United States patents cover all similar methods of manufacture
related to the proposed HIV vaccine and would have provided reasonable
assistance in enforcing these patents. Because these patents covered the method
of manufacture, we believe that the patents cover all strains of the HIV virus.
These patents expire in 2011, and as it was unlikely that the Company would be
in a position to commercialize the vaccine prior to the expiration of the
Patents, it was decided to return the patents to the University in 2007. We
believe that it might be possible to make new patent applications on new
developments as we continue our vaccine research.
License Agreement and Consulting Agreement.
We entered into a license assignment agreement with Intracell Vaccines
Limited, by agreement dated April 6, 1999. We agreed to assume all of Intracell
Vaccine's obligations under its license agreement with the University of
Birmingham, and issued them 57,529 shares of our common stock, and 10,000 shares
of preferred stock. We also agreed to finance the development of the proposed
vaccine, and entered into an anti-dilution agreement with Intracell Vaccines, so
that Intracell Vaccines and its shareholders would maintain a 60% interest in
our common shares (after allowing for options), up until the time we raise $5
million [in financing]. The shareholders of Intracell Vaccines also received
stock options under the license assignment agreement. These options expired on
April 1, 2004 without being excercised.
8
In addition, we, as the licensee, were responsible under the license
agreement for carrying out all clinical trials of the proposed vaccine that may
be required for patent and licensing purposes. We were also responsible for the
maintenance of the patents. In the event we, or the University of Birmingham,
made improvements to the patents, this would result in the extension of the
royalty obligations for the life of the new patent. The agreement could be
terminated if we failed to make the royalty payments within 60 days after
notice, or if we have a receiver appointed for all or any part of our assets.
At year end 30 September 2007, we were in arrears on the payment of
license fees due under the license agreement with The University of Birmingham.
We cancelled the license agreement with the University in December 2007. Under
the cancellation agreement, the University agreed to waive all outstanding
royalty payments, and the Company agreed to make a cancellation payment of
approximately $39,529 when funds are available.
We also entered into a consulting agreement with Intracell Vaccines
pursuant to which Intracell Vaccines agreed to provide us with research, process
science, clinical and regulatory support, primarily by making the services of
certain Intracell Vaccines personnel available to us. We were also required to
reimbursed Intracell Vaccines for all of its costs and expenses relating to the
provision of these services. We did not incur any consulting fees from Intracell
for the year ended September 30, 2009 and the year ended September 30, 2008. We
currently owe Intracell Vaccines $457,405 in outstanding consulting fees.
Item 2. Properties.
Our administration offices are located in Collingwood, Ontario. The
office is provided to us by Kevin Murray. We lease approximately 400 square feet
of laboratory space in Moseley, Birmingham, United Kingdom under a lease
agreement on a month to month basis at a rate of approximately $3,900 per annum.
The laboratory space in Moseley is used for storage of vaccine and limited
research that will allow us to maintain our ability to continue development of
our proposed vaccine in the future. We do not engage in any aspects of the real
estate business.
Item 3. Legal Proceedings.
We are not a party or subject to any legal proceedings the outcome of
which management believes would have a material adverse effect on our financial
condition or results of operations.
Item 4. Submission Of Matters To A Vote Of Security-Holders.
During our fiscal year ended September 30, 2009, no matters were
submitted to a vote of our security holders.
9
PART II
Item 5. Market For Registrant's Common Equity and Related Stockholder Matters.
Our common shares trade under the symbol "HIVV" in July 2001. Our
common shares ceased trading on the OTCBB on February 19, 2004, because we were
unable to maintain our full reporting status requirements for financial reasons.
We continued trading on the Pink Sheets since February 20, 2004 under the symbol
HIVV. We have been unable to retrieve historical financial information for our
trading activity during the period October 2006 through September 2009, but
believe that our shares were trading in the range of between $0.01 and $0.05.
As of September 30, 2009, there were 328 holders of record based on the
records of our transfer agent. This number does not include beneficial owners of
our common shares, of which we believe there are a substantial number whose
shares are held in the names of various securities brokers, dealers and
registered clearing agencies.
We have never paid dividends on our common shares and do not intend to
pay dividends on our common shares in the foreseeable future. Our board of
directors intends to retain any future earnings to provide funds for the
operation and expansion of our business. Any decision as to the future payments
of dividends will depend on our results of operations and financial position and
such other factors as our board of directors, in its discretion, deems relevant.
Recent Sales of Unregistered Securities
We did not issued any securities during the period
Item 6. Management's Discussion And Analysis Or Plan Of Operation.
The following discussion regarding us and our business and operations contains
forward-looking statements. Such statements consist of any statement other than
a recitation of historical fact, and can be identified by the use of such
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or the negative thereof or other variations thereon, or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative, and there are certain risks and uncertainties that
could cause actual events or results to differ materially from those referred to
in such forward-looking statements.
Summary of Significant Accounting Policies
Use of estimates:
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Impairment of long-lived assets:
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" ("SFAS 144"). Under SFAS 144, impairment
losses on long-lived assets are recognized when events or changes in
circumstances indicate that the undiscounted cash flows estimated to be
generated by such assets are less than their carrying value and, accordingly,
all or a portion of such carrying value may not be recoverable. Impairment
losses are then measured by comparing the fair value of assets to their carrying
amounts.
Net earnings (loss) per share:
The Company presents "basic" earnings (loss) per share and, if applicable,
"diluted" earnings per share pursuant to the provisions of Statement of
Financial Accounting Standards No. 128, "Earnings per Share". Basic earnings
(loss) per share is calculated by dividing net income or loss by the weighted
average number of common shares outstanding during each period. The calculation
of diluted earnings per share is similar to that of basic earnings per share,
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if all potentially dilutive
common shares, such as those issuable upon the exercise of stock options, were
issued during the period.
10
Foreign currency translation and transactions:
British assets and liabilities are translated at current exchanges rates and
expenses are translated at average exchange rates in effect during each period.
Resulting translation adjustments, if material, would be recorded as a separate
component of stockholders' deficiency. Foreign currency transaction gains and
losses, which have not been material, are included in results of operations as
incurred.
Our Plan of Operation
We were incorporated in January of 1997, and do not have any significant
operating history or financial results. We have limited 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
updating our research. As a result, for the fiscal year ended September 30, 2009
and the period from January 10, 1997 (date of inception) to September 30, 2009
we incurred approximately $21,079, and $1,814,349 in research and development
costs and $21,728 and $817,030 in general and administrative expenses,
respectively. We incurred a loss of $43,350 or $(.01) per share based on
9,830,652 weighted average shares outstanding for the fiscal year ended
September 30, 2009 compared to a loss of approximately $7,195,576 or $(.99) per
share based on 7,264,104 weighted average shares outstanding for the period from
January 10, 1997 (date of inception) to September 30, 2009.
We did not conduct any operations of a commercial nature during the period from
January 10, 1997 (date of inception) to September 30, 2009 Through September 30,
2009 we have relied on advances of approximately $540,129 from our principal
stockholders, trade payables of approximately $552,505, proceeds of $1,196,272
from the sale of common stock and the issue of stock for fees and/or services in
the amount of $4,684,900 to support our limited operations. As of September 30,
2009, we had approximately $847 of cash and cash equivalents. We seek additional
equity or debt financing of up to $7 million which we plan to use for HIV-VAC
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 terminate our operations and liquidate our
business (see Note 1 to financial statements).
Our business plan for the next year, is dependent on raising sufficient funding
to implement a Phase I/II trial in the United Kingdom through the application
for a CTX exemption with the Medical Control agency. We plan to apply for a CTX
exemption using the Clade B strain of the virus. The manufacture of the vaccine
will be contracted out to a manufacturer located in either the UK or the USA.
We also plan, subject to financing, to initiate further trials in Russia, in
conjunction with The Russia Federal Aids Center, a department of The Central
Institute of Epidemiology, Moscow, Russia. using in non-human primates in
parallel or preceding Phase I trials. We expect the regulatory approval process
to take up to twelve months to complete. The proposed primate vaccine will be
manufactured in Russia or the UK, under the supervision and quality control of
various parties, including independent laboratories in London and our laboratory
in Birmingham and London, U.K.
In addition, we anticipate, subject to financing set forth above, to initiate 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 $9
million, which is the 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.
11
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. There can be no assurance
that the results of the trials in Russia and/or Africa and the UK can be
predicted to be positive.
We estimate that we will require approximately $6 million to $7 million to
conduct our vaccine development activities through to a phase I trial.. This
amount would 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 annual report shall constitute an offer of any securities for
sale. Such shares when 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. To date, we have had very limited
success in raising funds, and if we are unable to raise this amount, we will
most likely cease all activity related to our vaccine development and marketing.
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.
If we proceeded with our vaccine development, we would need to purchase
approximately $500,000 in equipment to be used for research and expanding
testing laboratories. In addition, we would expect to hire an additional fifteen
employees for both research and administrative support over the duration of the
trials..
We are anticipating that the sources of funds for the intended clinical trials
will be the proceeds that we receive from the conversion of the Series B
preferred stock, and possible assistance from Intracell in the form of a loan.
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 and the payment of on-going
royalties on sales. The Company is not currently negotiating with any potential
joint venture partners and there can be no assurance that the Company will enter
into any joint venture agreements. We are also looking at obtaining government
or charitable grants to assist us in our funding.
We are also considering the acquisition of other technologies that might make
financing the Company more viable.
12
Item 7. Financial Statements.
HIV-VAC, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2009 AND 2008
AND FROM INCEPTION (JANUARY 10, 1997)
THROUGH SEPTEMBER 30, 2009
CONTENTS
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets F-2
Statements of Operations and Comprehensive (Loss) Income F-3
Statements of Stockholders' Equity (Deficit) F-4 - F-10
Statements of Cash Flows F-11 - F-12
Notes to Financial Statements F-13 - F-22
|
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders of
HIV-VAC, Inc.
We have audited the accompanying balance sheets of HIV-VAC, Inc. (the
"Company") as at September 30, 2009 and 2008, and the statements of operations
and comprehensive (loss) income, stockholders' equity (deficit), and cash flows
for each of the two years in the period ended September 30, 2009, and cumulative
from inception (January 10, 1997) through to September 30, 2009, except as
explained as follows: we did not audit the cumulative date from January 10, 1997
to September 30, 2001. The cumulative data was audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to the
amounts in the cumulative data through September 30, 2001, is based solely on
the report of other auditors. The Company's management is responsible for these
financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of HIV-VAC, Inc. as at
September 30, 2009 and 2008 and the results of its operations and its cash flows
for each of the two years in the period ended September 30, 2009 in conformity
with accounting principles generally accepted in the United States.
/s/ SF Partnership, LLP
Toronto, Canada CHARTERED ACCOUNTANTS
July 6, 2011
|
F-1
HIV-VAC, INC.
(A Development Stage Company)
Balance Sheets
September 30, 2009 and 2008
2009 2008
ASSETS
Current
Cash $ 847 $ 897
Furniture and Equipment, Net (Note 3) 3,746 4,289
----------- -----------
Total Assets $ 4,593 $ 5,186
----------- -----------
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 87,356 $ 92,508
Accrued liabilities 222,971 184,971
Advances from related parties (Note 4) 540,129 538,899
----------- -----------
Total Liabilities 850,456 816,378
----------- -----------
Stockholders' Deficit
Preferred stock, $0.01 par value;
10,000,000 shares authorized
Series A, non-preferential;
10,000 issued and outstanding 100 100
Series B, convertible, non-preferential;
300,000 shares issued and outstanding 3,000 3,000
Common stock, $0.001 par value;
500,000,000 shares authorized
9,830,652 shares issued and outstanding 9,831 9,831
Additional paid in capital 6,434,160 6,434,160
Deficit accumulated during the development stage (7,205,576) (7,162,226)
Accumulated other comprehensive loss (87,378) (96,057)
----------- -----------
Total Stockholders' Deficit (845,863) (811,192)
----------- -----------
Total Liabilities and Stockholders' Deficit $ 4,593 $ 5,186
=========== ===========
|
(The accompanying notes are an integral part of these financial statements.)
F-2
HIV-VAC, INC.
(A Development Stage Company)
Statements of Operations and Comprehensive Loss
Years Ended September 30, 2009 and 2008 and for the
Period from January 10, 1997 (Inception) to September 30, 2009
Cumulative
from
January 10,
1997
(Inception) to
September 30,
2009 2008 2009
Expenses
General and administrative $ 21,728 $ 20,220 $ 817,030
Research and development costs 21,079 20,902 1,814,349
Depreciation and amortization 543 626 175,708
Royalty fees -- 24,489 2,045,239
Legal fees -- -- 1,500,028
Licensing fees -- -- 635,500
Write off of intangible assets -- 53,963 53,963
Loss from disposal of assets -- -- 30,195
----------- ----------- --------------
43,350 120,200 7,072,012
----------- ----------- --------------
Loss from Operations (43,350) (120,200) (7,072,012)
----------- ----------- --------------
Other Income (Expense)
Other expenses -- -- (261,162)
Other income -- 566,005 569,779
----------- ----------- --------------
Total Other Income -- 566,005 308,617
----------- ----------- --------------
(Loss) Income from Continuing Operations (43,350) 445,805 (6,763,395)
Loss from Discontinued Operations -- -- (432,181)
----------- ----------- --------------
Net (Loss) Income (43,350) 445,805 (7,195,576)
Foreign currency translation adjustment 8,679 11,279 (87,378)
----------- ----------- --------------
Comprehensive (Loss) Income $ (34,671) $ 457,084 $ (7,282,954)
=========== =========== ==============
Weighted average number of shares
outstanding - basic and diluted 9,830,652 9,830,652
=========== ===========
Loss per weighted average number of
shares outstanding - basic and diluted $ -- $ 0.05
=========== ===========
|
(The accompanying notes are an integral part of these financial statements.)
F-3
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2009
Preferred Stock
-------------------------------------------------
Series A Series B Common Stock
-------------------- --------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
-------- ---------- ------------ ------------- ----------- -------------
Issuance of shares
to founders -- $ -- -- $ -- 1,016 $ 1
Net loss -- -- -- -- -- --
Merger with
Nouveaux Corporation -- -- -- -- 781 1
Additional investment
by stockholders -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 1998 -- -- -- -- 1,797 2
-------- ---------- ------------ ------------- ----------- -------------
Net loss -- -- -- -- -- --
Issuance of common stock
under 504 offering -- -- -- -- 200,103 200
Issuance of common stock
under 504 offering -- -- -- -- 92,463 92
Officers' compensation
capitalized -- -- -- -- -- --
Issuance of common and
series A preferred stock
for license agreement 10,000 100 -- -- 57,529 57
Purchase of treasury stock -- -- -- -- -- --
Issuance of common stock -- -- -- -- 400 1
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 1999 10,000 100 -- -- 352,292 352
-------- ---------- ------------ ------------- ----------- -------------
Net loss -- -- -- -- -- --
Other comprehensive loss -- -- -- -- -- --
Shares issued - acquisition
of Lifeplan -- -- -- -- 1,001 1
Forgiveness of
stockholder debt -- -- -- -- -- --
Issuance of common stock -- -- -- -- 4,548 4
Shares issued for license -- -- -- -- 31,252 31
Issuance of common stock -- -- -- -- 733 1
Shares issued for services -- -- -- -- 60,031 60
Issuance of common stock -- -- -- -- 4,600 5
Subscription received -- -- -- -- -- --
Issuance of common stock -- -- -- -- 4,600 5
Issuance of common stock -- -- -- -- 6,352 6
Officers' compensation
capitalized -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2000 10,000 $ 100 -- $ -- 465,409 $ 465
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-4
|
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2009
Deficit
Accumulated Accumulated Total
Additional Other During the Stockholders'
Treasury Paid in Subscription Comprehensive Development Equity
Stock Capital Receivable Income (loss) Stage (Deficit)
-------- ---------- ------------ ------------- ----------- -------------
Issuance of shares
to founders $ -- $ 507 $ -- $ -- $ -- $ 508
Net loss -- -- -- -- (432,181) (432,181)
Merger with
Nouveaux Corporation -- 350,458 -- -- (243,934) 106,525
Additional investment
by stockholders -- 342,108 -- -- -- 342,108
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 1998 -- 693,073 -- -- (676,115) 16,960
-------- ---------- ------------ ------------- ----------- -------------
Net loss -- -- -- -- (212,460) (212,460)
Issuance of common stock
under 504 offering -- 99,800 -- -- -- 100,000
Issuance of common stock
under 504 offering -- 139,908 (140,000) -- -- --
Officers' compensation
capitalized -- 15,000 -- -- -- 15,000
Issuance of common and
series A preferred stock
for license agreement -- 99,843 -- -- -- 100,000
Purchase of treasury stock (1,767) -- -- -- -- (1,767)
Issuance of common stock -- 5,040 -- -- -- 5,041
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 1999 (1,767) 1,052,664 (140,000) -- (888,575) 22,774
-------- ---------- ------------ ------------- ----------- -------------
Net loss -- -- -- -- (2,622,708) (2,622,708)
Other comprehensive loss -- -- -- (9,240) -- (9,240)
Shares issued - acquisition
of Lifeplan -- 9,999 -- -- (17,227) (7,227)
Forgiveness of
stockholder debt -- 7,227 -- -- -- 7,227
Issuance of common stock -- 99,986 -- -- -- 99,990
Shares issued for license -- 635,469 -- -- -- 635,500
Issuance of common stock -- 23,654 -- -- -- 23,655
Shares issued for services -- 1,349,940 -- -- -- 1,350,000
Issuance of common stock -- 99,985 -- -- -- 99,990
Subscription received -- -- 140,000 -- -- 140,000
Issuance of common stock -- 99,985 -- -- -- 99,990
Issuance of common stock -- 99,984 -- -- -- 99,990
Officers' compensation
capitalized -- 25,000 -- -- -- 25,000
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2000 $ (1,767) $3,503,893 $ -- $ (9,240) $(3,528,510) $ (35,059)
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-5
|
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2009
Preferred Stock
-------------------------------------------------
Series A Series B Common Stock
-------------------- --------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2000 10,000 $ 100 -- $ -- 465,409 $ 465
Net loss -- -- -- -- -- --
Other comprehensive loss -- -- -- -- -- --
Shares issued for services -- -- -- -- 5,003 5
Issuance of common
for license -- -- -- -- 3,000,000 3,000
Issuance of series B
preferred stock -- -- 1,000,000 10,000 -- --
Officers' compensation
capitalized -- -- -- -- -- --
Dividends - preferred
B stock -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2001 10,000 $ 100 1,000,000 $ 10,000 3,470,412 $ 3,470
======== ========== ============ ============= =========== =============
Net loss -- $ -- -- $ -- -- $ --
Other comprehensive loss -- -- -- -- -- --
Purchase of Treasury Stock -- -- -- -- -- --
Officers compensation
capitalized -- -- -- -- -- --
Shares issued for services -- -- -- -- 150,000 150
Shares issued for services -- -- -- -- 200,000 200
Shares issued to directors
and officers -- -- -- -- 300,000 300
Sale of treasury stock -- -- -- -- -- --
Shares issued to officer
for cash -- -- -- -- 100,000 100
Shares issued for debt -- -- -- -- 2,272,727 2,273
Shares issued for debt -- -- -- -- 1,323,529 1,324
Convert Note for Options -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2002 10,000 $ 100 1,000,000 $ 10,000 7,816,668 $ 7,817
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-6
|
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2009
Deficit
Accumulated Accumulated Total
Additional Other During the Stockholders'
Treasury Paid in Subscription Comprehensive Development Equity
Stock Capital Receivable Income (loss) Stage (Deficit)
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2000 $ (1,767) $3,503,893 $ -- $ (9,240) $(3,528,510) $ (35,059)
Net loss -- -- -- -- (2,015,401) (2,015,401)
Other comprehensive loss -- -- -- 2,030 -- 2,030
Shares issued for services -- 19,995 -- -- -- 20,000
Issuance of common
for license -- 1,497,000 -- -- -- 1,500,000
Issuance of series B
preferred stock -- 10,000 -- -- -- 20,000
Officers' compensation
capitalized -- 40,000 -- -- -- 40,000
Dividends - preferred
B stock -- -- -- -- (10,000) (10,000)
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2001 $ (1,767) $5,070,888 $ -- $ (7,210) $(5,553,911) $ (478,430)
======== ========== ============ ============= =========== =============
Net loss $ -- $ -- $ -- $ -- $ (806,523) $ (806,523)
Other comprehensive loss -- -- -- (1,059) -- (1,059)
Purchase of Treasury Stock (10,000) -- -- -- -- (10,000)
Officers compensation
capitalized -- 20,000 -- -- -- 20,000
Shares issued for services -- 22,350 -- -- -- 22,500
Shares issued for services -- 31,800 -- -- -- 32,000
Shares issued to directors
and officers -- 59,700 -- -- -- 60,000
Sale of treasury stock 3,000 12,000 -- -- -- 15,000
Shares issued to officer
for cash -- 19,900 -- -- -- 20,000
Shares issued for debt -- 497,727 -- -- -- 500,000
Shares issued for debt -- 223,676 -- -- -- 225,000
Convert Note for Options -- 140,000 -- -- -- 140,000
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2002 $ (8,767) $6,098,041 $ -- $ (8,269) $(6,360,434) $ (261,512)
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-7
|
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2009
Preferred Stock
-------------------------------------------------
Series A Series B Common Stock
-------------------- --------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2002 10,000 $ 100 1,000,000 $ 10,000 7,816,668 $ 7,817
Shares issued for to
directors and officers -- -- -- -- 300,000 300
Shares issued for debt -- -- -- -- 1,290,000 1,290
Net loss -- -- -- -- -- --
Other comprehensive loss -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2003 10,000 $ 100 1,000,000 $ 10,000 9,406,668 $ 9,407
======== ========== ============ ============= =========== =============
Net Loss -- $ -- -- $ -- -- $ --
Other comprehensive loss -- -- -- -- -- --
Shares issued for services -- -- -- -- 425,000 425
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2004 10,000 $ 100 1,000,000 $ 10,000 9,831,668 $ 9,832
======== ========== ============ ============= =========== =============
Cancellation of
Treasury Stock -- $ -- (700,000) $ (7,000) (1,016) $ (1)
Net Loss -- -- -- -- -- --
Other comprehensive income -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2005 10,000 $ 100 300,000 $ 3,000 9,830,652 $ 9,831
======== ========== ============ ============= =========== =============
Net Loss -- $ -- -- $ -- -- $ --
Other comprehensive loss -- -- -- -- -- --
Balance - September 30, 2006 10,000 $ 100 300,000 $ 3,000 9,830,652 $ 9,831
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-8
|
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2009
Deficit
Accumulated Accumulated Total
Additional Other During the Stockholders'
Treasury Paid in Subscription Comprehensive Development Equity
Stock Capital Receivable Income (loss) Stage (Deficit)
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2002 $ (8,767) $6,098,041 $ -- $ (8,269) $(6,360,434) $ (261,512)
Shares issued for to
directors and officers -- 49,800 -- -- -- 50,100
Shares issued for debt -- 246,010 -- -- -- 247,300
Net loss -- -- -- -- (510,450) (510,450)
Other comprehensive loss -- -- -- (15,222) -- (15,222)
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2003 $ (8,767) $6,393,851 $ -- $ (23,491) $(6,870,884) $ (489,784)
======== ========== ============ ============= =========== =============
Net Loss $ -- $ -- $ -- $ -- $ (282,180) $ (282,180)
Other comprehensive loss -- -- -- (17,408) -- (17,408)
Shares issued for services -- 42,075 -- -- -- 42,500
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2004 $ (8,767) $6,435,926 $ -- $ (40,899) $(7,153,064) $ (746,872)
======== ========== ============ ============= =========== =============
Cancellation of
Treasury Stock $ 8,767 $ (1,766) $ -- $ -- $ -- $ --
Net Loss -- -- -- -- (157,621) (157,621)
Other comprehensive income -- -- -- 14,714 -- 14,714
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2005$ -- $6,434,160 $ -- $ (26,185) $(7,310,685) $ (889,779)
======== ========== ============ ============= =========== =============
Net Loss $ -- $ -- $ -- $ -- $ (143,476) $ (143,476)
Other comprehensive loss -- -- -- (32,082) -- (32,082)
Balance - September 30, 2006 $ -- $6,434,160 $ -- $ (58,267) $(7,454,161) $ (1,065,337)
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-9
|
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2009
Preferred Stock
-------------------------------------------------
Series A Series B Common Stock
-------------------- --------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2006 10,000 $ 100 300,000 $ 3,000 9,830,652 $ 9,831
Net loss -- -- -- -- -- --
Other comprehensive loss -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2007 10,000 $ 100 300,000 $ 3,000 9,830,652 $ 9,831
======== ========== ============ ============= =========== =============
Net Income -- $ -- -- $ -- -- $ --
Other comprehensive Income -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2008 10,000 $ 100 300,000 $ 3,000 9,830,652 $ 9,831
======== ========== ============ ============= =========== =============
Net loss -- $ -- -- $ -- -- $ --
Other Comprehensive Income -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2009 10,000 $ 100 300,000 $ 3,000 9,830,652 $ 9,831
======== ========== ============ ============= =========== =============
Deficit
Accumulated Accumulated Total
Additional Other During the Stockholders'
Treasury Paid in Subscription Comprehensive Development Equity
Stock Capital Receivable Income (loss) Stage (Deficit)
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2006 $ -- $6,434,160 $ -- $ (58,267) $(7,454,161) $ (1,065,337)
Net loss -- -- -- -- (153,870) (153,870)
Other comprehensive loss -- -- -- (49,069) -- (49,069)
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2007 $ -- $6,434,160 $ -- $ (107,336) $(7,608,031) $ (1,268,276)
======== ========== ============ ============= =========== =============
Net Income $ -- $ -- $ -- $ -- $ 445,805 $ 445,805
Other comprehensive Income -- -- -- 11,279 -- 11,279
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2008 $ -- $6,434,160 $ -- $ (96,057) $(7,162,226) $ (811,192)
======== ========== ============ ============= =========== =============
Net loss $ -- $ -- $ -- $ -- $ (43,350) $ (43,350)
Other Comprehensive Income -- -- -- 8,679 -- 8,679
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2009 $ -- $6,434,160 $ -- $ (87,378) $(7,205,576) $ (845,863)
======== ========== ============ ============= =========== =============
|
(The accompanying notes are an integral part of these financial statements.)
F-10
HIV-VAC, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended September 30, 2009 and 2008 and for the Period
from January 10, 1997 (Inception) to September 30, 2009
Cumulative
from
January 10,
1997
(Inception) to
September 30,
2009 2008 2009
Cash Flows from Operating Activities
Net loss $ (43,350) $ 445,805 $ (7,195,576)
Adjustments to reconcile net loss to
net cash used in operating activities
Amortization and depreciation 543 626 175,708
Officers' compensation capitalized -- -- 100,000
Other expenses relating to Noveaux and
Lifeplan acquisition -- -- 261,163
Issuance of stock for licensing fees -- -- 2,135,500
Issuance of stock to directors and
officers' compensation -- -- 110,100
Issuance of option for note payable, current -- -- 140,000
Issuance of stock for services -- -- 2,439,300
Gain on forgiveness of debt -- (566,005) (566,005)
Decrease in notes payable -- -- (140,000)
Increase in prepaid expenses -- 24,489 --
Increase in accounts payable 3,527 3,867 552,505
Issuance in accrued liabilities 38,000 36,000 222,971
Write-down of intangible asset -- 53,963 53,963
----------- ----------- -------------
Net Cash Used in Operating Activities (1,280) (1,255) (1,710,371)
----------- ----------- -------------
Cash Flows from Investing Activities
Purchase of license 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 sale of treasury stock and warrants -- -- 15,000
Proceeds from advances from related parties 1,230 1,200 540,129
Payment of stockholder's loan -- -- (272)
Proceeds from additional paid in capital -- -- 342,108
----------- ----------- -------------
Net Cash Provided by Financing Activities 1,230 1,200 1,724,362
----------- ----------- -------------
Net (Decrease) Increase in Cash (50) (55) 847
Cash - Beginning of Year 897 952 --
----------- ----------- -------------
Cash - End of Year $ 847 $ 897 $ 847
=========== =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-11
|
HIV-VAC, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended September 30, 2009 and 2008 and for the Period
from January 10, 1997 (Inception) to September 30, 2009
Cumulative
from
January 10,
1997
(Inception) to
September 30,
2009 2008 2009
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
=========== =========== =============
Forgiveness of stockholder debt $ -- $ -- $ 7,227
=========== =========== =============
Cancellation of Treasury Stock $ -- $ -- $ (8,767)
=========== =========== =============
|
(The accompanying notes are an integral part of these financial statements.)
F-12
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
1. Operations
HIV-VAC, Inc. (the "Company"), formerly known as Personna Records, Inc.,
was incorporated on January 10, 1997 in the State of Nevada. Personna
Records formerly known as Sonic Records, Inc. was engaged in the
production and distribution of musical records. In April 1998, Personna
became the surviving corporation after a merger with Nouveaux Corporation.
In March 2000, HIV-VAC, Inc. became the surviving corporation after a
merger with Life Plan.
The Company is currently engaged in the research and development of a
vaccine to combat the Human Immunodeficiency Virus ("HIV"). The Company's
headquarters are located in Ontario, Canada and the research facility is
located in Birmingham, United Kingdom.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company's financial statements have been prepared following generally
accepted accounting principles in the United States ("U.S. GAAP"), which
are expressed in United States funds.
a) Use of Estimates
The preparation of the Company's financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the
financial statements, and the reported amounts of revenues and
expenses during the reporting periods. These estimates are based on
management's best knowledge of current events and actions the
Company may undertake in the future. Significant areas requiring the
use of estimates relate to the estimated useful lives of furniture
and equipment. Actual results could differ from these estimates.
These estimates are reviewed periodically and as adjustments become
necessary, they are reported in earnings in the period which they
become available.
b) Furniture and Equipment
Furniture and equipment are stated at cost. Major renewals and
betterments are capitalized while maintenance and repairs, which do
not extend the lives of the respective assets, are expensed when
incurred. Depreciation is computed over the estimated useful lives
of the assets.
Useful lives for furniture and equipment are as follows:
Office equipment 15% Declining balance
Furniture 10% Declining balance
The cost and accumulated depreciation for furniture and equipment
sold, retired, or otherwise disposed of are relieved from the
accounts, and any resulting gains or losses are reflected in income.
F-13
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
2. Summary of Significant Accounting Policies (cont'd)
c) Long-lived Assets
The Company reviews its long lived assets for impairment whenever
events or circumstances indicate that the related carrying amount of
the assets may not be recoverable. An impairment loss would be
recognized when estimated future cash flows expected to result from
the use of the asset and its eventual disposition are less than its
carrying amount.
d) Financial Instruments
All the Company's financial instruments are initially recorded at
their fair value. The Company classifies all financial instruments
as held-for-trading or other financial liabilities. Financial
liabilities are measured at amortized cost. Instruments classified
as held for trading are measured at fair value.
The Company has designated its cash as held for trading. Accounts
payable, accrued liabilities, and advances from related parties are
classified as other liabilities.
e) Income Tax
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.
f) Translation of Foreign Currency
The activity of the Company's foreign offices are translated in
accordance with ASC Topic 830, "Foreign Currency Matters", which
requires that foreign currency assets and liabilities be translated
using the exchange rates in effect at the balance sheet date.
Revenues and expenses are translated using the average exchange
rates prevailing throughout the year. Unrealized gains and losses
from foreign currency translations are included in other
comprehensive income for the period.
g) Loss Per Share
Basic loss per share, which does not include any dilutive
securities, is computed by dividing the loss available to common
stockholders by the weighted average number of common shares
outstanding during the period. In contrast, diluted loss per share
considers the potential dilution that could occur from other
financial instruments that would increase the total number of
outstanding shares of common stock. Potentially dilutive securities,
however, have not been included in the diluted loss per share
computation because their effect is anti-dilutive.
F-14
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
2. Summary of Significant Accounting Policies (cont'd)
h) Comprehensive (Loss) Income
The Company accounts for comprehensive loss in accordance with ASC
220, "Comprehensive Income", which establishes standards for
reporting and presentation of comprehensive loss and its components.
Comprehensive loss is presented in the statements of shareholders'
equity, and consists of net loss and foreign currency translation
adjustment.
i) Stock Based Compensation
The Company enters into transactions in which goods or services are
the consideration received for the issuance 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 goods or services received, whichever is more reliably
measurable. The services are expensed in the periods that the
services are rendered.
j) 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.
k) Recent Accounting Pronouncements
In August 2009, the Financial Accounting Standards Board ("FASB")
issued Accounting Standards Update ("ASU") 2009-05 ("ASU 2009-05"),
"Measuring Liabilities at Fair Value", which clarifies, among other
things, that when a quoted price in an active market for the
identical liability is not available, an entity must measure fair
value using one or more specified techniques. ASU 2009-05 was
effective for the first reporting period, including interim periods,
beginning after issuance. It is anticipated that the adoption will
not have a significant impact on the Company's financial statements.
In January 2010, the FASB issued ASU 2010-06, "Improving Disclosures
about Fair Value Measurements" ("ASU 2010-06"). The standard amends
Accounting Standards Codification ("ASC") Topic 820, "Fair Value
Measurements and Disclosures" to require additional disclosures
related to transfers between levels in the hierarchy of fair value
measurements. ASU 2010-06 is effective for interim and annual fiscal
years beginning after December 15, 2009. The standard does not
change how fair values are measured, accordingly the standard will
no have an impact on the Company.
In February 2010, the FASB issued ASU 2010-09 "Subsequent Events
(Topic 855); Amendments to Certain Recognition and Disclosure
Requirements" ("ASU 2010-09"). ASU 2010-09 requires an entity that
is an SEC filer to evaluate subsequent events through the date that
the financial statements are issued and removes the requirement for
an SEC filer to disclose a date, in both issued and revised
financial statements, through which the filer had evaluated
subsequent events. The adoption did not have a significant impact on
the Company's financial statements.
F-15
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
2. Summary of Significant Accounting Policies (cont'd)
k) Recent Accounting Pronouncements (cont'd)
In April 2010, the FASB issued ASU 2010-13, "Compensation-Stock
Compensation: Effect of Denominating the Exercise Price of a
Share-Based Payment Award in the Currency of the Market in Which the
Underlying Equity Security Trades" ("ASU 2010-13"). This ASU
provides amendments to Topic 718 to clarify that an employee
share-based payment award with an exercise price denominated in
currency of a market in which a substantial portion of the entity's
equity securities trade should not be considered to contain a
condition that is not a market, performance, or service condition.
Therefore, an entity would not classify such an award as a liability
if it otherwise qualifies as equity. The amendments in this ASU are
effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2010. The Company is
currently in the process of determining the impact, if any, of
adoption of the provisions of ASU 2010-13.
The FASB issues ASUs to amend the authoritative literature in ASC.
There have been a number of ASUs to date that amend the original
text of ASC. Those ASUs issued to date either (i) provide
supplemental guidance, (ii) are technical corrections, (iii) are not
applicable to the Company or (iv) are not expected to have a
significant impact on the Company.
3. Furniture and Equipment, Net
2009 2008
Accumulated Accumulated
Cost Depreciation Cost Amortization
--------- ------------ --------- ------------
Furniture and equipment $ 48,416 $ 44,670 $ 48,416 $ 44,127
--------- ------------ --------- ------------
Net carrying amount $ 3,746 $ 4,289
------------ ------------
|
Depreciation expenses for the years ended September 30, 2009 and 2008 were
$543 and $626, respectively.
F-16
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
4. Advances from Related Parties
2009 2008
Intracell Vacinnes Limited ("Intracell") $ 457,406 $ 457,406
Directors and officers of the Company 82,723 81,493
------------ ------------
$ 540,129 $ 538,899
============ ============
|
Intracell is a related party to the Company by virtue of the Company's
controlling shareholders owning Intracell.
These advances are non-interest bearing, unsecured and have no specified
terms for repayment.
5. Stockholders' Equity (Deficit)
Common and preferred stock were issued as follows:
a) Sale of common stock - In April 1998, the Company issued 1,016
shares of common stock to the Company's founders for cash of $508.
b) In April 1998, the Company issued 781 shares of common stock to
acquire 100 percent of the issued and outstanding shares of Nouveaux
Corporation.
c) During the year ended September 30, 1998, stockholders contributed
$342,108 in additional paid in capital.
d) On February 10, 1999, the Company issued 200,103 shares of common
stock for an aggregate amount of $100,000 under the Securities Act
of 1993, as amended Under Regulation D, Rule 504.
e) On February 23, 1999, the Company declared a 1:50 reverse split of
the Company's common stock, effective March 8, 1999.
f) On March 15, 1999, the Company issued 92,463 shares of common stock
for a subscription receivable with an aggregate amount of $140,000
under the Securities Act of 1993, as amended Under Regulation D,
Rule 504. The Company accepted a note receivable in lieu of payment.
The note was paid in 2000.
g) On April 6, 1999, the Company issued 57,529 shares of common stock
and 10,000 shares of preferred stock, Series A, for an aggregate
amount of $99,900 and $100 respectively, in exchange for the
exclusive right to the worldwide license for the development and
distribution of a HIV vaccine to combat aids. Each share of
preferred stock has 3,000 votes per common share at any meeting of
the stockholders where votes are submitted.
h) On April 6, 1999, the Company purchased treasury stock for $1,767.
F-17
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
5. Stockholders' Equity (Deficit) (cont'd)
i) On September 27, 1999, 400 shares of common stock were issued for an
aggregate amount of $5,041.
j) On March 8, 2000, the Company issued 1,001 shares of common stock
for the merger of Scientific Life Plan ("Lifeplan")
k) On May 26, 2000, the Company issued 4,548 shares of common stock for
an aggregate amount of $99,990. Concurrently, the Company issued
6,835 shares of common stock with an aggregate value of $150,000 to
Intracell under the terms of the anti-dilution provision of the
Assignment of License Agreement.
l) On June 29, 2000 the Company issued 733 shares of common stock for
an aggregate amount of $23,655. Concurrently, the Company also
issued 1,100 shares of common stock with an aggregate value of
$35,500 to Intracell under the terms of the anti-dilution provision
of the Assignment of License Agreement.
m) On June 29, 2000, the Company issued 30,000 shares of common stock
for an aggregate amount of $675,000 in legal services.
n) On July 5, 2000 the Company issued 4,600 shares of common stock for
an aggregate amount of $99,990. Concurrently, the Company issued
6,896 shares of common stock with an aggregate value of $150,000 to
Intracell under the terms of the anti-dilution provision of the
Assignment of License Agreement.
o) On July 24, 2000, the Company issued 30,031 shares of common stock
for an aggregate amount $675,000 in legal services.
p) On July 27, 2000 the Company issued 4,600 shares of common stock for
an aggregate amount of $99,990. Concurrently, the Company issued
6,896 shares of common stock with an aggregate value of $150,000 to
Intracell under the terms of the anti-dilution provision of the
Assignment of License Agreement.
q) On August 21, 2000, the Company issued 6,352 shares of common stock
for an aggregate amount of $99,990. Concurrently, the Company issued
9,525 shares of common stock with an aggregate value of $150,000 to
Intracell Vaccines Ltd under the terms of the anti-dilution
provision of the Assignment of License Agreement.
r) On May 16, 2001, the Company issued 5,003 shares of common stock for
an aggregate amount of $20,000 for consulting services.
s) On July 6, 2001 the Company declared a 1:100 reverse split of the
Company's common stock, effective March 22, 2001.
F-18
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
5. Stockholders' Equity (Deficit) (cont'd)
t) On August 7, 2001, the Company amended its license agreement with
Intracell. The amendment called for Intracell to waive its right to
terminate the agreement due to the Company's failure to raise
$1,500,000 pursuant to Section 9.1(b) of the agreement dated April
6, 1999 in exchange for the following:
i) 3,000,000 shares of common stock, and
ii) options to acquire 7,500,000 shares of the Company's common
stock.
The 3,000,000 shares were valued at the closing price on August 7,
2001 of $0.50 per share.
u) On August 10, 2001, the Company issued 1,000,000 shares of its
preferred stock, Series B, with attached warrants at par value of
$0.01 per share, or $10,000. The preferred Series B stock converts
to 20 million shares of the Company's common stock at 40 percent of
the market value of the common stock based on a stated value. The
attached warrants convert to 5,000,000 shares of the Company's
common stock at $1.50 per share. In accordance with the Emerging
Issues Task Force ("EITF") 98-5, the Company valued the beneficial
conversion feature at the amount of the proceeds received from the
sale of the stock ($10,000).
v) On January 7, 2002, the Company bought back the 1,000,000 preferred
shares and the attached warrants that had been issued on August 10,
2001 for a total consideration of $10,000. The preferred shares were
added to the treasury stock, while the warrants were cancelled.
w) On March 21, 2002, the Company issued 150,000 shares of common stock
for an aggregate amount of $22,500 for consulting services.
x) On April 15, 2002, the Company issued 200,000 shares of common stock
for an aggregate amount of $32,000 for consulting services.
y) On May 25, 2002, the Company issued 300,000 shares of common stock
for an aggregate amount of $60,000 for services rendered by the
directors and officers of the Company.
z) On July 29, 2002, the Company sold 300,000 preferred B series shares
from treasury for a total consideration of $15,000. The Company also
issued the purchaser of the preferred B series stock, 3,000,000
warrants. Each warrant is convertible into one common share at an
exercise price of $1.50 and expires in December 2003.
aa) On August 3, 2002, the Company issued 100,000 shares of common stock
for cash of $20,000 to an officer of the Company.
ab) On August 7, 2002, the Company issued 2,272,727 shares of common
stock to Intracell, under a settlement of debt agreement valued a
$500,000.
F-19
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
5. Stockholders' Equity (Deficit) (cont'd)
ac) On August 30, 2002, the Company issued 1,323,529 shares of common
stock to Intracell, under a settlement of debt agreement valued a
$225,000.
ad) On October 30, 2002, the Company issued 300,000 shares of common
stock for an aggregate amount of $50,100 for services rendered by
the directors and officers of the Company.
ae) On October 31, 2002, the Company issued 1,150,000 shares of common
stock under debt settlement agreements with a total value of
$195,500.
af) On April 23, 2003, the Company issued 140,000 shares of common stock
for an aggregate amount of $51,800 for legal fees for services
rendered to the Company during the previous 18 months.
ag) On November 3, 2003 the Company issued 425,000 common shares for an
aggregate amount of $42,500 for legal fees and consulting fees.
ah) On September 30, 2005, the Company cancelled 1,016 Common shares and
700,000 Preferred Series "B" shares that were held as treasury
stock.
6 Income Taxes
2009 2008
Temporary differences $ 14,741 $ 14,562
Loss carryforwards 2,064,483 1,885,254
Allowance for valuation (2,079,224) (1,899,816)
------------ ------------
$ - $ -
============ ============
|
Potential benefits of net operating losses have not been recognized in
these financial statements because the Company can not be assured it is
more likely than not it will utilize the net operating losses carried
forward in future years.
The Company's tax returns have not yet been filed and when they are filed
will be subject to audits and potential penalties and reassessments by
taxation authorities. The outcome of audits can not be reasonably
determined and the potential impact on the financial statements is not
determinable.
F-20
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
7. 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:
2009 2008
Directors and officers compensation $ 36,000 $ 34,000
============ ============
8. 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 $847 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 $87,356,
accrued liabilities of $222,971 and advances from related parties of
$540,129 are classified into level 2.
Level 3 valuation is for assets or liabilities that are not based on
observable market data.
b) Currency Risk
While the reporting currency is in the U.S. Dollar, 7% of expenses
for the year ended are denominated in U.K. pound (2008 - 24% of
expenses). As at September 30, 2009, 10% of liabilities are
originally denominated in U.K. pound (2008 - 11% of liabilities).
The Company is exposed to foreign exchange risk as the results of
operations may be affected by fluctuations in the exchange rates
between U.S. dollar and U.K. pound.
F-21
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2009 and 2008
9. Stockholders' Restrictions
The stockholders of the Company have a pre-emptive right regarding the
purchase of stock. Furthermore, the transfer of certain stock is
restricted, in accordance with the regulations of the Securities and
Exchange Commission ("SEC"). The regulations prevent the transfer of
stock, unless a registration statement is in effect, or if the stock is
subject to exemption under SEC regulations.
10. 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.
F-22
Item 8. Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure.
None
PART III
Item 9. Director's And Executive Officers Promoters And Control Persons,
Compliance With Section 16(a) Of The Exchange Act.
Directors and Executive Officers
Our directors and executive officers during the period are as follows
NAME AGE POSITION
-------- --- --------
Kevin W Murray 57 Chairman of the Board, President and CEO
Gordon R B Skinner 69 Director, Director of Research
Sally Del Principe 56 Director, Resigned August 2010
John Palethorpe 65 Vice President, Resigned August 2010
|
There are no individuals, other than those listed above, who make a significant
contribution to our business.
Kevin W. Murray has served as our Vice President of Finance and Administration,
and as a director, since from April of 1999 to June 2002. He was appointed our
Chairman, President and Chief Executive Officer in June 2002. He has been a
director of Intracell Vaccines Limited since September 1998. He is currently a
director of numerous private companies, including Mobsafety Inc, Pipevision Inc,
Bullfrog Wireless Ltd, Vision Aviation and Vaccine Research International Plc.
Mr. Murray holds a Bachelor of Accounting Science degree from The University of
South Africa, and completed post-graduate studies in accountancy at The
University of Cape Town, prior to gaining admission to the South African
Institute of Chartered Accountants.
Dr. Gordon R.B. Skinner is the developer of our proposed vaccine. He served as
our Chairman and President from April of 1999 to June 2002 and as our Director
of Research since June 2002. He has been a director of Intracell Vaccines
Limited since November of 1998. He is the Managing Director of Vaccine Research
International, PLC, a corporation involved in the development of a
staphylococcal vaccine. He is Chairman of the Vaccine Research Trust UK, and was
previously an Honorary Consultant in Infection at The University Hospital
Birmingham NHS Trust, Birmingham. Dr. Skinner was a senior lecturer at the
Department of Medical Microbiology at The University of Birmingham from 1976 to
1998. He received an MB ChB from the University of Glasgow in 1965, an MD (First
Class Honors) from The University of Birmingham in 1975, and a DSc from The
University of Birmingham in 1989. He is a Fellow of The Royal College of
Obstetrics and Gynecologists, and a Fellow of The Royal College of Pathologists.
Dr. Skinner developed the Skinner Herpes vaccine, and is the author of more than
100 scientific and medical publications. He maintains a medical practice in the
United Kingdom.
Sally Del Principe served as a director of the company from June 2001 to August
13, 2010 and served as Chief Financial Officer from June 2002 to September 2004.
She is a resident of United Kingdom and since 1992 has been a partner in Lupton
Del Principe Associates, a private company which specializes in credit insurance
brokerage. Ms Del Pricipe resigned on August 13, 1010
John Palethorpe has served as a Vice President since April of 1999. Since 1979,
Mr. Palethorpe has been the Chairman and Managing Director of Stourbridge
Forklift Co. Ltd., a company that acts as an agent for the sale of Desta and
Hyundai Forklifts. He is also the Chairman and managing director of the
following companies: Randcrown Ltd., a property and investment company
incorporated in 1979; J.Rigg Construction Ltd a property maintenance and repair
company incorporated in 1979; and Tionmartin Ltd., a company that sells used
forklifts and has been incorporated since 1975 and Vaccine Research
International Plc, a corporation involved in the development of a Staphyloccocal
vaccine. He has been involved in the financing of the development of our
proposed vaccine since 1993. Mr Palethorpe resigned as Vice President on August
5, 2010
14
There are no familial relationships between any of the Company's
executive officers and directors.
Conflicts of Interest
Our management has other financial and business interests to which a
significant amount of time is devoted which may pose conflicts of interest with
regard to allocation of their time and efforts. Our management, together, both
directly and indirectly, hold 75.63% of our common stock and 100% of our Series
"A" preferred shares. There can be no assurance that management will resolve all
conflicts of interest in favor of HIV-VAC.
Section 16(a) Beneficial Ownership Reporting Compliance .
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Company's
outstanding common stock, to file with the SEC, initial reports of beneficial
ownership and reports of changes in beneficial ownership of the Company's common
stock and other equity instruments of the Company. To the Company's knowledge,
the Company's directors and officers have not complied with the requirement.
CODE OF ETHICS
The company has adopted a Code of Ethics applicable to its Chief Executive
Officer and Chief Financial Officer. This Code of Ethics is filed herewith as an
exhibit.
Item 10. Executive Compensation.
As of the fiscal year ended September 30, 2009, we have accrued
compensation to our executive officers as follows:
Annual Compensation Long Term Compensation
------------------- ----------------------
Stock Awards
Fiscal and Other
Name and Position Year Salary Bonus Compensation
Kevin Murray 2006 $ 16,000 $ - $ -
Chairman and CEO 2007 $ 17,000 $ - $ -
2008 $ 18,000 $ - $ -
Dr. Gordon Skinner 2006 $ 16,000 $ - $ -
Director, Director of 2007 $ 17,000 $ - $ -
Research 2008 $ 18,000 $ - $ -
Sally Del Principe 2005 $ - $ - $ -
Director and CFO 2006 $ - $ - $ -
2007 $ - $ - $ -
John Palethorpe 2005 $ - $ - $ -
Vice President 2006 $ - $ - $ -
2007 $ - $ - $ -
--------------------------------------
|
No cash fees or other consideration has been paid to our directors
through the date hereof. The above compensation chart reflects amounts accrued,
but not paid to the officers.
15
There are no employment contracts in effect with any of our officers or
directors, nor are there any agreements or understandings with such persons
regarding termination of employment or change-in-control arrangements.
Item 11. Security Ownership Of Certain Beneficial Owners And Management.
The following chart sets forth certain information with respect to the
beneficial ownership of the common stock and the Series A preferred stock of the
Company as of September 30, 2009: (i) each person who is known by the Company to
beneficially own more than 5 percent of the Company's common stock, (ii) each of
the Company's directors, (iii) each of the Company's Named Executive Officers
(defined below), and (iv) all directors and executive officers as a group. As of
September 30, 2009, the Company had 9,830,652 shares of common stock
outstanding, 10,000 Series A preferred shares outstanding and 300,000 Series B
preferred shares outstanding.
Percentage
Name and Address Title of Class # of shares of Class
---------------- -------------- ----------- ----------
Kevin W. Murray Common Stock 2,445,098 24.87%
14 Laurel Blvd
Collingwood, Ontario Canada Series A Preferred Stock 3,333 33.33%
L9Y 5A8
Gordon Skinner Common Stock 2,445,098 24.87%
Harborough Banks
Old Lapworth Rd Series A Preferred Stock 3,333 33.33%
Solihill B94 6Ld
United Kingdom
John Palethorpe Common Stock 2,445,098 24.87%
Knoll Hill
Belbroughton Road Series A Preferred Stock 3,333 33.33%
Blakedown, Kidderminster
9YLD 3LN
United Kingdom
Sally Del Principe Common Stock 100,000 1.03%
Sunny Bank House
32 Moorhall Lane
Stourport on Severn
Worcestershire
DY13 8RB
United Kingdom
Directors and Officers Common Stock 7,435,294 75.63%
as a Group Series A Preferred Stock 10,000 100%
Tradebay Investments Ltd. Common Stock 3,000,000(1) 30.51%
-------------------------------------------
(1) Consists of 3,000,000 common shares issuable upon the conversion of Series B
preferred stock held by Tradebay Investments. Rosemary Hunter is the sole
Officer and Director of Tradebay Investments Ltd.
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16
Securities Authorized for Issuance Under Equity Compensation Plans
As of the end of the fiscal year, the Company does not have any equity
securities outstanding or authorized for issuance pursuant to any equity
compensation plans.
Item 12. Certain Relationships And Related Transactions.
As further noted above in more detail under the caption License
Agreement and Consulting Agreement, we acquired the rights to our proposed
vaccine from Intracell Vaccines Limited for consideration consisting of common
and preferred securities. At that time, Messrs. Skinner, Murray and Palethorpe
were shareholders of Intracell Vaccines, and Messrs. Skinner and Murray also
served as Intracell Vaccines directors. Messers Murray, Skinner and Palethorpe
acquired all of Intracell's shareholdings in equal proportions on 28 February
2006.
Item 13. Exhibits And Reports On Form 8-K
(a) Exhibits:
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation, filed as Exhibit to the Form 10-QSB
filed May 16, 2000.
3.2 Amended Articles of Incorporation, filed as Exhibit to the Form
10-QSB filed August 14, 2001.
3.3 By-laws, filed as Exhibit to Form 10-QSB filed May 16, 2000.
3.4 Certificate of Amendment to Certificate of Incorporation, dated as
of May 15, 2001, filed as Exhibit to the Form 10-QSB filed August
14, 2001.
10.1 License agreement between University of Birmingham and Intracell
Vaccines Ltd dated November 5, 1998, filed as and Exhibit to the
Amended Form 10-KSB filed Oct 22, 2002.
10.2 License Agreement between HIV-VAC, Inc. and Intracell Vaccines
Ltd., filed as an Exhibit to the Registration Statement on Form
SB-2 filed August 22, 2001.
10.3 Extension of Consulting Agreement between HIV-VAC, Inc. and
Intracell Vaccines Ltd. dated Oct 1, 2003, filed herewith.
File University termination agreement ?
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:
During the period covered by this report, we did not file any current
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reports on Form 8-K.
Item 14. 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, Kevin W. 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.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HIV-VAC, Inc.
By: /s/ KEVIN MURRAY
---------------------------------------------------
Chairman of the Board, President & CEO
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
By: /s/ KEVIN W MURRAY Chief Executive Officer September 30, 2011
---------------------- & Chief Financial Officer
Kevin Murray
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18
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