UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549





FORM 10-Q





R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2010
  or


£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from __________ to ____________


Commission File Number:  333-06718


VIROPRO, INC.(Exact name of registrant as specified in its charter)





Nevada
13-3124057(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)4199 Campus Drive, Suite 550, Irvine, CA
92612(Address of principal executive offices)
(Zip Code)





(949) 783-6573(Registrant’s telephone number, including area code)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past  90 days.


Yes£                      NoR





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes£                      NoR





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer£
Accelerated Filer£Non-Accelerated Filer£(Do not check if a smaller reporting company)
Smaller reporting companyR


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes£                      NoR


As of June 30, 2010, the number of the Company's shares of par value $.001 common stock outstanding was 297,951,761.


1


VIROPRO, INC.
 FORM 10-Q
 June 30, 2010





INDEX





PagePART I — FINANCIAL INFORMATION
3Item 1:
Financial Statements
3Consolidated Balance Sheets
4Consolidated Statements of Operations (Unaudited)
5Consolidated Statement of Changes in Stockholders’ Equity (Deficit) (Unaudited)
6Consolidated Statements of Cash Flows (Unaudited)
8Notes to Consolidated Financial Statements
9Item 2:
Management’s Discussion and Analysis of Financial Condition and Results of Operations
21Item 3:
Quantitative and Qualitative Disclosures about Market Risk
26Item 4:
Controls and Procedures
27PART II — Other Information
28Item 1:
Legal Proceedings
28Item 2:
Unregistered Sales of Equity Securities and Use of Proceeds
28Item 3:
Defaults Upon Senior Securities
28Item 6:
Exhibits
29











2





VIROPRO, INC.
 FORM 10-Q
 June 30, 2010
 
 
 PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements


The accompanying reviewed financial statements have been prepared in accordance with the instructions to FORM 10-Q.  Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting principles.  Except as disclosed herein, there has not been a material change in the information disclosed in the notes to the financial statements included in the Company’s annual report on Form 10-K for the year ended November 30, 2009.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.  Operating results for the one month transition period ended December 31, 2009 and seven months ended June 30, 2010 are not necessarily indicative of the results that can be expected for the year ended December 31, 2010.


3




VIROPRO, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSJUNE 30, 2010 (UNAUDITED) AND NOVEMBER 30, 2009(IN US$)ASSETSJune 30,


November 30,2010


2009(unaudited)CURRENT ASSETSCash

$
14,261


$
54,775Accounts receivable


148,691



-Prepaid expenses


3,057



4,863Total current assets


166,009



59,638Property and equipment,net of accumulated depreciation


75,953



2,219Total fixed assets


75,953



2,219Security deposits


5,593



-Goodwill


1,877,479Total other assets


1,883,072



-TOTAL ASSETS

$
2,125,034


$
61,857LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable and accrued expenses

$
256,315


$
130,420Convertible debentures


100,000



100,000Convertible promissory note


35,000



-Notes payable - related parties


73,556



-Liability for stock to be issued


-



200,000Total current liabilities


464,871



430,420TOTAL LIABILITIES


464,871



430,420STOCKHOLDERS' EQUITY (DEFICIT)Common stock, $.001 par value, 1,000,000,000 shares authorized,270,522,294 and 165,072,294 shares issued and outstanding


270,522



165,072Additional paid in capital


18,453,241



15,555,691Deficit accumulated during the development stage


-



(13,971,131
)Accumulated deficit


(16,700,786
)


(1,971,555
)Accumulated other comprehensive income (loss)


(362,814
)


(146,640
)Total stockholders' equity


1,660,163



(368,563
)TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
2,125,034


$
61,857







4


VIROPRO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2010 AND 2009 ANDTHE ONE MONTH ENDED DECEMBER 31, 2009 AND 2008 (TRANSITION PERIOD)(IN US$)TRANSITION PERIOD - ONE MONTH ENDED


THREE MONTHS ENDED


SIX MONTHS ENDEDDECEMBER 31, 2009


DECEMBER 31, 2008


JUNE 30, 2010


JUNE 30, 2009


JUNE 30, 2010


JUNE 30, 2009REVENUE

$
-


$
-


$
221,429


$
-


$
221,429


$
-COST OF REVENUES


-



-



-



-



-



-GROSS PROFIT


-



-



221,429



-



221,429



-OPERATING EXPENSESConsulting fees - non cash stock compensation


-



-



68,895



1,667



116,895



43,667Selling, general and administrative


47,189



706



759,273



49,672



802,551



279,996Total operating expenses


47,189



706



828,168



51,339



919,446



323,663NON-OPERATING INCOME (EXPENSE)Interest expense


(11
)


-



(11,899
)


(84,898
)


(12,883
)


(244,173
)R & D credit


-



-



-



-



-



-Gain (loss) on investment


-



-



-



-



-



-Loss on impairment of patents


-



-



-



-



-



-Gain (loss) on legal settlement


-



7,833



-



145,171



-



(9,417
)Gain on return of shares for services not rendered


-



-



-



253,326



-



253,326Gain (loss) on sale of assets


-



2,835



-



2,603



-



3,206Loss on settlement for conversion of debenture


-



-



-



(753,285
)


-



(753,285
)Debt forgiveness


-



-



-



-



-



-Loss on uncollectable advances


-



-



-



-



-



-Total non-operating expenses


(11
)


10,668



(11,899
)


(437,083
)


(12,883
)


(750,343
)NET LOSS

$
(47,200
)

$
9,962


$
(618,638
)

$
(488,422
)

$
(710,900
)

$
(1,074,006
)WEIGHTED AVERAGE NUMBEROF SHARES OUTSTANDING


165,072,294



40,508,434



235,428,887



95,545,368



201,423,683



72,070,881NET LOSS PER SHARE

$
0.00


$
0.00


$
(0.00
)

$
0.00


$
(0.00
)

$
0.00ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)Net (loss) income

$
(47,200
)

$
9,962


$
(618,638
)

$
(488,422
)

$
(710,900
)

$
(1,074,006
)Currency translation adjustments


38



3,565



421,958



3,565



422,646



(1,956
)$
(47,162
)

$
13,527


$
(196,680
)

$
(484,857
)

$
(288,254
)

$
(1,075,962
)


5


VIROPRO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)FOR THE PERIOD JULY 1, 2003 (INCEPTION) THROUGH JUNE 30, 2010(IN US$)  Deficit





AccumulatedAccumulated





OtherAdditional


Deferred


During the





ComprehensiveCOMMON STOCK


Paid-In


Stock


Development


Accumulated


IncomeShares


Amount


Capital


Compensation


Stage


Deficit


(Loss)


TotalBalance - July 1, 2003


4,116,974


$
4,117


$
1,957,308


$
-



-



(1,971,555
)


-


$
(10,130
)Shareholders direct payments for accounts payable


-



-



10,130



-



-



-



-



10,130Net loss for the period ended November 30, 2003


-



-



-



-



(8,525
)


-



-



(8,525
)Balance - November 30, 2003


4,116,974



4,117



1,967,438



-



(8,525
)


(1,971,555
)


-



(8,525
)Common shares issued for cash


250,000



250



49,750



-



-



-



-



50,000Common stock subscriptions


-



-



1,190,140



-



-



-



-



1,190,140Net loss for the year ended November 20, 2004


-



-



-



-



(1,159,543
)


-



2,478



(1,157,065
)Balance - November 30, 2004


4,366,974



4,367



3,207,328



-



(1,168,068
)


(1,971,555
)


2,478



74,550Issuance of shares subscribed for in 2004


3,834,500



3,834



(3,834
)


-



-



-



-



-Common shares issued for cash


1,415,630



1,416



289,230



-



-



-



-



290,646Common shares issued for services


6,265,965



6,266



1,744,828



-



-



-



-



1,751,094Common stock subcriptions - cash


-



-



297,500



-



-



-



-



297,500Common stock subcriptions - services


-



-



60,000



(60,000
)


-



-



-



-Amortization of deferred compensation


-



-



-



15,000



-



-



-



15,000Common stock subscriptions receivable


-



-



25,000



-



-



-



-



25,000Net loss for the year ended November 30, 2005


-



-



-



-



(2,513,542
)


-



(68,795
)


(2,582,337
)Balance - November 30, 2005


15,883,069



15,883



5,620,052



(45,000
)


(3,681,610
)


(1,971,555
)


(66,317
)


(128,547
)Common shares issued for cash


4,000,997



4,001



701,587



-



-



-



-



705,588Common  shares issued for services


9,108,555



9,109



3,023,790



(503,625
)


-



-



-



2,529,274Common shares issued for patent


3,500,000



3,500



1,046,500



-



-



-



-



1,050,000Amortization of deferred compensation


-



-



-



45,000



-



-



-



45,000Record debenture financing and debt discount


-



-



713,429



-



-



-



-



713,429Net loss for the year ended November 30, 2006


-



-



-



-



(4,435,376
)


-



25,022



(4,410,354
)Balance - November 30, 2006


32,492,621



32,493



11,105,358



(503,625
)


(8,116,986
)


(1,971,555
)


(41,295
)


504,390
   6
  VIROPRO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)FOR THE PERIOD JULY 1, 2003 (INCEPTION) THROUGH JUNE 30, 2010(IN US$)(CONTINUED FROM PRECEDING PAGE (P.6))
  Common shares issued for cash


600,000



600



61,400



-



-



-



-



62,000Common sharres issued for services


1,893,836



1,894



236,940



(238,834
)


-



-



-



-Common shares issued for converted debentures and interest


3,002,453



3,002



597,488



-



-



-



-



600,490Amortization of deferred compensation


-



-



-



672,599



-



-



-



672,599Record debenture financing and debt discount


-



-



600,848



-



-



-



-



600,848Net loss for the year ended November 30, 2007


-



-



-



-



(2,654,604
)


-



(56,937
)


(2,711,541
)Balance - November 30, 2007


5,496,289



5,496



1,496,676



433,765



(2,654,604
)


-



(56,937
)


(775,604
)Common shares issued for settlement


3,725,000



3,725



39,200



-



-



-



-



42,925Common stock cancelled


(3,727,750
)


(3,728
)


(209,009
)


-



-



-



-



(212,737
)Common stock cancelled - Immuno Japan


(2,750,000
)


(2,750
)


2,750



-



-



-



-



-Common shares issued for converted debentures and interest


150,000



150



29,850



-



-



-



-



30,000Amortization of deferred compensation


-



-



-



69,860



-



-



-



69,860Record debenture financing and debt discount


-



-



656,009



-



-



-



-



656,009Net loss for the year ended November 30, 2008


-



-



-



-



(1,734,615
)


-



(32,977
)


(1,767,592
)Balamce - November 30, 2008


2,893,539



2,893



2,015,476



503,625



(4,389,219
)


-



(89,914
)


(1,957,139
)Common shares issued for settlement


13,700,000



13,700



212,800



-



-



-



-



226,500Common stock cancelled


(991,632
)


(992
)


(252,335
)


-



-



-



-



(253,327
)Common shares issued for cash


62,500,000



62,500



717,499



-



-



-



-



779,999Common shares issued for converted debentures and interest


45,660,866



45,661



1,597,397



-



-



-



-



1,643,058Common shares issued for payment of interest


3,616,900



3,617



107,696



-



-



-



-



111,313Common shares issued for services


5,200,000



5,200



51,800



-



-



-



-



57,000Net loss for the year ended November 30, 2009


-



-



-



-



(1,464,926
)


-



(15,431
)


(1,480,357
)Balance - November 30, 2009


132,579,673



132,579



4,450,333



503,625



(5,854,145
)


-



(105,345
)


(872,953
)Net loss for the transition period ended December 31, 2009


-



-



-



-



(47,200
)


-



38



(47,162
)Balance - December 31, 2009


132,579,673



132,579



4,450,333



503,625



(5,901,345
)


-



(105,307
)


(920,115
)Common shares issued for services


7,700,000



7,700



62,800



-



-



-



-



70,500Issue shares for purchase of subsidiary


97,750,000



97,750



2,834,750



-



-



-



-



2,932,500Emergence from development stage


-



-



-



-



14,018,331



(14,018,331
)






-Net loss for the period ended June 30, 2010


-



-



-



-



-



(710,900
)


(216,212
)


(927,112
)Balance - June 30, 2010


238,029,673


$
238,029


$
7,347,883


$
503,625


$
8,116,986


$
(14,729,231
)

$
(321,519
)

$
1,155,773





7


VIROPRO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009AND THE ONE MONTH ENDED DECEMBER 31, 2009 AND 2008 (TRANSITION PERIOD)(IN US$)  TRANSITION PERIOD - ONE MONTH ENDED


SIX MONTHS ENDEDDECEMBER 31, 2009


DECEMBER 31, 2008


JUNE 30, 2010


JUNE 30, 2010CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)

$
(47,200
)

$
9,962


$
(710,900
)

$
(585,584
)Adjustments to reconcile net income (loss) tonet cash (used in) operating activities:Depreciation and amortization expense


-



-



9,223



-Consulting fees - non cash stock compensation


-



-



70,500



42,000Amortization - financing costs


-



-



-



51,389Amortization - beneficial conversion features


-



-



-



83,413(Gain) loss on sale of assets


-



(2,835
)


-



(603
)Loss on uncollectible advances


-



-



-



-(Gain) loss on legal settlement


-



(7,833
)


-



154,588Change in assets and liabilities(Increase) decrease in accounts receivable










(81,595
)(Increase) decrease in other recievables and payables


-



-



-



-(Increase) decrease in prepaid expenses


(22
)


(2,827
)


(37,757
)


7,159(Increase) decrease in taxes


-



2,429



-



-Increase (decrease) in accounts payable and accrued expenses


19,281



(6,894
)


(18,442
)


117,254Total adjustments


19,259



(17,960
)


(58,071
)


455,200Net cash (used in) operating activities


(27,941
)


(7,998
)


(768,971
)


(130,384
)CASH FLOWS FROM INVESTING ACTIVITIES:Sale of property and equipment


-



2,835



-



603Purchase of property and equipment


-



-



-



(2,470
)Net cash provided by (used in) investing activities


-



2,835



-



(1,867
)CASH FLOWS FROM FINANCING ACTIVITIES:Issuance of stock for cash


-



-



-



250,000Proceeds from convertible promissory note


-



-



35,000



-Advance from Intas


-



-



170,000



-Proceeds from notes payable - related parties


-



-



25



-Proceeds received for stock to be issued


-



-



-



(80,000
)Net cash provided by financing activities


-



-



205,025



170,000Effect of exchange rate on cash flows


(7,471
)


3,565



558,844



(35,055
)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(35,412
)


(1,598
)


(5,102
)


2,694CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD


54,775



2,726



19,363



1,128CASH AND CASH EQUIVALENTS - END OF PERIOD

$
19,363


$
1,128


$
14,261


$
3,822SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid during the period for:Interest

$
-


$
-


$
-


$
-


8


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1: Organization and Basis of Presentation
 
 The unaudited financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual statements and notes.  Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.  It is suggested that these financial statements be read in conjunction with the November 30, 2009 Form 10-K filed with the SEC, including the audited financial statements and the accompanying notes thereto.  While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.
 
 VIROPRO, INC. (formerly known as Food Concepts, Inc.) (“VIROPRO” or the “Company”) was organized under the laws of the State of Nevada on June 16, 1982. On October 27, 1995, the Company reorganized and acquired Savon Coffee, Inc. as a wholly owned subsidiary. On January 1, 1996, the Company acquired Palm Beach Gourmet Coffee, Inc. as a wholly owned subsidiary. On June 30, 1998, the Company divested itself of its coffee operations and simultaneously acquired Insecta Sales and Research, Inc. as a wholly owned subsidiary. VIROPRO and its subsidiaries are collectively referred to in the consolidated financial statements as the “Company”. The principal business of the Company, which had been the wholesale distribution of various insecticides, ceased operating during the year ended June 30, 2003. Subsequent to June 30, 2003, the Company changed its year-end to November 30 and became a development stage company in accordance with the provisions of ASC 915  “Accounting and Reporting for Development Stage Enterprises”. The Company is currently developing a generic version of a biopharmaceutical drug. On April 1, 2011, with the acquisition of Biologics Process Development Inc. of Poway, California (“BPD”), the Company emerged from the development stage as it is now in the biotech consulting and lab services business.
  Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Positions or Emerging Issue Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.
 
 Note 2: Going Concern
 
 The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
 
 The Company has experienced significant losses from operations. The accumulated deficit of the Company as of June 30, 2010 is$16,700,786. As of April 1, 2010, the Company acquired 100 % BPD. Income generated from this subsidiary is consolidated into the Company and as a result, the Company emerged from the development stage.
 
 The Company’s ability to continue as a going concern is contingent upon its ability to secure additional financing, increase ownership equity and attain profitable operations. In addition, the Company’s ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in established markets and the competitive environment in which the Company operates.
 
 These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
 9
 Notes to Financial Statements
 June 30, 2010


Note 3: Goodwill
 
 On April 14, effective April 1, 2010, the Company acquired Biologics Process Development Inc. of Poway for a total consideration of $2,932,500 and in so doing recorded $1,877,479 in goodwill.
 
 Note 4: Summary of Significant Accounting Policies
 
 Principles of Consolidation
 
 The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
 
 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to investment tax credits, bad debts, income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptionsthat are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
 
 Cash and Cash Equivalents
 
 The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents.
 
 Comprehensive Income
 
 The Company adopted ASC 220-10,Reporting Comprehensive Income, (formerly SFAS No. 130). ASC 220-10 requires the reporting of comprehensive income in addition to net income from operations.
 
 Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income.
 
 Fair Value of Financial Instruments
 
 The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments.  For the loans payable, the carrying amount reported is based upon the incremental borrowing rates otherwise available to the Company for similar borrowings.
 
 Currency Translation
 
 For subsidiaries outside the United States that prepare financial statements in currencies other than the U.S. dollar, the Company translates income and expense amounts at average exchange rates for the year, translates assets and liabilities at year-end exchange rates and equity at historical rates. The Company’s functional currency is the Canadian dollar, while the Company reports its currency in the US dollar. The Company records these translation adjustments as accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in other income (expense) in the results of operations.
 
 Revenue Recognition


The Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The Company generates revenues from consulting services as well as lab services they perform. They generally bill for these services at the end of each month or in accordance with the individual arrangements with their customers. All revenue recognized is for services that have been rendered, and the Company does not pre-bill for any services.


10
 Notes to Financial Statements
 June 30, 2010


Accounts Receivable
 
 The Company conducts business and extends credit based on an evaluation of the customers’ financial condition, generally without requiring collateral.
 
 Exposure to losses on receivables is expected to vary by customer due to the financial condition of each customer. The Company monitors exposure to credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. The Company has no allowance for doubtful accounts as of June 30, 2010.
 
 Accounts receivable are generally due within 30 days and collateral is not required. Unbilled accounts receivable represents amounts due from customers for which billing statements have not been generated and sent to the customers.
 
 Income Taxes
 
 The Company accounts for income taxes utilizing the liability method of accounting.  Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse.  Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.
 
 Fixed Assets
 
 Fixed assets are stated at cost.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets; office and computer equipment – 5 years.
 
 When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period.  The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized.  Deduction is made for retirements resulting from renewals or betterments.
 
 Depreciation expense for the one month ended December 31, 2009 and 2008 was nil as the seven months ended June, 2010 was $9,223 against nil for six months 2009.
 
 Long-lived assets and fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company does perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value.
 
 Loss Per Share of Common Stock
 
 Basic net loss per common share is computed using the weighted average number of common shares outstanding.  Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants.  Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss because to do so would be antidilutive for periods presented.


11
 Notes to Financial Statements
 June 30, 2010




The following is a reconciliation of the computation for basic and diluted EPS:


June 30,


June 30,2010


2009Net (loss)

$
(710,900)


$
(1,074,006)Weighted-average common shares Outstanding (Basic)


201,423,683



72,070,881Weighted-average common stock EquivalentsStock options


-



-Warrants


-



-Weighted-average common shares Outstanding (Diluted)


201,423,683



72,070,881


Stock-Based Compensation
 
 In 2006, the Company adopted the provisions of ASC 718-10“Share Based Payments”for its year ended December 31, 2008. The adoption of this principle had no effect on the Company’s operations
  The Company has elected to use the modified–prospective approach method. Under that transition method, the calculated expense in 2006 is equivalent to compensation expense for all awards granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair values. Stock-based compensation expense for all awards granted after January 1, 2006 is based on the grant-date fair values. The Company recognizes these compensation costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each award. The Company considers voluntary termination behaviour as well as trends of actual option forfeitures when estimating the forfeiture rate.
 
 The Company measures compensation expense for its non-employee stock-based compensation under ASC 505-50,Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.  The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received.
 
 The fair value is measured at the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital.
 
 Segment Information
 
 The Company follows the provisions of ASC 280-10,Disclosures about Segments of an Enterprise and Related Information. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions.
 
 Uncertainty in Income Taxes
 
 The Company follows ASC 740-10,Accounting for Uncertainty in Income Taxes(“ASC 740-10”). This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. ASC 740-10 is effective for fiscal years beginning after December 15, 2006. Management has adopted ASC 740-10 for 2009, and they evaluate their tax positions on an annual basis, and has determined that as of June 30, 2010, no additional accrual for income taxes other than the federal and state provisions and related interest and estimated penalty accruals is not considered necessary.


Fair Value Measurements
 
 In September 2006, ASC issued 820,Fair Value Measurements. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. Early adoption is encouraged. The adoption of ASC 820 is not expected to have a material impact on the financial statements.
 
 In February 2007, ASC issued 825-10,The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of ASC 320-10, (“ASC 825-10”) which permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. A business entity is required to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This statement is expected to expand the use of fair value measurement. ASC 825-10 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.


12
 Notes to Financial Statements
 June 30, 2010


Recent Accounting Pronouncements
 
 In December 2007, the ASC issued ASC 810-10-65,Noncontrolling Interests in Consolidated Financial Statements. ASC 810-10-65 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent’s ownership of a noncontrolling interest, calculation and disclosure of the consolidated net income attributable to the parent and the noncontrolling interest, changes in a parent’s ownership interest while the parent retains its controlling financial interest and fair value measurement of any retained noncontrolling equity investment. ASC 810-10-65 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. Management is determining the impact that the adoption of ASC 810-10-65 will have on the Company’s financial position, results of operations or cash flows.
 
 In December 2007, the Company adopted ASC 805,Business Combinations(“ASC 805”). ASC 805 retains the fundamental requirements that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. ASC 805 defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control.  ASC 805 will require an entity to record separately from the business combination the direct costs, where previously these costs were included in the total allocated cost of the acquisition.  ASC 805 will require an entity to recognize the assets acquired, liabilities assumed, and any non-controlling interest in the acquired at the acquisition date, at their fair values as of that date.
 
 ASC 805 will require an entity to recognize as an asset or liability at fair value for certain contingencies, either contractual or non-contractual, if certain criteria are met.  Finally, ASC 805 will require an entity to recognize contingent consideration at the date of acquisition, based on the fair value at that date.  This will be effective for business combinations completed on or after the first annual reporting period beginning on or after December 15, 2008.  Early adoption is not permitted and the ASC is to be applied prospectively only.  Upon adoption of this ASC, there would be no impact to the Company’s results of operations and financial condition for acquisitions previously completed.  The adoption of ASC 805 is not expected to have a material effect on the Company’s financial position, results of operations or cash flows.
  In March 2008, ASC issued ASC 815,Disclosures about Derivative Instruments and Hedging Activities, (“ASC 815”). ASC 815 requires enhanced disclosures about an entity’s derivative and hedging activities. These enhanced disclosures will discuss: how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for and its related interpretations; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. ASC 815 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company does not believe that ASC 815 will have an impact on their results of operations or financial position.
  In April 2008, ASC 350-30 was issued,Determination of the Useful Life of Intangible Assets. The Company was required to adopt ASC 350-30 on December 1, 2008. The guidance in ASC 350-30 for determining the useful life of a recognized intangible asset shall be applied prospectively to intangible assets acquired after adoption, and the disclosure requirements shall be applied prospectively to all intangible assets recognized as of, and subsequent to, adoption. The Company does not believe ASC 350-30 will materially impact their financial position, results of operations or cash flows.
  In May 2008, ASC 470-20 was issued,Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)(“ASC 470-20”). ASC 470-20 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. ASC 470-20 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis. The Company doesnot believe that the adoption of ASC 470-20 will have a material effect on its financial position, results of operations or cash flows.
  In June 2008, ASC 815-40 was issued,Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock(“ASC 815-40”), which supersedes the definition in ASC 605-50 for periods beginning after December 15, 2008. The objective of ASC 815-40 is to provide guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock and it applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative in accordance with ASC 815-20.
 ASC 815-40 also applies to any freestanding financial instrument that is potentially settled in an entity’s own stock. The Company believes that ASC 815-40, will not have a material impact on their financial position, results of operations and cash flows.


13
 Notes to Financial Statements
 June 30, 2010


In June 2008, ASC 470-20-65 was issued,Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios(“ASC 470-20-65”). ASC 470-20-65 is effective for years ending after December 15, 2008. The overall objective of ASC 470-20-65 is to provide for consistency in application of all the standards issued for convertible securities. The Company has computed and recorded a beneficial conversion feature in connection with certain of their prior financing arrangements and does not believe that ASC 470-20-65 will have a material effect on that accounting.
 
 Effective July 1, 2009, the Company adopted FASB ASU No. 2009-05,Fair Value Measurement and Disclosures (Topic 820)(“ASU 2009-05”). ASU 2009-05 provided amendments to ASC 820-10,Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities. ASU 2009-05 provides clarification that in circumstances in which a quoted market price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using certain techniques. ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of a liability. ASU 2009-05 also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required for Level 1 fair value measurements. Adoption of ASU 2009-05 did not have a material impact on the Company’s results of operations or financial condition.
 
 In January 2010, the Company adopted FASB ASU No. 2010-06,Fair Value Measurement and Disclosures (Topic 820)- Improving Disclosures about Fair Value Measurements(“ASU 2010-06”). These standards require new disclosures on the amount and reason for transfers in and out of Level 1 and 2 fair value measurements. The standards also require new disclosures of activities, including purchases, sales, issuances, and settlements within the Level 3 fair value measurements. The standard also clarifies existing disclosure requirements on levels of disaggregation and disclosures about inputs and valuation techniques. These new disclosures are effective beginning with the first interim filing in 2010. The disclosures about the rollforward of information in Level 3 are required for the Company with its first interim filing in 2011. The Company does not believe this standard will impact their financial statements.
 
 Other ASU’s that have been issued or proposed by the FASB ASC that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.
 
 Note 5: Property and Equipment


Equipment as of June 30, 2010 (unaudited) and November 30, 2009 were as follows:


Estimated

Useful LivesYears


June 30, 2010


December 31, 2010Computer Equipment


3-5


$
85,176



-Less : Accumulated Depreciation






(9,223
)


(-
)Equipment, net





$
75,953



-





There was $9,223 and $0 charged to operations for depreciation expense for the period ended June 30, 2010 and year ended November 30, 2009, respectively.


Note 6: Income Taxes
 
 As of June 30, 2010, the Company has a net operating loss carry forward of approximately $8,469,000  .  This loss will be available to offset future taxable income.  If not used, this carry forward will expire through 2030.  Components of net deferred tax assets, including a valuation allowance, are as follows:


2010Deferred tax assets:Net operating loss carryforward

$
2,879,460Total deferred tax assets


2,879,460Less: Valuation Allowance


(2,879,460
)Net Deferred Tax Assets

$
-





14
 Notes to Financial Statements
 June 30, 2010


The valuation allowance for deferred tax assets as of June 30, 2010 was approximately $2,879,460.  In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible.  Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment.  As a result, management determined it was more likely than not the deferred tax assets would not be realized as of June 30, 2010 and, accordingly, recorded the full valuation allowance.
  Reconciliation between the statutory rate and the effective tax rate is as follows at June 30:


2010

2009Federal statutory tax rate


(34.0
)%


(34.0
)%Change in valuation allowance


34.0
%


34.0
%Effective tax rate


0.0
%


0.0
%


Note 7: Convertible Debentures
 
 In early 2007, Viropro issued up to $1,300,000 of convertible debentures. The debentures had a beneficial conversion feature totaling $420,527.  The beneficial conversion feature has been recorded as a debt discount which will be amortized over the life of the loans.  The beneficial conversion feature was valued under the Black-Scholes option pricing model using the following assumptions: a stock price between $0.19 and $1.19; estimated life of 3 years; historical volatility rate ranging between 205% and 251% and debt discount rate of 6.00%. The investors had 3 years from March 1, 2006 to exercise 6,500,000 warrants.
 
 The warrant strike price was of $0.25 per share of restricted stock.  The Company has determined the warrants to have a value of $838,587 which has been reflected as a financing cost and amortized over the life of the loans.  The warrants were valued under the Black-Scholes option pricing model.
 
 From March 1, 2007 to March 1, 2009 investors converted $630,490 in private debenture financing which included accumulated interest of $74,490 into 3,032,112 common shares.  In addition, debentures totaling $56,000 were settled with cash.
 
 At the maturity date of the debentures, the Company offered to the owners to exchange the debentures for common shares instead of cash.  The Company has thus issued 13,661,600 common shares to convert $603,000 of debentures, cumulated interest of $43,424 and a premium valued at $36,656.  In addition, debentures totaling $25,000 were settled with $5,000 in cash.  At June 30, 2010 outstanding debentures of $30,000 relating to four debenture holders were still unpaid and are in default.The Company is involved in litigation regarding this outstanding total (See Note 8).
 
 On October 2007, the Company announced an expected $1.5 million financing.  On December 21, 2007, the Company informed its stockholders that the first tranche of $300,000 relating to the $1.5 Million financing was not closed due to unfavorable market conditions.  The Company raised only $70,000 from this first tranche of $300,000.
 
 The Company has determined the $70,000 debenture has a beneficial conversion feature totaling $22,165.  The beneficial conversion feature has been recorded as a debt discount has been amortized over the life of the loan.  The beneficial conversion feature was valued using the intrinsic value method using the following assumptions: a stock price of $0.08 and an estimated life of 2 years. This debenture bears an annual interest rate of 6%, the conversion price is set at $0.06 per share and the maturity is November 1, 2009. The beneficial conversion feature was fully amortized as of November 30, 2009. The $70,000 debenture remains outstanding as of June 30, 2010.


15
 Notes to Financial Statements
 June 30, 2010


Note 8: Convertible Promissory Note
  On June 14, 2010, the Company issued a $35,000, 8% Convertible Promissory Note to Asher Enterprises, Inc. The Convertible Promissory Note matures on March 16, 2011. The Convertible Promissory Note converts into shares of common stock at 58% of the 10 day average trading price of the common stock on the date of conversion. The note was converted on July 27, 2010. There was no change in the value of the common stock from date of issuance of the Convertible Promissory Note through June 30, 2010. There is no discount associated with this note. The $35,000 remained outstanding as of June 30, 2010.
 
 Note 9: Notes Payable – Related Parties
 
 The Company consolidated a $60,000 note payable to Dr. Scott Brown, founder of BPD and currently Chief Science Officer of the Company.  The note  and is non-interest bearing and due on demand. The amount is included in current liabilities on the consolidated balance sheet at June 30, 2010.
  The Company has also been advanced $13,556 from Jeff Hale, an officer of  the Company, through June 30, 2010. The advance is also non-interest bearing and due on demand. This advance is included in current liabilities on the consolidated balance sheet at June 30, 2010.
 
 
 Note 10:Stockholders’ Deficit
 
 During the five month period ended November 30, 2003, the Company implemented a 1 to 12.14 reverse stock split. All share and per share amounts have been restated to effect this split.
 
 During November 2004, the Company issued 250,000 common shares pursuant to the exemption contained in Regulation S for cash aggregating $50,000.
  During December 2004, the Company filed a Registration Statement under Rule S-8 and issued 1,000,000 common shares for services rendered during the year ended November 30, 2004. The fair value of these shares of $305,000 has been recorded as a stock subscription at November 30, 2004 and charged to operations during the year ended November 30, 2004.
 
 During December 2004, the Company issued 682,500 common shares pursuant to the exemption contained in Regulation S for cash received prior to November 30, 2004, aggregating $136,500. In conjunction with this offering the Company issued 1,457,500 warrants to purchase common shares at $.25 per share. The warrants expire in December 2006.
  During February 2005, the Company issued 2,152,000 common shares for services performed during the year ended November 30, 2004. The fair value of these shares of $748,640 has been recorded as a stock subscription at November 30, 2004 and charged to operations during the year ended November 30, 2004.
 
 During February 2005, the Company issued 493,200 common shares pursuant to the exemption contained in Regulation S for cash received in the aggregate amount of $105,660. In conjunction with this offering the Company also issued741,400 warrants to purchase common shares at $0.25 per share and 50,000 warrants to purchase common shares at $0.35 per share. The warrants expire in February 2007.
 
 During February 2005, the Company issued 685,000 common shares for services performed. The shares were valued at their fair market value of $287,700 which was charged to operations during the year.
 
 During March 2005, the Company issued 850,000 shares of common stock pursuant to a Form S-8 Registration Statement for services provided. These shares were valued at their fair market value of $405,150 which was charged to operations during the year.
 
 During the period from February to May 2005, the Company issued 922,430 common shares pursuant to the exemption contained in Regulation S for cash received aggregating $184,986. In conjunction with this offering the Company issued 543,930 warrants to purchase common shares at $0.25 per share. The warrants expired in 2007.
 
 During June 2005, the Company issued 1,245,000 common shares for services performed. The shares were valued at their fair market value of $361,050 which was charged to operations during the year.


16
 Notes to Financial Statements
 June 30, 2010


During September 2005, the Company issued 3,485,965 common shares for services performed. The shares were valued at their fair market value of $697,194 which was charged to operations during the year.
 
 During the period from September through November 2005, the Company agreed to issue an aggregate of 1,487,500 common shares pursuant to the exemption contained in Regulation S for cash received of $297,500 and 125,000 common shares for a receivable of $25,000 which was paid in March 2006. In conjunction with this offering the Company issued 1,597,500 warrants to purchase common shares at $0.25 per share. The warrants expire from September to December 2007. In addition the Company agreed to issue 300,000 common shares for services performed and to be performed which were valued at their fair market value of $60,000. Through November 30, 2005, the Company has charged $15,000 to operations related to this issuance.
 
 At February 28, 2006, the shareholders approved an increase in share capital to 45,000,000 authorized shares of common stock with a par value of $0.001.  On October 25, 2006, the shareholders approved an additional increase in share capital to 100,000,000 authorized shares of common stock.
  During the period December 2005 through November 2006, the Company issued an aggregate of 9,108,555 shares for consulting services rendered totaling $3,032,899.  In January 2006, the Company issued 3,500,000 shares valued at $1,050,000 in exchange for a patent.  During the period December 2005 through November 2006, the Company issued an aggregate of 4,000,997 common shares pursuant to the exemption contained in Regulation S for cash received of $705,588.
 
 During April 2007, 1,937,612 shares were issued for conversion of debenture and payment of interest valued at $387,522 or $0.20 per share.
 
 During May 2007, 557,500 shares were issued for services performed which were valued at their fair market value totaling $105,200.
 
 During May 2007, 203,021 shares were issued for conversion of debentures and payment of interest on the debenture, valued at $40,604 or $0.20 per share.
 
 During July 2007, 1,336,336 shares were issued for services performed, which were valued at their fair market value totaling $133,634.
 
 During October 2007, 740,000 shares were issued for conversion of debentures, valued at $148,000 or $0.20 per share.
 
 During November 2007, 121,820 shares were issued for payment of interest on the debentures, valued at $24,364 or $0.20 per share.
 
 During November 2007, 600,000 common shares were issued pursuant to the exemption contained in Regulation S for cash in the amount of $62,000.  The Company expensed $69,861 of previously issued shares recorded as deferred compensation. On March 19, 2007, the Company received $30,000 for 375,000 shares at $0.08 per share of common stock. As of May 31, 2008, the Company had not issued any of these shares and accordingly has reflected $30,000 as a common stock payable. The Company anticipates issuing such shares in the following fiscal year.
 
 On April 1, 2008, a holder of the Company’s convertible debentures agreed in writing to convert their debentures into restricted shares of the Company’s common stock.  The Company hereby converted $30,000 of principle on the debentures in exchange for the issuance of 150,000 shares of common stock.
 
 In 2006, the Company asserted a counter-claim (Case No. 2:06-cv-00739-RCJ-RJJ) seeking the return and cancellation of 6,800,000 million shares of Viropro that it felt were improperly issued.  On April 16, 2008, the Company settled with various individuals resulting in the following change in equity:  (See Note 8: Legal Proceedings for additional detail).


●
On April 16, 2008, the Company entered into six “Release of all Claims and Settlement Agreements” (“RCSAs”).  The settlements resulted in the return and cancellation of 2,847,000 restricted shares and issuance of 3,725,000 free trading shares under Section 3 (a) (10) of the Securities Act of 1933.  The 878,000 shares were valued at $0.05 per share, for a total value of $40,078.  In addition, the settlement called for the release of previous management from all liabilities.





●
On April 16, 2008, the Company entered into three other RCSA’s.  The settlements stated that the parties mutually agreed to return to the Company a total of 779,750 shares.  The return of the shares was valued based on their original issuance which ranged from $0.02 to $0.32 per share for a total value of $177,790 resulting in a gain on the settlement.  This resulted in a net gain on the settlement related to the cancellation of shares of $137,712.




●
On April 16, 2008, the Company also entered into an RCSA with an individual.  The settlement required the shareholder to return 1,000 shares for cash consideration of $100 paid by the Company.





17
 Notes to Financial Statements
 June 30, 2010





Also during May 2008, the Company received 100,000 shares that had been granted to one consultant for work that prior management considered had never been performed. The shares were valued at $32,000 and recorded as consulting expense in a prior year. The consultant agreed to return the shares and they were cancelled resulting in a gain in the current period of $32,000.


In July 2008, the Company negotiated the return and cancellation of 2,750,000 shares it had granted to Immuno Japan upon reaching an agreement for the supply of CHO cells and the marketing and production of therapeutic proteins. As this agreement was never implemented, Immuno Japan agreed to return 2,750,000 shares out of the 4,000,000 that had been issued at the onset, in November 2004.  The shares were deemed to have no value.
 
 During December 2008, the Company issued 5,000,000 restricted common shares to BPD pursuant to the exemption contained in Regulation S for cash aggregating $50,000.
 
 During December 2008, the Company issued 750,000 common shares to settle a claim against the company and resulting in a loss on settlement of $22,500.
 
 During February 2009, the Company issued 20,000,000 restricted common shares to BPD pursuant to the exemption contained in Regulation S for cash aggregating $200,000.
 
 During February 2009, 17,173,300 shares were issued for conversion of the First Royalty debenture and payment of interest on the debenture, valued at $801,151 or $0.03 per share.
 
 During February 2009, 16,500 shares were issued for payment of interest on the debenture, valued at $3,300 or $0.20 per share.
 
 During February 2009, 4,200,000 shares were issued for services performed which were valued at their fair market value totaling $42,000.
 
 Also during February 2009, the Company received 966,667 shares that had been granted to one consultant for work that prior management considered had never been performed. The shares were valued at $248,333 and recorded as consulting expense in a prior year. The consultant agreed to return the shares and they were cancelled resulting in a gain in the current period of $248,333.
 
 During March 2009, the Company repurchased convertible debentures issued to Seurecap against issuance of 13,661,600 free trading shares valued at $315,465 or $0,05 per shares. The outstanding balance of the debentures stands, as of November 30, 2009 at $30,000.
 
 In April 2009, the Company issued 500,000 free trading shares to Citivac for services rendered.
 
 In June 2009, the Company issued 2,000,000 free trading shares to Financial Pacific to settle a claim.
 
 In June 2009, the Company issued 8,333,333 restricted shares to BPD as conversion of the debenture it had purchased from First Royalties.
 
 In July 2009, the Company issued 1,225,000 restricted shares to 9188-5400 Quebec Inc as interest payment on the First Royalties convertible debentures.
 
 In July 2009, the Company issued 9,000,000 shares to Intas Biopharmaceuticals Ltd to convert its $180,000 milestone payment made in September 2007 as equity investment.
 
 In July 2009, the Company issued 37,500,000 restricted shares to BPD for cash investments totaling $250,000.


18
 Notes to Financial Statements
 June 30, 2010


In August 2009, the Company issued 500,000 free trading shares to Immuno Japan as settlement to cancel agreement entered into in 2004.
 
 In August 2009, the Company issued 8,333,333 restricted shares to BPD as conversion of the debenture BPD had purchased from First Royalties.
 
 In September 2009, the Company issued 1,250,000 free trading shares to Financial Pacific to settle a claim against the Company.
 
 In September 2009, the Company issued 400,000 free trading shares to 6143865 Canada Inc. to settle payment of a debt that had matured in March 2009.
 
 In November 2009, the Company issued 500,000 restricted shares to Richard Arcand as payment for services rendered.
 
 In March 2010, 3,200,000 shares were issued for services, valued at $48,000 or $0.015 per share.
 
 On April 20, 2010, 79,166,666 shares issued to BPD to acquire VIROPRO, INC. were cancelled and reissued with an additional 27,750,000 to Intas Biopharmaceuticals Ltd and a 70,000,000 issuance to IBP LLC as payment for the acquisition of BPD, for a total of 97,750,000 shares valued at $2,932,500. The Company recorded $1,877,479 in goodwill in this transaction.
 
 On May 27, 2010, 2,000,000 shares were issued to Claude Gingras and 2,500,000 to Serge Beausoleil under a Form S-8 Registration Statement, for a value of $22,500.
 
 Note 11: Commitments and Contingencies
 
 During the periods covered by these financial statements, the Company issued shares of common stock and subordinated debentures without registration under the Securities Act of 1933. Although the Company believes that the sales did not involve a public offering of its securities and the Company did comply with the “safe harbour” exemptions from registration, if such exemptions were found not to apply, this could have a material impact on the Company’s financial position and results of operations. In addition, the Company issued shares of common stock pursuant to Form S-8 registration statements and pursuant to Regulation S. The Company believes that it complied with the requirements of Form S-8 and Regulation S in regard to these issuances; however, if it were determined that the Company did not comply with these provisions, this could have a material impact on the Company’s financial position and results of operations.
 
 In April 2008, the Company awarded Innium Technologies of Montreal all its research and development on the Anti-CD20 project.  Viropro will fund the R&D costs but will retain the entire intellectual property and all rights relating to the project; in so doing, Viropro has further reduced its fixed costs but all advances made prior to this agreement have been expensed so as to reflect the arm’s length relation with Innium.
 
 Note 12: Legal Proceedings
  On July 13, 2009 HKDP, a supplier to Viropro initiated procedures claiming $37,991.95 for an unpaid bill. Management has entered into discussions with the claiming party in January 2011 and expects to reach settlement by the end of 2011.
 
 Note 13: Subsequent Events





In August, 2010, Dr. Rajiv Datar took over the position of Chief Executive Officer and President of the Company while Serge Beausoleil was appointed Advisor to Shareholder Communications.


On December 23, 2010, the Company announced it had retained the services of Gilford Securities Inc. of New York City to act as strategic advisors.


On January 5, 2011, the Company announced it had entered into an agreement with Spectrum Pharmaceuticals Inc. for the development of a biosimilar of Rituximab.


19
 Notes to Financial Statements
 June 30, 2010


On February 10, 2011, the Company settled litigation with Securcap Debenture holders; the Company  agreed to convert all outstanding debentures into common shares in exchange for the holders dismissing all claims.
  On February 22, 2011, the Company announced it had entered into an agreement to acquire Alpha Biologics Sdn Bhd in a share exchange transaction that was completed on July 12, 2011.
 
 From the period July 1, 2010 through June 30, 2011, the Company issued an additional 85,467,276 shares of common stock.
 
 On July 8, 2010, 2,500,000 shares were issued to  Serge Beausoleil, 2,500,000 to Rajiv Datar, 1,500,000 to Claude Gingras, 500,000 to Jean-Denis Gingras, 2,000,000 to Scott M Brown and 1,500,000 to Jeff Hale.
 
 On November 20, 2010, 20,000,000 shares were issued under a private placement agreement of 100,000.
 
 In December 28, 2010, 9,000,000 shares were issued as Payment in shares to a non related third party.
 
 On January 14, 2011 a total of 13,669,000 were issued to Serge Beausoleil and Claude Gingras as payment for fees payable dating back July 2010.
 
 On January 27, 2011, 4,000,000 shares were issued in a private placement that began in December 2010.
 
 On Jan 27, 2011, 1,550,000 shares were issued in a private placement that began in July 2010.
 
 On February 18, 2011a payment in shares of 4,500,000 shares was processed to a non related third party.
 
 On March 15, 2011, 200,000 shares were cancelled as per Court Order received by the transfer agent.


On March 17, 2011, 5,000,000 shares were issued pursuant to a Private Placement and 6,500,000 from the conversion of a debenture.


On April 26, 2011, 7,500,000 were issued pursuant to a private placement.
 
 On May 2, 2011, 17,000,000 shares were issued to Rajiv Datar and 4,000,000 Claude Gingras to offset due fees and expense accounts.
 
 On June 2, 2011, 5,000,000 shares were issued to a consultant.
 
 June 16, 2011, 6,000,000 shares were issued to Innium Technologies as payment in shares for services rendered.








20





Item 2. Management’s Discussion and Analysisof Financial Condition and Results of Operations
 
 THE FOLLOWING DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF VIROPRO, INC. SHOULD BE READ IN CONJUNCTION WITH THE UNAUDITED CONDENSED FINANCIAL STATEMENTS AND NOTES INCLUDED ELSEWHERE IN THIS REPORT.
 
 THIS DISCUSSION AND ANALYSIS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES.  YOU CAN IDENTIFY OUR FORWARD-LOOKING STATEMENTS BY WORDS SUCH AS “ANTICIPATE,” “BELIEVE,” “ESTIMATE,” “EXPECT,” “FORECAST,” “GOAL,” “INTEND,” “PLAN,” “PREDICT,” “PROJECT,” “SEEK,” “TARGET,” “COULD,” “MAY,” “SHOULD” OR “WOULD” OR OTHER SIMILAR EXPRESSIONS THAT CONVEY THE UNCERTAINTY OF FUTURE EVENTS OR OUTCOMES. IN ACCORDANCE WITH “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, THESE STATEMENTS ARE ACCOMPANIED BY CAUTIONARY LANGUAGE IDENTIFYING IMPORTANT FACTORS, THOUGH NOT NECESSARILY ALL SUCH FACTORS, WHICH COULD CAUSE FUTURE OUTCOMES TO DIFFER MATERIALLY FROM THOSE SET FORTH IN FORWARD-LOOKING STATEMENTS.


Overview
 
 VIROPRO, INC. (“Viropro” or the “Company”) conducts operations through its subsidiaries, Viropro International Inc. (“VPRI”) and Biologics Process Development Inc. of San Diego CA (”BPD”), and specializes in the transfer of its technologies for industrial production of biogeneric therapeutic proteins for the treatment of various diseases including cancer, diabetes, hepatitis or multiple sclerosis.  The Company’s principal objective is to provide Contractual Research and Manufacturing Services to biotech and biopharmaceutical companies in global markets.  Biotech and Biopharma are cutting edge industries calling for highly specialized installations, equipments, and highly skilled and highly educated personnel. Viropro owns and has access to such specialized resources.
 
 Viropro draws most of its revenues from services biotech and biopharma industries on a cost plus percentage basis. This percentage varies according to the type of services rendered.


Viropro enjoys close working relations with some of the leading biotech research institutes in North America, one of which is the Biotech Research Institute (BRI) in Montreal, Canada, a constituent of the National Research Council of Canada.  Viropro has licensed from BRI a high-efficiency expression system platform for antibody production.


In April 14, 2010, Intas Biopharmaceuticals Ltd. (“Intas”) of India, became the controlling shareholder of Viropro.  Intas is one of India’s leading biotechnology companies, with a “Products” business and a “Contract Services” business.  It is the only biotech company in India that has a cGMP (current Good Manufacturing Practice) biologics facility approved by the European Medicines Agency and has brought four biopharmaceuticals to the market in as many years.


Viropro’s strategic plan is to develop into a premier Biotechnology Contract Research and Manufacturing Services (“CRAM”) company, within a five-year timeframe.  The intention is to have our operating subsidiaries provide key services using modern biotechnology principles in the area of biologics process development and cGMP-based biologics contract manufacturing.





Viropro believes that the fundamentals of the biotech industry, from a US perspective, continue to be strong (in spite of recent global economic challenges) for the following reasons:





●
The biotech industry has had more than twenty-five years of building the necessary infrastructure for sustained growth.





●
Over $692 million flowed into early-stage biopharma, diagnostic and device companies in May [2010] and over $2.5 billion during 2009 and the first six months of 2010.





●
Pricing power in deals with pharmaceutical partners has steadily improved.  In the 1990s biotech companies were unable to negotiate high royalty percentages and settled for a low double-digit royalty from a pharmaceutical company to obtain sufficient funding for a drug’s development.  Currently, it is common for biotech companies and their pharmaceutical partners to enter into 50:50 profit sharing arrangements, representing at least a 3-fold increase in the industry’s pricing power.


21








●
This is a noncyclical industry that should be mostly sheltered from economic downturns.





●
Biotech has produced real results, with an increasing number of products coming to market.  Based upon the number of biotech drugs currently in the US FDAs approval pipeline, it can be said that the biotech industry has reached critical mass.





Viropro's analysis of the US biotech market is summarized below from the perspective of opportunities for Indo-US Biotech companies.  The availability of highly skilled, but low-cost scientific manpower in India – a situation not too different from the niche carved out by Indian software companies-provides the following avenues:





●
The increasing trend towards Contract R&D by bio/pharmaceutical companies due to the ever-expanding cost of bringing bio/pharmaceuticals to the market.





●
A noticeable trend towards contract manufacturing (in US FDA-approved GMP facilities).
 ●
The production of off-patent biopharmaceuticals (a.k.a. Biosimilars / Biogenerics / Follow-on biologics-FOBs ).





The worldwide biopharmaceutical market was estimated at over $50 billion in 2004 (Biopharma). Biopharmaceuticals are a growing field. The rate of new products being approved has increased steadily, more than doubling from the 1990s through to 2005 (Bioplan 2006 and Nature 2004). A series of key blockbuster products developed in the 1980s and 1990s and selling of over $30 billion are predicted to remain the dominant revenue generators over the coming years (Nature Biotech., 2004). All of Viropro’s targeted biogenerics are among these blockbuster biopharmaceuticals.





Viropro’s management structure is very lean. The Company is managed by two executivesDr. Rajiv Datar is President and CEO and Claude Gingras is Vice-President, Chief Financial Officer and Chief Compliance Officer.  Since April 2008, research and development operations have been subcontracted to Innium Technology with Viropro holding the exclusive rights on the research.  Innium Technology, an independent and private company bears the infrastructure and personnel costs leaving Viropro with minimal fixed costs and liabilities.





Contractual work is also low risk relative to research work and we believe contractual work will allow Viropro to generate steady revenues and cash flow for its development projects. Contractual work, as used in this report, refers to contractual agreements for cloning, sequencing, purifying, developing, validating and producing biopharmaceutical products and sub-products. Viropro typically generates the larger portion of its revenues in this manner. For the quarter ended June 30, 2010, these revenues represented 100% of Viropro’s revenues.





Technology and strategic alliances


Viropro now holds a versatile technology platform with an exclusive license portfolio. This is a result of  strong partnerships with the Biotechnology Institute in Montreal through an agreement that includes the use of a proprietary promoter that significantly enhances the yield of recombinant proteins.


Viropro's platform technology allows it to develop manufacturing processes for common biotech products which are already off patent or for which patent expiry is imminent. The platform also allows the Company to undertake contractual development for biotechnology and biopharmaceutical manufacturing companies, and develop or co-develop new products with partnering companies.


We believe our strength is in our technological platform, i.e. the intellectual property and know-how and rights that allows us to quickly develop high quality biopharmaceutical manufacturing processes at low cost.  We believe our technological platform will allow us to develop more efficient manufacturing processes than those of our competitors who most often use technologies dating to the 1980s and 90s.  Additionally, Viropro’s leadership team has a strong international network of contacts, which enables Viropro to acquire and out-license technologies and furthers the development goals of the Company.


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In order to strengthen and expand Viropro's manufacturing and development capabilities, a partnership agreement was signed in 2007 with the National Research Council of Canada’s Biotechnology Research Institute in Montreal (BRI) for scale-up of process development. This agreement allows the Company to benefit from BRI's proven expertise in recombinant protein process development and scale-up. With this agreement, the Company has an advantageous R&D leverage that minimizes its R&D expenditure and allows for a greater focus on development of novel products such as monoclonal antibodies. Viropro’s collaboration with the BRI is a productive one, and the Company enjoys the advantages of the BRI’s infrastructure and expertise, its highly specialized equipment for applied biotech, and a local network of skilled scientists and technicians to complement Viropro’s own.  On October 26, 2006, Viropro signed a second agreement with the National Research Council- Biotechnology Research Institute (NRC-BRI) for the use of powerful inducible expression systems developed and patented by the NRC-BRI.  Viropro is also planning to sign new licenses with NRC-BRI in the near future for the production of other therapeutic human proteins including cytokines and monoclonal antibodies.
 
 In consideration of such licences, NRC-BRI have agreed to the following schedule of fees:


·
Licence Fee :


o
50,000$ for the C-Switch technology
 o
60,000$ for the Reverse C-Switch
 o
25,000$ for the pMPG Vector and CMV5 Promoter


·
Licence Royalties:


o
0.4% for the C-Switch technology
 o
0.6% for the Reverse C-Switch
 o
0.2% for the pMPG Vector and CMV5 Promoter





A memorandum of understanding, or MOU, was signed on April 26, 2007 with Intas for the production of an undisclosed high value therapeutic product.  Intas was to pay Viropro a licensing fee for the development and technological transfer of the manufacturing process and Viropro would receive royalties based on net sales.  On September 21, 2007, the Final Collaborative Research, Development and Licence Agreement related to the above mentioned Intas MOU was signed.  It is a 10 year agreement along with a consultancy contract with Intas which will provide Viropro with product development and licensing revenues of $2.14 million over the next 2 years.


In December 2008, Intas transferred this agreement to Biologics Process Development, Inc of San Diego, California, its then-newly acquired subsidiary, which in turn purchased a majority stake in Viropro in a $1.0 million private placement.
 
 In the course of the 2009 fiscal year, Intas, BPD and the Company sought to make VIROPRO, INC. a holding company with VPRI and BPD as operating subsidiaries. Thus the prior transaction giving control to BPD was rescinded and all shares previously issued to BPD were issued to Intas, making Intas the direct controlling shareholder of VIROPRO, Inc. This transaction had no fiscal impact.


Industry





The size of the pharmaceutical industry was estimated at approximately $600 billion in 2006(Emerging Markets in Asia, Latin America and Eastern Europe Gain Strength, IMS Health, 2006).  Of this, biopharmaceutical products made up approximately 10%, or about $60 billion.  The biopharmaceutical segment is one of the fastest growing segments and is commonly said to be the future of the pharmaceutical industry.  Revenues of the world’s publicly-traded biotech companies grew 18 percent in 2005.  The U.S. and European biotechnology sectors showed 16% and 17% growth respectively, with the former posting its third consecutive year of strong product approvals and solid financial results (Beyond Borders: The Global Biotechnology Report, Ernst & Young, 2006).





Products, goals and objectives





Therapeutic protein products are the primary reason for the boom in biotech that occurred during the mid-1990s to late 2000s.  Monoclonal antibodies (a specific class of therapeutic proteins) posted sales of $14.5 billion in 2005 (The Future of Monoclonal Antibody Therapeutics, Business Insights, 2006), and it is estimated that in 2008 they accounted for 32% of all biotech revenue. With a considerable portion of the therapeutic protein sector having lost patent protection prior to or during 2010, there is a major opportunity in the technology transfer of therapeutic proteins throughout the world.







23


Viropro’s goals and objectives are as follows:





·
To develop and out-license manufacturing processes for biogenerics already in the public domain as soon as patent protection expires for various biopharmaceuticals;





·
To develop new biopharmaceutical products with various partners (conditional to total development cost coverage);





·
In the short term, to obtain recurring revenue;





·
To obtain 15 contracts for product development from clone to clinic by 2015;





Viropro is focused on the development and transfer of “in licensing”  leading technological processes for the manufacturing of high quality biopharmaceuticals. The business strategy being developed since 2005 is to target emerging, unserved markets with high potential development by transferring technologies and know-how to pharmaceutical partners in various local markets worldwide. The main markets that Viropro has focused on are South America and Asia (primarily India).





Administrative overhead





The Company plans to maintain low administrative and overhead costs that will ensure the funds are available for the development activities and accordingly create the maximum value for its shareholders. Research and Development work will be subcontracted to BRI, to university laboratories for experimental studies or to specialized companies for GMP manufacturing, toxicology and clinical studies. By selecting the optimal research and development work structure between VPRI and BPD seeks to minimize capital expenditures, generate results quickly and assure a high degree of confidence in results.





Development





All the research and development procedures, from the build-up of biological systems to the industrial production on a large-scale are done in close collaboration with key partners with whom Viropro has established strategic alliances:





As indicated above (see “—Technology and strategic alliances”), an alliance was formed with the Biotechnology Research Institute of the National Research Council Canada (“NRC-BRI” located in Montreal, Canada). This alliance gives Viropro access to expertise as well as state-of-the-art equipment and facilities for bio-process innovation and purification process development as well as the scalability of bioprocesses under industrial scale conditions.





Intas also signed a partnership agreement in October 2007 for the development and production of a proprietary therapeutic protein.  The signature of the development contract along with a consultancy agreement signed in parallel provided Viropro with product development and licensing revenues.  Since then, Intas has transferred this agreement to Biologics Process Development of San Diego, California (referred to elsewhere in this report as “BPD”), our newly-acquired subsidiary. This ensures adequate financing to Viropro for the development of the targeted biopharmaceutical drug.
 
 An agreement similar to our agreement with IBLA was signed by the Company in January 2011 with Spectrum Pharmaceuticals of Irvine, California.





Other negotiations are ongoing with companies specialized in providing clients and partners with industrially adapted biological material as well as offering high level scientific consulting services for the optimization of specific steps in the development of bioprocesses.





Viropro believes that market share for locally implemented companies will grow considerably; knowledge and access to market in specific geographic areas will represent a considerable strategic advantage. Viropro has identified certain products that it believes are capable of generating short to medium-term profits. These products are well proven in developed markets but are not yet manufactured at large scale in the emerging markets, where there is an important and growing demand.





Competition


Viropro’s management team has chosen to actively intervene in the biotechnology emergent sector by entering into geographic markets not serviced by large multinational pharmaceutical companies. The Company searches for partners in countries where it has identified a market potential. This gives the Company the opportunity to assure an active presence in the target countries and to have a thorough knowledge of these markets, namely potential customers, suppliers, investors and government regulatory agencies.


24


Viropro’s international business strategy targets the niche market in Latin American, African and Asian countries offering local companies solutions such as technology transfers.  These integrated solutions range from R&D to development procedures, through manufacturing and certification to enable manufacturing of several recombinant proteins.


Second quarter events
 
 Effective April 1, 2010, we acquired Biologics Process Development Inc. of Poway, CA, or “BPD,” which is one of our two operating subsidiaries.  Formerly, BPD was a wholly-owned subsidiary of Intas.  Further details on our acquisition of BPD are provided under the heading “—Technology and strategic alliances.”
 
 BPD has been providing contract laboratory services to the biotechnology and biopharmaceutical industries for more than decade.  The range of services includes molecular biology, cell culture, fermentation, protein purification, frozen storage, contract manufacturing, process scale-up and consulting services
 
 The Company issued a total of 97,750,000 common shares, a in an aggregate value of $2,932,500, in the acquisition.
 
 Subsequent events
 
 In August, 2010, Dr Rajiv Datar was appointed Chief Executive Officer and President of the Company and Serge Beausoleil took the position of Advisor to Shareholder Communications.
 
 On December 23, 2010, Company announced it had retained the services of Gilford Securities Inc. of New York City to act as strategic advisors.
 
 On January 5, 2011, the Company announced it had entered into agreement with Spectrum Pharmaceuticals Inc. for the development of a biosimilar of Rituximab.
 
 On February 22, 2011 the Company announced it had entered into an agreement to acquire Alpha Biologics Sdn Bhd (“Alpha Biologics”) in a share exchange transaction that was completed on July 12, 2011.


On July 12, 2011, we issued shares as payment for the acquisition of Alpha Biologics in a transaction previously announced in a February 2011 press release.  In the transaction, we issued 340,097,124 shares to Springhill Bioventures Sdn Bhd (“Springhill”) making it our new controlling shareholder.


Results of Operations
 
 Three Months Ended June 30, 2010 and June 30, 2009
 
 Revenues and Operating Loss — This is the first quarter in which the results for our new subsidiary Biologics Process Development Inc.(referred to in this report as BPD), are consolidated with those of the Company.  Gross profits of $221,449 are entirely attributable to BPD. Operating expenses, which consist of selling, general and administrative expenses and consulting fees, were $828,168 on a consolidated basis, compared to $51,339 for the three months ended June 30, 2009, an increase of approximately $780,000.  The increase was caused by the acquisition cost of BPD and the consolidation of its SG&A expenses Interest expense on outstanding debentures however decreased to $11,889 compared to $84,898 for the three months ended June 30, 2009 due to conversion of all the outstanding debentures of First Royalties Inc. during that quarter of 2009.
 
 Net Loss is $618,638 for the second quarter compared to $488,422 in the second quarter of 2009.  This is due to the consolidation of BPD’s costs where selling, general and administrative expenses still exceed revenues by the costs of rent and salaries. Management believes the current structure of costs at BPD will be maintained and is focusing on increasing revenues.


25


Gross profit for the six months totaled $221,429 entirely attributable to BPD in San Diego. Operating expenses however totaled $919,446 on a consolidated basis, an increase of approximately $600,000 from the six months ended June 30, 2009.  Operating expenses increased primarily due to [increases in consulting fees and rent. Interest expense was $12,883, a decrease of approximately $737,000 from the six months ended June 30, 2009, primarily due to conversion of all of the outstanding debentures of First Royalties Inc. during 2009.  Losses for six months ended June 30, 2010 are $710,900 compared to $1,074,006.  The decrease of approximately $290,000 was largely a result there again of the loss taken during 2009 on the conversion of the First Royalties debenture. However starting with second quarter 2010, selling, general and administrative costs at BPD impacted costs. The Company is seeking to increase revenues with expansion of facility which will enable BPD to obtain more important and more profitable contracts.
 
 Liquidity And Capital Resources — Material Changes In Financial Condition and Longevity


As of June 30, 2010, the Company had a working capital deficiency of $298,862 and $14,261 in cash. The Company was able to sustain operations through small equity infusions that occurred during the first quarter of 2010, totaling approximately $271,000. In April 2011, Viropro received additional equity infusions of approximately $600,000.




In June 2010, discussions were undertaken with an important client for the production of a biosimilar drug which would represent adequate funding for 12 months however such funds would start being paid only 6 months after the initial agreement is entered.




We will require substantial additional funding in order to attain profitability; our facilities in California and the UK require expansion to be able to bid for more important service requests. Our plant in Malaysia needs to undergo certification process to attain cGMP clearance and this process will not be completed until March 2012; from there, the first agreements will not immediately generate cash flow and continued cash deficiency is expected to continue until the end of 2012.We nevertheless believe we would have available cash to fund our operations at least through 2012 based on our current business and operational plans assuming new financings and collaborations are entered. Our capital requirements beyond that will depend on a number of factors, including cost of new technology and development programs and additional personnel costs. Further, these requirements may change at any time due to technological advances or competition from other companies.




We will continue to explore and consider new opportunities for funding our operations and activities through business partnerships involving our knowledge, human resources and intellectual property, as well as selling equity securities and possibly borrowings from financial institutions. We cannot assure you that adequate funding will be available to us or, if available, that it will be available on acceptable terms. Any shortfall in funding could result in our having to curtail the services we offer.




We expect to continue to incur substantial losses through at least the next two years and may incur losses in subsequent periods. The amount and timing of our future losses are highly uncertain. Our ability to achieve and thereafter sustain profitability will be dependent upon, among other things, increasing cash flow from service agreements, generating economies of scale from central purchasing procedures, a general increase in business undertakings from increased exposure of both our streamlined services and work synergy. We believe this synergy can be generated by constant exchange of information on work procedures between our operating subsidiaries.





Plan of Operations
 
 As indicated above, the Company will focus on the development and transfer of “in licensing” leading technological processes for the manufacturing of high quality biopharmaceutical products. Viropro focuses on one main line of therapeutic proteins, monoclonal antibodies such as Anti-CD20.




At the same time, the Company will be implementing its new business model that calls for Contractual Research and Manufacturing Services offered through complementary subsidiaries.Typically, microbiology will be performed at our Montreal facility then development will be switched to either our Cambridge or San Diego units before going into clinical production in Malaysia.  All research and development procedures are to be done in collaboration with the partners with whom Viropro has established its strategic alliances. Priority will be given to further development of these alliances, establishing the optimal product line, methods of manufacturing, distribution, and signing joint venture partnerships in the markets we are targeting.


Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
 Not applicable.


26


Item 4. Controls and Procedures


Evaluation of Disclosure Controls and Procedures


As of June 30, 2010, our management, under the direction of our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended.  Based on this evaluation, and the identification of material weaknesses in internal control over financial reporting as described below, our chief executive officer and chief financial officer each concluded that our disclosure controls and procedures were not effective as of June 30, 2010.


Internal Control over Financial Reporting


Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with generally accepted accounting principles defined in the Exchange Act.
  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
  A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.  Management has identified the following material weaknesses in the Company’s internal control over financial reporting as of March 31, 2010:
  The Company acquired Biologics Process Development, Inc. (“BPD”) in April 2010. The Company’s management began to integrate BPD into the Company and enhance the internal controls structure and policies and procedures.  Prior to our acquisition of BPD, BPD operated on a cash basis of accounting rather than an accrual basis.  Following the acquisition, we hired an external accountant specifically to assist us with BPD and began the process of changing BPD to accrual basis accounting. Since December 31, 2010, we have also implemented a number of other changes in internal control over financial reporting, as described in the next paragraph, to remediate material weaknesses.  Management believes that our internal control over financial reporting has improved.


Changes in Internal Control Over Financial Reporting


There have been a number of changes in our internal control over financial reporting during the quarter ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting as a result of the BPD acquisition and the material weaknesses described above.  As explained above, prior to the acquisition, BPD used cash basis accounting, and we undertook the process of changing BPD to accrual basis accounting.  Additionally, since the acquisition of BPD was consummated in April 2010, we have made changes to the internal control procedures of BPD to strengthen such controls.  For example, among other things, we have (i)  hired an external accounting firm from San Diego to handle accounting data coming from BPD, (ii) hired a US CPA firm established in Long Island, New York, to collect and assemble accounting information coming from us and each of our operating subsidiaries, VPRI and BPD, (iii) increased the oversight provided by Viropro’s executives over BPD’s operations and financial activities and (iv) instituted procedures to more accurately identify direct costs incurred for each subsidiaries contracts. In addition, the Company is planning to hire another full time personto further strengthen these functions, which will assist in the process of implementing additional effective internal controls over processes at the corporate level as well as in each subsidiary.


27





PART II - OTHER  INFORMATION
 
 Item  1.  Legal Proceedings.
 
 On June 21, 2009 a $5,000 Securecap convertible debenture holder initiated procedures against the Company to recover capital due at maturity. Management of the Company had offered to the holder, as it had done will all Securecap Convertible Debenture holders, to convert its debenture into common shares at a lower price than the initially set price. The claim was filed in the Small Claims Court of Montreal, district of Boucherville, Province of Quebec, Canada.
 
 On July 13, 2009 HKDP, supplier to Viropro, initiated procedures claiming $37,991.95 for an unpaid bill. Management is contesting the procedure arguing stay of execution was exceeded. Services deemed rendered were prior to 2007. The claim was filedin the Quebec Superior Court, district of Quebec City, Province of Quebec, Canada.
  Item  2.  Unregistered Sales of Equity Securities and Use of Proceeds.
 
 On April 20, 2010, 79,166,666 shares issued to Biologics Process Development Inc. to acquire VIROPRO, INC. were cancelled and reissued with an additional 27,750,000 to Intas Biopharmaceuticals Ltd and a 70,000,000 issuance to IBP LLC as payment for the acquisition of BPD.  In the aggregate, the shares were valued at approximately $2,700,000.  Because none of the shareholders of Intas are citizens of the United States, the shares were not registered under the Securities Act of 1933, as amended (the “Act”), in reliance on the exemption from registration provided by Regulation S, Rule 901 of the Act.
 
 Item 3.  Defaults Upon Senior Securities.
  The convertible debenture issued on March 1, 2007 came to maturity on March 1, 2009. Whereas all but $30,000 of this debenture was converted, this amount remains outstanding and is payable to the holders (see Note 7 of the Financial Statements).
 
 Item  4.  Submission of Matters to a Vote of Security-Holders.
 
 None.
 
 Item  5.  Other Information.
 
 None.


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Item  6.  Exhibits


Number

Title of Exhibit31.1

Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a)31.2

Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a)32.1

Certification pursuant to 1350, Chapter 63, Title 18 of United States Code


In accordance with the requirements of the Security Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, duly authorized.
 
 VIROPRO, INC.
 
 
 /s/ Rajiv Datar
 Rajiv Datar, President & CEO
 
 Dated:   August 31, 2011
 
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