As filed with the Securities and Exchange
Commission on November 25, 2014
Registration Statement No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
VG Life Sciences Inc.
(Exact name of registrant as specified in
its charter)
Delaware |
3845 |
33-0814123 |
(State or other jurisdiction of incorporation
or organization) |
(Primary Standard Industrial Classification
Code Number) |
(I.R.S. Employer Identification Number) |
VG Life Sciences Inc. |
|
John Tynan |
121 Gray Avenue, Suite 200 |
|
Chief Executive Officer |
Santa Barbara, CA 93101 |
|
VG Life Sciences Inc. |
(805) 879-9000 |
|
121 Gray Avenue, Suite 200 |
|
|
Santa Barbara, CA 93101 |
|
|
(805) 879-9000 |
(Address and telephone number of registrant’s principal executive offices) |
|
(Name, address, and telephone of agent for service) |
Copies of communications to:
Amy M. Trombly, Esq.
Trombly Business Law, PC
1434 Spruce Street, Suite 100
Boulder, CO 80302
Phone (617) 243-0060
Fax (617) 243-0066
Approximate date of commencement of proposed
sale to the public: From time to time after this registration statement becomes effective.
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933
check the following box: x
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. o
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 “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Large accelerated filer o |
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Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) |
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Smaller reporting company x |
CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of
Securities to be
Registered |
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Amount to be
Registered (1) |
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Proposed Maximum
Offering Price
Per Unit (2) |
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Proposed Maximum
Aggregate
Offering
Price (2) |
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Amount of
Registration
Fee |
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Common Stock, par value
$0.0001, to be sold by existing stockholders |
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10,000,000 |
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$0.09 |
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$900,000 |
|
104.58 |
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(1) Pursuant to
Rule 416(a) of the Securities Act of 1933, as amended, this registration statement shall be deemed to cover additional
securities that may be offered or issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.
(2) Estimated
solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457 of the Securities Act. The price
per share and aggregate offering prices for the shares registered hereby are calculated on the basis of $0.09, which is the average
of the high and low prices of the registrant’s common stock as reported on the OTCQB marketplace on November 24, 2014.
The registrant
hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
PROSPECTUS
VG LIFE SCIENCES
INC.
OFFERING UP
TO 10,000,000 COMMON SHARES
This prospectus
relates to the offer and resale of up to 10,000,000 shares of our common stock, par value $0.0001 per share, by the selling stockholder,
Dutchess Opportunity Fund, II, which Dutchess has agreed to purchase pursuant to the investment agreement we entered into with
Dutchess on May 9, 2014. Subject to the terms and conditions of the investment agreement, which we refer to in this
prospectus as the “Investment Agreement,” we have the right to “Put,” or sell, up to $5.0 million in shares
of our common stock to Dutchess. This arrangement is sometimes referred to as an “Equity Line.”
We will not receive
any proceeds from the resale of these shares of common stock offered by Dutchess. We will, however, receive proceeds
from the sale of shares to Dutchess pursuant to the Equity Line. When we Put an amount of shares to Dutchess, the per
share purchase price that Dutchess will pay to us in respect of such put will be determined in accordance with a formula set forth
in the Investment Agreement. Generally, in respect of each put, Dutchess will pay us a per share purchase price equal
to 94% of the lowest volume weighted average price, or “VWAP,” of our common stock during the five consecutive trading
day period beginning on the trading day that Dutchess receives our put notice.
Dutchess may sell
the shares of common stock from time to time at the prevailing market price on the OTCQB marketplace, or on an exchange if our
shares of common stock become listed for trading on such an exchange, or in negotiated transactions. Dutchess is an
“underwriter” within the meaning of the Securities Act of 1933, as amended, in connection with the resale of our common
stock under the Equity Line.
Our common stock
is quoted on the OTCQB marketplace under the symbol “VGLS”. The last reported sale price of our common stock on the
OTCQB marketplace on November 24, 2014 was $0.09 per share.
THIS INVESTMENT
INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SECURITIES ONLY
IF YOU CAN AFFORD A COMPLETE LOSS.
SEE “RISK
FACTORS” BEGINNING ON PAGE 3.
You should rely
only on the information provided in this prospectus or any supplement to this prospectus.
We have not authorized anyone else to provide you with different information. Neither the delivery of this prospectus nor any distribution
of the shares of common stock pursuant to this prospectus shall, under any circumstances, create any implication that there has
been no change in our affairs since the date of this prospectus.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Subject to Completion,
the date of this Prospectus is November 25, 2014.
TABLE OF CONTENTS
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Page |
Prospectus Summary |
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1 |
Risk Factors |
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3 |
Use of Proceeds |
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21 |
Selling Stockholder |
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21 |
Plan of Distribution |
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22 |
Description of Securities to be Registered |
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23 |
Interests of Named Experts and Counsel |
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23 |
Cautionary Statement Regarding Forward Looking Statements |
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24 |
Description of Our Business |
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24 |
Description of Our Property |
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45 |
Legal Proceedings |
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45 |
Market Price and Dividends on Common Equity and Related Stockholder Matters |
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45 |
Directors, Executive Officers, Promoters and Control Persons |
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46 |
Executive Compensation |
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48 |
Security Ownership of Certain Beneficial Owners and Management |
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52 |
Certain Relationships and Related Transactions |
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56 |
Director Independence |
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60 |
Legal Matters |
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60 |
Experts |
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60 |
Financial Statements |
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F-1 |
Management’s Discussion and Analysis of Financial Condition
and Results of Operations |
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61 |
Disclosure
of Commission Position On Indemnification For Securities Act Liabilities
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73 |
VG LIFE SCIENCES
INC.
PROSPECTUS SUMMARY
The following
information is a summary of the prospectus and it does not contain all of the information you should consider before making an
investment decision. You should read the entire prospectus carefully, including the financial statements and the notes relating
to the financial statements.
ABOUT US
We incorporated under the laws of the state
of Delaware on July 11, 1995 under the name Hitech Investment, Inc. On April 22, 1999, we changed our name to 5 Star Living Online,
Inc. and commenced operations by pursuing a business to implement an e-commerce luxury auction site. On October 2, 2001, we entered
into an Agreement and Plan of Exchange with Viral Genetics, Inc. through which Viral Genetics, Inc. became our wholly-owned subsidiary.
Subsequently, on November 5, 2001, we changed our name to Viral Genetics, Inc. On November 26, 2012, we changed our name to VG
Life Sciences Inc., which is our current name.
Our principal executive offices are located
at 121 Gray Avenue, Suite 200, Santa Barbara, California 93101, and our telephone number is (805) 879-9000. Our fiscal year end
is December 31. Our website is www.vglifesciences.com. We do not intend for information on our website to be incorporated into
this prospectus.
We are a drug discovery and development
company researching two core technologies: Targeted Peptide Technology, or TPT, which is currently our main focus, and Metabolic
Disruption Technology, or MDT, which is our secondary focus.
Our research indicates that our TPT therapies
may be useful in treating autoimmune diseases, or diseases that trigger the body’s immune system when doing so is not necessary.
Certain molecular patterns displayed on the surface of all cells allow the immune system to distinguish the body’s own cells,
or self-cells, from foreign cells, or non-self cells, as well as to distinguish between healthy cells and infected cells. When
a given cell displays a non-self molecular pattern, that pattern alerts the immune system to the presence of pathogen(s) and provides
an identity of the pathogen(s). This recognition of foreign markers initiates an immune response: acute inflammation followed by
targeted destruction of invaders and of compromised self-cells. When non-infected, healthy, self-cells are inappropriately targeted
by the immune system, the resulting conditions, effects, and symptoms are termed chronic inflammatory and autoimmune diseases.
Current therapies that combat these immune disorders generally focus on eliminating pro-inflammatory cells and/or their pro-inflammatory
signals. Such therapies may be non-specific and immunosuppressive, weakening a patient’s ability to fight secondary infections.
We believe we have produced a peptide, which is a small segment of protein that may selectively eliminate certain pro-inflammatory
immune system cells that play a key role in inflammatory and autoimmune conditions. Our TPT therapy, which uses this peptide, requires
significant additional work before the commencement of clinical trials, including favorable animal toxicity study results and then
regulatory review and approval of protocols. We believe TPT could potentially be a significant discovery for patients who battle
the symptoms of these largely untreatable autoimmune diseases.
Additionally, we have one drug research
program in clinical stage, which is a MDT therapy that helps, in combination with other drugs, to fight cancers with solid tumors
in situations where the cancer is resistant to the initial cancer drug therapy. Our MDT trial was initially for ovarian cancer,
but has since expanded to include other solid tumors, including those located in the breast, colon, liver, lung, and pancreas.
Currently, we do not have sufficient funding to complete this work and plan to seek additional funding.
Our research and development programs are
based on technology, for which we have an exclusive license that was developed by Dr. M. Karen Newell Rogers, while she was working
at the University of Colorado, the University of Vermont, and Texas A&M University.
SUMMARY FINANCIAL DATA
Because this
is only a summary of our financial information, it does not contain all of the financial information that may be important to
you. Therefore, you should carefully read all of the information in this prospectus and any prospectus supplement,
including the financial statements and their explanatory notes and the section entitled “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” before making a decision to invest in our common
stock. The information contained in the following summary is derived from our financial statements for the
quarters ended September 30, 2014 and 2013, and the fiscal years ended December 31, 2013 and 2012.
| |
Nine Months Ended September 30, | | |
Year Ended December 31, | |
| |
2014 | | |
2013 | | |
2013 | | |
2012 | |
| |
| | |
| | |
| | |
| |
REVENUES | |
$ | – | | |
$ | – | | |
$ | – | | |
$ | – | |
| |
| | | |
| | | |
| | | |
| | |
EXPENSES | |
| | | |
| | | |
| | | |
| | |
Research and development | |
| 975,864 | | |
| 349,636 | | |
| 808,517 | | |
| 496,245 | |
Management salaries | |
| 780,625 | | |
| 489,307 | | |
| 772,432 | | |
| 367,500 | |
Depreciation and amortization | |
| – | | |
| – | | |
| – | | |
| – | |
Legal and professional | |
| 1,077,551 | | |
| 696,586 | | |
| 874,133 | | |
| 551,060 | |
Consulting fees | |
| 37,629 | | |
| 152,915 | | |
| 98,421 | | |
| 845,871 | |
General and administrative | |
| 730,502 | | |
| 84,649 | | |
| 1,354,127 | | |
| 337,836 | |
| |
| | | |
| | | |
| | | |
| | |
Total expenses | |
| 1,773,093 | | |
| 1,773,093 | | |
| 3,907,630 | | |
| 2,598,512 | |
| |
| | | |
| | | |
| | | |
| | |
LOSS FROM OPERATIONS | |
| (1,773,093 | ) | |
| (1,773,093 | ) | |
| (3,907,630 | ) | |
| (2,598,512 | ) |
| |
| | | |
| | | |
| | | |
| | |
OTHER INCOME (EXPENSE) | |
| | | |
| | | |
| | | |
| | |
Asset impairment | |
| – | | |
| – | | |
| – | | |
| – | |
Sale of distribution rights | |
| – | | |
| – | | |
| – | | |
| – | |
Interest income | |
| – | | |
| – | | |
| – | | |
| – | |
Derivative benefit/(expense) | |
| (94,935 | ) | |
| (2,098,134 | ) | |
| (2,495,663 | ) | |
| (582,362 | ) |
Interest expense | |
| (2,093,704 | ) | |
| (502,875 | ) | |
| (1,075,905 | ) | |
| (3,758,840 | ) |
| |
| | | |
| | | |
| | | |
| | |
Total other income (expense) | |
| (2,188,639 | ) | |
| (2,601,009 | ) | |
| (3,571,568 | ) | |
| (4,341,202 | ) |
| |
| | | |
| | | |
| | | |
| | |
NET LOSS | |
$ | (5,790,810 | ) | |
$ | (4,374,102 | ) | |
$ | (7,479,198 | ) | |
$ | (6,939,714 | ) |
THE OFFERING
This prospectus
relates to the resale of up to 10,000,000 shares of our common stock by Dutchess Opportunity Fund, II, LP. Dutchess
will acquire our common stock pursuant to the terms and conditions of the Investment Agreement.
The Investment
Agreement with Dutchess provides that Dutchess is committed to purchase from us, from time to time, up to $5,000,000 of our common
stock over the course of thirty-six months. We may draw on the facility from time to time, as and when we determine
appropriate in accordance with the terms and conditions of the Investment Agreement. The amount that the we are entitled
to put in any one notice will be equal to either 1) 200% of the average daily volume of the common stock for the 3 trading days
prior to the applicable Put notice date, multiplied by the average of the 3 daily closing prices immediately preceding the Put
date or 2) $150,000. When we “Put,” or sell, an amount of shares to Dutchess, the per share purchase price
that Dutchess will pay to us in respect of such put will be determined in accordance with a formula set forth in the Investment
Agreement. Generally, in respect of each Put, Dutchess will pay us a per share purchase price equal to 94% of the volume
weighted average price, or VWAP, of our common stock during the five consecutive trading day period beginning on the trading day
our put notice is received. The initial number of shares issuable by us and purchasable by Dutchess under the Investment
Agreement is 10,000,000 shares.
Common stock outstanding as of October 15, 2014 |
32,585,608 |
|
|
Securities Offered |
Up to 10,000,000 shares of our common stock by Dutchess, the selling stockholder. |
|
|
Offering Price |
To be determined by the prevailing market price for the shares at the time of sale. |
|
|
Use of Proceeds |
We will not receive any proceeds from the sale of the shares by the selling stockholder. We will, however, receive proceeds from the shares of our common stock that we sell to Dutchess under the Equity Line. See “Use of Proceeds” section. |
|
|
Risk Factors |
An investment in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 3 and the other information in this prospectus for a discussion of the factors you should consider before investing in the shares of common stock offered hereby. |
|
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Stock Symbol |
VGLS |
RISK FACTORS
Risks Related to Our Business
We are a development stage company
with no commercial products.
We are developing two drug candidates:
VG1177, our lead pre-clinical drug candidate, initially for HIV/AIDS application, and MDT, our clinical drug candidate, initially
aimed to fight solid tumor cancers in situations where the cancer is resistant to initial cancer drug therapy. Currently, we have
no product candidates in our clinical development pipeline other than VG1177 for HIV/AIDS and MDT for a cancer application, and
we have no products approved for sale. We plan to file an IND application with the FDA for our VG1177 after completion of the animal
toxicity studies. Thereafter, we expect to commence our initial clinical trials for VG1177 for HIV/AIDS. Although we have begun
pre-clinical and in vitro studies, we have not yet begun human clinical trials, and therefore, we are still many years from beginning
to commercialize and market VG1177 or any other product candidate, if ever. We expect the clinical development of VG1177 will require
significant additional effort, resources, time, and expenses prior to seeking FDA approval. VG1177 is not expected to be commercially
available in the United States or outside the United States for several years, if ever. If we are unable to make VG1177 commercially
available, we may not be able to fund future operations, including developing, testing and obtaining regulatory approval for new
product candidates.
We may be unable to continue as a
going concern.
As we don’t have enough cash on hand
to pay our expenses for the next 12 months of operations, our independent auditors have included a “going concern”
qualification in their audit report. We expect to continue incurring losses for the foreseeable future and will need to raise additional
capital to pursue our product development initiatives, to penetrate markets for the sale of our products and continue as a going
concern. This qualification may also make it more difficult for us to raise capital and could increase the cost of any capital
raised. We cannot provide any assurances that we will be able to raise additional capital. Our management believes that we have
access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other
means, if needed; however, we can provide no assurance that new financing will be available on commercially acceptable terms, if
needed.
We have a history of operating losses.
We expect to incur net losses and we may never achieve or maintain profitability.
We have not been profitable since
our inception. We reported net losses of approximately $5.8 million and $4.4 million for the nine months ended September
30, 2014 and 2013, respectively and $7.5 million and $6.9 million for the years ended December 31, 2013 and 2012,
respectively. As of September 30, 2014, we had an accumulated deficit of approximately $105.5 million. We have not generated any
revenue from product sales or royalties from product sales to date, and it is possible that we will never have significant
product sales revenue or royalty revenue. We expect to continue to incur losses for at least the next several years as we and
our collaborators pursue clinical trials and research and development efforts. To become profitable, we, either alone, or
with our collaborators, must successfully develop, manufacture, and market our current product candidates, particularly
VG1177 or our MDT compound, as well as continue to identify, develop, manufacture, and market new product candidates. It is
possible that we will never have significant product sales revenue or receive significant royalties on our licensed product
candidates.
We will need additional financing,
but our access to capital funding is uncertain.
Our current and
anticipated operations, particularly our product development and commercialization programs, require substantial capital,
which we have not yet obtained in lump sum. We are continually seeking funding for our ongoing operations, and we have funded
operations through a series of private placements and support from stockholders. Cash as of September
30, 2014 was $53,842. Those funds have since been utilized and we have entered into agreements with related and unrelated
parties to receive additional capital after September 30, 2014 of up to $700,000 to allow us to continue through March
2015. As of September 30, 2014, we have received $400,000 of this amount. Until we are able to secure long-term
financial support or financing in a sufficiently large quantity to fund operations for at least 18-24 months, our ability to
operate is uncertain and a significant portion of our management’s time is devoted to fund-raising. However, these and
future capital needs will depend on many factors, including the extent to which we enter into collaboration agreements with
respect to any of our proprietary product candidates and make progress in our internally funded research, development and
commercialization activities. Our capital requirements will also depend on the magnitude and scope of these activities, our
ability to maintain existing, and establish new, collaborations, the terms of those collaborations, the success of our
collaborators in the future to develop and market products under their respective collaborations with us, our success in
producing clinical and commercial supplies of our product candidates on a timely basis and in sufficient quantities to meet
our requirements, competing technological and market developments, the time and cost of obtaining regulatory approvals, the
extent to which we choose to commercialize our future products through our own sales and marketing capabilities, and the cost
of preparing, filing, prosecuting, maintaining and enforcing patent and other rights. We do not have committed external
sources of funding, and we cannot assure you that we will be able to obtain additional funds on acceptable terms, if at all.
If adequate funds are not available, we may be required to:
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· |
engage in equity financings that would be dilutive to current stockholders; |
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· |
delay, reduce the scope of, or eliminate one or more of our development programs; |
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· |
obtain funds through arrangements with collaborators or others that may require us to relinquish rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize ourselves; or |
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· |
license rights to technologies, product candidates, or products on terms that are less favorable to us than might otherwise be available. |
If funding is insufficient at any time
in the future, we may not be able to develop or commercialize our products, take advantage of business opportunities or respond
to competitive pressures.
We are heavily dependent on the success
of our lead drug candidate, and we cannot provide any assurance that our lead drug candidate or other product candidates we may
have in the future will be commercialized.
We intend to invest the vast majority of
our time and financial resources in the development and commercialization of our lead drug candidate, VG1177, which is currently
in pre-clinical development. We plan to file an IND for our HIV/AIDS VG1177 with the FDA in early 2015. We expect to commence patient
enrollment for our Phase I-clinical trial thereafter. Our future success depends heavily on our ability to successfully develop,
obtain regulatory approval for, and commercialize our lead drug candidate, which may never occur. We currently generate no revenues
and incur substantial losses, and we may never be able to develop or commercialize a marketable drug. Our MDT candidate is our
secondary candidate, nearing completion of a Phase I-Physician’s IND.
Before we generate any revenues from product
sales, we must complete preclinical studies and clinical trials for VG1177, establish manufacturing capabilities that comply with
the FDA’s current Good Manufacturing Practices requirements for manufacturing sterile drugs, receive approval from the FDA
in the United States and other regulatory agencies in foreign jurisdictions, build a commercial organization, make substantial
investments and undertake significant marketing efforts ourselves or in partnership with others. We will not be permitted to market
or promote VG1177, MDT, or any other product candidates we may have in the future, before we receive regulatory approval from the
FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for VG1177, MDT or any of our
other product candidates.
We have not previously submitted a biologics
license application, or a new drug application, or NDA, to the FDA, or similar drug approval filings to comparable foreign authorities,
for VG1177. We cannot be certain that our lead drug candidate or any other product candidate will be successful in clinical trials
or receive regulatory approval. Further, our lead drug candidate or any other product candidate may not receive regulatory approval
even if our clinical trials are successful. If we do not receive regulatory approvals for our lead drug candidate or any other
product candidate, we may not be able to continue our operations. Even if we successfully obtain regulatory approvals to market
our lead drug candidate or any other product candidate, our revenues will be dependent, in part, upon the size of the markets in
the territories for which we gain regulatory approval and have commercial rights. If the markets for patient subsets that we are
targeting are not as significant as we estimate, we may not generate significant revenues from sales of such products, if approved.
Clinical trials involve a lengthy
and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial
results.
VG1177, MDT and any future product candidate
that we may pursue will be subject to extensive regulation by the FDA in the United States and by other regulatory agencies in
foreign jurisdictions, including activities related to preclinical studies, human clinical trials, manufacturing, labeling, packaging
and sterilization, storage, recordkeeping, advertising, promotion, export, import, marketing and distribution and other possible
activities.
Our lead drug candidate, VG1177, is a proprietary,
computationally designed anti-inflammatory peptide. We expect to pursue FDA drug approval for VG1177 as a new chemical entity.
There may be other similar drug candidates in development by other companies and these candidates may gain FDA drug approval prior
to VG1177. We are conducting pre-clinical testing to support our IND for VG1177 and we have received feedback from the FDA regarding
our proposed trial. Based on the feedback we received from the FDA, we hope to submit the IND to the FDA in 2015 and commence patient
enrollment in our Phase I-clinical trial thereafter. As we move through the regulatory process, the FDA may make other suggestions
that may impact our ability to complete our clinical trials within the timeframe or budget that we are anticipating, which could
impact investors’ interest in our business and our stock price.
Our MDT combination with other cancer drugs
to treat late stage cancers is a proprietary use. There may be other similar drug candidates in development by other companies
and these candidates may gain FDA drug approval prior to our MDT compound. We are conducting phase I-clinical testing to support
our MDT compound in combination with Nexavar® for treatment of late-stage ovarian cancer, and the trial has been expanded to
encompass solid tumors, including breast, colon, lung, liver, and pancreatic cancers. Our Physician’s Investigational New
Drug, or P-IND, Phase I clinical trial on late-stage patients with solid tumors is entering its fourth cohort with maximum dosing,
and we are completing the analysis of the results of those trials. As we move through the regulatory process, the FDA may make
other suggestions that may impact our ability to complete our clinical trials within the timeframe or budget that we are anticipating,
which could impact investors’ interest in our business and our stock price.
The results of preclinical studies and
clinical trials of previously published similar products may not necessarily be indicative of the results of our future clinical
trials. Preliminary results may not be confirmed upon full analysis of the detailed results of an early clinical trial. Product
candidates in later stages of clinical trials may fail to show safety and efficacy sufficient to support intended use claims despite
having progressed through initial clinical trials. The data collected from clinical trials of our product candidates may not be
sufficient to obtain regulatory approval in the United States or elsewhere. Because of the uncertainties associated with drug development
and regulatory approval, we cannot determine if, or when, we may have an approved product for commercialization or whether we will
ever achieve sales or profits of VG1177 or other product candidates we may pursue in the future.
If our products do not gain market
acceptance, our business will suffer because we might not be able to fund future operations.
A number of factors may affect the market
acceptance of our products or any other products we develop or acquire, including, among others:
|
· |
the price of our products relative to other products for the same or similar treatments; |
|
· |
the perception by patients, physicians and other members of the healthcare community of the effectiveness and safety of our products for their indicated applications and treatments; |
|
· |
our ability to fund our sales and marketing efforts; and |
|
· |
the effectiveness of our sales and marketing efforts. |
If our products do not gain market acceptance,
we may not be able to fund future operations, including developing, testing and obtaining regulatory approval for new product candidates
and expanding our sales and marketing efforts for our approved products, which would cause our business to suffer.
Our research and development program
for drug candidates other than VG1177 and MDT is at an early stage, and we cannot be certain our program will result in the commercialization
of any drug.
Except for our development program for
VG1177 and MDT, our research and development program targeting all other disease applications is at an early stage and, to date,
we have not developed any other product candidates generated in our TPT research program. Any product candidates we develop will
require significant additional research and development efforts prior to commercial sale, including extensive pre-clinical and
clinical testing and regulatory approval. This may require increases in spending on internal projects, the acquisition of third
party technologies or products, and other types of investments. We cannot be sure that our approach to drug discovery, acting independently
or with partners, will be effective or will result in the development of any drug. We cannot expect that any drug candidates that
do result from our research and development efforts will be commercially available for many years.
We have limited experience in conducting
pre-clinical testing and clinical trials. Even if we receive initially positive clinical trial results, those results will not
guaranty that similar results will be obtained in the later stages of drug development. Our current lead drug candidate and all
of our potential drug candidates are prone to the risks of failure inherent in pharmaceutical product development, including the
possibility that none of our drug candidates will be:
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safe, non-toxic and effective; |
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approved by regulatory authorities; |
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developed into a commercially viable drug; |
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manufactured or produced economically; |
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successfully marketed; or |
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accepted widely by customers. |
If we cannot commercialize any of our drugs,
we may not generate revenues and our Company may fail.
We may be unable to maintain sufficient
clinical trial liability insurance.
Our inability to obtain and retain
sufficient clinical trial liability insurance at an acceptable cost to protect against potential liability claims could
prevent or inhibit our ability to conduct clinical trials for product candidates we develop. We currently do not have
clinical trial liability insurance for VG1177 and would need to secure coverage before commencing patient enrollment for our
Phase II P-IND clinical trials in the United States. Any claim that may be brought against us could result in a court judgment
or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of
our insurance coverage. We expect we will supplement our clinical trial coverage with product liability coverage in
connection with the commercial launch of our first product candidate; however, we may be unable to obtain such increased
coverage on acceptable terms or at all. If we are found liable in a clinical trial lawsuit or a product liability lawsuit in
the future, we will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage
limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay
such amounts.
If product liability claims are brought
against us or we are unable to obtain or maintain product liability insurance, we may incur substantial liabilities that could
reduce our financial resources.
The clinical testing and commercial use
of pharmaceutical products involves significant exposure to product liability claims. We have, in the past, obtained limited product
liability insurance coverage for some of our clinical trials on humans; however, our insurance coverage may be insufficient to
protect us against all product liability damages. Further, liability insurance coverage is becoming increasingly expensive and
we might not be able to obtain or maintain product liability insurance in the future on acceptable terms or in sufficient amounts
to protect us against product liability damages. Regardless of merit or eventual outcome, liability claims may result in decreased
demand for a future product, injury to reputation, withdrawal of clinical trial volunteers, loss of revenue, costs of litigation,
distraction of management and substantial monetary awards to plaintiffs. Additionally, if we are required to pay a product liability
claim, we may not have sufficient financial resources to complete development or commercialization of any of our product candidates
and our business and results of operations will be adversely affected.
If we are unable to develop satisfactory
sales and marketing capabilities, we may not succeed in commercializing VG1177 or any other product candidate.
We have no experience in marketing and
selling drug products. We have not entered into arrangements for the sale and marketing of VG1177 or any other product. We are
developing VG1177 for large patient populations served by physicians. These patient populations may number in the millions. Typically,
pharmaceutical companies would employ groups of sales representatives and associated sales and marketing staff numbering in the
hundreds to thousands of individuals to call on this large number of physicians and hospitals. We may seek to collaborate with
a third party to market our drugs or may seek to market and sell our drugs by ourselves. If we seek to collaborate with a third
party, we cannot be sure that a collaborative agreement can be reached on terms acceptable to us. If we seek to market and sell
our drugs directly, we will need to hire additional personnel skilled in marketing and sales. We cannot be sure that we will be
able to acquire, or establish third party relationships to provide, any or all of these marketing and sales capabilities. The establishment
of a direct sales force or a contract sales force or a combination direct and contract sales force to market our products will
be expensive and time-consuming and could delay any product launch.
Further, we can give no assurances that
we may be able to maintain a direct and/or contract sales force for any period of time or that our sales efforts will be sufficient
to grow our revenues or that our sales efforts will ever lead to profits.
Even if we obtain regulatory approvals
to commercialize VG1177 or any other drug, our drug candidates may not be accepted by physicians or the medical community in general.
There can be no assurance that VG1177 or
any other product candidate successfully developed by us, independently or with partners, will be accepted by physicians, hospitals
and other healthcare facilities. VG1177 and any future product candidates we develop will compete with a number of similar drugs
and products manufactured and marketed by major pharmaceutical and medical technology companies. The degree of market acceptance
of any drugs we develop depends on a number of factors, including:
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our demonstration of the clinical efficacy and safety of VG1177 or any other drug candidate; |
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timing of market approval and commercial launch of VG1177 or any other drug candidate; |
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the clinical indication(s) for which VG1177 or any other drug candidate is approved; |
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product label and package insert requirements; |
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advantages and disadvantages of our product candidates compared to existing therapies; |
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continued interest in and growth of the market for auto-immune and/or anti-inflammation drugs; |
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strength of sales, marketing, and distribution support; |
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product pricing in absolute terms and relative to alternative treatments; |
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future changes in healthcare laws, regulations, and medical policies; and |
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availability of reimbursement codes and coverage in select jurisdictions, and future changes to reimbursement policies of government and third party payors. |
Significant uncertainty exists as to the
coverage and reimbursement status of any product candidate for which we obtain regulatory approval. In the United States and markets
in other countries, sales of any products for which we receive regulatory approval for commercial sale will depend in part on the
availability of reimbursement from third-party payors. Third-party payors include government health administrative authorities,
managed care providers, private health insurers and other organizations.
Our failure to successfully acquire,
develop and market additional drug candidates or approved drug products could impair our ability to grow.
As part of our growth strategy, we may
evaluate, acquire, license, develop and/or market additional product candidates and technologies. These investments will not constitute
a significant portion of our business. However, because our internal research capabilities are limited, we may be dependent upon
pharmaceutical and biotechnology companies, academic scientists and other researchers to sell or license products or technology
to us. The success of this strategy depends partly upon our ability to identify, select and acquire promising pharmaceutical product
candidates and products. The process of proposing, negotiating and implementing a license or acquisition of a product candidate
or approved product is lengthy and complex. Other companies, including some with substantially greater financial, marketing, and
sales resources, may compete with us for the license or acquisition of product candidates and approved products. We have limited
resources to identify and execute the acquisition or licensing of third party products, businesses and technologies and integrate
them into our current infrastructure. Moreover, we may devote resources to potential acquisitions or in-licensing opportunities
that are never completed, or we may fail to realize the anticipated benefits of such efforts. We may not be able to acquire the
rights to additional product candidates on terms that we find acceptable, or at all.
In addition, future acquisitions may entail
numerous operational and financial risks, including:
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exposure to unknown liabilities; |
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disruption of our business and diversion of our management’s and technical personnel’s time and attention to develop acquired products or technologies; |
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incurrence of substantial debt or dilutive issuances of securities to pay for acquisitions; |
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higher than expected acquisition and integration costs; |
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increased amortization expenses; |
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difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel; |
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impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and |
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inability to retain key employees of any acquired businesses. |
Any product candidate that we acquire may
require additional development efforts prior to commercial sale, including extensive clinical testing and approval by the FDA and
applicable foreign regulatory authorities. All product candidates are prone to risks of failure typical of pharmaceutical product
development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval
by regulatory authorities. In addition, we cannot provide assurance that any products that we develop or approved products that
we acquire will be manufactured profitably or achieve market acceptance.
If we do not have the resources necessary
to manage growth effectively, then our business, operating results and financial condition could be materially adversely affected.
We believe that as our business plan is
more fully realized, we may experience a period of rapid growth that will result in new and increased responsibilities for management
personnel and will place a significant strain upon our management, operating and financial systems and resources. To accommodate
any rapid growth and to compete effectively and manage future growth, if any, we will be required to implement and improve our
operational, financial and management information systems, procedures and controls on a timely basis and to expand, train, motivate
and manage our workforce. Our personnel, systems, procedures and controls might not be adequate to support our existing and future
operations. Any failure to implement and improve our operational, financial and management systems or to expand, train, motivate
or manage employees could have a materially adverse effect on our business, operating results and financial condition.
We may be unable to obtain patents
to protect our technologies from other companies with competitive products, and patents of other companies could prevent us from
manufacturing, developing or marketing our products.
The patent positions of pharmaceutical
and biotechnology firms are uncertain and involve complex legal and factual questions. The U.S. Patent and Trademark Office has
not established a consistent policy regarding the breadth of claims that it will allow in biotechnology patents. If it allows broad
claims, the number and cost of patent interference proceedings in the United States and the risk of infringement litigation may
increase. If it allows narrow claims, the risk of infringement may decrease, but the value of our rights under our patents, licenses
and patent applications may also decrease. In addition, the scope of the claims in a patent application can be significantly modified
during prosecution before the patent is issued and/or narrowed in a patent re-examination. Consequently, we cannot know whether
our pending applications will result in the issuance of patents or, if any patents are issued, whether they will provide us with
significant proprietary protection or will be circumvented, invalidated, or found to be unenforceable. Until recently, patent applications
in the United States were maintained in secrecy until the patents issued, and publication of discoveries in scientific or patent
literature often lags behind actual discoveries. Patent applications filed in the United States after November 2000 generally will
be published 18 months after the filing date unless the applicant certifies that the invention will not be the subject of a foreign
patent application. We cannot assure you that, even if published, we will be aware of all such literature. Accordingly, we cannot
be certain that the named inventors of our products and processes were the first to invent that product or process or that we were
the first to pursue patent coverage for our inventions.
Our commercial success depends in
part on our ability to maintain and enforce our proprietary rights.
If third-parties engage in activities that
infringe our proprietary rights, our management's focus will be diverted and we may incur significant costs in asserting our rights.
We may not be successful in asserting our proprietary rights, which could result in our patents being held invalid or a court holding
that a third- party is not infringing, either of which would harm our competitive position. In addition, there can be no assurance
that others will not design around our patented technology.
Moreover, we may have to participate in
interference proceedings declared by the United States Patent and Trademark Office or other analogous proceedings in other parts
of the world to determine priority of invention and the validity of patent rights granted or applied for, which could result in
substantial cost and delay, even if the eventual outcome is favorable to us. We cannot assure you that our pending patent applications,
if issued, would be held valid or enforceable. Additionally, many of our foreign patent applications have been published as part
of the patent prosecution process in such countries. Protection of the rights revealed in published patent applications can be
complex, costly and uncertain.
We also rely on trade secrets, know-how
and confidentially provisions in our agreements with our collaborators, employees and consultants to protect our intellectual property.
We rely on trade secrets and know how to
protect our intellectual property. During the course of our business, our employees, consultants and collaborators may be exposed
to trade secrets and know-how, the disclosure of which would adversely affect our business. Such parties have signed non-disclosure
agreements with us, however these parties may not comply with the terms of their agreements with us. If such parties violate these
confidentiality provisions, we might be unable to adequately enforce our rights against these parties or to obtain adequate compensation
for the damages caused by their unauthorized disclosure or use. Furthermore, our trade secrets or those of our collaborators may
become known or may be independently discovered by others.
Our success also depends on avoiding
infringement of the proprietary technologies of others.
In particular, there may be certain issued
patents and patent applications claiming subject matter that we or our collaborators may be required to license in order to research,
develop or commercialize our product candidates. In addition, third parties may assert infringement or other intellectual property
claims against us based on our patents or other intellectual property rights. An adverse outcome in these proceedings could subject
us to significant liabilities to third-parties, require disputed rights to be licensed from third-parties or require us to cease
or modify our use of the technology. If we are required to license such technology, we cannot assure you that a license under such
patents and patent applications will be available on acceptable terms or at all. Further, we may incur substantial costs defending
ourselves in lawsuits against charges of patent infringement or other unlawful use of another's proprietary technology.
We are subject to extensive government
regulations that may cause us to cancel or delay the introduction of our products to market.
Our research and development activities
and the clinical investigation, manufacture, distribution and marketing of drug products are subject to extensive regulation by
governmental authorities in the United States and other countries. Prior to marketing in the United States, federal laws, including
the Federal Food, Drug and Cosmetic Act, require that a drug undergo rigorous testing and an extensive regulatory approval process
implemented by the FDA. To receive approval, we, or our collaborators must, among other things, demonstrate with substantial evidence
from well-controlled clinical trials that the product is both safe and effective for each indication where approval is sought.
Depending upon the type, complexity and novelty of the product and the nature of the disease or disorder to be treated, that approval
process can take several years and require substantial expenditures. Data obtained from testing is susceptible to varying interpretations
that could delay, limit or prevent regulatory approvals of our products. Drug testing is subject to complex FDA rules and regulations,
including the requirement to conduct human testing on a large number of test subjects. We, our collaborators, or the FDA may suspend
human trials at any time if a party believes that the test subjects are exposed to unacceptable health risks. There can be no assurance
that any of our product candidates will be safe for human use. Other countries also have extensive requirements regarding clinical
trials, market authorization and pricing. These regulatory schemes vary widely from country to country, but, in general, are subject
to all of the risks associated with United States approvals.
Risks Related to Development and Regulatory
Approval of VG1177 and MDT
We cannot be certain that VG1177
or MDT will receive regulatory approval, and without regulatory approval we will not be able to market our product candidates.
Our business currently depends on the successful
development and commercialization of VG1177 and, to a lesser extent, on the successful development and commercialization of MDT.
Our ability to generate revenue related to product sales, if ever, will depend on the successful development and regulatory approval
of VG1177 and MDT for the treatment of our disease applications.
We currently have no products approved
for sale and we cannot guarantee that we will ever have marketable products. The development of a product candidate and issues
relating to its approval and marketing are subject to extensive regulation by the FDA in the United States and similar regulatory
authorities in other countries, with regulations differing from country to country. We are not permitted to market our product
candidates in the United States until we receive a New Drug Application, or NDA, approval from the FDA. We have not submitted any
marketing applications for any of our product candidates.
An NDA must include extensive preclinical
and clinical data and supporting information to establish the product candidate’s safety and effectiveness for each desired
indication. NDAs must also include significant information regarding the chemistry, manufacturing and controls for the product.
Obtaining approval of an NDA is a lengthy, expensive and uncertain process, and we may not be successful in obtaining approval.
The FDA review processes can take years to complete and approval is never guaranteed. If we submit an NDA to the FDA, the FDA must
decide whether to accept or reject the submission for filing. We cannot be certain that any submissions will be accepted for filing
and review by the FDA.
Regulators of other jurisdictions have
their own procedures for approval of product candidates. Regulatory authorities in countries outside of the United States also
have requirements for approval of drug candidates with which we must comply prior to marketing in those countries. Obtaining regulatory
approval for marketing of a product candidate in one country does not ensure that we will be able to obtain regulatory approval
in any other country.
Even if a product is approved, the FDA
may limit the indications for which the product may be marketed, require extensive warnings on the product labeling or require
expensive and time-consuming clinical trials or reporting as conditions of approval. In addition, delays in approvals or rejections
of marketing applications in the United States or other countries may be based upon many factors, including regulatory requests
for additional analyses, reports, data, preclinical studies and clinical trials, regulatory questions regarding different interpretations
of data and results, changes in regulatory policy during the period of product development and the emergence of new information
regarding our product candidates or other products. Also, regulatory approval for any of our product candidates may be withdrawn.
We cannot predict whether our future trials
and studies will be successful or whether regulators will agree with our conclusions regarding the preclinical studies and clinical
trials we have conducted to date. If we are unable to obtain approval from the FDA or other regulatory agencies for VG1177, MDT
and our other product candidates, or if, subsequent to approval, we are unable to successfully commercialize VG1177, MDT, or our
other product candidates, we will not be able to generate sufficient revenue to become profitable or to continue our operations.
Clinical trials for our product candidates
are expensive, time-consuming, uncertain and susceptible to change, delay or termination.
Clinical trials are very expensive, time-consuming
and difficult to design and implement. Even if the results of our clinical trials are favorable, clinical trials usually continue
for several years and may take significantly longer to complete. In addition, we, the FDA, an Institutional Review Board, or other
regulatory authorities, including state and local authorities, may suspend, delay or terminate our clinical trials at any time
for various reasons, including:
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lack of effectiveness of our lead drug candidate or any other product candidate during clinical trials; |
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discovery of serious or unexpected toxicities or side effects experienced by study participants or other safety issues; |
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slower than expected rates of subject recruitment and enrollment rates in clinical trials; |
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delays or inability in manufacturing or obtaining sufficient quantities of materials for use in clinical trials due to regulatory and manufacturing constraints; |
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inadequacy of or changes in our manufacturing process or product formulation; |
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delays in obtaining regulatory authorization to commence a study, including “clinical holds” or delays requiring suspension or termination of a study by a regulatory agency, such as the FDA, before or after a study is commenced; |
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changes in applicable regulatory policies and regulations; |
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delays or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective clinical trial sites; |
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delay or failure to supply product for use in clinical trials that conforms to regulatory specification; |
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unfavorable results from ongoing clinical trials and pre-clinical studies; |
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failure by us, our employees, our CROs or their employees to comply with all applicable FDA or other regulatory requirements relating to the conduct of clinical trials or the handling, storage, security and recordkeeping for controlled substances; |
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failure to design appropriate clinical trial protocols; |
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scheduling conflicts with participating clinicians and clinical institutions; and |
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failure to design appropriate clinical trial protocols. |
Any of the foregoing could have a material
adverse effect on our business, results of operations and financial condition.
There is a high rate of failure for
drug candidates proceeding through clinical trials.
Generally, there is a high rate of failure
for drug candidates proceeding through clinical trials. We may suffer significant setbacks in our clinical trials similar to those
experienced by a number of other companies in the pharmaceutical and biotechnology industries. Further, even if we view the results
of a clinical trial to be positive, the FDA or other regulatory authorities may disagree with our interpretation of the data. In
the event that we obtain negative results from the VG1177 or MDT planned clinical trials or receive poor clinical results for other
product candidates, or the FDA chooses to block progress of the trials due to potential Chemistry, Manufacturing and Controls,
or CMC, issues or other hurdles or does not approve our NDA for VG1177 or MDT, we may not be able to generate sufficient revenue
or obtain financing to continue our operations, our ability to execute on our current business plan will be materially impaired,
our reputation in the industry and in the investment community would likely be significantly damaged and the price of our stock
would likely decrease significantly.
Serious adverse events or other safety
risks could require us to abandon development and preclude, delay or limit approval of our product candidates, or limit the scope
of any approved label or market acceptance.
If VG1177, MDT, or any of our product candidates,
prior to, or after any approval for commercial sale, cause serious or unexpected side effects, a number of potentially significant
negative consequences could result, including:
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regulatory authorities may interrupt, delay or halt clinical trials; |
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regulatory authorities may deny regulatory approval of our product candidates; |
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regulatory authorities may withdraw their approval of the product or impose restrictions on its distribution in the form of a risk evaluation and mitigation strategy, or REMS; |
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regulatory authorities may require the addition of labeling statements, such as warnings or contraindications or limitations on the indications for use; |
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we may be required to change the way the product is administered or conduct additional clinical trials; |
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we could be sued and held liable for harm caused to patients; or |
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our reputation may suffer. |
We may voluntarily suspend or terminate
our planned clinical trials if, at any time, we believe that they present an unacceptable risk to participants or if preliminary
data demonstrate that our product candidates are unlikely to receive regulatory approval or unlikely to be successfully commercialized.
In addition, regulatory agencies, institutional review boards or data safety monitoring boards may, at any time, order the temporary
or permanent discontinuation of our clinical trials or request that we cease using investigators in the clinical trials if they
believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, or that they present
an unacceptable safety risk to participants. If we elect or are forced to suspend or terminate any planned clinical trial of VG1177,
MDT or any other of our product candidates, the commercial prospects for that product will be harmed and our ability to generate
product revenue from that product may be delayed or eliminated. Furthermore, any of these events could prevent us, or our partners,
from achieving or maintaining market acceptance of the affected product and could substantially increase the costs of commercializing
our product candidates and impair our ability to generate revenue from the commercialization of these products either by us or
by our strategic alliance partners. As of the date of this filing, we have had no adverse events in our P-IND Phase I study of
MDT.
Any failure by us to comply with
existing regulations could harm our reputation and operating results.
We will be subject to extensive regulation
by U.S. federal and state and foreign governments in each of the markets where we intend to sell VG1177 and MDT if, and when, they
are approved. For example, we will have to adhere to all regulatory requirements including the FDA’s current Good Clinical
Practices, Good Laboratory Practice and Good Manufacturing Practices requirements. If we fail to comply with applicable regulations,
including FDA pre-or post-approval current Good Manufacturing Practices requirements, then the FDA or other foreign regulatory
authorities could sanction us. Even if a drug is FDA-approved, regulatory authorities may impose significant restrictions on a
product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-marketing studies.
If VG1177 or MDT is approved in the United
States, it will be subject to ongoing regulatory requirements for labeling, packaging, storage, advertising, promotion, sampling,
record-keeping and submission of safety and other post-market information, including both federal and state requirements in the
United States. In addition, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements,
including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices. As such,
we and our contract manufacturers are subject to continual review and periodic inspections to assess compliance with current Good
Manufacturing Practices. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas
of regulatory compliance, including manufacturing, production and quality control. We will also be required to report certain adverse
reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for
our products. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions
and must be consistent with the information in the product’s approved label. As such, we may not promote our products for
indications or uses for which they do not have FDA approval.
If a regulatory agency discovers previously
unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where
the product is manufactured, or disagrees with the promotion, marketing or labeling of the product, a regulatory agency may impose
restrictions on that product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable
regulatory requirements, a regulatory agency or enforcement authority may:
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issue warning letters; |
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impose civil or criminal penalties; |
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suspend regulatory approval; |
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suspend any of our ongoing clinical trials; |
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refuse to approve pending applications or supplements to approved applications submitted by us; |
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impose restrictions on our operations, including closing our contract manufacturers’ facilities; or |
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seize or detain products or require a product recall. |
Any government investigation of alleged
violations of law could require us to expend significant time and resources in response, and could generate negative publicity.
Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize
and generate revenue from VG1177 or MDT. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value
of our Company and our operating results will be adversely affected. Additionally, if we are unable to generate revenue from sales
of VG1177 or MDT, our potential for achieving profitability will be diminished and the capital necessary to fund our operations
will be increased.
Any action against us for violation of
these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s
attention from the operation of our business and damage our reputation. We expend significant resources on compliance efforts and
such expenses are unpredictable and might adversely affect our results. Changing laws, regulations and standards might also create
uncertainty, higher expenses and increase insurance costs.
We are substantially dependent on
our ability to successfully and timely complete clinical trials and obtain regulatory approval to market our most advanced product
candidates, VG1177 and MDT. Our business will be materially harmed and our stock price adversely affected if regulatory approval
is not obtained with respect to these product candidates.
We intend to file an IND with the FDA for
VG1177. We are conducting laboratory testing and research to support the filing of the IND. Our success will depend, to a great
degree, on our ability to obtain the requisite regulatory approval to market VG1177 overseas and in the United States. The process
of obtaining regulatory approvals is costly, time consuming, uncertain, and subject to unanticipated delays. In order to obtain
the necessary regulatory approval, we must demonstrate with substantial evidence from well-controlled clinical trials and to the
satisfaction of the applicable regulatory reviewing agency that VG1177 is both safe and efficacious. There is no assurance that
we will be able to do so and, if we do, that the applicable regulatory requirements for approval will have been met. We cannot
predict the ability of third party service providers to collect the data from our trials with VG1177, analyze the data, and deliver
their final reports to us. There may be significant delays in this process. Regulatory authorities may require additional testing
for safety and efficacy, which would result in a substantial delay in the regulatory approval process. If we fail to successfully
obtain regulatory approvals for VG1177 or we face significant delays, our business will be materially harmed and our stock price
will be adversely affected.
Doctors at Scott & White Healthcare
in Temple, Texas, and the Cancer Therapy and Research Center at the University of Texas at San Antonio, are conducting a Phase
I Physician’s IND trial for patients with late-stage ovarian cancer utilizing an MDT compound, called hydroxychloroquine,
for which we hold the pending patent application for combination with an existing cancer drug, called sorafenib, which is marketed
as Nexavar ®. Since its inception in July 2012, the trial has been expanded to encompass solid tumors, including breast, colon,
lung, liver, and pancreatic cancers. Our Physician’s Investigational New Drug, or P-IND, Phase I clinical trial on late-stage
patients with solid tumors is entering its fourth cohort with maximum dosing, and we are completing the analysis of the results
of those trials. This trial is designed to assess the safety of a combination treatment using hydroxychloroquine, or HCQ, and
sorafenib. The combination treatment is designed to disrupt the metabolism of the cancer cells, making them more prone to the
effects of sorafenib. To date, patients in the P-IND Phase I trial have not experienced unacceptable levels of toxicity. Despite
these results, we cannot predict that our future clinical trials will be successful or will be approved by the FDA. If we fail
to successfully obtain regulatory approval for our MDT compound or if we face significant delays, our business will be materially
harmed and our stock price will be adversely affected.
We depend on various suppliers to
supply VG1177, our MDT compounds, and our other products.
We believe our current suppliers can produce
sufficient material to support ongoing study of VG1177, our MDT cancer study. However, if approved and/or successful in these studies,
we will have to source a manufacturer with significantly larger capacity. With regard to our drug programs and in particular the
TPT programs, prior to initiation of the studies it is also required that we secure a manufacturer that will be able to meet production
requirements that meet Good Manufacturing Practices and Good Laboratory Practices throughout the development process and possibly
through marketing and distribution. Our manufacturer is Ambiopharm, Inc. Ambiopharm synthesizes the peptide on a contract basis
for specific amounts. We do not currently have a contract or an exclusivity agreement with Ambiopharm. Ambiopharm is capable of
procuring Good Manufacturing Practices grade compounds, but we cannot be certain that they will be able to produce our product
in the future. Changing manufacturers of a drug product can involve significant regulatory delay while comparing products made
at the old manufacturer with products made at the new manufacturer. Consequently, while changing manufacturers is possible, it
is highly desirable to avoid doing so. There is no guarantee that we will be able to find a manufacturer that can meet our production
and distribution requirements throughout the life of our drug products. If we are required to change manufacturers, there will
likely be significant delays in our ability to study or, if approved, sell our drug products, which would materially harm our business
and adversely affect our stock price.
With regard to our MDT compounds, which
are used in combination with other existing drugs including drugs that are approved or have been deregistered by the FDA, the availability
of such third-party drugs cannot be guaranteed on terms that are reasonable or at all. While we do not anticipate manufacturing
issues in the foreseeable future, we are dependent on the University of Texas Health Science Center at San Antonio, or UTHSCSA,
for procurement of MDT compounds in our ongoing Phase I P-IND cancer trial. Disruption of the supply of these third party compounds
would delay or impair our ability to study our compounds in combination with them, and would have a materially harmful effect on
our business and adversely affect our stock price.
Clinical trials are long, expensive
and uncertain processes and overseas regulators and the FDA may ultimately not approve any of our product candidates.
We cannot assure you that data collected
from pre-clinical studies and clinical trials of our product candidates will be sufficient to support approval by overseas regulators
or the FDA, the failure of which could delay our profitability and adversely affect our stock price.
All of our research and development programs
are at an early stage and clinical trials are long, expensive, and uncertain processes. Clinical trials may not be commenced or
completed on schedule, and government regulators may not ultimately approve our product candidates for commercial sale. Further,
even if the results of our pre-clinical studies or clinical trials are initially positive, it is possible that we will obtain different
results in the later stages of drug development or that results seen in clinical trials will not continue with longer-term treatment.
Drugs in late stages of clinical development may fail to show the desired safety and efficacy traits despite having progressed
through initial clinical testing. For example, positive results in early Phase I or Phase II clinical trials may not be repeated
in larger Phase II or Phase III clinical trials. All of our potential drug candidates are prone to the risks of failure inherent
in drug development. The clinical trials of any of our drug candidates, including VG1177, could be unsuccessful, which would prevent
us from commercializing the drug. Our failure to develop safe, commercially viable drugs would substantially impair our ability
to generate revenues and sustain our operations and would materially harm our business and adversely affect our stock price.
If we fail to maintain our existing
or establish new collaborative relationships, or if our collaborators do not devote adequate resources to the development and commercialization
of our licensed drug candidates, we may have to reduce our rate of product development and may not see products brought to market
or be able to achieve profitability.
We rely heavily upon our current collaborative
relationships with Dr. Newell Rogers, Dr. Evan Newell and Dr. Brett Mitchell, Scott & White Healthcare and Dr. Richard Tobin,
all of whom are engaged in biomedical research related to our product candidates. Because we currently have no product candidates
that are approved for sale and ready for commercialization, our success depends upon our ability to maintain our existing collaborative
relationships with our key partners. If we are unable to maintain these relationships, we may not be able to meet the requirements
for approval by the FDA or other comparable regulatory agencies and we may not achieve or maintain profitability.
For us to receive any significant revenues
from sale of our products, our collaborators must advance drug candidates through clinical trials, establish the safety and efficacy
of our drug candidates, obtain regulatory approvals and achieve market acceptance of those products. As a result, if a collaborator
elects to terminate its efforts, our ability to commercialize our products may be significantly impaired.
Below is a summary of the compensation
that we are obligated to pay to our consultant pursuant to our consulting agreements with them. All options and shares have been
adjusted to reflect our 1 for 600 reverse split on November 26, 2012 (“2012 Reverse Split”).
M. Karen Newell Rogers |
Fees |
$10,000/month (1) |
Bonus Stock Options |
16,667 initially
4,167 annually (2) |
Royalty |
0.75% of net sales in developed countries
0.125% of net sales in undeveloped countries |
Reimbursement of Expenses |
All reasonable expenses incurred in providing services (3) |
Evan Newell |
Fees |
$2,000/month (1) |
Bonus Stock Options |
1,667 initially
1,667 annually (2) |
Royalty |
0.75% of net sales in developed countries
0.125% of net sales in undeveloped countries |
Reimbursement of Expenses |
All reasonable expenses incurred in providing services (4) |
Brett Mitchell |
Fees |
$7,500/3 months (5) |
Reimbursement of Expenses |
All reasonable expenses incurred in providing services (6) |
Scott & White Healthcare |
License Fee |
$50,000 initially |
Royalty |
3.0% of net sales in developed countries
0.5% of net sales in undeveloped countries |
Minimal Compensation (7) |
$20,000 January 1, 2014
$40,000 January 1, 2015
$70,000 January 1, 2016
$100,000 January 1, 2017
$150,000 January 1, 2018
$200,000 each year after |
Milestone Payments |
$100,00 conclusion of each Phase I clinical
trial
$500,000 conclusion of each Phase Ill clinical
trial
$2,000,000 for each regulatory/market approval |
Richard Tobin |
Fees |
$3,500/month (8) |
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(1) |
Earned but unpaid fees due automatically accrue under a convertible note with the consultant. |
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(2) |
The exercise price of each annual option shall be the volume weighted average price, or VWAP, for the twenty trading days up to and including January 1 of such year. |
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(3) |
Prior approval is required for any expenses in excess of $750. |
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(4) |
Prior approval is required for any expenses in excess of $500. |
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(5) |
The fee shall be paid in shares of our common stock at a price equal to the volume-weighted average closing price, or VWAP, of the shares for the twenty trading days ending on the date such payment period ends. |
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(6) |
Prior approval is required for any expenses in excess of $100. |
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(7) |
In the event that payment of royalties for the previous year due do not meet or exceed the required minimum annual consideration, royalty payment for the last quarter of the calendar year must include payment of the balance needed to achieve the required minimum. |
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(8) |
The monthly payments shall consist of $2,000 in cash and $1,500 in shares of our common stock. |
We also agreed to indemnify the consultants
against third party claims brought as a result of their good faith performances of services pursuant to the agreement.
If we fail to establish new collaborative
relationships, or if our new collaborators do not devote adequate resources to the development and commercialization of our licensed
drug candidates, we may have to reduce our rate of product development and may not see products brought to market or be able to
achieve profitability.
We may need to collaborate with additional
parties in order to gain approval of our product candidates. As we progress through the FDA approval stages, we may need to enter
into agreements in order to conduct the necessary studies. If we cannot obtain the partnership of such third parties on terms that
are acceptable, or at all, then we may never be able to sell any of our product candidates and we may fail.
Furthermore, we anticipate needing to enter
into new collaborative relationships in the future to manufacture, market and distribute our products. We have not entered into
such partnerships and do not expect to until an IND is approved and/or clinical trials in the United States have progressed. It
is likely we will grant exclusive commercialization and marketing rights to our products to third parties, and such parties will
have substantial control over the continued efforts in their territories and the resources they commit to the programs. Accordingly,
the success of the commercialization of our products in some or all territories may substantially depend on the efforts of third
parties and is to a degree beyond our control.
For us to receive any significant revenues
from sale of our products, any such collaborators must advance drugs through clinical trials, establish the safety and efficacy
of our drug candidates, obtain regulatory approvals and achieve market acceptance of those products. As a result, if a collaborator
elects to terminate its efforts, our ability to commercialize our products may be significantly impaired.
Because of the uncertainty of pharmaceutical
pricing, reimbursement, and healthcare reform measures, we may be unable to sell our products profitably.
The availability of reimbursement by governmental
and other third-party payors affects the market for any pharmaceutical product. These third-party payors continually attempt to
contain or reduce the costs of healthcare. There have been legislative and regulatory changes to the healthcare system recently,
including, most notably, the Affordable Care Act. Significant uncertainty exists with respect to the reimbursement status of newly
approved healthcare products under existing laws including the new Affordable Care Act. It is uncertain whether reimbursement will
be available for any of our product candidates if and when they are approved at a rate that is acceptable to most patients, if
any reimbursement is available at all. We might not be able to sell our products profitably or recoup the value of our investment
in product development if reimbursement is unavailable or limited in scope.
As a result of intense competition
and technological change in the pharmaceutical industry, the marketplace may not accept our products, and we may not be able to
complete successfully against other companies in our industry and achieve profitability.
Many of our competitors have drug products
that have already been approved or are in development, and operate large, well-funded research and development programs in these
fields. Many of our competitors have substantially greater financial and management resources, superior intellectual property positions
and greater manufacturing, marketing and sales capabilities, areas in which we have limited or no experience. In addition, many
of our competitors have significantly greater experience than we do in undertaking preclinical testing and clinical trials of new
or improved pharmaceutical products and obtaining required regulatory approvals. Consequently, our competitors may obtain FDA and
other regulatory approvals for product candidates sooner and may be more successful in manufacturing and marketing their products
than us or our collaborators. Existing and future products, therapies and technological approaches will compete directly with the
products we seek to develop. Current and prospective competing products may provide greater therapeutic benefits for a specific
problem, may offer easier delivery or may offer comparable performance at a lower cost. Any product candidate that we develop and
that obtains regulatory approval must then compete for market acceptance and market share. Our product candidates may not gain
market acceptance among physicians, patients, healthcare payors and the medical community. Further, any products we develop may
become obsolete before we recover any expenses we incurred in connection with the development of these products. As a result, we
may never achieve profitability.
If any of our products receive regulatory
approval, the approval will be limited to those disease states and conditions for which the product is safe and effective, as demonstrated
through clinical trials.
In addition, results of pre-clinical studies
and clinical trials with respect to our products could subject us to adverse product labeling requirements that could harm the
sale of such products. Even if regulatory approval is obtained, later discovery of previously unknown problems may result in restrictions
of the product, including withdrawal of the product from the market. Further, governmental approval may subject us to ongoing requirements
for post-marketing studies. Even if we obtain governmental approval, a marketed product, its respective manufacturer and its manufacturing
facilities are subject to unannounced inspections by the FDA and must comply with the FDA’s current Good Manufacturing Practices
and other regulations. These regulations govern all areas of production, record keeping, personnel and quality control. If a manufacturer
fails to comply with any of the manufacturing regulations, it may be subject to, among other things, product seizures, recalls,
fines, injunctions, suspensions or revocations of marketing licenses, operating restrictions and criminal prosecution. Other countries
also impose similar manufacturing requirements.
Risks Related to Our Common Stock
Trading in our common stock is limited
and the price of our common stock may be subject to substantial volatility.
Our common stock is quoted on the OTCQB
marketplace. We expect our common stock to continue to be quoted on the OTCQB for the foreseeable future. Broker-dealers may decline
to trade in OTCQB stocks given the market for such securities is often limited, the stocks are more volatile and the risk to investors
is greater. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This
may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of their shares.
This could cause our stock price to decline.
Additionally, the price of our common stock
may be volatile as a result of a number of factors, including, but not limited to, the following:
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our ability to successfully conceive and to develop new products; |
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our ability to obtain customers and demand for our products; |
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the timing and level of market acceptance of our new products; |
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our ability to successfully manage any future acquisitions of businesses, solutions or technologies; and |
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price and volume fluctuations in the stock market at large which do not relate to our operating performance. |
“Penny stock” rules may
make buying or selling our securities difficult which may make our stock less liquid and make it harder for investors to buy and
sell our securities.
Trading in our securities is subject to
the SEC’s “penny stock” rules and it is anticipated that trading in our securities will continue to be subject
to the penny stock rules for the foreseeable future. The SEC has adopted regulations that generally define a penny stock to be
any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that
any broker-dealer who recommends our securities to persons other than prior customers and accredited investors must, prior to the
sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to
execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving
a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock
market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by these requirements
may discourage broker-dealers from recommending transactions in our securities, which could severely limit the liquidity of our
securities and consequently adversely affect the market price for our securities.
The price of our common stock may
fluctuate substantially.
You should consider an investment in our
common stock to be risky, and you should invest in our common stock only if you can withstand a significant loss and wide fluctuations
in the market value of your investment. Some factors that may cause the market price of our common stock to fluctuate, in addition
to the other risks mentioned in this “Risk Factors” section and elsewhere in this registration statement are:
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sale of our common stock by our stockholders, executives, and directors; |
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volatility and limitations in trading volumes of our shares of common stock; |
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our ability to obtain financings to conduct and complete research and development activities including, but not limited to, our human clinical trials, and other business activities; |
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our ability to secure resources and the necessary personnel to conduct clinical trials on our desired schedule; |
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commencement, enrollment or results of our clinical trials of VG1177 or any future clinical trials we may conduct; |
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changes in the development status of VG1177; |
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any delays or adverse developments or perceived adverse developments with respect to the FDA’s review of our planned pre-clinical and clinical trials; |
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any delay in our submission for studies or product approvals or adverse regulatory decisions, including failure to receive regulatory approval for VG1177; |
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our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments; |
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unanticipated safety concerns related to the use of VG1177; |
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failures to meet external expectations or management guidance; |
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changes in our capital structure or dividend policy; |
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our cash position; |
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announcements and events surrounding financing efforts, including debt and equity securities; |
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our inability to enter into new markets or develop new products; |
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reputational issues; |
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competition from existing technologies and products or new technologies and products that may emerge; |
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announcements of acquisitions, partnerships, collaborations, joint ventures, new products, capital commitments, or other events by us or our competitors; |
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changes in general economic, political and market conditions in or any of the regions in which we conduct our business; |
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changes in industry conditions or perceptions; |
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changes in valuations of similar companies or groups of companies; |
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analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage; |
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departures and additions of key personnel; |
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disputes and litigations related to intellectual properties, proprietary rights, and contractual obligations; |
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changes in applicable laws, rules, regulations, or accounting practices and other dynamics; and |
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other events or factors, many of which may be out of our control. |
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In addition, if the market for stocks in
our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence,
the trading price of our common stock could decline for reasons unrelated to our business, financial condition and results of operations.
If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful,
could be costly to defend and a distraction to management.
If an active, liquid trading market
for our common stock does not develop, you may not be able to sell your shares quickly or at or above the price you paid for it.
Although our common stock is listed on
the OTCQB marketplace, an active and liquid trading market for our common stock has not yet and may not ever develop or be sustained.
You may not be able to sell your shares quickly or at or above the price you paid for our stock if trading in our stock is not
active.
We do not intend to pay cash dividends
on our shares of common stock so any returns will be limited to the value of our shares.
We currently anticipate that we will retain
future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash
dividends for the foreseeable future. Any return to stockholders will therefore be limited to the increase, if any, of our share
price.
Holders of our Series A Preferred
Stock have special voting rights that allow them to out vote all common stock holders on any voting matter.
Our Series A Preferred stock may vote as
common stock on all matters requiring shareholder approval. Additionally, the Series A Preferred stock has special voting rights
that allow the aggregate Series A Preferred votes to be 1.01 times greater than the aggregate number of votes for the issued and
outstanding common stock. This means that the Series A Preferred shareholders may out vote all the common stock shareholders on
any and all matters requiring shareholder approval, which may make it difficult to complete some corporate transactions without
the support of the Series A Preferred shareholders and may prevent a change in control. As of October 15, 2014, our Chairman of
our Board and Vice President of Research and Development held 5,573,725 or 57.4% of the issued and outstanding Series A preferred
stock.
Our management holds significant
control over our voting stock and may be able to control our Company indefinitely.
Our management has significant control
over our voting stock, which may make it difficult to complete some corporate transactions without their support and may prevent
a change in control. As of October 15, 2014, our management owned or had the rights to acquire 77.4% of our common stock and the
Chairman of our Board and Vice President of Research and Development owned 57.4% of the Series A Preferred stock.
Risks Related to This Offering
We are registering
the resale of 10,000,000 shares of common stock, which may be issued to Dutchess under the Equity Line. The resale of
such shares by Dutchess could depress the market price of our common stock and you may not be able to sell your investment for
what you paid for it.
We are registering
the resale of 10,000,000 shares of common stock under the registration statement of which this prospectus forms a part. We
may issue up to that number of shares to Dutchess pursuant to the Equity Line. The sale of these shares into the public
market by Dutchess could depress the market price of our common stock and you may not be able to sell your investment for what
you paid for it.
Existing
stockholders could experience substantial dilution upon the issuance of common stock pursuant to the Equity Line.
Our Equity Line
with Dutchess contemplates our issuance of up to 10,000,000 shares of our common stock to Dutchess, subject to certain restrictions
and obligations. If the terms and conditions of the Equity Line are satisfied, and we choose to exercise our Put rights
to the fullest extent permitted and sell 10,000,000 shares of our common stock to Dutchess, our existing stockholders’ ownership
will be diluted by such sales. Consequently, the value of your investment may decrease.
Dutchess
will pay less than the then-prevailing market price for our common stock under the Equity Line.
The common stock
to be issued to Dutchess pursuant to the Investment Agreement will be purchased at a 6% discount to the volume weighted average
price, VWAP, of our common stock during the five consecutive trading day period beginning on the trading day on the date of delivery
of a put notice by us to Dutchess, subject to certain exceptions. Dutchess has a financial incentive to sell our common
stock upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price.
If Dutchess sells the shares, the price of our common stock could decrease.
We may not
be able to access sufficient funds under the Equity Line when needed.
Our ability to
put shares to Dutchess and obtain funds under the Equity Line is limited by the terms and conditions in the Investment Agreement,
including restrictions on when we may exercise our put rights, restrictions on the amount we may put to Dutchess at any one time,
which is determined in part by the trading volume of our common stock, and a limitation on Dutchess’s obligation to purchase
if such purchase would result in Dutchess beneficially owning more than 4.99% of our common stock. Accordingly, the Equity Line
may not be available to satisfy all of our funding needs.
USE OF PROCEEDS
We will not receive
any proceeds from the resale of our common stock offered by Dutchess. We will, however, receive proceeds from the sale
of our common stock to Dutchess pursuant to the Investment Agreement. The proceeds from our exercise of the put option
pursuant to the Investment Agreement will be used for working capital and general corporate purposes.
SELLING STOCKHOLDER
The
information provided in the table and discussions below has been obtained from Dutchess, the selling
stockholder. The selling stockholder may have sold, transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time or from time to time since the date on which it provided the information regarding the
shares, all or a portion of the shares of common stock beneficially owned in transactions exempt from the registration
requirements of the Securities Act. As used in this prospectus, “selling stockholder” includes the person or
persons listed in the table below, and the donees, pledgees, transferees or other successors-in-interest selling
shares received from the named selling stockholder as a gift, pledge, distribution or other transfer.
Beneficial ownership
is determined in accordance with Rule 13d-3(d) promulgated by the Commission under the Securities Exchange Act of 1934. Unless
otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject
to community property laws where applicable.
Name of Selling
Security Holder |
Ownership Before Offering |
Percentage Before Offering |
Number of Shares
to be Sold
under this
Prospectus |
Number of Shares
Owned After
Offering(1) |
Percentage Owned
After Offering(3) |
Dutchess Opportunity Fund, II, L.P. (2) |
0 |
0 |
10,000,000 (3) |
0 |
0 |
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(1) |
These numbers assume the selling stockholder sells all of its shares being offered pursuant to this prospectus. |
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(2) |
Dutchess is a Delaware limited partnership. Michael Novielli and Douglas H. Leighton are
directors of Dutchess with voting and investment power over the shares. |
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(3) |
Represents the maximum number of shares issuable by us and purchasable by Dutchess under the Investment Agreement, all of which are being offered by the selling stockholder under this prospectus. |
PLAN OF DISTRIBUTION
The purpose
of this prospectus is to permit the selling stockholder to offer and resell up to an aggregate of 10,000,000 shares of our
common stock at such times and at such places as they choose. In this section of the prospectus, the term “selling
stockholder” includes the partners, pledgees, donees, transferees or other successors-in-interest of the selling
stockholder, which may sell shares received after the date of this prospectus from the selling stockholder as a pledge, gift,
partnership or similar distribution or other non-sale related transfer. To the extent required, we may amend and supplement
this prospectus from time to time to describe a specific plan of distribution. The decision to sell any shares offered
pursuant to this prospectus is within the sole discretion of the selling stockholder.
The distribution
of the common stock by the selling stockholder may be effected from time to time in one or more transactions. Any of
the common stock may be offered for sale, from time to time, by the selling stockholder at prices and on terms then obtainable,
at fixed prices, at prices then prevailing at the time of sale, at prices related to such prevailing prices, or in negotiated transactions
at negotiated prices or otherwise. The common stock may be sold by one or more of the following methods:
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on the OTCQB marketplace or any other national common stock exchange or automated quotation system on which our common stock is traded, which may involve transactions solely between a broker-dealer and its customers which are not traded across an open market and block trades; |
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through one or more dealers or agents (which may include one or more underwriters), including, but not limited to |
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block trades in which the broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus; |
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purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus; |
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ordinary brokerage transactions; |
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transactions in which the broker solicits purchasers; |
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directly to one or more purchasers; |
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combination of these methods. |
Dutchess and any
broker-dealers who act in connection with the sale of its shares are “underwriters” within the meaning of the Securities
Act, and any discounts, concessions or commissions received by them and profit on any resale of the shares as principal may be
deemed to be underwriting discounts, concessions and commissions under the Securities Act. Because the selling stockholder is an
“underwriter” within the meaning of the Securities Act, it will be subject to the prospectus delivery requirements
of the Securities Act, including Rule 172 thereunder.
The selling stockholder
or its underwriters, dealers or agents may sell the common stock to or through underwriters, dealers or agents, and such underwriters,
dealers or agents may receive compensation in the form of discounts or concessions allowed or reallowed. Underwriters,
dealers, brokers or other agents engaged by the selling stockholder may arrange for other such persons to participate. Any
fixed public offering price and any discounts and concessions may be changed from time to time. Underwriters, dealers
and agents who participate in the distribution of the common stock may be deemed to be underwriters within the meaning of the Securities
Act, and any discounts or commissions received by them or any profit on the resale of shares by them may be deemed to be underwriting
discounts and commissions thereunder. The proposed amounts of the common stock, if any, to be purchased by underwriters
and the compensation, if any, of underwriters, dealers or agents will be set forth in a prospectus supplement.
Unless granted
an exemption by the SEC from Regulation M under the Exchange Act, or unless otherwise permitted under Regulation M, the selling
stockholder will not engage in any stabilization activity in connection with our common stock, will furnish each broker or dealer
engaged by the selling stockholder and each other participating broker or dealer the number of copies of this prospectus required
by such broker or dealer, and will not bid for or purchase any common stock or attempt to induce any person to purchase
any of the common stock other than as permitted under the Exchange Act.
We will not receive
any proceeds from the sale of these shares of common stock offered by the selling stockholder. We shall use our reasonable efforts
to prepare and file with the SEC such amendments and supplements to the registration statement and this prospectus as may be necessary
to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition
of the common stock covered by the registration statement for the period required to effect the distribution of such common stock.
We are paying
certain expenses incidental to the offering and sale of the common stock to the public, which are estimated to be approximately
$30,000. If we are required to update this prospectus during such period, we may incur additional expenses in excess
of the amount estimated above.
In order to comply
with certain state securities laws, if applicable, the common stock will be sold in such jurisdictions only through registered
or licensed brokers or dealers. In certain states the shares of common stock may not be sold unless they have been registered or
qualify for sale in such state or an exemption from registration or qualification is available and is complied with.
DESCRIPTION
OF SECURITIES TO BE REGISTERED
The following
description of our capital stock and provisions of our Certificate of Incorporation, as amended, and Bylaws is only a summary.
You should also refer to our Certificate of Incorporation, as amended, a copy of which is incorporated by reference as an exhibit
to the registration statement of which this prospectus is a part, and our Bylaws, a copy of which is incorporated by reference
as an exhibit to the registration statement of which this prospectus is a part.
Common Stock
We are authorized to issue up to a total
of 150,000,000 shares of common stock, par value $0.0001 per share. The shares of common stock are non-assessable, without preemption
rights, and do not carry cumulative voting rights. Holders of our common stock are entitled to one vote for each share held on
all matters submitted to a vote of our stockholders. Holders of our common stock are entitled to receive dividends if, and when,
declared by our Board of Directors.
INTERESTS OF
NAMED EXPERTS AND COUNSEL
No expert or counsel
named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity
of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock
was employed for such purpose on a contingency basis, or had, or is to receive, in connection with this offering, a substantial
interest, direct or indirect, in us or any of our parents or subsidiaries, nor was any such person connected with us or any of
our parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
CAUTIONARY STATEMENT
REGARDING FORWARD LOOKING STATEMENTS
Some of the statements
contained or incorporated by reference in this prospectus are “forward-looking statements” and we intend that such
forward-looking statements be subject to the safe harbors thereby. These statements are based on the current expectations,
forecasts, and assumptions of our management and are subject to various risks and uncertainties that could cause our actual results
to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are
sometimes identified by language such as “believe,” “may,” “could,” “estimate,”
“continue,” “anticipate,” “intend,” “should,” “plan,” “expect,”
“appear,” “future,” “likely,” “probably,” “suggest,” “goal,”
“potential” and similar expressions and may also include references to plans, strategies, objectives, and anticipated
future performance as well as other statements that are not strictly historical in nature. The risks, uncertainties, and other
factors that could cause our actual results to differ materially from those expressed or implied in this prospectus include, but
are not limited to, those noted under the caption “Risk Factors” beginning on page 3 of this prospectus. Readers
should carefully review this information as well as the risks and other uncertainties described in other filings we may make after
the date of this prospectus with the Securities and Exchange Commission.
Readers are cautioned
not to place undue reliance on forward-looking statements. They reflect opinions, assumptions, and estimates only as
of the date they were made, and we undertake no obligation to publicly update or revise any forward-looking statements in this
prospectus, whether as a result of new information, future events or circumstances, or otherwise.
DESCRIPTION
OF OUR BUSINESS
Overview
We are a drug discovery and development
company researching two core technologies: Targeted Peptide Technology, or TPT, which is currently our main focus, and Metabolic
Disruption Technology, or MDT, which is our secondary focus.
Our research indicates that our TPT therapies
may be useful in treating autoimmune diseases, or diseases that trigger the body’s immune system when doing so is not necessary.
Certain molecular patterns displayed on the surface of all cells allow the immune system to distinguish the body’s own cells,
or self-cells, from foreign cells, or non-self cells, as well as to distinguish between healthy cells and infected cells. When
a given cell displays a non-self molecular pattern, that pattern alerts the immune system to the presence of pathogen(s) and provides
an identity of the pathogen(s). This recognition of foreign markers initiates an immune response: acute inflammation followed by
targeted destruction of invaders and of compromised self-cells. When non-infected, healthy self-cells are inappropriately targeted
by the immune system, the resulting conditions, effects, and symptoms are termed chronic inflammatory and autoimmune diseases.
Current therapies that combat these immune disorders generally focus on eliminating pro-inflammatory cells and/or their pro-inflammatory
signals. Such therapies may be non-specific and immunosuppressive, weakening a patient’s ability to fight secondary infections.
We believe we have produced a peptide, which is a small segment of protein that may selectively eliminate certain pro-inflammatory
immune system cells that play a key role in inflammatory and autoimmune conditions. Our TPT therapy, which uses this peptide, requires
significant additional work before the commencement of clinical trials, including favorable animal toxicity study results and then
regulatory review and approval of protocols. We believe TPT could potentially be a significant discovery for patients who battle
the symptoms of these largely untreatable autoimmune diseases.
Additionally, we have one drug research
program in clinical stage, which is a MDT therapy that helps, in combination with other drugs, to fight cancers with solid tumors
in situations where the cancer is resistant to the initial cancer drug therapy. Our MDT trial was initially for ovarian cancer,
but has since expanded to include other solid tumors, including those located in the breast, colon, liver, lung, and pancreas.
Currently, we do not have sufficient funding to complete this work and plan to seek additional funding.
Our research and development programs are
based on technology that was developed by Dr. M. Karen Newell Rogers, for which we have an exclusive license. while working at
the University of Colorado, the University of Vermont, and Texas A&M University. Through Dr. Rogers and the universities for
whom she has worked, we have collaborated with:
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Stanford University on multiple diseases affected by chronic inflammation, such as HIV, from October 2013 to present; |
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Harvard University on HIV from 2008 to present and on brain tumors from November 2013 to present; and |
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Scott & White Healthcare Center on pre-eclampsia and high blood pressure from March 2010 to present. |
History of Our Technology
Prior to our acquisition of Viral Genetics
in 2001, Viral Genetics had acquired the right to use certain technology, called Thymus Nuclear Protein, or TNP, through license
agreements. Viral Genetics believed TNP to be useful in ameliorating HIV/AIDS, autoimmune conditions and immunological deficiency.
Viral Genetics stopped studying TNP in 2007 when we entered into agreements with the University of Colorado, Dr. Newell Rogers,
Texas A&M University and Scott & White Healthcare related to the licensing of TPT. We believe Dr. Newell Rogers’s
work provides the scientific theory and explanation of the biological mechanism behind TNP and pointed the direction for developing
other autoimmune applications that had been indicated in a prior TNP study.
In 2009, we acquired an exclusive worldwide
license to a body of patents and patent applications underlying the use of Metabolic Disruption Technology, or MDT, compounds in
the treatment of cancers that were developed by Dr. Newell Rogers, and are owned by the University of Colorado and the University
of Vermont. We believe MDT technology interferes with cancer cells’ ability to get the energy they need, making them more
susceptible to chemotherapy and radiation and more visible and vulnerable to the body’s own immune system.
There are hundreds of existing cancer treatments
that could potentially be used successfully in combination with MDT compounds. All cells, including cancer cells, need energy to
continue functioning. MDT compounds interfere with target cells' methods for obtaining the energy they need to function. Such methods
for obtaining energy are called metabolic processes. In order to get energy, cells may undergo a process called autophagy, or self-eating,
where the cells consume themselves in order to continue to function. This process is particularly relevant to cancer cells, which
are very energy intensive due to their short cell cycle and rapid proliferation. We believe our MDT compounds interrupt the cancer
cells’ metabolic processes, ultimately weakening them to
other cancer therapies or killing them outright. We are currently studying the efficacy of an MDT compound called hydroxychloroquine
in combination with an existing drug, called sorafenib, which is marketed as Nexavar®, on solid tumors, including those located
in the breast, liver, ovaries and pancreas. MDT compounds do not work on their own to treat cancerous tumors, but we believe they
disrupt cellular metabolism, weakening the cancerous cells and making them more susceptible to the mechanism of a given cancer
therapy.
Our Subsidiaries
VG Energy, Inc.
In 2010, we established a subsidiary, VG
Energy, Inc. We currently own 81.65% of the common and preferred shares of VG Energy. The subsidiary was established to develop
non-pharmaceutical applications of our science for use in the augmentation of oils that could be refined into diesel and other
transportation fuels, as well as into high-value edible, cosmetic and nutraceutical oils. We have demonstrated in the lab that
the same techniques used in our medical research increase oil yields of other plant and plant-like cells, as well as fungi, including
yeast, corn, palm, soy and pea. While we believe that VG Energy could develop viable products, we are not investing resources in
this subsidiary so we can focus our efforts on our drug development programs.
MetaCytoLitics, Inc.
On July 27, 2009, we formed the subsidiary,
MetaCytoLytics, Inc. to study the use of MDT in the treatment of cancerous tumors. This subsidiary is largely inactive now and
we are conducting MDT research through our own efforts.
Our Vision
The primary focus of our business is pharmaceutical
and medical applications of our science. We are engaged in the research and development of drugs and disease treatments using two
platform technologies, Targeted Peptide Technology, or TPT, and Metabolic Disruption Technology, or MDT. A portion of pharmaceutical
research conducted for the benefit of our licensed MDT and TPT technologies is funded through grants and other outside funding
provided to the lab of Dr. M. Karen Newell Rogers. These grants include (a) two grants totaling $200,000 and paid in two installments
in February 2009 and January 2012 from Time for Lyme, Inc., and Turn the Corner Foundation, of which approximately 40% benefited
our TPT program and (b) a single $1,500,000 grant from the Scott & White Foundation in January 2011, of which approximately
20% benefited our MDT program. The remainder of the funding comes from our fundraising efforts.
Targeted Peptide Technology, or TPT
Our Targeted Peptide Technology, or TPT,
targets the body’s immune cells and seems to explain the mechanism behind some autoimmune diseases while presenting a possible
solution. Our current, second generation TPT compound is called VG1177.
Autoimmune diseases occur when the immune
system attacks the body’s own cells, mistaking them for pathogens. In some cases, this confusion can arise from an initial
infection, where the pathogen possesses antigens similar to tissue in the body, such as in Coxsackie induced myocarditis or chronic
Lyme disease. Additionally, the immune system can be activated non-specifically, that is, it mounts a chronic inflammatory response
without a target. When non-infected, healthy self-cells are inappropriately targeted by the immune system, the resulting conditions,
effects, and symptoms are termed chronic inflammatory and autoimmune diseases.
Certain molecular patterns displayed on
all cell surfaces allow the immune system to distinguish self from non-self cells as well as healthy cells from infected cells.
When a given cell displays a non-self molecular pattern, that pattern alerts the immune system to the presence of pathogen(s) and
provides an identity of the pathogen(s). This recognition of foreign markers initiates an immune response: acute inflammation followed
by targeted destruction of invaders and of compromised self-cells.
Certain cells in the body ingest foreign,
damaged or infected cells and then produce a receptor on the cells surface, called Major Histocompatibility Complex II, or MHC-II
receptor. The MHC-II receptor allows other immune cells, called T-cells, to identify the foreign, damaged or infected cell and
cause the cell’s death, eliminating the threat and stopping the immune response.
Our research indicates that the self-peptide
called Class II-associated invariant chain peptide, or CLIP, can fit into MHC-II receptors, preventing T-cells from recognizing
the MHC-II receptor and cause cell death. This prolongs a chronic, non-specific immune activation. Our research also indicates
that these CLIP+ immune cells have increased pro-inflammatory characteristics.
We believe TPT can work by displacing the
“armor” of CLIP from its place in an extracellular MHC-II receptor. We believe VG1177 will out-compete CLIP for the
MHC-II groove because it is designed to have a higher binding coefficient than CLIP, effectively displacing CLIP and producing
the desired anti-inflammatory therapeutic effect.
TPT, in a general sense, is related to
discovering receptor-mediated pathways, pathways that can be found using receptors that other cells can bind to and designing peptides
that can augment how those receptors function. These peptides, synthesized by our research team, have been engineered to work nearly
universally in everyone’s MHC-II receptors. We expect our TPT drug compounds to enable the body to destroy the cells that
help trigger the symptoms of autoimmune diseases.
We also believe that various other conditions,
such as Lyme disease, traumatic brain injury, hypertension, preeclampsia, glioblastoma, Type I and Type II diabetes, Crohn’s
disease, ulcerative colitis, lymphedema, staphylococcus, streptococcus, and sepsis infection, multiple sclerosis, transplant rejection,
and Pediatric Autoimmune Neuropsychiatric Disorders, or PANDAS, may be treatable using TPT. However, we have not and do not currently
plan to expend any significant funds to explore these applications.
Metabolic Disruption Technology, or
MDT
Our Metabolic Disruption Technology, or
MDT, program may be used in combination with a variety of existing drugs and compounds to treat drug resistant cancers. MDT compounds
manipulate target cells' methods for obtaining the energy they need to function, weakening the drug resistant cancer cells so that
the cancer cells are more sensitive to the cancer treatment.
We believe a growing body of research indicates
that interfering with cell metabolism could be the key to targeting cancer cells. Our research shows the way a cell metabolizes
its sources of energy appears to determine whether it will survive the most common treatments for cancer chemotherapy and radiation.
Cells that rely on glucose or sugar for fuel are easily damaged and killed. Cells that can change their metabolic strategy to use
lipids can become deadly. They continue to survive and even thrive during cancer treatments, thereby assisting in the development
of drug resistant tumors that can become lethal to their victims.
Every cell in the body produces, consumes,
and stores energy using a distinct metabolic strategy to perform its normal functions. Each cell can use carbohydrate, protein,
or fat in different proportions to insure that the cell has sufficient energy. The cell’s choice of fuel, i.e. the cell’s
metabolic strategy, will change depending on its activation or differentiation state as well as its environment. For example, a
cell that is dividing has different energy demands than one that is non-dividing and, thus, must employ an alternative metabolic
strategy.
Due to the fact that, in general, cancer
cells grow very rapidly, cancer cells have very high energy demands. We have learned that some of the mechanisms the tumor cells
use to meet their energy demands are unique to the tumor cell and are not used by normal cells, suggesting that those specific
pathways could make clinically relevant therapeutic targets. As a result, our research now indicates that when the tumor cells’
specific energy strategies are interrupted with “metabolic disrupting” agents, the consequences are two-fold: the cancer
cells can no longer generate energy needed to survive and the disruption of the intracellular energy levels reduces their ability
to repair damage from other cytotoxic agents, resulting in a much greater sensitivity to chemotherapy and radiation.
Tumor cells exhibit at least two generalizable
metabolic features that we have chosen as selective targets: high rate glycolysis, which is the process of breaking down glucose
to smaller carbon-containing units in the intracellular fluid of the cell, and fatty acid oxidation, the process of breaking fats
down to smaller carbon containing units in the cell’s powerhouse, the mitochondria. The preferential use of fatty acid oxidation
in drug resistant cells is a particularly important focus of our therapeutic strategy because drug resistance, either acquired
through drug treatment or inherent drug resistance, is the leading cause of death for cancer patients. For all of these reasons,
our initial clinical compounds are comprised of pharmaceutical compositions that interfere with various aspects of high rate glycolysis
and fatty acid oxidation.
Our research indicates that we are capable
of interfering with the metabolic strategy of both drug sensitive and multi-drug resistant tumor cells. Our studies both in vitro
and in tumor-bearing mice have demonstrated a lack of toxicity and impressive therapeutic activity of some compounds in multi-drug
resistant cancer cells and an even more potent effect on both drug sensitive and drug resistant tumor cells when used in combinations.
In addition, certain compounds have striking therapeutic activity in tumor-bearing mice when used together, or in conjunction with,
standard chemotherapy.
Doctors at Scott & White Healthcare
in Temple, Texas, and the Cancer Therapy and Research Center at the University of Texas at San Antonio, are completing a Phase
I Physician’s IND trial, for patients with solid tumors utilizing an MDT compound, called hydroxychloroquine, in combination
with an existing cancer drug, called sorafenib, which is marketed as Nexavar®. Our MDT trials initially were only for ovarian
cancer, but have since expanded to include other solid tumors, including those located in the breast, colon, liver, lung, and pancreas.
We are currently reviewing our options, including an expanded Phase I Physician’s IND with a large 5th cohort
of patients at maximum dosage or a Phase II trial. However, we have not expended any significant funds to explore these applications,
nor we do not have funds on hand to explore these applications.
A phase I study may be conducted at a clinical
trial location in healthy patients, or it may be administered to patients suffering with the targeted indication by a physician,
where the latter becomes a physician investigational new drug trial, or P-IND. An IND refers to the molecular entity or entities
not yet approved for a given indication or indications. Any plan to use the specific entity or entities must be approved by the
FDA prior to initiation. A clinical protocol may be exempted from IND approval procedures if the following conditions are met:
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The investigation is not intended to be reported to the FDA as a well-controlled study in support of a new indication for use, nor intended to support any other significant change in labeling for the drug; |
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The investigation is not intended to support a significant change in the advertising for a prescription drug product; |
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The investigation does not involve a change in route of administration, dosage level, or patient population, or other factors that significantly increase the risks (or decreases the acceptability of risks) associated with use of the drug product; |
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The investigation is conducted in compliance with the requirements for Institutional Review Board approval. Institutional Review Boards review studies that are conducted with human subjects to ensure that there is oversight of such research and that such research is conducted with the appropriate precautions and all subjects are given informed voluntary consent before participating in the study; and |
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The investigation may not represent that the drug being studied is safe or effective, nor may it be commercially distributed, for the purposes for which it is under investigation. |
The current clinical protocol was exempted
from IND regulations on May 4, 2012, which means that an IND approval was not needed prior to study commencement, and with the
receipt of the notification, the study could commence. We are the sponsor of the trial and Dr. Tyler Curiel is the primary investigator.
The subject of the protocol is a hydroxychloroquine and sorafenib combination as a treatment for all solid tumors in patients that
have failed first line cancer therapies.
We hold an exclusive license for the
patent application for this MDT combination treatment. Since its inception in July 2012, the trial has been expanded to
encompass solid tumors, including breast, colon, lung, liver, and pancreatic cancers. We are in the process of completing our
Phase I Physician’s IND study utilizing MDT as a combination therapy. The goal with this treatment is to weaken the
drug resistant cancer cells so that they may be sensitized to other treatments as well as becoming vulnerable to the
body’s immune system.
Product Candidates
Currently, we have one pre-clinical product
candidate and one clinical-stage product candidate. Our clinical-stage product candidate is an MDT therapy, which helps, in combination
with other drugs, to fight cancers with solid tumors in situations where the cancer is resistant to the initial cancer drug therapy.
Our MDT trial was initially for ovarian cancer, but has since expanded to include other solid tumors, including those located in
the breast, colon, liver, lung, and pancreas. Our pre-clinical product candidate is a TPT therapy for HIV/AIDS using our computationally
designed peptide known as VG1177. The success of our business is primarily dependent upon our ability to discover or acquire rights
to products, and to develop and commercialize our product candidates.
TPT for HIV/AIDS
VG1177 is a proprietary, computationally
designed anti-inflammatory peptide with a wide range of potential applications. Currently, we are devoting most of our resources
to develop VG1177 for the treatment of HIV/AIDS. We believe VG1177 prevents the survival of pro-inflammatory cells under conditions
where inflammation is unwanted, thereby allowing the body’s natural containment systems to provide protection from harm,
which has implications for chronic inflammatory conditions and autoimmune and infectious diseases. We began animal toxicity studies
in November 2013 and we engaged ITR Laboratories in Montreal, Canada to complete the safety studies. These toxicity studies are
the prerequisite step before beginning a Phase I clinical trial. We expect these safety results in early 2015. We have engaged
an additional team of industry consultants to guide us through this pivotal, pre-FDA planning stage with a specific focus on drug
formulation, on-site inspections, clinical creation and other aspects of clinical planning. This group of advisors includes:
Chrysalis Pharma Partners:
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Jim MacDonald, PhD, provides over 40 years
of experience working with Merck, Schering-Plough as the head of toxicology departments. He is a key advisor in the design
and execution of our IND-enabling program and received his PhD in Toxicology from the University of Cincinnati. |
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Shelley Ching, PhD, DVM, provides over 20 years of experience as a pathologist and animal toxicity program manager. She is an expert in navigating the language and process of Clinical Research Organizers, or CROs, as well as assessing and critiquing protocol details to maximize the value of each of our studies. She received her PhD in Pathology from Colorado State University and her DVM from the University of Georgia. |
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John Stubbs, PhD, provides over 35 years of experience with Beecham and Merck, Merck, and Johnson & Johnson. He advises us regarding design and assessment of the LCMS-MS assay, as well as pharmacokinetic data produced by our third party animal toxicity group. He received his PhD in Bioanalytical Chemistry and Drug Metabolism from the University of London’s School of Pharmacy. |
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Russ Hensel, PhD, provides over 30 years of experience with Rhone-Poulenc Rorer, Covance Laboratories, Johnson & Johnson, and Tandem Labs. He designs and assesses pharmacokinetic data produced by our third party animal toxicity group. He received his PhD in Analytical Chemistry from Drexel University. |
Advisors we Independently Contract with:
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Dr. Eric Rosenberg, an Associate Professor of Medicine at Harvard Medical School, advises us on questions related to HIV research. He has an extensive background studying HIV and is best known for his research on early HIV infection, with findings published and highly cited in journals, including Science and Nature. Dr. Rosenberg has been co-chair, co-principal investigator, and principal investigator of clinical trials focused on HIV treatment. He received his MD from the Mount Sinai School of Medicine in New York and completed his residency in Internal Medicine at the University of North Carolina. |
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Catherine Strader, PhD, provides over 35 years of experience working with Merck, Schering-Plough as a Senior Vice President of Science and Technology. She is instrumental in identifying and engaging the critical paths to advancing VG1177 from a concept to treatment. |
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Gary Musso, PhD, provides over 25 years of experience with Big Pharma at Salk Institute of Biotechnology, Alkermes Inc., Praecis Pharmaceutics, and Proteolix/Only Pharmaceuticals. He designed a suitable formulation that can be taken into clinical trials and advises us in general capacities. He received his PhD in Bio-Organic Chemistry from the University of Chicago. |
MDT Compound for Drug Resistant Cancer
called Hydroxychloroquine
Hydroxychloroquine is a MDT compound that
can be used, in combination with other cancer drugs, such as sorafenib, which is marketed as Nexavar ®, to treat drug resistant
cancer. We hold a license to a pending patent application for the combination treatment. In 2012, doctors at Scott & White
Healthcare and the Cancer Therapy Research at Texas A&M University began conducting a Phase I Physician’s IND trial for
patients with late stage ovarian cancer using this MDT combination treatment. The trial has progressed to encompass solid tumors,
including; breast, colon, lung, liver and pancreatic cancers. Our Physician-IND Phase I Study is testing the tolerability and toxicity
of our patented technology in patients with advanced stage solid tumors. The study, which is ongoing in patients with solid tumors
that do not respond to treatment or have returned after a period of improvement, examines the safety and efficacy of hydroxychloroquine,
or HCQ, in combination with sorafenib, marketed as Nexavar®, which was co-developed by Bayer AG and Onyx Pharmaceuticals.
The study is designed with four cohorts,
three cycles of administration in each cohort and four different patients in each cohort. Thus there are 16 total patients targeted
to complete the trial. Sorafenib and HCQ are FDA approved and thus the study is testing the drugs in combination for safety and
toxicity. The dosing for each cohort is as follows:
Cohort Number |
SORAFENIB |
HCQ |
1 |
400 mg |
200 mg |
2 |
600 mg |
200 mg |
3 |
800 mg |
200 mg |
4 |
800 mg |
400 mg |
As a Phase I study, the investigators are
primarily testing for safety, but are also testing for efficacy in reducing tumor mass or stunting tumor growth. No patients have
been dropped from the study for toxicity. The primary investigator reported two clinical responses in cohort number 3 with four
months of disease stabilization in a patient with metastatic ovarian cancer, which has spread throughout portions of the body,
and five months of disease stabilization in a patient with triple-negative breast cancer, which is a type of cancer that does not
express three genes that are key to traditional cancer treatment, making treatment more difficult. The final patient in cohort
number 3 has stage IV, or metastatic, adenocarcinoma of the lung, which is a common form of lung cancer, and has four separate
lung lesions. During the course of the study, the four lesions have all regressed about 20% in size. This study is being conducted
at the Cancer Therapy and Research Center at the University of Texas Health Sciences Center at San Antonio. The primary investigator
is medical oncologist Dr. Tyler Curiel, M.D., MPH and is based on the research of Dr. M. Karen Newell-Rogers, PhD, our Chief Scientific
Advisor. In March 2014, the University of Texas Data Safety Monitoring Committee approved an expansion to cohort number 4. In the
final cohort, the trial is at maximum sorafenib plus maximum HCQ. Cohort number 4 has enrolled the first 3 patients.
We are completing our Phase I Physician’s
IND study utilizing MDT as a combination therapy. We are actively planning for either an expanded Physician’s IND Phase I
study or a Phase II study, but we do not have the capital to fund a Phase II study at present.
Intellectual Property
We seek to protect our novel compounds,
cloned targets, expressed proteins, assays, organic synthetic processes, screening technology and other technologies by, among
other things, filing, or causing to be filed on our behalf, patent applications. Except as specifically noted below, the patent
rights described below may be subject to potential patent term extensions and/or supplemental protection certificates extending
such term extensions in countries where such extensions may become available. We control over 40 U.S. and foreign patents and/or
pending patent applications through licensing agreements with universities, as well as Scott & White Healthcare. As of November
10, 2014, we, along with our subsidiaries, own or co-own 3 pending U.S. patent applications, and 4 pending foreign patent applications.
Patent Applications we own or co-own
Patent Title |
Country |
Application No. |
Earliest Non-provisional priority date |
Expiration Date (2) |
Type of Patent Protection |
Clip Inhibitors and Methods of Modulating Immune Function |
United States |
13/911680 |
7/23/2009 |
7/23/2029 |
Use |
Clip Inhibitors and Methods of Modulating Immune Function |
Australia |
2009274512 |
7/23/2009 |
7/23/2029 |
Use and composition |
Clip Inhibitors and Methods of Modulating Immune Function |
Canada |
2737146 |
7/23/2009 |
7/23/2029 |
Use and composition |
Clip Inhibitors and Methods of Modulating Immune Function |
European Patent (1) |
20130155864 |
07/23/2009 |
07/23/2029 |
Use |
Plant Viral Vaccine and Therapeutics |
United States |
14/346214 |
9/21/2012 |
7/23/2032 |
Use and composition |
Methods and Products for Treating Preeclampsia and Modulating Blood Pressure |
Canada |
2862491 |
11/30/2012 |
11/30/2032 |
Use |
Methods and Products for Treating Preeclampsia and Modulating Blood Pressure |
United States |
14/362157 |
06/02/2014 |
11/30/2032 |
Use |
|
(1) |
A European patent refers to patents granted under the European Patent Convention. The European Patent Convention allows for unified filing of a patent application with the European Patent Office. The applicant may designate any of the countries, who are a party to the convention, in which the applicant seeks protection. There are 38 countries that are parties to the European Patent Convention. Each of the designated countries must confirm the patent. Once granted, a European patent comes into existence as a group of national patents in each of the designated countries. |
|
|
|
|
(2) |
The expiration dates of pending U.S. patent applications do not take into consideration any potential patent term adjustment that may be applied by the U.S. Patent Office upon issuance of the patent or any terminal disclaimers that may be filed in the future. |
The rights we consider significant in relation
to our business as a whole are covered by two exclusive license agreements we entered into with the University of Colorado, one
of which pertains to patents and patent applications concerning TPT, referred to as the CLIP License, and the other concerning
MDT, referred to as the Metabolic Distribution License. Through institutional agreements between the University of Colorado and
the University of Vermont, patent rights held by the University of Vermont, where an inventor on the University of Vermont patents,
Dr. Newell Rogers, was employed, are also included in our exclusive license to the MDT. We also hold licenses from Texas A&M
University and Scott & White Healthcare, referenced as the S & W License. These licenses grant us a worldwide exclusive
license to the patents and require us to make certain royalty and milestone payments, as specified below.
Clip License
On August 25, 2009, we entered into a worldwide
exclusive license agreement with the University of Colorado granting us rights to patents, patent applications, and technologies
developed by Dr. Newell Rogers and owned by the University of Colorado. The termination provisions of the agreement allow us to
terminate the agreement in its entirety if we:
(1) Pay all amounts due as well as all
non-cancelable costs to the University of Colorado through the termination date;
(2) Submit final payments with interest
equal to the lesser of one percent per month compounded, or the maximum interest rate allowed by law, and a final report;
(3) Return any confidential materials provided
to us by the University of Colorado in connection with the agreement;
(4) Suspend our use
and sales of the licensed product(s) and licensed process(es) covered by the agreement; provided however, that subject to making
certain payments and furnishing certain reports as specified in the agreement, we may, for a period of ninety (90) days after the
effective date of such termination, sell all licensed products which may be in inventory; and
(5) Provide the University of Colorado
the right to access any regulatory information filed with any U.S. or foreign government agency with respect to licensed products
and licensed processes.
The termination provisions of the agreement
also allows us to terminate the agreement in its entirety if the University of Colorado:
(1) Is delinquent on any report or payment
that is not in dispute; is in breach of the diligence obligations described in the agreement, including the milestone requirements
and such missed milestone, which is not otherwise excused pursuant to the terms of the agreement; provides any false report, as
specified in the agreement, breaching any dispute resolution of the agreement, or is in breach of any other material provision
of the agreement, and fails to cure any of these circumstances within 30 days of the University of Colorado's written notice to
us;
(2) Violates any laws or regulations of
applicable governmental entities;
(3) Becomes insolvent, as defined by the
voluntary filing of a Chapter 7 proceeding under bankruptcy law, or if we cease to carry on its business or development activities
pertaining to the licensed patents; or
(4) Institutes a legal action challenging
the validity of any licensed patent.
The exclusive license granted by the agreement
will terminate if a non-voluntary Chapter 7 proceeding under bankruptcy law is filed that is not dismissed prior to liquidation.
The exclusive license will not pass to a trustee in a Chapter 7 bankruptcy or be held as an asset of said Chapter 7 bankruptcy.
This license gives us rights to 13 pending
U.S. and foreign patent applications and one issued U.S. patent, as specified below:
Patent Applications
Patent Title |
Country |
Application No. |
Earliest Non-provisional priority date |
Expiration Date (2) |
Type of Patent Protection |
Competitive Inhibitors of Invariant Chain Expression and/or Ectopic Clip Binding |
Canada |
2703585 |
10/23/2008 |
10/23/2028 |
Composition and Use |
Competitive Inhibitors of Invariant Chain Expression and/or Ectopic Clip Binding |
Australia |
2008317374 |
10/23/2008 |
10/23/2028 |
Composition and Use |
Competitive Inhibitors of Invariant Chain Expression and/or Ectopic Clip Binding |
European Patent (1) |
20080841310 |
10/23/2008 |
10/23/2028 |
Composition and Use |
Competitive Inhibitors of Invariant Chain Expression and/or Ectopic Clip Binding |
United States |
12/739459 |
10/23/2008 |
10/23/2028 |
Composition |
Clip Inhibitors and Methods of Modulating Immune Function |
Canada |
2737146 |
07/23/2009 |
07/23/2029 |
Composition and Use |
Clip Inhibitors and Methods of Modulating Immune Function |
Australia |
2009274512 |
7/23/2009 |
07/23/2029 |
Composition and Use |
Clip Inhibitors and Methods of Modulating Immune Function |
European Patent (1) |
20130155864 |
07/23/2009 |
07/23/2029 |
Use |
Clip Inhibitors and Methods of Modulating Immune Function |
United States |
13/911680 |
07/23/2009 |
07/23/2029 |
Use |
Methods of Modulating Immune Function |
Canada |
2676129 |
01/28/2008 |
01/28/2028 |
Use |
Methods of Modulating Immune Function |
European Patent (1) |
20080724877 |
01/28/2008 |
01/28/2028 |
Use |
Methods of Modulating Immune Function |
United States |
12/021118 |
01/28/2008 |
01/28/2028 |
Use |
Treating Neurological Disorders |
United States |
62/033088 |
08/04/2014 |
08/04/2015 |
Use |
Treating Neurological Disorders |
United States |
PCT/US2014/054845 |
09/16/2013 |
09/09/2034 |
Use |
|
(1) |
A European patent refers to patents granted under the European Patent Convention. The European Patent Convention allows for unified filing of a patent application with the European Patent Office. The applicant may designate any of the countries, who are a party to the convention, in which the applicant seeks protection. There are 38 countries that are parties to the European Patent Convention. Each of the designated countries must confirm the patent. Once granted, a European patent comes into existence as a group of national patents in each of the designated countries. |
|
(2) |
The expiration dates of pending U.S. patent applications do not take into consideration any potential patent term adjustment that may be applied by the U.S. Patent Office upon issuance of the patent or any terminal disclaimers that may be filed in the future. |
Issued Patents
Patent Title |
Country |
No. |
Earliest Non-provisional priority date |
Days of Patent Term Adjustment (1) |
Terminal Disclaimer (2) |
Expiration |
Type of Patent Protection |
Methods of Modulating Immune Function |
United States |
8557764 |
01/28/2008 |
308 |
0 |
12/01/2028 |
Use |
|
(1) |
The U.S. Patent Office can extend the term of a patent in order to accommodate delays caused by the U.S. Patent Office during the application process. This extension is called a patent term adjustment. |
|
(2) |
An application that includes a terminal disclaimer may have a reduced patent term. |
In exchange for an exclusive license to
this patent, we are required to pay the following royalties to the University of Colorado as specified below:
Minimum Annual Royalty
|
· |
$25,000/year until commercial sales |
|
· |
$75,000/year after commercial sales |
Earned Royalty
|
· |
3% of net sales in developed countries |
|
· |
0.5% of net sales in undeveloped countries |
Milestone Events
|
· |
$35,000 upon acceptance of each Investigational New Drug Application, or INDA, with the FDA or with the European Agency for the Evaluation of Medicinal Products, or EMEA |
|
· |
$100,000 w/in 90 days of each first indication at the initiation of Phase I |
|
· |
$200,000 w/in 90 days of each first indication at the initiation of Phase II |
|
· |
$300,000 w/in 90 days of each first indication at the initiation of Phase III |
|
· |
$500,000 w/in 90 days of FDA approval of a first indication |
|
· |
½ of all aforementioned milestones for each second/subsequent indications |
If we are required to enter into a license
agreement with a third party in order to make, use or sell a product that is covered under this agreement requiring us to pay a
royalty to the third party, then our royalty fee to the University of Colorado shall be reduced by 50% of the royalty paid to the
third party, unless such amount would be less than half of what would otherwise be owed to the University of Colorado.
Under the agreement, we may sublicense
the technology to third parties. However, if we do, we must pay additional sublicense royalties based on when we enter into the
sublicense, as specified below:
|
· |
In the first 12 months, 50% of sublicense income |
|
· |
If within the 2nd or 3rd years after the effective date, 35% of sublicense income |
|
· |
If after the 3rd year, 20% of sublicense income |
This agreement expires on the date that
the last patent covered by it expires.
Metabolic Distribution License
On November 22, 2009, we entered into a
worldwide exclusive license agreement with the University of Colorado granting us rights to patents, patent applications, and technologies
developed by Dr. Newell Rogers and owned by the University of Colorado and the University of Vermont. The license gives us rights
to 10 pending U.S. and foreign patent applications and 11 issued U.S. and foreign patents, as specified below:
Patent Applications
Patent Title |
Country |
Application No. |
Date Filed |
Expiration Date (2) |
Type of Patent Protection |
Methods and Products for Treating Proliferative Diseases |
Australia |
2009271579 |
07/14/2009 |
07/14/2029 |
Use |
Methods and Products for Treating Proliferative Diseases |
Canada |
2730773 |
07/14/2009 |
07/14/2029 |
Use |
Methods and Products for Treating Proliferative Diseases |
United States |
13/054147 |
07/14/2009 |
07/14/2029 |
Use |
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors |
Canada |
2534816 |
06/11/2004 |
06/11/2024 |
Use |
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds, with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors |
European Patent (1) |
20040755015.7 |
06/11/2004 |
6/11/2014 |
Use |
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds, with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors |
United States |
13/302211 |
6/11/2004 |
06/11/2024 |
Use |
Compositions and Methods for Promoting Fatty Acid Production in Plants |
Australia |
2010303935 |
10/06/2010 |
10/06/2030 |
Use and Process |
Compositions and Methods for Promoting Fatty Acid Production in Plants |
Indonesia |
W-00201201717 |
10/06/2010 |
10/06/2030 |
Use and Process |
Compositions and Methods for Promoting Fatty Acid Production in Plants |
Thailand |
1201001582 |
10/06/2010 |
10/06/2030 |
Use and Process |
Compositions and Methods for Promoting Fatty Acid Production in Plants |
United States |
13/500682 |
06/10/2009 |
10/06/2030 |
Use and Process |
|
(1) |
A European patent refers to patents granted under the European Patent Convention. The European Patent Convention allows for unified filing of a patent application with the European Patent Office. The applicant may designate any of the countries, who are a party to the convention, in which the applicant seeks protection. There are 38 countries that are parties to the European Patent Convention. Each of the designated countries must confirm the patent. Once granted, a European patent comes into existence as a group of national patents in each of the designated countries. |
|
(2) |
The expiration dates of pending U.S. patent applications do not take into consideration any potential patent term adjustment that may be applied by the U.S. Patent Office upon issuance of the patent or any terminal disclaimers that may be filed in the future. |
Issued Patents
Patent Title |
Country |
No. |
Earliest Non-provisional priority date |
Days of Patent Term Adjustment (2) |
Terminal Disclaimer (3) |
Expiration |
Patent Protection |
Composition and Methods for Promoting Wound Healing |
United States |
6582713 |
03/30/2001 |
0 |
0 |
03/30/2021 |
Use and Composition |
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds, with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors |
United States |
8071645 |
06/11/2004 |
957 |
0 |
01/24/2027 |
Use |
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds, with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors |
European Patent (1) |
2377528 |
06/11/2004 |
N/A |
N/A |
06/11/2024 |
Use |
Composition of UCP Inhibitors, Fas Antibody, a Fatty Acid Metabolism Inhibitor/or a Glucose Inhibitor |
United States |
7510710 |
01/07/2005 |
0 |
0 |
01/07/2025 |
Composition |
Method for Treating Drug Resistant Cancer |
United States |
8293240 |
01/07/2005 |
0 |
2 over 8,071,645 (expires 01/27/27) 7,445,794 |
02/23/2009 |
Use |
Combination of compounds, or a bifunctional compound, that provides fatty acid metabolism and glycolysis inhibition |
United States |
8329753 |
04/20/2006 |
755 |
0 |
05/14/2028 |
Composition |
Methods and Products Related to Metabolic Interactions in Disease |
United States |
7381413 |
03/27/1999 |
0 |
0 |
03/27/2019 |
Use |
Methods and Products Related to Metabolic Interactions in Disease |
United States |
7390782 |
03/27/1999 |
299 |
0 |
01/20/2020 |
Use |
Methods for Treating Human Proliferative Diseases, with a combination of fatty Acid Metabolism Inhibitors and Glycotic Inhibitors |
United States |
7445794 |
04/28/2005 |
0 |
2 over
8,071,645
(expires 01/24/27)
7,510,710
(expires 01/07/25) |
01/07/2025 |
Use |
Methods for treating cancer using combination therapy |
United States |
8394377 |
02/19/2009 |
0 |
0 |
02/19/2029 |
Use or Method of Treatment |
Compositions and Methods for Promoting Fatty Acid Production in Plants |
United States |
8450090 |
10/06/2009 |
178 |
0 |
12/05/2029 |
Process
|
|
(1) |
A European Patent refers to patents granted under
the European Patent Convention. The European Patent Convention allows for unified filing of a patent application with the
European Patent Office. The applicant may designate any of the countries, who are a party to the convention, in which the
applicant seeks protection. There are 38 countries that are parties to the European Patent Convention. Each of the
designated countries must confirm the patent. Once granted, a European patent comes into existence as a group of national
patents in each of the designated countries. We were awarded protection only in the U.K. for European Patent No.
2377528. |
|
(2) |
The United States Patent and Trademark Office can extend the term of a patent in order to accommodate delays caused by the U.S. patent office during the application process. This extension is called a patent term adjustment. |
|
(3) |
An application that includes a terminal disclaimer may have a reduced patent term. |
In exchange for an exclusive license to
these patents, we are required to pay a one-time license fee of $150,000 and the following royalties to the University of Colorado
as specified below:
Minimum Annual Royalty
|
· |
$25,000/year until commercial sales |
|
· |
$75,000/year after commercial sales |
Earned Royalty
|
· |
3% of net sales in developed countries |
|
· |
0.5% of net sales in undeveloped countries |
Milestone Events
|
· |
$35,000 upon acceptance of each Investigational New Drug Application, or INDA, with the FDA or with the European Agency for the Evaluation of Medicinal Products, or EMEA |
|
· |
$100,000 w/in 90 days of each first indication at the initiation of Phase I |
|
· |
$200,000 w/in 90 days of each first indication at the initiation of Phase II |
|
· |
$300,000 w/in 90 days of each first indication at the initiation of Phase III |
|
· |
$500,000 w/in 90 days of FDA approval of a first indication |
|
· |
½ of all aforementioned milestones for each second/subsequent indications |
If we are required to enter into a license
agreement with a third party in order to make, use or sell a product that is covered under this agreement requiring us to pay a
royalty to the third party, then our royalty fee to the University of Colorado shall be reduced by 50% of the royalty paid to the
third party, unless such amount would be less than half of what would otherwise be owed to the University of Colorado.
Under the agreement, we may sublicense
the technology to third parties. However, if we do, we must pay additional sublicense royalties based on when we enter into the
sublicense, as specified below:
|
· |
In the first 12 months, 50% of sublicense income |
|
· |
If within the 2nd or 3rd years after the effective date, 35% of sublicense income |
|
· |
If after the 3rd year, 20% of sublicense income |
This agreement expires upon the date that
the last patent covered by it expires.
Scott & White Healthcare License
On July 18, 2013, we entered into a worldwide
exclusive license agreement with Scott & White Healthcare granting us rights to patents, patent applications, and technologies
developed by Dr. Newell Rogers and owned by Texas A&M University and Scott & White Healthcare. The license gives us rights
to 9 pending U.S. and foreign patent applications, as specified below:
Patent Title |
Country |
App. No. |
File Date |
Expiration Date (3) |
Type of Patent Protection |
Methods and products for treating preeclampsia and modulating blood pressure |
Patent Cooperation Treaty (1) |
PCT/US2012/067364 |
11/30/2012 |
11/30/2032
(expiration date for U.S. application claiming priority to PCT) |
Use |
Methods
and Products for Treating Preeclampsia and Modulating Blood Pressure |
Canada |
2862491 |
11/30/2012 |
11/30/2032 |
Use |
Methods and Products for Treating Preeclampsia and Modulating Blood Pressure |
United States |
14/362157 |
06/02/2014 |
11/30/2032
|
Use |
Plant viral vaccines and therapeutics |
United States |
14/346214 |
09/21/2012 |
09/21/2032 |
Use and Composition |
Cancer Biomarkers and Therapeutics |
Patent Cooperation Treaty (1) |
PCT/US2013/052137 |
07/25/2013 |
07/25/2033 |
Use |
Mhc engagement and clip modulation for the treatment of disease |
European Patent (2) |
2012768150 |
04/04/2012 |
04/04/2032 |
Use and composition |
Mhc engagement and clip modulation for the treatment of disease |
United States |
14/009944 |
04/04/2012 |
04/04/2032 |
Use and composition |
Clip modulation for the treatment of mucosal diseases |
United States |
13/977944 |
05/01/2012 |
05/01/2032 |
Use |
Methods and Products for Generating Oils |
United States |
14/357679 |
05/12/2014 |
11/09/2032 |
Process |
Treating Neurological Disorders |
United States |
62/033088 |
08/04/2014 |
08/04/2015 |
Use |
Treating Neurological Disorders |
Patent Cooperation Treaty |
PCT/US2014/054845 |
09/09/2014 |
09/16/2034 |
Use |
|
(1) |
The Patent Cooperation Treaty provides for unified filing of patent applications in order to protect inventions in each of the treaty’s contracting countries. Once a patent has been reviewed by a regional office, the standard application is then granted or rejected according to each country’s law. There are 148 countries that are parties to the treaty. |
|
|
|
|
(2) |
A European Patent refers to patents granted under the European Patent Convention. The European Patent Convention allows for unified filing of a patent application with the European Patent Office. The applicant may designate any of the countries, who are a party to the convention, in which the applicant seeks protection. There are 38 countries that are parties to the European Patent Convention. Each of the designated countries must confirm the patent. Once granted, a European patent comes into existence as a group of national patents in each of the designated countries. |
|
|
|
|
(3) |
The expiration dates of pending U.S. patent applications do not take into consideration any potential patent term adjustment that may be applied by the U.S. Patent Office upon issuance of the patent or any terminal disclaimers that may be filed in the future. |
In exchange for an exclusive license to
these patents, we are required to pay a one-time license fee of $50,000 and the following annual, earned, and milestone royalties
to the Scott & White Healthcare as specified below:
Minimum Annual Royalty
|
· |
$20,000 in 2014 |
|
· |
$40,000 in 2015 |
|
· |
$70,000 in 2016 |
|
· |
$100,000 in 2017 |
|
· |
$150,000 in 2018 |
|
· |
$200,000 each year after 2018 |
Earned Royalty
|
· |
3% of net sales in developed countries |
|
· |
0.5% net sales in undeveloped countries |
Milestone Events
|
· |
$100,000 upon completion of each Phase I product |
|
· |
$500,000 upon completion of each Phase III clinical trial or any trial followed by Phase II |
|
· |
$2,000,000 upon market approval |
If we are required to enter into a license
agreement with a third party in order to make, use or sell a product that is covered under this agreement requiring us to pay a
royalty to the third party, then our royalty fee to Scott & White Healthcare shall be reduced as follows:
|
· |
In the first year 35% owed to third-party then 15% to Scott & White Healthcare |
|
· |
In the second and third year 20% owed to third-party then 20% to Scott & White Healthcare |
After the third year 20% to third-party
and 15 % to Scott & White Healthcare
Under the agreement, we may sublicense
the technology to third parties. However, if we do, we must pay additional sublicense royalties based on when we enter into the
sublicense, as specified below:
|
· |
In the first 12 months, 50% of sublicense income |
|
· |
If within the 2nd or 3rd years after the effective date, 35% of sublicense income |
|
· |
If after the 3rd year, 20% of sublicense income |
This agreement expires upon the date that
the last patent covered by it expires.
Other Royalty Agreements
Under two consulting agreements effective January 1, 2011 and
terminating December 31, 2015 with Dr. M. Karen Newell Rogers and Dr. Evan Newell, we are obligated to pay certain royalties upon
the commercialization of products developed from their work.
These royalties are the same for both Dr. M. Karen Newell Rogers
and Dr. Evan Newell. Each individual is entitled to three fourths of one percent, or 0.75%, of net sales from sales in developed
countries, and one half of one percent, or 0.50%, from sales in undeveloped countries.
Under the exclusive license agreements,
in general, we are obligated to fund the costs of any patents, even if such work would be outside a field of use for which we currently
have exclusive rights. We are continually evaluating whether additional applications may be appropriate to protect extensions and
variations of our product candidates, and expect to file additional and new applications related thereto. Under international agreements,
in recent years, global protection of intellectual property rights is improving. The General Agreement on Tariffs and Trade requires
participant countries to amend their intellectual property laws to provide patent protection for pharmaceutical products by the
end of a ten-year transition period. A number of countries are following suit. Patent protection in other countries where we have
obtained patents and filed patent applications, including the European Patent Office, the Eurasian Patent Organization, New Zealand,
Australia, and Israel, extend for varying periods according to the date of patent filing or grant and the legal term of patents
in the various countries where patent protection is obtained. The actual protection afforded by a patent, which can vary from country
to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in the country.
The expiration of a product patent or loss
of patent protection resulting from a legal challenge would be expected to result in significant competition from generic products
against the covered product and, particularly in the U.S., could result in a significant reduction in sales of the pioneering product.
If we were to lose patent protection, we may be able to continue to obtain commercial benefits from product trade secrets, patents
on use of our product, and patents on processes and intermediates for the economical manufacture of the active ingredients. The
effect of product patent expiration or loss also depends upon the nature of the market and the position of the product in it, the
growth of the market, the complexities and economics of manufacture of the product, and the requirements of generic drug laws.
With respect to proprietary know-how and
products and processes for which patents are of questionable value or are difficult or impossible to obtain or enforce, we rely
on confidentiality agreements and other trade secret protection measures to protect our interests. We take measures to protect
our proprietary know-how, technologies, and confidential data, including requiring all employees, consultants and customers to
enter into confidentiality agreements. In arrangements with our customers or suppliers that require the sharing of processes and
data, our policy is to make available only such data as is relevant to our agreements with such customers and suppliers, subject
to appropriate contractual restrictions, including requirements for them to maintain confidentiality and use such processes and
data solely for our benefit. However, such measures may not adequately protect our data.
Manufacturing and Supply
TPT compounds used for preclinical studies
in our drug research programs are produced by external production facilities. Acquisition of drugs used in concert with our MDT
compounds can present challenges given that the manufacturer or drug developer generally must agree to the use of the compounds
in a research setting. This can involve more detailed communication and negotiation with the manufacturer rather than simply purchasing
product. The production of larger batches of products for commercial sale after FDA approval would require construction of our
own facility or a long-term contracting relationship with a manufacturer with sufficient capacity. We have sourced a manufacturer
for TPT compounds that we believe will be able to meet long-term production demands throughout the development period and beyond.
At present, we obtain MDT compounds from
the University of Texas Health Science Center at San Antonio. We recently sourced a manufacturer for our TPT compounds, including
VG1177, and are now capable of procuring Good Manufacturing Practices grade compound, which is required for human clinical trials.
The manufacturer is Ambiopharm Inc. Ambiopharm synthesizes the peptide on a contract basis for specific amounts. We do not currently
have a contract or an exclusivity agreement with Ambiopharm. We do not expect any significant issues in connection with manufacturing
for the foreseeable future.
Sales and Marketing/Commercialization
Our lead drug candidate, VG1177, is intended
to address a variety of market segments, some of which are large healthcare markets. We do not currently have a commercialization
organization capable of marketing, selling, or distributing VG1177. We have commenced discussions and may establish partnerships
with pharmaceutical, biotechnology and other organizations that have the existing organization experience and resources to bring
our initial, and potentially future, product candidates to market. In some cases, we may collaborate with third parties during
the development stage of a product candidate to further benefit from their financial support as well as clinical development, regulatory,
market research, pre-marketing and other expertise. For commercialization outside of the United States, we may enter into joint
ventures, license arrangements or distribution agreements, as appropriate, depending on the particular requirements of the market
and the potential partner’s core competencies to assist us with such requirements. Pending FDA approval of our products,
we may establish or contract with a specialty sales force with expertise in marketing and selling to various healthcare markets.
We may also establish or contract for other complementary capabilities related to marketing and selling our potential pharmaceutical
products.
Competition
Competition is intense in the pharmaceutical
business and includes many large and small competitors. Technological innovations affecting efficacy, safety, patient ease-of-use,
and cost-effectiveness by other pharmaceutical companies with greater financial and research resources working on competitive products
could result in products that offer the same or similar benefits as our product candidates. We intend to compete with existing
products on the basis of product quality and efficacy, product safety, economic benefit, and/or promotion, however our MDT oncology
therapies are designed to function as an adjunct or add-on to current treatments and so our therapies do not directly compete with
those current treatments.
However, our MDT oncological combination
therapies may compete directly with other adjunct therapies. As there are over 200 million possible combinations of approved and
development-stage oncological drugs, not including the hundreds of MDT oncological agents patented (Nature Biotechnology, Vol.
30 No 7 July 2012), it is more relevant to discuss the competition that may be faced by the sorafenib/hydroxychloroquine, or HCQ,
treatment in an FDA phase I study.
Currently, there are over 350 clinical
trials, initiated, ongoing, and completed, involving a sorafenib combination treatment. Not all of these trials are sponsored by
industry groups, and not all of these trials will advance further in clinical development. Furthermore, this number does not include
other multikinase or angiogenesis inhibitors, and it is possible that our sorafenib/HCQ treatment may face other successful sorafenib
or sorafenib-like combination therapies.
The key detail needed to evaluate competition
will be the oncological indication chosen for the sorafenib/HCQ therapy, as cancer treatments must be approved for discrete types
of cancer.
Government Regulation
Our current and contemplated activities,
and the products and processes that will result from such activities, are subject to substantial government regulation.
United States—FDA Drug Approval
Process
Pre-Clinical Testing: Before
beginning testing of any compounds with potential therapeutic value in human subjects in the United States, stringent government
requirements for pre-clinical data must be satisfied. Pre-clinical testing includes both in vitro, or in an artificial
environment outside of a living organism, and in vivo, or within a living organism, laboratory evaluation and characterization
of the safety and efficacy of a drug and its formulation. We perform pre-clinical testing on all of our drug candidates before
initiating human trials.
Investigational New Drug, IND, Applications: Pre-clinical
testing results obtained from in vivo studies in several animal species, as well as from in vitro studies,
are submitted to the FDA, or an international equivalent, as part of an IND or equivalent, and are reviewed by the FDA prior to
the commencement of human clinical trials. The pre-clinical data must provide an adequate basis for evaluating both the safety
and the scientific rationale for the initial clinical studies in human volunteers.
Clinical Trials: Clinical trials
involve the administration of the drug to healthy human volunteers or to patients under the supervision of a qualified investigator
pursuant to an FDA-reviewed protocol. Human clinical trials typically are conducted in three sequential phases, although the phases
may overlap with one another. Clinical trials must be conducted under protocols that detail the objectives of the study, the parameters
to be used to monitor safety, and the efficacy criteria, if any, to be evaluated. Each protocol must be submitted to the FDA as
part of the IND.
|
· |
Phase 1 clinical trials—test for safety, dose tolerance, absorption, bio-distribution, metabolism, excretion and clinical pharmacology and, if possible, to gain early evidence regarding efficacy. |
|
· |
Phase 2 clinical trials—involve a small sample of the actual intended patient population and seek to assess the efficacy of the drug for specific targeted indications, to determine dose-response and the optimal dose range and to gather additional information relating to safety and potential adverse effects. |
|
· |
Phase 3 clinical trials—consist of expanded, large-scale studies of patients with the target disease or disorder to obtain definitive statistical evidence of the efficacy and safety of the proposed product and dosing regimen. |
|
· |
Phase 4 clinical trials—conducted after a product has been approved. These trials can be conducted for a number of purposes, including to collect long-term safety information or to collect additional data about a specific population. As part of a product approval, the FDA may require that certain Phase 4 studies, which are called post-marketing commitment studies, be conducted post-approval. |
Good Clinical Practices: All of
the phases of clinical studies must be conducted in conformance with the FDA's bioresearch monitoring regulations and Good Clinical
Practices, which are ethical and scientific quality standards for conducting, recording, and reporting clinical trials to assure
that the data and reported results are credible and accurate, and that the rights, safety, and well-being of trial participants
are protected.
Our Employees
As of October 15 2014, we have a total
of six employees, three of which are full-time. We are not a party to any collective bargaining agreements. We believe our relations
with our employees are good.
Key Consultants
We also rely on the services of consultants.
We have ongoing arrangements with Dr. Newell Rogers, Dr. Evan Newell, Dr. Richard Tobin, and Dr. Brett Mitchell, all of whom are
engaged in biomedical research related to our product candidates. Under these consulting agreements, each consultant has agreed
to assist us with the research, analysis and development of our product candidates, including assisting us with obtaining government
approvals and securing intellectual property protections for our product candidates. In exchange, we have agreed to compensate
each consultant as specified below:
Dr. Newell Rogers
|
· |
$10,000 monthly consultation fee automatically added to a convertible note if not paid which shall mature on December 31, 2015; |
|
· |
Bonus 16,667 (adjusted for 2012 reverse split) options at an exercise price that is equal to the VWAP, or volume weighted average price, for twenty trading days following the execution of the consulting agreement that terminate on December 31, 2018; |
|
· |
Not less than 4,167 (adjusted for 2012 reverse split) options annually at an exercise price that is equal to the VWAP for twenty days following the first of each year that terminate on December 31, 2018; |
|
· |
0.75% net sales in developed countries; and 0.125% net sales from undeveloped countries, and |
|
· |
Reimbursement of all reasonable expenses incurred in providing services with prior approval of expenses that exceed $750. |
Dr. Brett Mitchell
|
· |
$7,500 every three months consultation fee payable in common shares at a price equal to the VWAP for twenty trading days ending on the date the payment period ends, and |
|
· |
Reimbursement of all reasonable expenses incurred in providing services with prior approval of expenses that exceed $100. |
Dr. Evan Newell
|
· |
$2,000 monthly consultation fee automatically added to a convertible note if not paid which shall mature on December 31, 2015; |
|
· |
Bonus 16,667 (adjusted for 2012 reverse split) options at an exercise price that is equal to the VWAP for twenty trading days following the execution of the consulting agreement that terminate on December 31, 2018; |
|
· |
Not less than 1,667 (adjusted for 2012 reverse split) options annually at an exercise price that is equal to the VWAP for twenty days following the first of each year that terminate on December 31, 2018; |
|
· |
0.75% net sales in developed countries; and 0.125% net sales from undeveloped countries, and |
|
· |
Reimbursement of all reasonable expenses incurred in providing services with prior approval of expenses that exceed $500. |
Dr. Richard Tobin
|
· |
$3,500 monthly consultation fee that consists of $2,000 in cash and $1,500 in shares of our common stock. |
We believe our relations with our consultants
are good.
Available Information
Our website is located at www.vglifesciences.com.We
make available on our website, free of charge, copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports, as applicable and as soon as reasonably practicable after we
electronically file or furnish such materials to the Securities and Exchange Commission. Our website and the information contained
therein or connected thereto are not intended to be incorporated into this registration statement.
You may also read and copy any materials
we file with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. Information
on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet
site that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov.
DESCRIPTION
OF PROPERTY
Pursuant to the Strategic Collaboration
Agreement, MedBridge Development Company, LLC, or MDC, has agreed to and is currently providing us with approximately 3,000 square
feet of office space in Santa Barbara, California, which serves as our principal executive offices. Under this agreement the value
of this service as well as other services is convertible into shares of common stock. We do not have any lease agreements in place.
We believe that our properties will be adequate to meet our needs through the foreseeable future.
LEGAL
PROCEEDINGS
We may be involved from time to time in
ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. We
are not aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could
have a material impact on our operations or finances.
MARKET
PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock, OTC: VGLS,
is quoted on the OTCQB marketplace. The following table sets forth the high and low bid prices for our common stock for
each quarter during the last two and the current fiscal years as quoted on the OTCQB marketplace. Such OTC market quotations
reflect inter-dealer prices, without retail markup, markdown or commissions and may not necessarily represent actual
transactions. All prices have been adjusted to reflect a 1 for 600 reverse stock split, effective November 26, 2012.
|
High |
Low |
For the Fiscal Year Ended December 31, 2012 |
|
|
First Quarter Ended 3/31/12 |
$14.97 |
$6.58 |
Second Quarter Ended 6/30/12 |
$11.85 |
$5.32 |
Third Quarter Ended 9/30/12 |
$5.26 |
$0.95 |
Fourth Quarter Ended 12/31/12 |
$1.01 |
$0.20 |
For the Fiscal Year Ended December 31, 2013 |
|
|
First Quarter Ended 3/31/13 |
$0.58 |
$0.12 |
Second Quarter Ended 6/30/13 |
$0.19 |
$0.05 |
Third Quarter Ended 9/30/13 |
$0.50 |
$0.06 |
Fourth Quarter Ended 12/31/13 |
$0.58 |
$0.20 |
For the Fiscal Year Ended December 31, 2014 |
|
|
First Quarter Ended 3/31/14 |
$0.27 |
$0.17 |
Second Quarter Ended 6/30/14 |
$0.25 |
$0.13 |
Third Quarter Ended 9/30/14 |
$0.18 |
$0.07 |
Fourth Quarter Ended 12/31/14 (through 11/12/14) |
$0.12 |
$0.07 |
Holders
As of October 15, 2014, we had approximately
1,016 holders of record of our common stock. Holders of record include nominees who may hold shares on behalf of multiple owners.
Dividends
We have never declared or paid any cash
dividends on our capital stock, and we do not currently intend to pay any cash dividends on our common stock in the foreseeable
future. At present, we intend to retain our earnings, if any, to finance research and development and expansion of our business.
DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE
Identification of Directors and Executive
Officers
Set forth below is certain information
with respect to the individuals who are our directors and executive officers as of October 15, 2014.
Name |
Age |
Position(s) or Office(s) Held |
John Tynan |
59 |
President and Chief Executive Officer; Director |
David Odell |
47 |
Chief Financial Officer; Director |
Haig Keledjian |
53 |
Chairman of the Board of Directors; Vice President of Research and Development; Secretary |
Brennan de Raad |
27 |
Chief Operating Officer |
Arthur Keledjian |
48 |
Director |
Biographies and Qualifications of Our
Executive Officer and Directors.
The biographies of our executive officers
and directors and certain information regarding each individual’s experience, attributes, skills and/or qualifications that
led to the conclusion that the individual should be serving as an executive officer and/or director of our Company are as follows:
Executive Officers
John Tynan
John Tynan has served as our President
and Chief Executive Officer since July 2013 and as a director of our Company since March 2013. Mr. Tynan serves our Company with
a focus on our achievement of key milestones, which includes completing VG1177 animal studies, identifying partnerships for cancer
and agricultural applications of Metabolic Disruption Technology, or MDT, and achieving timely financial filings. He is a valuable
member of our Board of Directors due to his extensive business and development experience. In the past five years, Mr. Tynan has
been responsible for the management of over $1 billion in hospitality development and renovation projects, overseeing complex,
multi-year projects to completion for major hotel brands.
Prior to joining our Company, Mr. Tynan
founded TynanGroup, Inc. in Santa Barbara, California in 1993 and currently serves as its President. Twenty years of experience
in the industry and over $4 billion of development experience has made Mr. Tynan one of the most respected executives in the country.
His wealth of exposure involving commercial, industrial, and residential development and his projects have benefited some of the
biggest corporations in America. As President of TynanGroup, Inc., Mr. Tynan has also developed a full-service consulting firm
with offices strategically located across the country.
Prior to founding TynanGroup, Mr. Tynan
spent nearly a decade managing the construction of several luxury resort and hotel projects for Hyatt Development Corporation.
As its Vice President of Planning and Construction, Mr. Tynan successfully oversaw the entitlements, design management and construction
of some $1.5 billion dollars in project expenditures and a total field force of over 9,000 people.
He is a frequent speaker with industry
and trade publications, as well as conventions and Fortune 500 corporate retreats. Irish American Magazine named Mr. Tynan one
of its “Business 100.” Mr. Tynan holds a Bachelor of Science in civil engineering from the University of Illinois and
an MBA in finance from DePaul University in Chicago, Illinois.
David Odell
David Odell has served as our Chief Financial
Officer since December 2013 and as a director of our Company since March 2013. Mr. Odell has also served as a member of the Board
of Directors of our subsidiary, VG Energy, Inc. since 2012. He serves our Company with a focus on providing strategic direction,
fundraising activities, and financial oversight of our controller. Prior to joining us in an official capacity, Mr. Odell was a
long-time investor of our Company. Mr. Odell is a valuable member of our Board of Directors due to his extensive entrepreneurial
business and investment experience in the healthcare industry.
Alongside his role with us, Mr. Odell leads
finance and partnership management for MedBridge Development Company, LLC as its President and Chief Executive Officer. He is also
an Executive Vice President and Chief Financial Officer for TynanGroup, Inc., where he successfully managed TynanGroup’s
growth that led to recognition of the company by Inc. Magazine as one of the fastest growing companies in America. Mr. Odell also
serves in several non-public board and advisor roles for companies and non-profit groups throughout Santa Barbara, California.
Prior to joining TynanGroup in 1995, Mr.
Odell was employed by a private accounting firm serving a broad spectrum of planning, audit and tax clients as a licensed CPA.
Mr. Odell holds a Bachelor of Arts in economics and business from Westmont College.
Haig Keledjian
Haig Keledjian currently serves as our
Vice President of Research and Development and Secretary, a position he has held since July 2013. He also serves as Chairman of
our Board of Directors, a position he has held since 2001. Mr. Keledjian is the original founder of our Company and has served
in various positions with our Company since founding our Company in 2001, including previously serving as our Chief Executive Officer.
He previously oversaw the licensing of our global intellectual property portfolio and guided our research and development program
for over 10 years, and now focuses his efforts on expanding our intellectual property portfolio, as well as coordination of ongoing
research, collaborator relationships, and fundraising activities.
Mr. Keledjian is a California attorney.
Prior to founding our Company, he practiced tax and estate law in California. Mr. Keledjian is a valuable member of our Board of
Directors due to his intimate knowledge of our Company as he was our original founder and his extensive strategic and management
experience in our industry.
Mr. Keledjian holds a Bachelor of Science
in Business and Accounting from California State University Los Angeles, followed by a Master’s Degree in Taxation, or MBT,
from Golden State University in 1985. In 1989, Mr. Keledjian completed his undergraduate law studies by obtaining a B.S. in law
from Glendale University and in 1991 obtained his Juris Doctorate from Glendale University. He was admitted to the California State
Bar in 1993.
Brennan de Raad
Brennan de Raad has served as our Chief
Operating Officer since July 2013 and manages our Company’s progress toward major milestones, including financial accountability,
completion of animal safety studies, and other items as directed by Mr. Tynan.
Prior to joining us, from 2009 to 2013,
Mr. de Raad directed start-ups and turnarounds for clients and affiliates of MedBridge Development Company, LLC in multiple industries
including healthcare, nutraceuticals, real estate and software. He also previously served as a manager of MedBridge’s private
equity and real estate investments. Mr. de Raad continues to remain affiliated with MedBridge and supports the real estate and
equipment financing needs of MedBridge and many of its affiliates and subsidiaries as its Senior Director of Corporate Development.
Mr. de Raad graduated Cum Laude from Westmont
College with a Bachelor of Arts in economics and business.
Non-Employee Directors
Arthur Keledjian
Arthur Keledjian, brother of Haig Keledjian,
has served as a member of our Board of Directors since 2001. Mr. Keledjian has been involved with us since our inception and is
a valuable addition to our Board of Directors due to his longevity with us and extensive strategic advising experience. Mr. Keledjian
is responsible for procuring and managing over $10 million in annual sales with SCI – Hispana in his business development
role. He is based in Los Angeles, CA.
Mr. Keledjian graduated from California
State University, Los Angeles with a Bachelor of Science in Business Administration & Marketing.
Other Involvement in Certain Legal Proceedings
None of our directors or executive officers
has been involved in any bankruptcy or criminal proceedings, nor have there been any judgments or injunctions brought against any
of our directors or executive officers during the last ten years that we consider material to the evaluation of the ability and
integrity of any director or executive officer.
EXECUTIVE
COMPENSATION
Summary Compensation
The following table sets forth all compensation
for our fiscal years ended December 31, 2013 and 2012 awarded to, earned by, or paid to our Principal Executive Officer and our
two most highly compensated executive officers, all of which are referred to herein as the “Named Executive Officers.”
Summary Compensation Table for Fiscal
Years Ended December 31, 2013 and 2012
Name and Principal Position |
Year Ended December 31 |
Salary ($) |
Bonus ($) |
Option awards ($) (1) |
Total ($) |
John Tynan
Chief Executive Officer |
2013 |
0
(2) |
0 |
303,470 (2), (3) |
303,470 |
David Odell
Chief Financial Officer |
2013 |
0
(4) |
0 |
303,470 (4), (5) |
303,470 |
Haig Keledjian Chairman of the Board of Directors; Vice President of Research and Development; Secretary |
2013 |
292,500
(6), (9) |
0 |
304,770
(7), (8) |
597,470 |
2012 |
292,500
(6), (9) |
0 |
51,000 (8) |
343,500 |
|
(1) |
Represents the aggregate grant date fair value of stock option awards granted in the covered fiscal year as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. The fair value of each stock option award is estimated for the covered fiscal year on the date of grant using the Black-Scholes option valuation model. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 10 to our audited consolidated financial statements for the year ended December 31, 2013. The amounts in this column do not represent the actual amounts paid to or realized by our Named Executive Officers during the fiscal years ended December 31, 2013 and 2012. |
|
(2) |
John Tynan was appointed our Chief Executive Officer in July 2013. He does not receive cash compensation for his services as an executive officer and director of our Company. Mr. Tynan receives equity-based compensation for his services. He is a managing member of MedBridge Venture Fund, LLC, or MedBridge Venture Fund, through Wild Harp Holdings, LLC, an entity which he controls. Mr. Tynan has directed that equity-based compensation for his management services pursuant to the MVF agreement should be issued in the name of his designee, MedBridge Venture Fund. |
|
(3) |
Mr. Tynan was granted an aggregate of 1,400,000 options to purchase common stock. 1,000,000 of these options were awarded for his services as an executive officer of our Company, and the remaining 400,000 options were awarded for his services as a director of our Company on the date of the grant, and expire ten years from the date of grant. |
|
(4) |
David Odell was appointed our Chief Financial Officer in December 2013. He does not receive cash compensation for his services as an executive officer and director of our Company. Mr. Odell receives equity-based compensation for his services. He is a managing member of MedBridge Venture Fund through DW Odell Company, LLC, an entity which he controls. |
|
(5) |
Mr. Odell was granted an aggregate of 1,400,000 options to purchase common stock. 1,00,000 of these options were awarded for his services as an executive officer of our Company, and the remaining 400,000 options were awarded for his services as a director of our Company. The options vest on the date of the grant, and expire ten years from the date of grant. |
|
(6) |
Haig Keledjian is our Vice President of Research
and Development. He served as our Chief Executive Officer from 2001 until July 2013. Pursuant to the terms of an employment
agreement we entered into with Mr. Keledjian effective January 1, 2011 and executed on March 11, 2011, Mr. Keledjian has
elected not to receive cash compensation for his services as an executive officer and director of our Company. In lieu of
cash compensation, we have agreed to accrue the full value of Mr. Keledjian’s salary each year under a convertible
note secured by all of the assets of our Company we issued to Best Investment, Inc., now Best Investment Trust, controlled
and owned by Mr. Keledjian, on March 5, 2008 and restated and amended on October 1, 2013. The
amended and restated note is unsecured. The note is non-interest bearing and is due on October
31, 2018. On December 4, 2013, Best Investment, Inc. converted $479,090.75 and received
2,000,000 shares at a price of $0.24 (rounded) and 2,000,000 five-year warrants at an
exercise price of $0.36 per share. In the nine month period ended September 30, 2014 an
aggregate of $513,376 in principal was converted into 2,441,792 common shares and warrants
to purchase an equal number of shares at 1.5 times the conversion prices. If not converted
earlier, unpaid principal of $63,952 at September 30, 2014, plus accrued interest, due at
maturity shall automatically be exchanged for Units based upon the exchange price upon
maturity. |
|
(7) |
Mr. Keledjian was granted an aggregate of 1,400,000 options to purchase common stock on December 31, 2013 at an exercise price of $0.2249. The options vest on the date of the grant, and expire ten years from the date of grant. 1,000,000 of these options were awarded for his services as an executive officer of our Company, and the remaining 400,000 options were awarded for his services as a director of our Company. |
|
(8) |
The employment agreement we entered into with Mr.
Keledjian on January 1, 2011 also provided for the award of 12 million pre-reverse split options in the initial year and
5,000 (3,000,000 pre reverse split) stock option grants annually to Mr. Keledjian. The
exercise price for the options is based upon the volume weighted average price, or VWAP, twenty
days after the grant date. All option awards are fully vested on grant, expire in December 2018, and
allow for cashless exercise. The conversion price for the options Mr. Keledjian received in 2012
was $0.0171 per share and accordingly the value of the award is $51,000. The conversion price for the
5,000 options Mr. Keledjian received in 2013 was $230.28 (pre-reverse split price of $0.3838) per
share and accordingly the value of the award is $1,151,400. The conversion price for the 5,000 options
Mr. Keledjian received in 2014 was $143.25 (pre-reverse split price of $0.2387) per share and
accordingly the value of the award is $716,230. |
|
(9) |
Effective January 1, 2011, our majority-owned subsidiary, VG Energy, Inc. entered into an employment agreement with Mr. Keledjian. The agreement provides for a base annual salary of $97,500, as well as for the award of certain stock option grants annually to Mr. Keledjian. In lieu of cash compensation, VG Energy agreed to accrue the full value of Mr. Keledjian’s salary each year under a secured line of credit note issued to Mr. Keledjian on March 8, 2005 through VG Life Sciences Inc. This secured revolving line of credit note refinanced on October 1, 2013 through the Unsecured Best Investment Trust note. The secured revolving line of credit note had a balance of $0 as of October 1, 2013. As of October 1, 2013, Mr. Keledjian’s VG Energy salary accrues quarterly in Employee Notes Payable. |
Narrative to Summary Compensation Table
Our Named Executive Officers are compensated
pursuant to contractual agreements. As specified in the notes to the summary compensation table above, our Named Executive Officers
currently receive equity for their services. Mr. Tynan has designated that equity earned by him for management services should
be issued in the name of MedBridge Venture Fund. The full value of Mr. Keledjian’s salary each year is accrued under an unsecured
convertible note we issued to Best Investment, Inc., an entity controlled and owned by Mr. Keledjian. Mr. Keledjian’s salary
now accrues quarterly in Employee Notes Payable.
Employment Arrangements with John Tynan
and David Odell
On March 18, 2013, we entered into a Memorandum
of Understanding with MedBridge Development Company, LLC, or MDC, for a two-year strategic collaboration. Under this arrangement,
MDC has agreed to provide us with financial support, administrative support and other services to enable us to continue our research
and development activities and provide for our operating expenses. John Tynan and David Odell are the managing members of MedBridge
Development Company, LLC. Under the terms of the agreement, Messrs. Tynan and Odell were appointed to our Board of Directors, sharing
one vote between the two directors, and also agreed to provide certain services to us. In lieu of cash compensation for the services
of Mr. Tynan or Mr. Odell, Messrs. Tynan and Odell have directed us to award the respective value of their services in equity-based
compensation to their designee, MedBridge Venture Fund, LLC.
VG Life Sciences Inc. Employment Agreement
with Haig Keledjian
Effective January 1, 2011, we entered into
a five–year employment agreement with Haig Keledjian. At the time, Mr. Keledjian was our Chief Executive Officer. As of July
2013, he serves as our Vice President of Research and Development. The terms of the employment provides for an annual base salary
of $195,000 for Mr. Keledjian. In lieu of cash compensation, we accrued the full value of Mr. Keledjian’s salary each year,
through October 1, 2013, under an unsecured convertible note we issued to Mr. Keledjian on March 5, 2008. The note is non-interest
bearing and was amended October 1, 2013. It is due on October 31, 2018. As of October 1, 2013, Mr. Keledjian’s salary accrues
quarterly in Employee Notes Payable. As of December 31, 2013, we owe Mr. Keledjian approximately $577,328 per the non-interest
bearing note for unpaid salary and other expenses, and $48,750 in accrued but unpaid salary for October 1 – December 31,
2013.
The employment agreement also
provides for the award of 5,000 stock option grants annually to Mr. Keledjian. The exercise price for the options is based
upon the volume weighted average price, or VWAP, 20 days after the grant date. All option awards are fully vested on grant,
expire in December 2018, and allow for cashless exercise.
The employment agreement provides Mr. Keledjian
with certain one-year severance benefits in the event we terminate him without cause, as such term is defined in the employment
agreement. Mr. Keledjian shall be compensated by us through a single sum payment due within 30 days after such termination in an
amount equal to the annual Salary in effect as of the date of termination and payable in cash or, at Mr. Keledjian election, in
stock, and the minimum number of all options that would be due to Employee during the Initial Term had the Agreement not been terminated
or, in the case of a subsequent one-year extension, the Annual Option due for that year, provided that the exercise price of all
such options shall be determined using the VWAP as of the effective date of termination. In the event Mr. Keledjian is terminated
by us in the event of “good reason,” as such term is defined in the employment agreement, or for any other reason,
no severance benefits are owed to Mr. Keledjian.
VG Energy Employment Agreement
with Haig Keledjian
Also effective January 1, 2011, our majority-owned
subsidiary, VG Energy, Inc. entered into an employment agreement with Mr. Keledjian. The agreement provides for a base annual salary
of $97,500, as well as for the award of certain stock option grants annually to Mr. Keledjian. In lieu of cash compensation, VG
Energy agreed to accrue the full value of Mr. Keledjian’s salary each year under a secured line of credit note issued to
Mr. Keledjian on March 8, 2005 through VG Life Sciences Inc. This secured revolving line of credit note refinanced on October 1,
2013 through the Unsecured Best Investment Trust note. The secured revolving line of credit note had a balance of $0 as of October
1, 2013. As of October 1, 2013, Mr. Keledjian’s VG Energy salary accrues quarterly in Employee Notes Payable.
Under Mr. Keledjian’s unsecured Best
Investment Trust note, he may exchange the principal amount outstanding under the note for our common stock at a conversion price
equal to the volume weighted average price or VWAP, or if not available, then the fair market value, calculated on the date of
conversion. Accrued but unpaid salary is recorded on our balance sheet as accrued expenses. As of December 31, 2013, VG Energy owes
Mr. Keledjian approximately $24,375.
Outstanding Equity Awards at Fiscal
Year-End
The following table shows grants of options
outstanding on December 31, 2013, the last day of our fiscal year, to each of the Named Executive Officers named in the Summary
Compensation Table.
Name |
Number of Securities Underlying Unexercised Options (1) |
Option Exercise Price |
Option Expiration Date |
John Tynan (2) |
1,400,000 |
$0.2249 |
12/31/2023 |
David Odell (2) |
1,400,000 |
$0.2249 |
12/31/2023 |
Haig Keledjian (2) |
1,400,000 |
$0.2249 |
12/31/2023 |
Haig Keledjian (2013 Grant per Contract) |
5,000 |
$0.3838 |
12/31/2018 |
|
(1) |
Options with an expiration date of December 31, 2023 vest on the date of the grant. |
|
(2) |
Granted pursuant to the 2013 equity incentive plan approved by our Board of Directors and subsequently approved by our stockholders on December 30, 2013. |
Director Compensation
The following table sets forth the compensation
earned or paid to our non-employee director for services to us during the fiscal year ended December 31, 2013. The compensation
of directors who are employees of our Company is reflected in the Summary Compensation Table above.
Director Compensation Table for Fiscal
Year Ended December 31, 2013
Name of Director |
Fees earned or paid in cash ($) |
Option awards ($) (1) |
Total ($) |
Arthur Keledjian |
0 |
86,706 |
86,706 |
|
(1) |
Represents the aggregate grant date fair value of stock option awards granted in the covered fiscal year as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. The fair value of each stock option award is estimated for the covered fiscal year on the date of grant using the Black-Scholes option valuation model. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 10 to our audited consolidated financial statements for the year ended December 31, 2013. The amounts in this column do not represent the actual amounts paid to or realized by our director during the fiscal year ended December 31, 2013. |
Narrative to Director Compensation Table
We do not have a formal director compensation
plan. In 2013, we granted each of our employee and non-employee directors an option to purchase 400,000 shares of our common stock.
These options vest in equal monthly increments over the period of one year and the exercise price is $0.2249, the closing price
of our common stock on December 31, 2013. The expiration date of the options is ten years from the date of grant and the options
have a cashless exercise feature. We intend to issue similar grants in 2014 on a quarterly basis. We issued identical grants to
the directors on March 31, 2014, June 30, 2014 and September 30, 2014.
We have not historically paid cash compensation
to our directors for services and we have no intention, at this time, to provide cash compensation to directors in the future.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information
related to the beneficial ownership, as of the close of business on October 15, 2014 of our Series A Preferred Stock and common
stock by: (i) all persons we know who beneficially hold more than 5% of our securities, (ii) all of our directors, (iii) all of
our executive officers and (iv) our directors and executive officer as a group. The information on beneficial ownership in the
table and footnotes thereto is based upon data furnished to us by, or on behalf of, the persons listed in the table.
We have determined beneficial ownership
in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished
to us, that the persons and entities named in the table below have sole voting and investment power as indicated with respect to
all securities that they beneficially own, subject to applicable community property laws.
In computing the number of securities beneficially
owned by a person and the percentage ownership of that person, we deemed outstanding the shares underlying stock options, warrants
and convertible notes held by that person that are currently exercisable or exercisable within 60 days after October 15, 2014.
We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
Series A Preferred Stock
Name and address |
Amount and nature of beneficial ownership |
Percentage of class beneficially owned (1) |
Haig Keledjian
P.O. Box 1020
South Pasadena, CA 91031 |
5,573,725 (2) |
57.4% |
(1) |
On October 15, 2014, we had 9,715,443 shares of
Series A Preferred Stock issued and outstanding. Series A stockholders have not changed since we completed a 1 for 600
reverse stock split on November 26, 2012. Prior to the Reverse Stock Split, one Series A share was convertible to 10 common
shares. The Reverse Stock Split did not adjust the number of Series A preferred shares outstanding, however, the reverse did
adjust the number of common shares that one share of Series A preferred stock is convertible into. Prior to the Reverse Stock
Split, one share of Series A Preferred Stock could be converted into ten shares of common stock. The effect of the reverse
split is that one share of Series A Preferred Stock may now be converted into 0.0167 shares of common stock, such that the
9,715,443 shares of Series A Preferred Stock issued and outstanding may be converted into 161,924 shares of common
stock. |
(2) |
Mr. Keledjian is Chairman of our Board of Directors and serves as our Vice President of Research and Development. He is also our former Chief Executive Officer. Mr. Keledjian beneficially owns 5,573,725 shares of our Series A Preferred Stock. His ownership consists of (a) 349,928 shares held in the name of Mr. Keledjian; (b) an aggregate of 4,989,621 shares which have been irrevocably transferred to trusts for Mr. Keledjian’s family and children; (c) 177,154 shares held by Best Investment Trust, formerly Best Investments, LLC.; and (d) 57,022 shares held by Bretton Securities UDT 7/20/95, where Mr. Keledjian is Trustee for the trust and therefore has control but not ownership. Mr. Keledjian is the trustee of these trusts, and has sole voting and dispositive control over the shares. |
Stockholders Known by Us to Own Over
5% of Our Common Stock
Name and address |
Amount and nature of beneficial ownership |
Percentage of class beneficially owned (1) |
MedBridge Venture Fund, LLC
121 Gray Avenue, Suite 200
Santa Barbara, CA 93101 |
38,119,982
(2) |
53.9% |
MedBridge Development Company, LLC
121 Gray Avenue, Suite 200
Santa Barbara, CA 93101 |
4,918,480 (3) |
15.2% |
(1) |
On October 15, 2014, we had 32,585,608 shares of common stock issued and outstanding. |
(2) |
Pursuant to an agreement entered into with MedBridge Venture Fund, LLC, or MVF, MVF is the beneficial owner of 36,139,456 shares of common stock. On July 13, 2013, MVF agreed to provide up to $2,500,000 in cash advances and services to us. MVF may convert the cash advanced to us ($1,450,000) and the cost of services earned ($656,250 as of September 30, 2014) into shares of common stock at any time, subject to lock-up provisions. As of October 15, 2014, MVF had converted $120,000 in cash advances owed into 2,040,816 shares of common stock. |
|
|
|
MVF is co-managed by Wild Harp Holdings, LLC, which is 100% owned by our CEO and director, John Tynan, and DW Odell Company, LLC, which is 100% owned by our CFO and director, David Odell. My Tynan and Mr. Odell have voting and dispositive control over the shares held by MVF. |
(3) |
Pursuant to two agreements entered into with MedBridge Development Company, or MDC, MDC is the beneficial owner of 4,918,480 shares of common stock. |
|
|
|
On March 18, 2013, MDC agreed to provide a maximum line of credit of $550,000 consisting of cash advances. MDC also agreed to provide services to us at a fee of $20,000 per month. As of October 15, 2014, MDC has advanced $287,500 in cash advances and MDC has provided $369,032 in services. MDC may convert the cash advanced to us ($287,500) and the value of services earned ($369,032) into shares of common stock. As of October 15 2014, MDC converted $287,500 in cash advances and $369,032 services owed into 4,476,002 shares of common stock. In accordance with the agreement, the number of shares that MDC may acquire for services has been calculated based on the quarterly average share price less 10% which has ranged from $0.0965 to $0.2302 in the period through September 30, 2014. |
|
|
|
On August 27, 2014, MDC agreed to provide us $50,000. As of October 15, 2014, MDC has advanced $50,000 through this agreement. MDC may convert the cash advance to us into shares of common stock. As of October 15, 2014, MDC had converted $0 of cash advances into common stock. The number of shares MDC may acquire for cash advanced to us has been calculated based on a contractual stock price of $0.113 or 442,478 shares. |
|
|
|
MDC is owned 42.66% by the Tynan Family Trust, of which our CEO and director, John Tynan is the trustee; 42.66% by our CFO and director, David Odell; 4.87% by EDK, LLC, which is managed by Edward Koke; 7.31% by West Beach Investments, LLC, which is managed by Steven Schott; and 2.5% by Ruth Loomer, an individual. Mr. Tynan and Mr. Odell have voting and dispositive control over the shares held by MDC. |
Common Stock Owned by Officers and Directors
|
|
Amount of beneficial ownership |
|
Name and address of beneficial owner (1) |
Nature of beneficial ownership |
Shares owned |
Shares - rights to acquire (3) |
Total number |
Percentage of shares beneficially owned (2) |
John Tynan (4) |
Chief Executive Officer; Director |
4,481,910 |
22,547,731 |
27,029,641 |
49.0% |
David Odell (5) |
Chief Financial Officer; Director |
4,488,144 |
21,467,799 |
25,955,943 |
48.0% |
Haig Keledjian (6) |
Chairman of the Board of Directors; Vice President of Research and Development, Secretary |
4,978,518 |
4,062,256 |
9,040,774 |
24.7% |
Brennan de Raad (7) |
Chief Operating Officer |
167 |
770,000 |
770,167 |
2.3% |
Arthur Keledjian (8) |
Director |
0 |
700,000 |
700,000 |
2.1% |
All directors and executive officers as a group (5 persons) |
13,948,739 |
49,547,786 |
63,496,525 |
77.3% |
(1) |
Unless otherwise stated, the address of each beneficial owner listed on the table is c/o VG Life Sciences Inc., 121 Gray Avenue, Suite 200, Santa Barbara, California 93101. |
(2) |
On October 15, 2014, we had 32,585,608 shares of common stock issued and outstanding. |
(3) |
Represents shares subject to outstanding stock options and warrants currently exercisable or exercisable, or currently vested or that will vest, within 60 days of October 15, 2014. |
(4) |
Mr. John Tynan is our Chief Executive Officer and
a member of our Board of Directors. He owns 4,481,910 shares of common stock and rights to 22,547,731 shares of common
stock which may be acquired within 60 days of October 15, 2014. His ownership consists of (a) 2,038 shares held in the
name of Mr. Tynan, (b) 3,870 shares which have been irrevocably transferred to the Tynan Family Trust, Mr. Tynan is the
trustee of the Tynan Family Trust, and has sole voting and dispositive control over the shares, (c) 4,476,002 shares held
in the name of MedBridge Development Company, LLC, of which he owns 42.66% and has voting and dispositive control of the
shares, (d) 15,901,360 shares which may be acquired within 60 days of October 15, 2014, through ownership in MedBridge
Venture Fund, LLC, held in the name of MedBridge Development Company, LLC, of which he owns 42.66% and has voting and
dispositive control of the shares, (e) 1,505,102 shares which may be acquired within 60 days of October 15, 2014, through
ownership in MedBridge Venture Fund, LLC, held in the name of Wild Harp Holdings, LLC, of which he owns 100% and has
voting and dispositive control of the shares, (f) 850,340 shares which may be acquired within 60 days of October 15,
2014, through ownership in MedBridge Venture Fund, LLC, held in the name of TynanGroup, Inc., of which he owns 50.0% and
has voting and dispositive control of the shares, (g) 2,450,000 shares which may be acquired within 60 days of October
15, 2014, through option grants received through October 15, 2014, (h) 442,478 shares which may be acquired within 60
days of October 15, 2014, through ownership in MedBridge Development Company, LLC., and (i) 1,398,451 shares which may be
acquired within 60 days of October 15, 2014 through ownership in Wild Harp Holdings, of which he owns 100% and has voting
and dispositive control of the shares. Mr. Tynan shares voting and investment control over the shares owned by MedBridge
Venture Fund, LLC and MedBridge Development Company, LLC with Mr. Odell. |
(5) |
Mr. David Odell is our Chief Financial Officer and
a member of our Board of Directors. He owns 4,488,144 shares of common stock and rights to 21,467,799 shares of common stock
which may be acquired within 60 days of October 15, 2014. His ownership consists of (a) 12,142 shares held in the name of
Mr. Odell, (b) 4,476,002 shares held in the name of MedBridge Development Company, LLC, of which he owns 42.66% and has
voting and dispositive control of the shares, (c) 15,901,360 shares which may be acquired within 60 days of October 15,
2014, through ownership in MedBridge Venture Fund, LLC, held in the name of MedBridge Development Company, LLC, of which
he owns 42.66% and has voting and dispositive control of the shares, (d) 1,275,510 shares which may be acquired within 60
days of October 15, 2014, through ownership in MedBridge Venture Fund, LLC, held in the name of DW Odell Company, LLC, of
which he owns 100% and has voting and dispositive control of the shares, (e) 2,450,000 shares which may be acquired
within 60 days of October 15, 2014, through option grants received through October 15, 2014; and (f) 442,478
shares which may be acquired within 60 days of October 15, 2014, through ownership in MedBridge Development Company,
LLC., and (g) 1,398,451 shares which may be acquired within 60 days of October 15, 2014 through ownership in DW Odell
Company, of which he owns 100% and has voting and dispositive control of the shares. Mr. Odell shares voting and
investment control over the shares owned by MedBridge Venture Fund, LLC and MedBridge Development Company, LLC with Mr.
Tynan. |
(6) |
Mr. Haig Keledjian is Chairman of our Board of
Directors, Vice President of Research and Development and Secretary. He owns 4,978,518 shares of common stock and rights
to 4,062,256 shares of common stock which may be acquired within 60 days of October 15, 2014, which includes 92,524 shares
that he may acquire by converting his Series A preferred stock at a rate of 0.0016 shares of common stock for each share
of Series A preferred stock and 350,000 shares the may be acquired upon the exercise of options. His ownership consists
of (a) 22,803 shares held in the name of Mr. Keledjian; (b) an aggregate of 4,952,438 shares which have been irrevocably
transferred to trusts for Mr. Keledjian’s family and children, where Mr. Keledjian is the trustee for a
client’s trust; (c) 2,450,000 shares which may be acquired within 60 days of October 15, 2014, through option grants
received through October 15, 2014; and (d) 3,277 shares held by Valerian Financial Services, LLC, a
corporation controlled and owned by Mr. Keledjian. The aggregate of 4,952,438 shares of
common stock, which have been irrevocably transferred to trusts for Mr. Keledjian’s family
and children, where Mr. Keledjian is the trustee for a client’s trust, were transferred
as follows: (i) 9,888 shares of common stock held in the Geko Trust, (ii) 4,462,833 shares of
common stock held in the Best Investment Trust, (iii) 6,677 shares of common stock held
in the Bretton Securities UDT 7/20/95 Trust, (iv) 4,089 shares of common stock held in the GK
Trust, (v) 2,763 shares of common stock held in the Tomson Voting Trust, (vi) 36 shares of
common stock held in the Foundation for Advancement of Health Sciences, and (vii) 466,152 shares of
common stock held in NISCA Irrevocable Trust. Mr. Keledjian is the trustee of these trusts,
and has sole voting and dispositive control over the shares. |
(7) |
Mr. Brennan de Raad is our Chief Operating
Officer. He owns 167 shares of common stock and rights to 770,000 shares of common stock which may be acquired within 60
days of October 15, 2014. |
(8) |
Mr. Arthur Keledjian is a member of our Board of
Directors. He owns rights to 700,000 shares of common stock which may be acquired within 60 days of October 15,
2014. |
As of October 15, 2014, there are no arrangements
among our beneficial owners known to management which could result in a change in control of our Company.
Securities Authorized for Issuance under
Equity Compensation Plans
The following table summarizes information
about our equity compensation plans as of September 30, 2014.
Plan category |
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights |
Weighted-average
exercise price of
outstanding options,
warrants and rights |
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a)) |
Equity compensation plans approved by security holders |
10,465,000 |
$0.19499 |
1,535,000 |
Equity compensation plans not approved by security holders |
0 |
n/a |
0 |
Total |
10,465,000 |
$0.19499 |
1,535,000 |
Equity Incentive Plan
On December 20, 2013, our Board of Directors
approved an equity incentive plan which provides for up to 12,000,000 shares of common stock to be issued under the terms and conditions
of such plan. This plan was subsequently approved by a majority vote of the stockholders on December 30, 2013. The purpose of the
plan is to provide a means by which eligible recipients of stock awards may be given an opportunity to benefit from increases in
value of the common stock through the granting of the following stock awards: (i) incentive stock options, (ii) nonstatutory stock
options, (iii) restricted stock awards and (iv) stock appreciation rights. We, by means of the plan, seek to retain the services
of the group of persons eligible to receive stock awards, to secure and retain the services of new members of this group and to
provide incentives for such persons to exert maximum efforts for the success of our Company and our affiliates.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
MedBridge Development Company and MedBridge
Venture Fund, LLC
MedBridge Development Company, LLC
On March 18, 2013, we entered into a Memorandum
of Understanding with MedBridge Development Company, LLC, or MDC, for a two-year strategic collaboration. At the time of the transaction,
the Chief Executive Officer of MDC, David Odell, was a current stockholder of our Company but was not employed by us in a director
or officer capacity. John Tynan, the other managing member of MDC, had also purchased certain of our securities in the past.
Under this arrangement, MDC has agreed
to provide us with financial support up to $550,000 cash, administrative support valued at $20,000 per month and other services
to enable us to continue our research and development activities and provide for our operating expenses. Excluding the first $50,000
of cash, all other payments and fees shall accrue under a convertible note we issued to MDC on March 18, 2013. As of September
30, 2014, we have accrued $60,000 in management fees related to Q3 2014. As of October 15, 2014, we have accrued $0 in management
fees related to Q4 2014. As of October 15, 2014, 2,513,365 shares have been issued or are authorized to be issued to MDC for all
management fees earned through September 30, 2014.
The agreement provides an option to convert
the amount owed under the convertible note into shares of our common stock. Any amounts advanced by MDC are convertible at the
20 day average of our stock price prior to the conversion date, and any costs thereafter shall be paid in shares of our common
stock valued at the average stock price per quarter, discounted by 10%. Such share payments will be made on a quarterly basis.
For each share issued, MDC shall also receive warrants to purchase one additional share exercisable at the undiscounted average
stock price for the corresponding quarter. Each warrant expires 18 months after the two-year lock up period. We also agreed to
a two-year lock-up provision from March 18, 2013, and MDC is unable to sell the shares it holds in our Company until that restriction
has lifted. Each warrant’s 18 month term starts from the date the restriction is lifted.
Under the terms of the agreement,
John Tynan and David Odell were appointed to our Board of Directors, sharing one vote between the two directors, and also
agreed to provide certain services to us. Mr. Tynan was appointed our Chief Executive Officer in July 2013, and Mr. Odell was
appointed our Chief Financial Officer in December 2013. As of October 15, 2014, Messrs. Tynan and Odell collectively own
85.32% of MDC. Mr. Odell continues to serve as Chief Executive Officer of MDC, in addition to his service as our Chief
Financial Officer. In lieu of cash compensation for the management services of Mr. Tynan or Mr. Odell, Messrs. Tynan and
Odell have directed us to award the respective value of their services in equity-based compensation to their designee,
MedBridge Venture Fund.
On August 27, 2014, we entered into a convertible
promissory note and warrant purchase agreement with MDC, pursuant to which MDC provided us $50,000 in cash. In exchange, we issued
MDC a convertible promissory note with a principal amount of $50,000 and a warrant to purchase 200,000 shares of our common stock.
The note has an annual interest rate of 8% and is convertible at the option of the holder in four equal tranches on November 27,
2015, February 27, 2016, May 27, 2016 and August 27, 2016. The conversion price is $0.113 per share. The warrant has an exercise
price of $0.85 per share and shall be exercisable from August 27, 2018 until August 27, 2019. The warrant has a cashless exercise
feature.
MDC is owned 42.66% by the
Tynan Family Trust, of which our Chief Executive Officer and director, John Tynan is the trustee; 42.66% by our Chief
Financial Officer and director, David Odell; 7.5% by EDK, LLC, which is managed by Edward Koke; 7.31% by West Beach Investments,
LLC, which is managed by Steven Schott; and 2.5% by Ruth Loomer, an individual. Mr. Tynan and Mr. Odell have voting and
dispositive control over the shares held by MDC.
MedBridge Venture Fund, LLC
On July 13, 2013, we entered into an agreement
with MedBridge Venture Fund, LLC, or MVF. MVF agreed to provide us with a minimum investment of $250,000 cash and up to $2,500,000
in cash ($1,765,000) and services ($735,000) in the form of a convertible note. The amount accrued under the note is convertible
at an exercise price equal to 10% lower than the lowest three-day average closing price starting on July 16, 2013 and ending on
September 15, 2013 ($0.0588). As of September 30, 2014, we have received $1,650,000, including $100,000 from an unrelated party,
in cash proceeds and received $656,250 in services. We have accrued approximately $135,000 in interest related to this aggregate
obligation. The parties also agreed to a staggered lock up provision, with free-trading shares available in four equal parts, 25%
each, on the following dates: December 15, 2014, March 15, 2015, June 15, 2015, and September 15, 2015.
We also issued warrants to MVF to
purchase four shares for each $1.00 invested in our Company. These warrants are not exercisable before 48 months from the
date of issuance and not after 60 months from the date of issuance, unless our Board resolves to allow exercise of shares
prior to the fourth year. MVF is co-managed by Wild Harp Holdings, LLC, which is 100% owned by our Chief Executive
Officer and director, John Tynan, and DW Odell Company, LLC, which is 100% owned by our Chief Financial Officer and director,
David Odell.
Haig Keledjian
Best Investments, Inc. and Best Investment
Trust
On March 5, 2008, we entered into a debt
restructuring agreement with Best Investments, Inc. Best Investments is a corporation controlled and owned by Haig Keledjian. Mr.
Keledjian is our Chairman, Vice President of Research and Development and Secretary. He served as our Chief Executive Officer from
2001 until July 2013 and was our Chief Executive Officer at the time of the transaction.
As of the date of the agreement, we owed
certain debts to entities controlled by Mr. Keledjian for cash and services provided by Mr. Keledjian since our inception in 1995.
The nature of Mr. Keledjian’s services include strategic planning, research and development management, legal management,
fundraising, regulatory management, and day-to-day operational oversight. Best Investments was created by Mr. Keledjian to restructure
and consolidate those debts owed by us. The amount Best Investments agreed to lend us under the revolving line of credit was not
limited and was secured by substantially all of our assets. Further, the obligations owed by us under the revolving line of credit
were guaranteed by our subsidiary, VG Energy, Inc.
Pursuant to the terms of the agreement,
the parties agreed to restructure the indebtedness owed by us to Best Investments in addition to accrued interest and for us to
issue Best Investments a convertible note. The original indebtedness matured on March 29, 2008 and the revolving line of credit
matured on June 30, 2013 with an interest rate of 5% per annum, payable at the maturity date.
Under the terms of the debt restructuring
agreement, Best Investments agreed to allow us to prepay our obligations due under the line of credit at any time and that portions
of the debt may be exchanged for shares of our common stock and warrants. The conversion price is equal to the volume-weighted
closing price of our common stock for the 20 trading days preceding the notice of conversion by Best Investments. For each share
of stock issued for conversion of our debt owed under the line of credit, we agreed to issue Best Investments a warrant to purchase
a share of common stock for 150% of the price at which the debt under the revolving line of credit were converted. Such warrants
will expire five years from the date of issuance.
On October 1, 2013, we entered into
an unsecured note with Best Investment Trust, in the amount of $993,023 ($577,328 at December 31, 2013) with interest at 5%
per annum, due December 31, 2018. This note was issued as a replacement and amendment of the secured revolving line of credit
dated March 5, 2008 and subsequently assigned to Best Investment Trust. During the years ended December 31, 2013 and 2012,
there were no interest payments, all interest was accrued. In the six month period ended September 30, 2014 an aggregate of
$513,376 in principal was converted into 2,441,792 common shares and warrants to purchase an equal number of shares at 1.5
times the conversion prices. If not converted earlier, unpaid principal of $63,952 at September 30, 2014, plus accrued
interest, due at maturity shall automatically be exchanged for Units based upon the exchange price upon maturity. In
addition, we issued an identical note in the amount of $63,375 to another individual who participated in the arrangement with
Best Investment Trust, which amount was converted into 292,808 common shares by the holder on March 3, 2014. This BIT note
was issued as a replacement and amendment of the secured revolving line of credit dated March 5, 2008 and subsequently
assigned to Best Investment Trust. Best Investment Trust is controlled by Haig Keledjian, our Chairman of the Board,
Vice President of Research and Development and Secretary.
Mr. Keledjian’s balance on September 30,
2014 of $2,460 consisted of the following:
Accrued Salaries (1) |
$2,460 |
Revolving Line of Credit Advances and Accrued Interest (2) |
$0 |
Balance |
$2,460 |
|
1) |
Mr. Keledjian is our founder and has served in various roles since 2001. He currently serves as Our Chairman, Vice President of Research and Development and as our Corporate Secretary, a position he has held since July 2013. Immediately prior to July 2013, Mr. Keledjian served as our Chief Executive Officer and Chief Executive Officer of VG Energy. He has also served as our Chief Operating Officer and Chief Financial Officer. |
|
2) |
This includes $162,002 of interest which was calculated at 5% per annum from the inception of the Revolving Line of Credit arrangement in March 2008. Interest was only calculated with respect to the Revolving Line of Credit and not the accrued salaries. |
Mr. Keledjian can be deemed to have full
economic interest in the revolving line of credit. All transactions by Best Investments relating to our line of credit and the
convertible note are reflected in our accompanying financial statements.
John Tynan
Wild Harp Holdings, LLC
On July 9, 2014, we entered into a convertible
promissory note and warrant purchase agreement with Wild Harp Holdings, LLC, pursuant to which Wild Harp Holdings is obligated
to provide us with a minimum of $100,000 and a maximum of $250,000 to be received no later than July 9, 2015. On July 9, 2014,
we received the minimum $100,000 and, in exchange, issued Wild Harp Holdings a convertible promissory note in the amount of $100,000
with an 8% interest rate per annum and a warrant to purchase 400,000 shares of common stock at an exercise price of $0.93 per share
that may be exercised at any time from July 9, 2018 to July 9, 2019. The warrants have a cashless exercise provision. The note
shall be convertible at the option of Wild Harp Holdings in four equal tranches on October 9, 2015, January 9, 2016, April 9, 2016
and July 9, 2016. The defined conversion price is $0.1245 per share. If the remaining principal and interest due under the note
is not paid by July 9, 2016, the maturity date, then the remaining amount shall automatically be converted into shares of common
stock using the same conversion ratio above. In addition, we agreed to issue 50,000 shares of our Series B Preferred Stock to Wild
Harp Holdings. John Tynan, our Chief Executive Officer, owns 100% of Wild Harp Holdings.
On July 19, 2014, we entered into the First
Amendment to the Convertible Promissory Note and Warrant Purchase Agreement with Wild Harp Holdings in order to remove all references
to Series B Preferred Shares and removing the agreement to issue 50,000 shares of our Series B Preferred Stock. All other terms
and conditions of the Convertible Promissory Note and Warrant Purchase Agreement remain unmodified and in full force and effect.
On September 16, 2014, we received an additional
$50,000 from Wild Harp Holdings, LLC and issued Wild Harp Holdings a Convertible Promissory Note in the amount of $50,000 with
an 8% interest rate per annum and a Warrant to purchase 200,000 shares of common stock at an exercise price of $0.63 per share
that may be exercised from September 16, 2018 to September 18, 2019. The note and warrant have the same terms and conditions as
the ones we issued in July 2014 except that the defined conversion price of the note shall be $0.084.
On October 27, 2014, we received an additional
$50,000 from Wild Harp Holdings, LLC and issued Wild Harp Holdings a convertible promissory note in the amount of $50,000 with
an 8% interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.49 per share
that may be exercised from October 27, 2018 to October 26, 2019. The note and warrant have the same terms and conditions as the
ones we issued in July 2014, except that the defined conversion price of the note shall be $0.065.
David Odell
DW Odell Company, LLC
On July 9, 2014, we entered into a convertible
promissory note and warrant purchase agreement with DW Odell, LLC, pursuant to which DW Odell is obligated to provide us with a
minimum of $100,000 and a maximum of $250,000 to be received no later than July 9, 2015. On July 9, 2014, we received the minimum
$100,000 and, in exchange, issued DW Odell a convertible promissory note in the amount of $100,000 with an 8% interest rate per
annum and a warrant to purchase 400,000 shares of common stock at an exercise price of $0.93 per share that may be exercised at
any time from July 9, 2018 to July 9, 2019. The warrants have a cashless exercise provision. The note shall be convertible at the
option of DW Odell in four equal tranches on October 9, 2015, January 9, 2016, April 9, 2016 and July 9, 2016. The defined conversion
price is $0.1245 per share. If the remaining principal and interest due under the note is not paid by July 9, 2016, the maturity
date, then the remaining amount shall automatically be converted into shares of common stock using the same conversion ratio above.
In addition, we agreed to issue 50,000 Shares of our Series B Preferred Stock to DW Odell. David Odell, our Chief Financial Officer,
owns 100% of DW Odell.
On July 19, 2014, we entered into the First
Amendment to the Convertible Promissory Note and Warrant Purchase Agreement with DW Odell Company in order to remove all references
to Series B Preferred Shares and removing the agreement to issue 50,000 shares of our Series B Preferred Stock. All other terms
and conditions of the Convertible Promissory Note and Warrant Purchase Agreement remain unmodified and in full force and effect.
On September 16, 2014, we received an additional
$50,000 from DW Odell Company, LLC and issued DW Odell Company a Convertible Promissory Note in the amount of $50,000 with an 8%
interest rate per annum and a Warrant to purchase 200,000 shares of common stock at an exercise price of $0.63 per share that may
be exercised from September 16, 2018 to September 18, 2019. The note and warrant have the same terms and conditions as the ones
we issued in July 2014 except that the defined conversion price of the note shall be $0.084.
On October 27, 2014, we received an additional
$50,000 from DW Odell Company, LLC and issued DW Odell Company a convertible promissory note in the amount of $50,000 with an 8%
interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.49 per share that may
be exercised from October 27, 2018 to October 26, 2019. The note and warrant have the same terms and conditions as the ones we
issued in July 2014, except that the defined conversion price of the note shall be $0.065.
Director
Independence
We are not currently
listed on any national securities exchange that has a requirement that our Board of Directors consist of independent directors.
At this time, we do not have an “independent director” as that term is defined under the rules of The NASDAQ Capital
Market.
LEGAL
MATTERS
Certain legal
matters in connection with the securities will be passed upon for us by the law firm of Trombly Business Law, P.C., Boulder, Colorado.
Ms. Trombly will not receive a direct or indirect interest in the small business issuer and has never been a promoter, underwriter,
voting trustee, director, officer, or employee of our company. Nor does Ms. Trombly have any contingent based agreement with us
or any other interest in or connection to us.
EXPERTS
The
December 31, 2013 and 2012 financial statements included in this prospectus have been audited by KWCO, PC, independent
auditors, and have been included in reliance upon the report of such firm given upon their authority as experts in
accounting and auditing. KWCO, PC, has no direct or indirect interest in us, nor
were they a promoter or underwriter.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
VG Life Sciences Inc.
CONTENTS
Financial Statements: |
|
|
|
Consolidated Balance Sheets as of September 30, 2014 (Unaudited) and December 31, 2013 |
F-2 |
|
|
Consolidated Statements of Operations, Three and Nine Months Ended September 30, 2014 and 2013 (Unaudited) |
F-3 |
|
|
Consolidated Statements of Cash Flows, Nine Months Ended September 30, 2014 and 2013 (Unaudited) |
F-4 |
|
|
Notes to Consolidated Financial Statements, Nine Months Ended September 30, 2014 and 2013 (Unaudited) |
F-6 |
|
|
Report of Independent Registered Public Accounting Firm |
F-10 |
|
|
Consolidated Balance Sheets at December 31, 2013 and 2012 |
F-11 |
|
|
Consolidated Statements of Operations for the years ended
December 31, 2013 and 2012, and for the period July 11, 1995 (Inception) to December 31, 2013 |
F-12 |
|
|
Consolidated Statement of Stockholders’ deficit for the
period July 11, 1995 (Inception) to December 31, 2013 |
F-13 |
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012, and for the period July 11, 1995 (Inception) to December 31, 2013 |
F-25 |
|
|
Notes to Consolidated Financial Statements for the years ended December 31, 2013 and 2014 |
F-27 |
|
|
VG LIFE SCIENCES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
(Unaudited) | | |
(Audited) | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash | |
$ | 53,842 | | |
$ | 713,892 | |
Prepaid expenses and other current assets | |
| 6,621 | | |
| 75,494 | |
Total Current Assets | |
| 60,463 | | |
| 789,386 | |
| |
| | | |
| | |
PROPERTY AND EQUIPMENT, NET | |
| – | | |
| – | |
| |
| | | |
| | |
OTHER ASSETS | |
| | | |
| | |
Intangible assets | |
| 1,076,836 | | |
| 1,076,836 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 1,137,299 | | |
$ | 1,866,222 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
| |
| | | |
| | |
Accounts payable | |
$ | 866,146 | | |
$ | 405,000 | |
Accrued expenses | |
| 182,730 | | |
| 434,471 | |
Accrued interest | |
| 265,001 | | |
| 69,898 | |
Insurance finance agreement | |
| – | | |
| 33,836 | |
Convertible debt - related parties | |
| 2,599,689 | | |
| 1,844,732 | |
Convertible debt - other | |
| 1,098,360 | | |
| 1,363,272 | |
Derivative liabilities | |
| 1,295,487 | | |
| 2,183,440 | |
| |
| | | |
| | |
Total Current Liabilities | |
| 6,307,413 | | |
| 6,334,649 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
| | | |
| | |
| |
| | | |
| | |
STOCKHOLDERS' DEFICIT | |
| | | |
| | |
Preferred stock, 20,000,000 shares authorized, $0.0001 par value; 9,715,443 and 9,715,443 issued and outstanding, respectively | |
| 972 | | |
| 972 | |
Common stock, 150,000,000 shares authorized, $0.0001 par value; 31,230,318 and 17,459,752 issued and outstanding, respectively | |
| 3,123 | | |
| 1,746 | |
Additional paid-in capital | |
| 99,696,993 | | |
| 94,609,247 | |
Noncontrolling interests | |
| 673,115 | | |
| 698,921 | |
Deficit accumulated during the development stage | |
| (105,544,317 | ) | |
| (99,779,313 | ) |
Total Stockholders' Deficit | |
| (5,170,114 | ) | |
| (4,468,427 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | |
$ | 1,137,299 | | |
$ | 1,866,222 | |
See accompanying notes to unaudited interim consolidated financial
statements.
VG LIFE SCIENCES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | | |
July 11, 1995 (Inception) to September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | | |
2014 | |
| |
| | |
| | |
| | |
| | |
| |
REVENUES | |
$ | – | | |
$ | – | | |
$ | – | | |
$ | – | | |
$ | 347,750 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
EXPENSES | |
| | | |
| | | |
| | | |
| | | |
| | |
Research and development | |
| 339,881 | | |
| 300,196 | | |
| 975,864 | | |
| 349,636 | | |
| 18,964,648 | |
Management salaries | |
| 214,376 | | |
| 259,425 | | |
| 780,625 | | |
| 489,307 | | |
| 6,657,399 | |
Depreciation and amortization | |
| – | | |
| – | | |
| – | | |
| – | | |
| 1,645,748 | |
Legal and professional | |
| 179,878 | | |
| 190,723 | | |
| 1,077,551 | | |
| 696,586 | | |
| 8,402,688 | |
Consulting fees | |
| – | | |
| 50,415 | | |
| 37,629 | | |
| 152,915 | | |
| 19,561,051 | |
General and administrative | |
| 64,637 | | |
| 52,873 | | |
| 730,502 | | |
| 84,649 | | |
| 10,439,268 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total expenses | |
| 798,772 | | |
| 853,632 | | |
| 3,602,171 | | |
| 1,773,093 | | |
| 65,670,802 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
LOSS FROM OPERATIONS | |
| (798,772 | ) | |
| (853,632 | ) | |
| (3,602,171 | ) | |
| (1,773,093 | ) | |
| (65,323,052 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
OTHER INCOME (EXPENSE) | |
| | | |
| | | |
| | | |
| | | |
| | |
Asset impairment | |
| – | | |
| – | | |
| – | | |
| – | | |
| (475,000 | ) |
Sale of distribution rights | |
| – | | |
| – | | |
| – | | |
| – | | |
| 1,309,966 | |
Interest income | |
| – | | |
| – | | |
| – | | |
| – | | |
| 9,392 | |
Derivative benefit/(expense) | |
| 414,895 | | |
| (633,000 | ) | |
| (94,935 | ) | |
| (2,098,134 | ) | |
| (5,043,766 | ) |
Interest expense | |
| (687,800 | ) | |
| (71,672 | ) | |
| (2,093,704 | ) | |
| (502,875 | ) | |
| (36,269,992 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total other income (expense) | |
| (272,905 | ) | |
| (704,672 | ) | |
| (2,188,639 | ) | |
| (2,601,009 | ) | |
| (40,469,400 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
NET LOSS | |
| (1,071,677 | ) | |
| (1,558,304 | ) | |
| (5,790,810 | ) | |
| (4,374,102 | ) | |
| (105,792,452 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | |
| 8,602 | | |
| 9,297 | | |
| 25,806 | | |
| 31,703 | | |
| 248,135 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | |
$ | (1,063,075 | ) | |
$ | (1,549,007 | ) | |
$ | (5,765,004 | ) | |
$ | (4,342,399 | ) | |
$ | (105,544,317 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
NET LOSS PER COMMON SHARE, BASIC AND DILUTED | |
$ | (0.04 | ) | |
$ | (0.18 | ) | |
$ | (0.24 | ) | |
$ | (0.68 | ) | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING, BASIC AND DILUTED | |
| 28,935,882 | | |
| 8,403,425 | | |
| 23,986,056 | | |
| 6,354,005 | | |
| | |
See accompanying notes to unaudited interim consolidated financial
statements.
VG LIFE SCIENCES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
| |
Nine Months Ended | | |
Cumulative for the Period July 11, 1995
(Inception) to | |
| |
September 30, | | |
September 30, | |
| |
2014 | | |
2013 | | |
2014 | |
Cash Flows From Operating Activities: | |
| | | |
| | | |
| | |
Net loss attributable to controlling interests | |
$ | (5,765,004 | ) | |
$ | (4,342,399 | ) | |
$ | (105,544,317 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | | |
| | |
Depreciation | |
| – | | |
| – | | |
| 1,645,748 | |
Amortization of debt discount | |
| 1,878,116 | | |
| 74,472 | | |
| 9,265,943 | |
Debt Issuance costs | |
| – | | |
| – | | |
| 13,339,211 | |
Imputed Interest | |
| – | | |
| 63,300 | | |
| 189,826 | |
Non-Controlling Interest | |
| (25,806 | ) | |
| (31,703 | ) | |
| (248,135 | ) |
Services included in accounts payable to be satisfied in shares | |
| – | | |
| – | | |
| 200,000 | |
Issuance of common stock and warrants for services | |
| 54,756 | | |
| – | | |
| 677,006 | |
Stock based compensation | |
| – | | |
| – | | |
| 1,890,449 | |
Issuance of common stock for services and finders fee | |
| – | | |
| – | | |
| 7,864,423 | |
Issuance of convertible notes for services | |
| 1,001,565 | | |
| 627,277 | | |
| 2,495,575 | |
Beneficial conversion feature | |
| – | | |
| – | | |
| 71,500 | |
Issuance of preferred stock for interest | |
| – | | |
| – | | |
| 225,000 | |
Settlement-distribution agreement rights | |
| – | | |
| – | | |
| 1,668,953 | |
Debt Settlement liabilities and common shares in excess of recorded liabilities | |
| – | | |
| – | | |
| 399,530 | |
Issuance of stock and warrants for interest and financing costs | |
| – | | |
| – | | |
| 7,730,776 | |
Non-cash operating expenses and other charges | |
| – | | |
| – | | |
| 5,387,663 | |
Non-cash income-gain on settlements | |
| – | | |
| – | | |
| (384,966 | ) |
Options and warrants issued for services and wages | |
| 597,269 | | |
| 347,600 | | |
| 13,243,795 | |
Options exercised for services | |
| – | | |
| – | | |
| 116,317 | |
Contingently issued stock issued for services | |
| – | | |
| – | | |
| 792,499 | |
Warrants exercised for services | |
| – | | |
| – | | |
| 12,500 | |
Issuance of common stock for expenses paid by third party | |
| – | | |
| – | | |
| 593,947 | |
Issuance of common stock for settlement agreement | |
| – | | |
| – | | |
| 1,060,000 | |
Notes payable issued for expenses | |
| – | | |
| – | | |
| 897,306 | |
Notes payable converted to accrued wages | |
| – | | |
| – | | |
| (25,000 | ) |
Satisfaction of Syexia-in excess of accrual | |
| – | | |
| – | | |
| 104,577 | |
Change in variable common stock purchase options | |
| – | | |
| – | | |
| (22,418 | ) |
(Increase) decrease in prepaid expenses and other current assets | |
| 68,873 | | |
| – | | |
| (97,941 | ) |
(Increase) decrease in deposits and other assets | |
| – | | |
| – | | |
| 1,972,832 | |
Increase (decrease) in accrued interest | |
| 195,102 | | |
| 49,103 | | |
| 1,486,762 | |
Increase (decrease) in accounts payable | |
| 461,144 | | |
| 199,838 | | |
| 1,778,853 | |
Increase (decrease) in accrued expenses | |
| (62,997 | ) | |
| 416,206 | | |
| 2,594,291 | |
Increase (decrease) in accrued wages payable | |
| – | | |
| – | | |
| 771,744 | |
Increase (decrease) in advances-related parties | |
| – | | |
| – | | |
| 74,283 | |
Increase (decrease) in advances | |
| – | | |
| – | | |
| 136,000 | |
Increase (decrease) in insurance finance agreement | |
| – | | |
| – | | |
| 33,836 | |
Increase (decrease) in convertible debt-related parties and other | |
| – | | |
| – | | |
| (112,475 | ) |
Increase (decrease) in derivative liability | |
| 94,935 | | |
| 2,098,134 | | |
| 4,802,935 | |
| |
| | | |
| | | |
| | |
Net cash used in operating activities | |
| (1,502,047 | ) | |
| (498,172 | ) | |
| (22,911,172 | ) |
| |
| | | |
| | | |
| | |
Cash Flows From Investing Activities: | |
| | | |
| | | |
| | |
Increase in leasehold improvements | |
| – | | |
| – | | |
| (1,039,306 | ) |
Acquisition of equipment | |
| – | | |
| – | | |
| (361,665 | ) |
Increase in intangible assets | |
| – | | |
| – | | |
| (5,206,051 | ) |
| |
| | | |
| | | |
| | |
Net cash used in investing activities | |
| – | | |
| – | | |
| (6,607,022 | ) |
(continued)
|
|
|
Nine Months Ended |
|
|
|
Cumulative for the Period July 11, 1995 (Inception) to |
|
|
|
|
September 30, |
|
|
|
September 30, |
|
|
|
|
2014 |
|
|
|
2013 |
|
|
|
2014 |
|
Cash Flows From Financing Activates: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds of MedBridge Debt |
|
|
– |
|
|
|
– |
|
|
|
125,000 |
|
Proceeds from convertible debt-related party and other |
|
|
875,833 |
|
|
|
628,002 |
|
|
|
7,482,433 |
|
Payment for convertible debt-related party and other |
|
|
(33,836 |
) |
|
|
(121,038 |
) |
|
|
(930,603 |
) |
Proceeds from sale of common stock and warrants, net |
|
|
– |
|
|
|
– |
|
|
|
11,082,204 |
|
Proceeds from Revolving line of credit-related party |
|
|
– |
|
|
|
– |
|
|
|
3,087,432 |
|
Repayments of Revolving line of credit-related party |
|
|
– |
|
|
|
– |
|
|
|
(1,694,162 |
) |
Proceeds of sale of VGE securities to third parties, net |
|
|
– |
|
|
|
– |
|
|
|
600,000 |
|
Proceeds from notes payable |
|
|
– |
|
|
|
– |
|
|
|
267,000 |
|
Proceeds from exercise of options and warrants |
|
|
– |
|
|
|
|
|
|
|
173,061 |
|
Proceeds from notes payable--related parties |
|
|
– |
|
|
|
– |
|
|
|
9,379,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
841,997 |
|
|
|
506,964 |
|
|
|
29,572,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in Cash |
|
|
(660,050 |
) |
|
|
8,792 |
|
|
|
53,842 |
|
Cash and cash equivalents, beginning of period |
|
|
713,892 |
|
|
|
6,090 |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
53,842 |
|
|
$ |
14,882 |
|
|
$ |
53,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
Income taxes |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH TRANSACTIONS |
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants for convertible notes and interest |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
6,072,377 |
|
Discount on indebtedness |
|
$ |
1,807,205 |
|
|
$ |
330,472 |
|
|
$ |
10,472,155 |
|
Reclassification of derivative liability to additional paid-in-capital |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,264,800 |
|
Conversion of various accruals to convertible notes |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,953,954 |
|
Issuance of common stock in satisfaction of accounts payable/notes/accruals |
|
$ |
1,645,439 |
|
|
$ |
532,500 |
|
|
$ |
5,432,742 |
|
Refinancing of convertible debt -related party Revolving line of credit |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
3,180,393 |
|
Issuance of common shares in various debt settlements and partial satisfactions |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
629,451 |
|
Issuance of unsecured convertible debentures for accounts payable |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
476,866 |
|
Issuance of common stock for debt repayment-DMBM/Wonderland, net |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
35,214 |
|
Noncontrolling interest, net |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
2,447 |
|
Issuance of common stock for T & T legal and accrued interest |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,035,000 |
|
Issuance of convertible note to acquire interest in unconsolidated subsidiary |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
782,814 |
|
Issuance of common shares, options and warrants- V Clip acquisition |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,502,479 |
|
Issuance of common shares - repurchase product royalty rights, China Market |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
231,000 |
|
Issuance of common shares and warrants - Carcinotek acquisition |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,000,000 |
|
Restructuring of convertible debentures |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,198,167 |
|
Issuance (settlement) of unsecured convertible debentures - patents |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
248,000 |
|
Issuance of common stock for debt paid by third party |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
593,947 |
|
Issuance of common stock for debt and interest |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
9,086,511 |
|
Issuance of common stock finders fee |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
450,000 |
|
Warrants issued with convertible debentures and amendment of arrangement |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
516,800 |
|
Transfer from derivative liabilities |
|
$ |
984,455 |
|
|
$ |
798,048 |
|
|
$ |
2,988,878 |
|
Issuance of warrant in partial consideration of notes payable |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
100,000 |
|
Issuance of note in consideration of White Label acquisitions |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
100,000 |
|
Issue Series A Preferred Stock for secured revolving credit note |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
252,000 |
|
See accompanying notes to unaudited interim consolidated financial statements.
VG LIFE SCIENCES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Nine
Months Ended September 30, 2014 and 2013
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION
OF BUSINESS
VG Life Sciences Inc. (the “Company”
or “VGLS”) was incorporated in California on July 11, 1995 and is in the development stage. The Company is engaged
in research and development of therapeutic and diagnostic pharmaceutical and medical products. The Company was acquired by a publicly
traded Delaware Corporation and became a reporting issuer on October 1, 2001. On November 5, 2001, this publicly traded company
changed its name to Viral Genetics, Inc. On November 26, 2012, the Company’s name was changed to VG Life Sciences Inc. from
Viral Genetics, Inc. The Company terminated registration with the SEC on March 24, 2009. The Company became a reporting issuer
again on August 22, 2014. The Company’s fiscal year-end is December 31.
As of September 30, 2014, the Company has
the following subsidiaries:
Subsidiary
Name | |
Origination/
Acquisition Date | |
Ownership Percentage |
V-Clip Pharmaceuticals | |
2008 | |
100% |
Carcinotek, Inc. | |
2008 | |
100% |
White Label Generics, Inc. | |
2008 | |
49% |
MetaCytolytics, Inc. | |
2009 | |
100% |
Viral Genetics Beijing, Ltd. | |
2009 | |
100% |
VG Energy, Inc. (“VGE”) | |
2010 | |
81.65% |
The various subsidiaries were organized
or acquired to facilitate the use of the Company’s Targeted Peptide Technology (“TPT”) and Metabolic Disruption
Technology (“MDT”). As of September 30, 2014 and December 31, 2013, all subsidiaries were inactive.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated
financial statements as of September 30, 2014 and for the three and nine month periods ended September 30, 2014 and 2013 have been
prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information
and on the same basis as the audited annual consolidated financial statements. The unaudited interim consolidated balance sheet
as of September 30, 2014, unaudited interim consolidated statements of operations for the three and nine month periods ended September
30, 2014 and 2013, and the unaudited interim consolidated statements of cash flows for the nine month periods ended September 30,
2014 and 2013 include all material adjustments, consisting only of normal recurring adjustments (unless otherwise discussed below),
which management considered necessary for a fair presentation of the financial position and operating results for the periods presented.
These unaudited financial statements are the representations of management. The results for the three and nine month periods ended
September 30, 2014 are not necessarily indicative of results to be expected for the year ending December 31, 2014 or for any
future interim period. The audited consolidated balance sheet at December 31, 2013 has been derived from the audited consolidated
financial statements; however, the notes to the accompanying unaudited consolidated financial statements do not include all of
the information and notes required by accounting principles generally accepted in the United States of America for complete consolidated
financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto for the year ended December 31, 2013 included in Amendment # 2
of the Company’s Form 10 filed with the Securities and Exchange Commission on October 1, 2014. These accompanying notes are
generally limited to the information necessary to update the information included in the aforementioned financial statements for
the year ended December 31, 2013.
Going Concern
As of September 30, 2014, the Company had
a deficit accumulated during the development stage of approximately $105.5 million and requires substantial additional funds to
continue its research and development, to support its operations and to achieve its business development goals, the attainment
of which are not assured. The Company has been able to satisfy certain liabilities with convertible indebtedness and common shares
and enter into debt settlement arrangements, facilitated by third party financing, with vendors and creditors for substantial amounts
of its various financial obligations. Convertible instruments have also been converted into equity. In September 2013, the Company
also entered into arrangements with related parties under which it has and will continue to receive certain financial and administrative
support and services through March 18, 2015 and has consummated related party and unrelated convertible debenture and warrant agreements
from which it will receive cash and executive services (from related parties only). However, substantial indebtedness remains and
substantial recurring losses from operations and additional liabilities continue to be incurred.
These factors and uncertainties raise substantial
doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might
incur in the event the Company cannot continue in existence. Management has designed plans for sales of the Company’s future
pharmaceutical related products. Management intends to seek additional capital from new equity securities offerings, from debt
financing and debt restructuring to provide funds needed to increase liquidity, fund internal growth and fully implement its business
plan. However, management can give no assurance that these funds will be available in adequate amounts, or if available, on terms
that would be satisfactory to the Company.
The timing and amount of the Company’s
capital requirements will depend on a number of factors, including the need for funds to support research and development and payment
requirements to sustain licensing rights, demand for products and services and the availability of opportunities for international
expansion through affiliations, to maintain its status as a public company, shareholder and investor relations, to establish and
maintain current and new business relationships and for other general corporate business purposes.
NOTE 3 – CONVERTIBLE DEBT –
OTHER
On January 24, 2014, KED Consulting Group
LLC, (“KED”) entered into a Convertible Promissory Note and Warrant Purchase Agreement with the Company in the amount
of $270,000. The notes are unsecured, bear interest at 8% per annum, and are convertible into common shares at $0.0588 per share.
KED also received warrants to purchase 1,080,000 shares at $0.45 per share on execution of this agreement, exercisable at any time
from the four year anniversary to the fifth year anniversary of this arrangement. Shares will be issuable on conversion of these
notes in total in four equal tranches (25% each) on the following dates: December 15, 2014, March 15, 2015, June 15, 2015 and September
15, 2015, to the extent not earlier converted, at the conversion price per share ($0.0588). All proceeds were received by September
30, 2014. Of the $270,000: $100,000 was to be paid directly in satisfaction of a vendor liability of ours, which has been paid,
and $170,000 was to be paid in cash in six equal monthly payments of $28,333. The final payment was received on September 30, 2014.
Debt discount of $270,000 was recorded of which $58,704 and $130,508 was amortized as interest expense in the three and nine month
periods ended September 30, 2014, respectively.
Effective March 1, 2014, investors in unsecured
convertible debentures aggregating a total of $165,000 exchanged these debentures and any associated warrants (waiving any defaults
and accrued interest on the notes) for an equal principal amount under a Convertible Promissory Notes and Warrants Purchase Agreement
with the same terms and conditions as described in the preceding paragraph. These investors received warrants to purchase an aggregate
of 660,000 common shares, with the same terms and conditions as described preceding paragraph. Debt discount of $165,000 was recorded
of which $70,620 and $92,740 was amortized as interest expense in the three and nine month periods ended September 30, 2014, respectively.
Effective August 27, 2014, the Company
received proceeds of $50,000 from an unrelated investor, pursuant to a Convertible Promissory Note and Warrant Purchase Agreement
under terms and conditions that are the same as those described in Note 4, except that this note is due on August 22, 2016 and
this investor has the right to purchase notes totaling $150,000 through August 21, 2015. Principal and accrued interest are convertible
in four equal quarterly tranches of principal, plus accrued interest commencing on November 22, 2015, or at any time at the investor’s
option, at the conversion price. Debt discount of $50,000 was recorded of which $3,064 was amortized as interest expense in the
nine month period ended September 30, 2014.
NOTE 4 – CONVERTIBLE DEBT –
RELATED PARTIES
In the nine month period ended September
30, 2014, the Company entered into Convertible Promissory Notes (“Notes”) and Warrant Purchase Agreements with three
related party entities: on July 9, 2014 with Wild Harp Holdings, LLC (“Wild Harp”) controlled by John Tynan, our CEO,
and DW Odell Company (“DW Odell”) controlled by David Odell, our CFO, and on August 27, 2014, with Medbridge Development
Company, LLC (“MDC”), an entity controlled by Mr. Tynan and Mr. Odell. John Tynan and David Odell are officers and
directors of the Company. The Wild Harp and DW Odell agreements provide for Notes of up to $250,000 each to be purchased at the
option of each party through July 9, 2015, of which $150,000 has been received from each of Wild Harp and DW Odell through September
30, 2014. The MDC agreement provides for a Note of $50,000, proceeds of which were received from MDC on August 27, 2014. All three
Notes bear interest at 8% per annum and have a two year term. Principal and accrued interest are convertible in four equal quarterly
tranches of principal, plus accrued interest commencing 15 months after the issuance date of each Note, or at any time at each
party’s option, at the conversion price. The Wild Harp and DW Odell balances are each comprised of two Notes having identical
conversion provisions; (i) a Note with $100,000 in principal with a conversion rate of $0.1245 and warrant exercise price of $0.93
per share and (ii) a Note with $50,000 in principal with a conversion rate of $0.084 and warrant exercise price of $0.63 per share.
The MDC Note of $50,000 has a conversion price of $0.1134 and a warrant exercise price of $0.85 per share. The warrants received
by the parties are to purchase four common shares for each $1 of principal, an aggregate of 1,400,000 shares as of September 30,
2014, exercisable on any date from the four-year anniversary to the five-year anniversary of the agreement. Similar warrants will
be issued with future Wild Harp and DW Odell note proceeds of up to $200,000, if any; exercisable at 7.5 times the corresponding
conversion price. All warrants include a cashless exercise provision. These Notes issued through September 30, 2014, are convertible
into 3,237,819 shares of common stock of the Company.
NOTE 5 – EQUITY INCENTIVE PLAN
In the three and nine month periods ended
September 30, 2014, the Company granted 1,515,000, and 4,545,000, respectively, non-qualified stock options under its 2013 Equity
Incentive Plan to management and consultants. The fair value of these options was estimated using the Black-Scholes Option Pricing
Model with the following assumptions: risk free annual interest ranging from 2.52% to 2.73%; volatility approximating 127%; expected
life of 5 years; and no expected dividends. The aggregate fair value of these options granted for the nine months ended September
30, 2014 of $597,269 was included in research and development in the amount of $59,136 and general and administrative expense in
the amount of $538,133.
NOTE 6 – COMMON AND PREFERRED
STOCK
Effective on July 9, 2014, the Company
filed a certificate of amendment to its Delaware Certificate of Incorporation increasing the total number of authorized shares
of capital stock to 170,000,000 from 160,000,000. The total number of authorized Preferred Shares was increased to 20,000,000 from
10,000,000 and authorized Common Shares remained at 150,000,000; each having a par value of $0.0001 per share. Also on July 9,
2014, the Company established a Series B Preferred Stock ("Series B"), which the Company removed through an Amendment
and Restatement of the Articles of Incorporation on September 4, 2014 and an Amended and Restated Certificate of Designation on
September 4, 2014.
NOTE 7 – SUBSEQUENT EVENTS
On March 28, 2014, the Company entered
into an Investment Agreement (“the Agreement”) with Dutchess Opportunity Fund II L.P. (“Dutchess”) whereby
Dutchess may purchase up to that number of common shares having an aggregate purchase price of $5,000,000. Under terms of the Agreement,
the Company may, at its sole discretion, deliver a Put Notice to Dutchess stating the dollar amount of common shares, which the
Company intends to sell to Dutchess on a closing date. The maximum amount that Dutchess can be required to purchase at any one
time shall be equal to (1) 200% of the average daily volume for the three trading days immediately preceding the formal date of
the notice to Dutchess or (2) $150,000, determined at the sole discretion of the Company. The share purchase price is 94% of the
lowest daily volume-weighted average price of Company stock for the 5 consecutive trading days beginning with the notice date and
the ensuing four trading days. The Agreement is for a term of three years from the date of execution, or, if earlier, the sale
of $5,000,000 or written notice to Dutchess by the Company. On September 4, 2014, the Company and Dutchess amended the agreement
to require the Company to file a Registration Statement on Form S-1 (or other appropriate form) with the SEC covering any registrable
securities that may be issued under the Investment Agreement within 30 days of the completion of the review of the Form 10 by the
SEC. The Company was notified by the SEC of the completion of the SEC’s review on October 14, 2014. The Company must initially
register for resale up to 10,000,000 shares of common stock, except to the extent that the SEC requires the share amount to be
reduced as a condition of effectiveness.
On October 27, 2014, the Company received
an additional $100,000 in proceeds from Wild Harp and DW Odell pursuant to the arrangements described in Note 4.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Stockholders
of VG Life Sciences Inc. (Formerly Viral Genetics, Inc.)
Santa Barbara, California 93101
We have audited the accompanying consolidated
balance sheets of VG Life Sciences Inc. (a development stage company) as of December 31, 2013 and 2012, and the related consolidated
statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December
31, 2013 and for the cumulative development stage period from July 11, 1995 (inception) to December 31, 2013. Our report on the
cumulative statements of operations, stockholders’ deficit and cash flows from July 11, 1995 to December 31, 2013, in so
far as it relates to amounts for periods on or prior to December 31, 2004, is based solely on the reports of other auditors. VG
Life Sciences Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of VG Life Sciences Inc. as of December
31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the two-year period ended December
31, 2013, and for the cumulative development stage period from July 11, 1995 (inception) to December 31, 2013, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements
have been prepared assuming that VG Life Sciences Inc. will continue as a going concern. As discussed in Note 2 to the consolidated
financial statements, VG Life Sciences Inc. has suffered recurring losses from operations and its limited capital resources raise
substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is described
in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ KWCO, PC
Odessa, Texas
April 30, 2014
VG LIFE SCIENCES INC. (formerly VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
| |
December 31, | |
| |
2013 | | |
2012 | |
| |
| | | |
| | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash | |
$ | 713,892 | | |
$ | 6,091 | |
Prepaid expenses and other current assets | |
| 75,494 | | |
| – | |
Total Current Assets | |
| 789,386 | | |
| 6,091 | |
| |
| | | |
| | |
| |
| | | |
| | |
| |
| | | |
| | |
PROPERTY AND EQUIPMENT, NET | |
| – | | |
| – | |
| |
| | | |
| | |
OTHER ASSETS | |
| | | |
| | |
Intangible assets | |
| 1,076,836 | | |
| 1,076,836 | |
Total Other Assets | |
| 1,076,836 | | |
| 1,076,836 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 1,866,222 | | |
$ | 1,082,927 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
| |
| | | |
| | |
Accounts payable | |
$ | 405,000 | | |
$ | 391,847 | |
Accrued expenses | |
| 434,471 | | |
| 430,108 | |
Accrued interest | |
| 69,898 | | |
| 184,807 | |
Directors and officers insurance premium finance obligation | |
| 33,836 | | |
| – | |
Convertible debt - related parties | |
| 1,844,732 | | |
| 1,440,876 | |
Convertible debt - other | |
| 1,363,272 | | |
| 2,126,119 | |
Derivative liabilities | |
| 2,183,440 | | |
| 706,239 | |
| |
| | | |
| | |
Total Current Liabilities | |
| 6,334,649 | | |
| 5,279,996 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
$ | – | | |
$ | – | |
| |
| | | |
| | |
STOCKHOLDERS' DEFICIT | |
| | | |
| | |
Preferred stock, 10,000,000 shares authorized, $0.0001
par value; 9,715,443 and 9,715,443 issued and outstanding, respectively |
|
|
972 |
|
|
|
972 |
|
Common stock, 150,000,000 shares authorized, $0.0001 par
value; 17,459,752 and 3,116,901 issued and outstanding, respectively |
|
|
1,746 |
|
|
|
312 |
|
Additional paid-in capital | |
| 94,609,247 | | |
| 87,462,841 | |
Noncontrolling interests | |
| 698,921 | | |
| 698,397 | |
Deficit accumulated during the development stage | |
| (99,779,313 | ) | |
| (92,359,591 | ) |
Total Stockholders' Deficit | |
| (4,468,427 | ) | |
| (4,197,069 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | |
$ | 1,866,222 | | |
$ | 1,082,927 | |
See accompanying notes to consolidated financial
statements.
VG LIFE SCIENCES,
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENTS
OF OPERATIONS
| |
| | |
| | |
July 11, 1995 | |
| |
| | |
| | |
(Inception) to | |
| |
Years Ended December 31, | | |
December 31, | |
| |
2013 | | |
2012 | | |
2013 | |
| |
| | |
| | |
| |
REVENUES | |
$ | – | | |
$ | – | | |
$ | 347,750 | |
| |
| | | |
| | | |
| | |
EXPENSES | |
| | | |
| | | |
| | |
Research and development | |
| 808,517 | | |
| 496,245 | | |
| 17,988,784 | |
Management salaries | |
| 772,432 | | |
| 367,500 | | |
| 5,876,774 | |
Depreciation and amortization | |
| – | | |
| – | | |
| 1,645,748 | |
Legal and professional | |
| 874,133 | | |
| 551,060 | | |
| 7,325,136 | |
Consulting fees | |
| 98,421 | | |
| 845,871 | | |
| 19,523,422 | |
General and administrative | |
| 1,354,127 | | |
| 337,836 | | |
| 9,708,766 | |
| |
| | | |
| | | |
| | |
Total expenses | |
| 3,907,630 | | |
| 2,598,512 | | |
| 62,068,630 | |
| |
| | | |
| | | |
| | |
LOSS FROM OPERATIONS | |
| (3,907,630 | ) | |
| (2,598,512 | ) | |
| (61,720,880 | ) |
| |
| | | |
| | | |
| | |
OTHER INCOME (EXPENSE) | |
| | | |
| | | |
| | |
Asset impairment | |
| – | | |
| – | | |
| (475,000 | ) |
Sale of distribution rights | |
| – | | |
| – | | |
| 1,309,966 | |
Interest income | |
| – | | |
| – | | |
| 9,392 | |
Derivative expense | |
| (2,495,663 | ) | |
| (582,362 | ) | |
| (4,948,831 | ) |
Interest expense | |
| (1,075,905 | ) | |
| (3,758,840 | ) | |
| (34,176,289 | ) |
| |
| | | |
| | | |
| | |
Total other income (expense) | |
| (3,571,568 | ) | |
| (4,341,202 | ) | |
| (38,280,762 | ) |
| |
| | | |
| | | |
| | |
NET LOSS | |
| (7,479,198 | ) | |
| (6,939,714 | ) | |
| (100,001,642 | ) |
| |
| | | |
| | | |
| | |
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | |
| 59,476 | | |
| 89,080 | | |
| 222,329 | |
| |
| | | |
| | | |
| | |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | |
$ | (7,419,722 | ) | |
$ | (6,850,634 | ) | |
$ | (99,779,313 | ) |
| |
| | | |
| | | |
| | |
NET LOSS PER COMMON SHARE, BASIC AND DILUTED | |
$ | (0.91 | ) | |
$ | (3.19 | ) | |
| | |
| |
| | | |
| | | |
| | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING, BASIC AND DILUTED |
|
|
8,189,521 |
|
|
|
2,146,585 |
|
|
|
|
|
See accompanying notes to consolidated financial
statements.
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Issuance of
common stock at nil per share | |
| 23,800,079 | | |
$ | 2,380 | | |
| – | | |
$ | – | | |
$ | (1,380 | ) | |
$ | – | | |
| | | |
$ | 1,000 | |
Net loss for the period
ended December 31, 1995 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (5,913,219 | ) | |
| (5,913,219 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 1995 | |
| 23,800,079 | | |
| 2,380 | | |
| – | | |
| – | | |
| (1,380 | ) | |
| – | | |
| (5,913,219 | ) | |
| (5,912,219 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for cash at $0.84 per share | |
| 59,500 | | |
| 6 | | |
| – | | |
| – | | |
| 49,994 | | |
| | | |
| | | |
| 50,000 | |
Issuance of common stock
for services at $0.84 per share | |
| 357,001 | | |
| 36 | | |
| – | | |
| – | | |
| 299,964 | | |
| | | |
| | | |
| 300,000 | |
Net
loss for the year ended December 31, 1996 | |
| – | | |
| – | | |
| – | | |
| – | | |
| | | |
| | | |
| (810,189 | ) | |
| (810,189 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 1996 | |
| 24,216,580 | | |
| 2,422 | | |
| – | | |
| – | | |
| 348,578 | | |
| – | | |
| (6,723,408 | ) | |
| (6,372,408 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for cash at $0.84 per share | |
| 339,151 | | |
| 34 | | |
| | | |
| | | |
| 284,966 | | |
| | | |
| | | |
| 285,000 | |
Issuance of common stock
for services at $0.84 per share | |
| 499,802 | | |
| 50 | | |
| | | |
| | | |
| 419,950 | | |
| | | |
| | | |
| 420,000 | |
Net
loss for the year ended December 31, 1997 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (577,066 | ) | |
| (577,066 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 1997 | |
| 25,055,533 | | |
| 2,506 | | |
| – | | |
| – | | |
| 1,053,494 | | |
| – | | |
| (7,300,474 | ) | |
| (6,244,474 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for cash at $0.84 per share | |
| 345,101 | | |
| 35 | | |
| | | |
| | | |
| 289,965 | | |
| | | |
| | | |
| 290,000 | |
Net
loss for the year ended December 31, 1998 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (708,567 | ) | |
| (708,567 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 1998 | |
| 25,400,634 | | |
| 2,541 | | |
| – | | |
| – | | |
| 1,343,459 | | |
| – | | |
| (8,009,041 | ) | |
| (6,663,041 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for cash at $0.42 per share | |
| 595,002 | | |
| 59 | | |
| | | |
| | | |
| 249,941 | | |
| | | |
| | | |
| 250,000 | |
Issuance of common stock
for cash at $0.84 per share | |
| 34,272 | | |
| 3 | | |
| | | |
| | | |
| 28,797 | | |
| | | |
| | | |
| 28,800 | |
Net
loss for the year ended December 31, 1999 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (2,037,638 | ) | |
| (2,037,638 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 1999 | |
| 26,029,908 | | |
| 2,603 | | |
| – | | |
| – | | |
| 1,622,197 | | |
| – | | |
| (10,046,679 | ) | |
| (8,421,879 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non- controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Issuance of
common stock for cash at $0.42 per share | |
| 595,002 | | |
| 59 | | |
| | | |
| | | |
| 249,941 | | |
| | | |
| | | |
| 250,000 | |
Issuance of common stock
for cash at $0.84 per share | |
| 842,523 | | |
| 84 | | |
| | | |
| | | |
| 707,916 | | |
| | | |
| | | |
| 708,000 | |
Issuance of common stock
for cash at $1.94 per share | |
| 51,567 | | |
| 6 | | |
| | | |
| | | |
| 99,994 | | |
| | | |
| | | |
| 100,000 | |
Issuance of common stock
for services at $0.84 per share | |
| 2,163,824 | | |
| 216 | | |
| | | |
| | | |
| 1,818,117 | | |
| | | |
| | | |
| 1,818,333 | |
Net
loss for the year ended December 31, 2000 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (2,185,117 | ) | |
| (2,185,117 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2000 | |
| 29,682,824 | | |
| 2,968 | | |
| – | | |
| – | | |
| 4,498,165 | | |
| – | | |
| (12,231,796 | ) | |
| (7,730,663 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for cash at $0.84 per share | |
| 29,464 | | |
| 3 | | |
| | | |
| | | |
| 24,747 | | |
| | | |
| | | |
| 24,750 | |
Issuance of common stock
for services at $0.84 per share | |
| 37,811 | | |
| 4 | | |
| | | |
| | | |
| 31,464 | | |
| | | |
| | | |
| 31,468 | |
Recapitalization through
reverse merger and acquisition of 5 Starliving Online, Inc. | |
| 8,035,693 | | |
| 804 | | |
| | | |
| | | |
| (281,079 | ) | |
| | | |
| | | |
| (280,275 | ) |
Miscellaneous adjustments
to merger | |
| 481 | | |
| – | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| – | |
Net
loss for the year ended December 31, 2001 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (1,356,117 | ) | |
| (1,356,117 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2001 | |
| 37,786,273 | | |
| 3,779 | | |
| – | | |
| – | | |
| 4,273,297 | | |
| – | | |
| (13,587,913 | ) | |
| (9,310,837 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for cash at $0.70 per share | |
| 215,000 | | |
| 21 | | |
| | | |
| | | |
| 149,979 | | |
| | | |
| | | |
| 150,000 | |
Issuance of common stock
from the exercise of options for cash at $0.01 per share | |
| 1,000,000 | | |
| 100 | | |
| | | |
| | | |
| 149,900 | | |
| | | |
| | | |
| 150,000 | |
Issuance of common stock
for debt at $0.80 per share | |
| 1,654,027 | | |
| 165 | | |
| | | |
| | | |
| 1,323,057 | | |
| | | |
| | | |
| 1,323,222 | |
Issuance of common stock
for services at $0.22 per share | |
| 67,837 | | |
| 7 | | |
| | | |
| | | |
| 14,993 | | |
| | | |
| | | |
| 15,000 | |
Net
loss for the year ended December 31, 2002 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (1,776,851 | ) | |
| (1,776,851 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2002 | |
| 40,723,137 | | |
| 4,072 | | |
| – | | |
| – | | |
| 5,911,226 | | |
| – | | |
| (15,364,764 | ) | |
| (9,449,466 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Issuance of
options for services at $0.10 to $0.66 per option | |
| | | |
| | | |
| | | |
| | | |
| 2,384,000 | | |
| | | |
| | | |
| 2,384,000 | |
Issuance of warrants for
services at $0.29 to $0.35 | |
| | | |
| | | |
| | | |
| | | |
| 177,000 | | |
| | | |
| | | |
| 177,000 | |
Issuance of common stock
for cash at $0.20 to $0.35 per share | |
| 3,531,456 | | |
| 354 | | |
| | | |
| | | |
| 873,889 | | |
| | | |
| | | |
| 874,243 | |
Issuance of common stock
for cash at $0.2135 per share | |
| 2,341,675 | | |
| 234 | | |
| | | |
| | | |
| 499,766 | | |
| | | |
| | | |
| 500,000 | |
Issuance of common stock
from the exercise of options for cash at $0.01 per share | |
| 700,000 | | |
| 70 | | |
| | | |
| | | |
| 6,930 | | |
| | | |
| | | |
| 7,000 | |
Issuance of common stock
from the exercise of options for debt at $0.01 per share | |
| 480,769 | | |
| 48 | | |
| | | |
| | | |
| 4,760 | | |
| | | |
| | | |
| 4,808 | |
Issuance of common stock
from the exercise of options for services at $0.01 per share | |
| 250,000 | | |
| 25 | | |
| | | |
| | | |
| 2,475 | | |
| | | |
| | | |
| 2,500 | |
Issuance of common stock
from the exercise of warrants for expenses at $0.05 per share | |
| 250,000 | | |
| 25 | | |
| | | |
| | | |
| 12,475 | | |
| | | |
| | | |
| 12,500 | |
Issuance of common stock
for services at $0.20 to $0.70 per share | |
| 383,096 | | |
| 38 | | |
| | | |
| | | |
| 132,984 | | |
| | | |
| | | |
| 133,022 | |
Issuance of common stock
and warrants for debt and interest at $0.30 per share | |
| 450,880 | | |
| 45 | | |
| | | |
| | | |
| 135,219 | | |
| | | |
| | | |
| 135,264 | |
Allocation of expired warrants
to additional paid-in capital | |
| | | |
| | | |
| | | |
| | | |
| – | | |
| | | |
| | | |
| – | |
Beneficial conversion feature
of convertible debt | |
| | | |
| | | |
| | | |
| | | |
| 9,322,066 | | |
| | | |
| | | |
| 9,322,066 | |
Net
loss for the year ended December 31, 2003 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (13,765,173 | ) | |
| (13,765,173 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2003 | |
| 49,111,013 | | |
| 4,911 | | |
| – | | |
| – | | |
| 19,462,790 | | |
| – | | |
| (29,129,937 | ) | |
| (9,662,236 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Issuance of
common stock and warrants for cash at $0.250 per share | |
| 8,000,000 | | |
| 800 | | |
| | | |
| | | |
| 1,999,200 | | |
| | | |
| | | |
| 2,000,000 | |
Issuance of common stock
and warrants for debt at $0.30 per share in connection with | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
note conversion | |
| 24,708,580 | | |
| 2,471 | | |
| | | |
| | | |
| 7,501,803 | | |
| | | |
| | | |
| 7,504,274 | |
Issuance of common stock
from the exercise of warrants for cash at $0.01 to $0.05 per share | |
| 350,000 | | |
| 35 | | |
| | | |
| | | |
| 15,465 | | |
| | | |
| | | |
| 15,500 | |
Issuance of options for
consulting services at $0.34 to $0.84 per option | |
| | | |
| | | |
| | | |
| | | |
| 3,892,960 | | |
| | | |
| | | |
| 3,892,960 | |
Issuance of common stock
from the exercise of options for cash at $0.01 per share | |
| 2,913,400 | | |
| 291 | | |
| | | |
| | | |
| 28,843 | | |
| | | |
| | | |
| 29,134 | |
Issuance of common stock
for services at $0.30 to $0.67 per share | |
| 979,722 | | |
| 98 | | |
| | | |
| | | |
| 467,589 | | |
| | | |
| | | |
| 467,687 | |
Issuance of common stock
for cash at $0.30 to $0.53 per share | |
| 1,337,865 | | |
| 134 | | |
| | | |
| | | |
| 506,769 | | |
| | | |
| | | |
| 506,903 | |
Issuance of common stock
and warrants for debt conversion at $0.30 per share | |
| 66,666 | | |
| 7 | | |
| | | |
| | | |
| 19,993 | | |
| | | |
| | | |
| 20,000 | |
Issuance of common stock
for settlement at $0.44 to $0.70 per share | |
| 1,750,000 | | |
| 175 | | |
| | | |
| | | |
| 834,825 | | |
| | | |
| | | |
| 835,000 | |
Issuance of common stock
for finders fee at $0.45 per share | |
| 1,000,000 | | |
| 100 | | |
| | | |
| | | |
| 449,900 | | |
| | | |
| | | |
| 450,000 | |
Cancellation of common stock
for shares issued in error at $0.48 per share | |
| (100,000 | ) | |
| (10 | ) | |
| | | |
| | | |
| (47,990 | ) | |
| | | |
| | | |
| (48,000 | ) |
Allocation of expired options
to additional paid-in capital | |
| | | |
| | | |
| | | |
| | | |
| 338,751 | | |
| | | |
| | | |
| 338,751 | |
Net
loss for the year ended December 31, 2004 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (7,282,338 | ) | |
| (7,282,338 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2004 | |
| 90,117,246 | | |
| 9,012 | | |
| – | | |
| – | | |
| 35,470,898 | | |
| – | | |
| (36,412,275 | ) | |
| (932,365 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Issuance of
options for consulting services at $.01 – $.41 per share | |
| | | |
| | | |
| | | |
| | | |
| 1,290,662 | | |
| | | |
| | | |
| 1,290,662 | |
Issuance of common stock
for the exercise of options at $0.01 per share | |
| 2,064,900 | | |
| 206 | | |
| | | |
| | | |
| 20,443 | | |
| | | |
| | | |
| 20,649 | |
Issuance of 1,650,000 shares
for consulting services | |
| 1,650,000 | | |
| 165 | | |
| | | |
| | | |
| 590,835 | | |
| | | |
| | | |
| 591,000 | |
Sale of common stock and
issuance of warrants at exercise prices of $0.45-$0.50 per share | |
| 4,230,555 | | |
| 423 | | |
| | | |
| | | |
| 1,079,577 | | |
| | | |
| | | |
| 1,080,000 | |
Beneficial conversion feature
of convertible debt | |
| | | |
| | | |
| | | |
| | | |
| 516,800 | | |
| | | |
| | | |
| 516,800 | |
Sale of common stock
at $.15 and $0.18 per share | |
| 222,008 | | |
| 22 | | |
| | | |
| | | |
| 34,946 | | |
| | | |
| | | |
| 34,968 | |
Net
Loss for the year ended December 31, 2005 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (5,032,793 | ) | |
| (5,032,793 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2005 | |
| 98,284,709 | | |
| 9,828 | | |
| – | | |
| – | | |
| 39,004,161 | | |
| – | | |
| (41,445,068 | ) | |
| (2,431,079 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for services at $.15 – $.79 per share | |
| 2,405,579 | | |
| 241 | | |
| | | |
| | | |
| 1,245,734 | | |
| | | |
| | | |
| 1,245,975 | |
Issuance of common stock
for debt repayment at $.40 per share | |
| 667,500 | | |
| 67 | | |
| | | |
| | | |
| 266,933 | | |
| | | |
| | | |
| 267,000 | |
Issuance of common stock
for the exercise of options at $.01 per share | |
| 570,550 | | |
| 57 | | |
| | | |
| | | |
| 5,649 | | |
| | | |
| | | |
| 5,706 | |
Issuance of common stock at $.35 per share | |
| 1,800,000 | | |
| 180 | | |
| | | |
| | | |
| 629,820 | | |
| | | |
| | | |
| 630,000 | |
Issuance of common stock
for redemption of convertible debt at $.12 - $.18 per share and payment of interest at $.08 - $.14 per share |
|
|
9,805,329 |
|
|
|
981 |
|
|
|
|
|
|
|
|
|
|
|
837,469 |
|
|
|
|
|
|
|
|
|
|
|
838,450 |
|
Issuance of options for
wages and services at $.01 - $.80 per share | |
| | | |
| | | |
| | | |
| | | |
| 1,087,953 | | |
| | | |
| | | |
| 1,087,953 | |
Issuance of warrants as
inducement to sell convertible debt | |
| | | |
| | | |
| | | |
| | | |
| 598,741 | | |
| | | |
| | | |
| 598,741 | |
Issuance of warrants in
connection with convertible debt | |
| | | |
| | | |
| | | |
| | | |
| 2,540,732 | | |
| | | |
| | | |
| 2,540,732 | |
Issuance of warrants to
broker in connection with convertible debt issue | |
| | | |
| | | |
| | | |
| | | |
| 57,831 | | |
| | | |
| | | |
| 57,831 | |
Issuance of warrants for
services at $.80 per share | |
| | | |
| | | |
| | | |
| | | |
| 132,000 | | |
| | | |
| | | |
| 132,000 | |
Additional interest charge
for stock issued at below market prices | |
| | | |
| | | |
| | | |
| | | |
| 11,619 | | |
| | | |
| | | |
| 11,619 | |
Adjustment of derivative
liability due to conversion of convertible debt | |
| | | |
| | | |
| | | |
| | | |
| 300,472 | | |
| | | |
| | | |
| 300,472 | |
Net
Loss for the year ended December 31, 2006 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (12,609,187 | ) | |
| (12,609,187 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2006 | |
| 113,533,667 | | |
| 11,354 | | |
| – | | |
| – | | |
| 46,719,114 | | |
| – | | |
| (54,054,255 | ) | |
| (7,323,787 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred
Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Issuance of
options for compensation | |
| – | | |
| – | | |
| | | |
| | | |
| 14,496 | | |
| | | |
| | | |
| 14,496 | |
Issuance of common stock
for compensation | |
| 9,400,000 | | |
| 940 | | |
| | | |
| | | |
| 709,060 | | |
| | | |
| | | |
| 710,000 | |
Issuance of common stock
options for consulting services | |
| – | | |
| – | | |
| | | |
| | | |
| 268,594 | | |
| | | |
| | | |
| 268,594 | |
Issuance of common stock
for consulting services | |
| 17,641,667 | | |
| 1,763 | | |
| | | |
| | | |
| 843,240 | | |
| | | |
| | | |
| 845,003 | |
Issuance of common stock
for redemption of convertible debt | |
| 2,300,403 | | |
| 230 | | |
| | | |
| | | |
| 272,959 | | |
| | | |
| | | |
| 273,189 | |
Issuance of common stock
and warrants for restructuring of convertible debt | |
| 10,385,679 | | |
| 1,039 | | |
| | | |
| | | |
| 1,197,128 | | |
| | | |
| | | |
| 1,198,167 | |
Adjustment of derivative
liability due to restructuring of convertible debt | |
| – | | |
| – | | |
| | | |
| | | |
| 959,288 | | |
| | | |
| | | |
| 959,288 | |
Vesting of contingently
issued common shares | |
| 1,130,200 | | |
| 113 | | |
| | | |
| | | |
| 647,910 | | |
| | | |
| | | |
| 648,023 | |
Issuance of common stock
and warrants for cash proceeds | |
| 6,533,333 | | |
| 653 | | |
| | | |
| | | |
| 391,347 | | |
| | | |
| | | |
| 392,000 | |
Adjustment of compensation
related to variable common stock purchase options | |
| – | | |
| – | | |
| | | |
| | | |
| (54,839 | ) | |
| | | |
| | | |
| (54,839 | ) |
Net
Loss for the year ended December 31, 2007 | |
| – | | |
| – | | |
| | | |
| | | |
| | | |
| | | |
| (2,753,485 | ) | |
| (2,753,485 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2007 | |
| 160,924,949 | | |
| 16,092 | | |
| – | | |
| – | | |
| 51,968,297 | | |
| – | | |
| (56,807,740 | ) | |
| (4,823,351 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Acquisition
of product royalty rights granted - Chinese market | |
| 7,700,000 | | |
| 770 | | |
| | | |
| | | |
| 230,230 | | |
| | | |
| | | |
| 231,000 | |
Issuance of shares for legal
services | |
| 1,000,000 | | |
| 100 | | |
| | | |
| | | |
| 29,900 | | |
| | | |
| | | |
| 30,000 | |
Issuance of shares for consulting
services | |
| 1,125,000 | | |
| 113 | | |
| | | |
| | | |
| 22,387 | | |
| | | |
| | | |
| 22,500 | |
Issuance of compensatory
stock options - Black-Scholes valuation | |
| | | |
| | | |
| | | |
| | | |
| 75,921 | | |
| | | |
| | | |
| 75,921 | |
Vesting of contingently
issued common shares | |
| 7,096,256 | | |
| 710 | | |
| | | |
| | | |
| 424,778 | | |
| | | |
| | | |
| 425,488 | |
Adjustment of compensation
related to variable common stock purchase options | |
| | | |
| | | |
| | | |
| | | |
| (18,279 | ) | |
| | | |
| | | |
| (18,279 | ) |
Issuance of shares, options
and warrants in V-Clip acquisition | |
| 26,683,078 | | |
| 2,668 | | |
| | | |
| | | |
| 854,167 | | |
| | | |
| | | |
| 856,835 | |
Payment of RLC - related
party to common shares | |
| 15,000,000 | | |
| 1,500 | | |
| | | |
| | | |
| 148,500 | | |
| | | |
| | | |
| 150,000 | |
Issuance of shares for cash | |
| 6,594,665 | | |
| 659 | | |
| | | |
| | | |
| 340,001 | | |
| | | |
| | | |
| 340,660 | |
Convertible debentures and
accrued interest converted to common shares | |
| 25,178,393 | | |
| 2,518 | | |
| | | |
| | | |
| 1,097,225 | | |
| | | |
| | | |
| 1,099,743 | |
Issuance of stock options
- Board of advisors | |
| | | |
| | | |
| | | |
| | | |
| 8,321 | | |
| | | |
| | | |
| 8,321 | |
Conversion feature of convertible
note issued in connection with acquisition of White Label | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| – | |
Genetics, Inc. Black - Scholes
valuation | |
| | | |
| | | |
| | | |
| | | |
| 100,000 | | |
| | | |
| | | |
| 100,000 | |
Net
Loss for the year ended December 31, 2008 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (4,546,351 | ) | |
| (4,546,351 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2008 | |
| 251,302,341 | | |
| 25,130 | | |
| – | | |
| – | | |
| 55,281,448 | | |
| – | | |
| (61,354,091 | ) | |
| (6,047,513 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Paid-in Additional | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Conversion of
consultants debenture to shares in 504 placement | |
| 7,042,800 | | |
| 704 | | |
| | | |
| | | |
| 34,510 | | |
| | | |
| | | |
| 35,214 | |
Convertible debentures and
accrued interest converted to debt | |
| 82,075,790 | | |
| 8,208 | | |
| | | |
| | | |
| 2,223,657 | | |
| | | |
| | | |
| 2,231,865 | |
Issuance of common stock
for cash and warrants | |
| 37,318,333 | | |
| 3,732 | | |
| | | |
| | | |
| 1,282,385 | | |
| | | |
| | | |
| 1,286,117 | |
Issuance of common stock
for cash - 504 placement | |
| 18,600,000 | | |
| 1,860 | | |
| | | |
| | | |
| 368,150 | | |
| | | |
| | | |
| 370,010 | |
Issuance of shares - private
placement commission | |
| 500,000 | | |
| 50 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 50 | |
Issuance of preferred stock
for acquisition of Carcinotek, Inc. | |
| | | |
| | | |
| 5,000,000 | | |
| 500 | | |
| 499,500 | | |
| | | |
| | | |
| 500,000 | |
Stock options exercised
for cash | |
| 800,000 | | |
| 80 | | |
| | | |
| | | |
| 19,920 | | |
| | | |
| | | |
| 20,000 | |
Warrants exercised for cash
in connection with convertible debt | |
| 2,031,896 | | |
| 203 | | |
| | | |
| | | |
| 66,130 | | |
| | | |
| | | |
| 66,333 | |
Revolving line of credit
- related party - converted to common shares and warrants | |
| 46,416,175 | | |
| 4,642 | | |
| | | |
| | | |
| 4,853,028 | | |
| | | |
| | | |
| 4,857,670 | |
Warrants issued in partial
satisfaction of notes payable | |
| | | |
| | | |
| | | |
| | | |
| 100,000 | | |
| | | |
| | | |
| 100,000 | |
Adjustment of compensation
related to variable common stock purchase option | |
| | | |
| | | |
| | | |
| | | |
| 186,214 | | |
| | | |
| | | |
| 186,214 | |
Warrants and options issued
for services | |
| 21,800,000 | | |
| 2,180 | | |
| | | |
| | | |
| 1,434,405 | | |
| | | |
| | | |
| 1,436,585 | |
Issuance, conversion of
White Lake Generics acquisition | |
| 7,518,396 | | |
| 752 | | |
| | | |
| | | |
| 99,248 | | |
| | | |
| | | |
| 100,000 | |
Settlement of dispute with
Synexda SA | |
| 5,638,129 | | |
| 564 | | |
| | | |
| | | |
| 304,013 | | |
| | | |
| | | |
| 304,577 | |
Net
Loss for the year ended December 31, 2009 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (7,674,009 | ) | |
| (7,674,009 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2009 | |
| 481,043,860 | | |
| 48,105 | | |
| 5,000,000 | | |
| 500 | | |
| 66,752,608 | | |
| – | | |
| (69,028,100 | ) | |
| (2,226,887 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Issuance of
common stock and warrants for cash | |
| 19,193,333 | | |
| 1,919 | | |
| – | | |
| – | | |
| 411,948 | | |
| | | |
| | | |
| 413,867 | |
Issuance of common stock
for cash, net of repricing adjustments - 504 placements | |
| 12,000,000 | | |
| 1,200 | | |
| – | | |
| – | | |
| 63,942 | | |
| | | |
| | | |
| 65,142 | |
Convertible debentures and
accrued interest converted to shares and warrants | |
| 2,327,900 | | |
| 233 | | |
| – | | |
| – | | |
| 65,133 | | |
| | | |
| | | |
| 65,366 | |
Revolving line of credit,
related party - converted to shares and warrants | |
| 33,820,161 | | |
| 3,382 | | |
| – | | |
| – | | |
| 3,167,124 | | |
| | | |
| | | |
| 3,170,506 | |
Satisfaction of liabilities
- issuance of common stock | |
| 3,627,573 | | |
| 363 | | |
| – | | |
| – | | |
| 177,137 | | |
| | | |
| | | |
| 177,500 | |
Satisfaction of liabilities
- issuance of common stock and warrants | |
| 500,000 | | |
| 50 | | |
| – | | |
| – | | |
| 27,950 | | |
| | | |
| | | |
| 28,000 | |
Consultants notes and accrued
interest converted to shares and warrants | |
| 5,052,318 | | |
| 505 | | |
| – | | |
| – | | |
| 428,541 | | |
| | | |
| | | |
| 429,046 | |
Issuance of common shares
for services | |
| 2,273,333 | | |
| 227 | | |
| – | | |
| – | | |
| 105,273 | | |
| | | |
| | | |
| 105,500 | |
Issuance of common shares
and warrants for services | |
| 1,000,000 | | |
| 100 | | |
| – | | |
| – | | |
| 137,900 | | |
| | | |
| | | |
| 138,000 | |
Issuance of common shares
in connection with debt settlement transactions | |
| 55,514,804 | | |
| 5,551 | | |
| – | | |
| – | | |
| 1,976,405 | | |
| | | |
| | | |
| 1,981,956 | |
Issuance of common shares
for cancellation of marketing rights | |
| 7,500,000 | | |
| 750 | | |
| – | | |
| – | | |
| 224,250 | | |
| | | |
| | | |
| 225,000 | |
Cash received and issuance
of additional warrants upon exercise of warrants | |
| 2,500,000 | | |
| 250 | | |
| – | | |
| – | | |
| 74,750 | | |
| | | |
| | | |
| 75,000 | |
Adjustment of variable common
stock purchase options | |
| – | | |
| – | | |
| – | | |
| – | | |
| (169,252 | ) | |
| | | |
| | | |
| (169,252 | ) |
Amortization of fair value
of warrants issued for services | |
| – | | |
| – | | |
| – | | |
| – | | |
| 109,324 | | |
| | | |
| | | |
| 109,324 | |
Conversion of preferred shares into common
shares | |
| 2,500,000 | | |
| 250 | | |
| (250,000 | ) | |
| (25 | ) | |
| (225 | ) | |
| | | |
| | | |
| – | |
Cost of beneficial conversion
feature of debt | |
| | | |
| | | |
| | | |
| | | |
| 657,338 | | |
| | | |
| | | |
| 657,338 | |
Proceeds of issuance for
non-controlling interest in VG Energy | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 100,000 | | |
| | | |
| 100,000 | |
Net Loss attributable to
noncontrolling interest, year ended December 31, 2010 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (213 | ) | |
| | | |
| (213 | ) |
Net
Loss attributable to controlling interest, year ended December 31, 2010 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (8,517,707 | ) | |
| (8,517,707 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2010 | |
| 628,853,282 | | |
| 62,885 | | |
| 4,750,000 | | |
| 475 | | |
| 74,210,146 | | |
| 99,787 | | |
| (77,545,807 | ) | |
| (3,172,514 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Issuance of
common stock and warrants for cash | |
| 7,300,000 | | |
| 730 | | |
| | | |
| | | |
| 85,270 | | |
| | | |
| | | |
| 86,000 | |
Notes and interest converted
to common shares | |
| 225,227,074 | | |
| 22,523 | | |
| | | |
| | | |
| 2,232,301 | | |
| | | |
| | | |
| 2,254,824 | |
Issuance of common shares
for services | |
| 56,152,122 | | |
| 5,615 | | |
| | | |
| | | |
| 895,199 | | |
| | | |
| | | |
| 900,814 | |
Conversion of preferred shares into common
shares | |
| 5,000,000 | | |
| 500 | | |
| (500,000 | ) | |
| (50 | ) | |
| (450 | ) | |
| | | |
| | | |
| – | |
Issuance of preferred shares
to Wonderland | |
| | | |
| | | |
| 500,000 | | |
| 50 | | |
| 224,950 | | |
| | | |
| | | |
| 225,000 | |
Debt discount | |
| | | |
| | | |
| | | |
| | | |
| 2,232,742 | | |
| | | |
| | | |
| 2,232,742 | |
Derivative liability on
conversions | |
| | | |
| | | |
| | | |
| | | |
| 139,339 | | |
| | | |
| | | |
| 139,339 | |
Imputed interest on notes
payable - consultants | |
| | | |
| | | |
| | | |
| | | |
| 22,632 | | |
| | | |
| | | |
| 22,632 | |
Options earned by employees | |
| | | |
| | | |
| | | |
| | | |
| 1,092,000 | | |
| | | |
| | | |
| 1,092,000 | |
Issuance of warrants for
interest and services | |
| | | |
| | | |
| | | |
| | | |
| 440,120 | | |
| | | |
| | | |
| 440,120 | |
Issuance of VGE shares for
services | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 261,250 | | |
| | | |
| 261,250 | |
Investment by noncontrolling
interest | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 500,000 | | |
| | | |
| 500,000 | |
Net Loss attributable to
noncontrolling interest, year ended December 31, 2011 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (73,560 | ) | |
| | | |
| (73,560 | ) |
Net
Loss attributable to controlling interest, year ended December 31, 2011 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (7,963,150 | ) | |
| (7,963,150 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2011 | |
| 922,532,478 | | |
| 92,253 | | |
| 4,750,000 | | |
| 475 | | |
| 81,574,249 | | |
| 787,477 | | |
| (85,508,957 | ) | |
| (3,054,503 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Effect
of reverse 600:1 stock split | |
| (920,837,717 | ) | |
| (92,084 | ) | |
| | | |
| | | |
| 92,084 | | |
| | | |
| | | |
| – | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance January 1, 2012 | |
| 1,694,761 | | |
| 169 | | |
| 4,750,000 | | |
| 475 | | |
| 81,666,333 | | |
| 787,477 | | |
| (85,508,957 | ) | |
| (3,054,503 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Issuance of
common stock and warrants for cash | |
| 68,056 | | |
| 7 | | |
| | | |
| | | |
| 131,993 | | |
| | | |
| | | |
| 132,000 | |
Convertible promissory notes
converted to shares, including noncash interest | |
| 781,244 | | |
| 78 | | |
| | | |
| | | |
| 692,422 | | |
| | | |
| | | |
| 692,500 | |
Satisfaction of liabilities
- issuance of common stock | |
| 516,667 | | |
| 52 | | |
| | | |
| | | |
| 154,948 | | |
| | | |
| | | |
| 155,000 | |
Issuance of common shares
for services | |
| 66,941 | | |
| 7 | | |
| | | |
| | | |
| 567,636 | | |
| | | |
| | | |
| 567,643 | |
Cancellation of preferred shares - Zhabllov | |
| (10,768 | ) | |
| (1 | ) | |
| (154,587 | ) | |
| (15 | ) | |
| 16 | | |
| | | |
| | | |
| – | |
Fair value of options granted
to employees and consultants | |
| | | |
| | | |
| | | |
| | | |
| 195,500 | | |
| | | |
| | | |
| 195,500 | |
Exchange of common stock
purchase options and warrants for preferred stock | |
| | | |
| | | |
| 1,620,030 | | |
| 162 | | |
| (162 | ) | |
| | | |
| | | |
| – | |
Conversion to Secured Revolving
Credit Note - Best to preferred shares | |
| | | |
| | | |
| 3,500,000 | | |
| 350 | | |
| 251,650 | | |
| | | |
| | | |
| 252,000 | |
Imputed interest on notes
payable - consultants | |
| | | |
| | | |
| | | |
| | | |
| 57,405 | | |
| | | |
| | | |
| 57,405 | |
Derivative liability on
consultants notes | |
| | | |
| | | |
| | | |
| | | |
| 107,000 | | |
| | | |
| | | |
| 107,000 | |
Beneficial conversion feature
- DMBM debentures arising from stock split and other modifications | |
| | | |
| | | |
| | | |
| | | |
| 2,160,828 | | |
| | | |
| | | |
| 2,160,828 | |
Beneficial conversion feature
on 6% and other debentures | |
| | | |
| | | |
| | | |
| | | |
| 185,071 | | |
| | | |
| | | |
| 185,071 | |
Beneficial conversion feature
due to conversion factor changes | |
| | | |
| | | |
| | | |
| | | |
| 1,292,201 | | |
| | | |
| | | |
| 1,292,201 | |
Net Loss attributable to
noncontrolling interest, year ended December 31, 2012 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (89,080 | ) | |
| | | |
| (89,080 | ) |
Net
Loss attributable to controlling interest, year ended December 31, 2012 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (6,850,634 | ) | |
| (6,850,634 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2012 | |
| 3,116,901 | | |
| 312 | | |
| 9,715,443 | | |
| 972 | | |
| 87,462,841 | | |
| 698,397 | | |
| (92,359,591 | ) | |
| (4,197,069 | ) |
(continued)
VG LIFE SCIENCES
INC. (formerly VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A Development
Stage Company)
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' DEFICIT
July 11, 1995
(Inception) to December 31, 2013
(continued)
| |
Common Stock | | |
Preferred Stock | | |
Additional Paid-in | | |
Non-
controlling | | |
Deficit Accumulated During Development Stage | | |
Total Stockholders' Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
interests | | |
(Restated) | | |
(Deficit) | |
Convertible
promissory notes converted to shares, including noncash interest | |
| 14,110,351 | | |
| 1,411 | | |
| | | |
| | | |
| 1,601,696 | | |
| | | |
| | | |
| 1,603,107 | |
Satisfaction of liabilities
- issuance of common stock | |
| 230,000 | | |
| 23 | | |
| | | |
| | | |
| 41,977 | | |
| | | |
| | | |
| 42,000 | |
Issuance of common shares
for services | |
| 2,500 | | |
| | | |
| | | |
| | | |
| 43,350 | | |
| | | |
| | | |
| 43,350 | |
Fair value of options granted
to employees and consultants | |
| | | |
| | | |
| | | |
| | | |
| 1,442,844 | | |
| | | |
| | | |
| 1,442,844 | |
Derivative liability on
conversions | |
| | | |
| | | |
| | | |
| | | |
| 1,018,462 | | |
| | | |
| | | |
| 1,018,462 | |
Imputed interest on notes
payable - consultants | |
| | | |
| | | |
| | | |
| | | |
| 109,789 | | |
| | | |
| | | |
| 109,789 | |
Fair value of debt discount
on various issuances | |
| | | |
| | | |
| | | |
| | | |
| 2,593,381 | | |
| | | |
| | | |
| 2,593,381 | |
Beneficial conversion feature
on notes to settlement arrangements | |
| | | |
| | | |
| | | |
| | | |
| 294,907 | | |
| | | |
| | | |
| 294,907 | |
Issuance of VGE shares for
services | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 60,000 | | |
| | | |
| 60,000 | |
Net Loss attributable to
noncontrolling interest, year ended December 31, 2013 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (59,476 | ) | |
| | | |
| (59,476 | ) |
Net
Loss attributable to controlling interest, year ended December 31, 2013 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (7,419,722 | ) | |
| (7,419,722 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, December 31,
2013 | |
| 17,459,752 | | |
$ | 1,746 | | |
| 9,715,443 | | |
$ | 972 | | |
$ | 94,609,247 | | |
$ | 698,921 | | |
$ | (99,779,313 | ) | |
$ | (4,468,427 | ) |
See accompanying notes to consolidated financial
statements.
VG LIFE SCIENCES INC. (formerly VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
| |
Year Ended
December 31, | | |
Cumulative for the Period
July 11, 1995
(Inception) to | |
| |
2013 | | |
2012 | | |
December 31, 2013 | |
Cash Flows From Operating Activities: | |
| | | |
| | | |
| | |
Net loss attributable to controlling interests | |
$ | (7,419,722 | ) | |
$ | (6,850,634 | ) | |
$ | (99,779,313 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Depreciation | |
| – | | |
| – | | |
| 1,645,748 | |
Accretion of debt discount | |
| 1,017,795 | | |
| 3,625,654 | | |
| 7,387,827 | |
Debt issuance costs | |
| – | | |
| – | | |
| 13,339,211 | |
Imputed interest | |
| 109,789 | | |
| 57,405 | | |
| 189,826 | |
Non-controlling interest | |
| (59,476 | ) | |
| (89,080 | ) | |
| (222,329 | ) |
Services included in accounts payable to be satisfied in shares. | |
| – | | |
| – | | |
| 200,000 | |
Issuance of common stock and warrants for services | |
| 60,000 | | |
| – | | |
| 472,250 | |
Stock based compensation | |
| – | | |
| – | | |
| 1,890,449 | |
Issuance of common stock for services and finder’s fee | |
| – | | |
| – | | |
| 7,864,423 | |
Issuance of convertible notes for services | |
| 834,010 | | |
| – | | |
| 1,494,010 | |
Beneficial conversion feature | |
| – | | |
| 71,500 | | |
| 71,500 | |
Issuance of preferred stock for interest | |
| | | |
| | | |
| 225,000 | |
Settlement - distribution agreement rights | |
| – | | |
| – | | |
| 1,668,953 | |
Debt Settlement liabilities and common shares in excess of recorded liabilities | |
| – | | |
| – | | |
| 399,530 | |
Issuance of stock and warrants for interest and financing costs | |
| – | | |
| – | | |
| 7,513,378 | |
Non-cash operating expenses and other charges | |
| – | | |
| – | | |
| 5,387,663 | |
Non-cash income - gain on settlements | |
| – | | |
| – | | |
| (384,966 | ) |
Options and warrants issued for services and wages | |
| 1,442,844 | | |
| 195,500 | | |
| 13,013,924 | |
Options exercised for services | |
| – | | |
| – | | |
| 116,317 | |
Contingently issued stock issued for services | |
| – | | |
| – | | |
| 792,499 | |
Warrants exercised for services | |
| – | | |
| – | | |
| 12,500 | |
Issuance of common stock for expenses paid by third party | |
| – | | |
| – | | |
| 593,947 | |
Issuance of common stock for settlement agreement | |
| | | |
| | | |
| 1,060,000 | |
Notes payable issued for expenses | |
| – | | |
| – | | |
| 897,306 | |
Notes payable converted to accrued wages | |
| – | | |
| – | | |
| (25,000 | ) |
Satisfaction of Syexia - in excess of accrual | |
| – | | |
| – | | |
| 104,577 | |
Change in variable common stock purchase options | |
| – | | |
| – | | |
| (22,418 | ) |
(Increase) decrease in prepaid expenses and other current assets | |
| (75,494 | ) | |
| – | | |
| (166,814 | ) |
(Increase) decrease in deposits and other assets | |
| – | | |
| – | | |
| 1,972,832 | |
Increase (decrease) in accrued interest | |
| 54,939 | | |
| 4,281 | | |
| 1,291,660 | |
Increase (decrease) in accounts payable | |
| 74,655 | | |
| 204,471 | | |
| 1,317,709 | |
Increase (decrease) in accrued expenses | |
| 223,412 | | |
| 1,377,999 | | |
| 2,657,288 | |
Increase (decrease) in accrued wages payable | |
| 282,249 | | |
| (139,250 | ) | |
| 771,744 | |
Increase (decrease) in advances - related parties | |
| – | | |
| – | | |
| 74,283 | |
Increase (decrease) in advances | |
| – | | |
| – | | |
| 136,000 | |
Increase (decrease) in insurance finance agreement | |
| 33,836 | | |
| – | | |
| 33,836 | |
Increase (decrease) in convertible debt - related parties and other | |
| (112,475 | ) | |
| – | | |
| (112,475 | ) |
Increase (decrease) in derivative liability | |
| 2,495,663 | | |
| 582,362 | | |
| 4,708,000 | |
| |
| | | |
| | | |
| | |
Net cash used in operating activities | |
| (1,037,975 | ) | |
| (959,792 | ) | |
| (21,409,125 | ) |
| |
| | | |
| | | |
| | |
Cash Flows From Investing Activities: | |
| | | |
| | | |
| | |
Increase in leasehold improvements | |
| – | | |
| – | | |
| (1,039,306 | ) |
Acquisition of equipment | |
| – | | |
| – | | |
| (361,665 | ) |
Increase in intangible assets | |
| – | | |
| – | | |
| (5,206,051 | ) |
| |
| | | |
| | | |
| | |
Net cash used in investing activities | |
| – | | |
| – | | |
| (6,607,022 | ) |
(continued)
| |
Year Ended December 31, | | |
Cumulative for the Period July 11, 1995 (Inception) to | |
| |
2013 | | |
2012 | | |
December 31, 2013 | |
Cash Flows From Financing Activities: | |
| | | |
| | | |
| | |
Proceeds of MedBridge Debt | |
| 125,000 | | |
| – | | |
| 125,000 | |
Proceeds from convertible debt - related party and other | |
| 1,829,020 | | |
| 1,121,010 | | |
| 6,606,600 | |
Payment for convertible debt - related party and other | |
| (208,244 | ) | |
| (292,912 | ) | |
| (896,767 | ) |
Proceeds from sale of common stock and warrants, net | |
| – | | |
| 132,000 | | |
| 11,082,204 | |
Proceeds from Revolving line of credit- related party | |
| – | | |
| – | | |
| 3,087,432 | |
Repayments of Revolving line of credit - related party | |
| – | | |
| – | | |
| (1,694,162 | ) |
Proceeds of sale of VGE securities to third parties, net | |
| – | | |
| – | | |
| 600,000 | |
Proceeds from notes payable | |
| | | |
| | | |
| 267,000 | |
Proceeds from exercise of options and warrants | |
| – | | |
| – | | |
| 173,061 | |
Proceeds from notes payable - related parties | |
| – | | |
| – | | |
| 9,379,671 | |
| |
| | | |
| | | |
| | |
Net cash provided by financing activities | |
| 1,745,776 | | |
| 960,098 | | |
| 28,730,039 | |
| |
| | | |
| | | |
| | |
Increase (decrease) in Cash | |
| 707,801 | | |
| 306 | | |
| 713,892 | |
Cash and cash equivalents, beginning of period | |
| 6,091 | | |
| 5,785 | | |
| – | |
| |
| | | |
| | | |
| | |
Cash and cash equivalents, end of period | |
$ | 713,892 | | |
$ | 6,091 | | |
$ | 713,892 | |
| |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |
| | | |
| | | |
| | |
Cash paid during the period for: | |
| | | |
| | | |
| | |
Interest | |
$ | – | | |
$ | – | | |
$ | 546,003 | |
Income taxes | |
$ | – | | |
$ | – | | |
$ | – | |
| |
| | | |
| | | |
| | |
NON-CASH TRANSACTIONS | |
| | | |
| | | |
| | |
Issuance of common stock and warrants for convertible notes and interest | |
$ | – | | |
$ | – | | |
$ | 6,072,377 | |
Discount on indebtedness | |
$ | 2,865,607 | | |
$ | 3,566,601 | | |
$ | 8,664,950 | |
Reclassification of derivative liability to additional paid-in capital | |
$ | 1,018,462 | | |
$ | 107,000 | | |
$ | 1,264,800 | |
Conversion of various accruals to convertible notes | |
$ | 604,436 | | |
$ | 802,755 | | |
$ | 1,953,934 | |
Issuance of common stock in satisfaction of accounts payable/notes/accruals | |
$ | 1,711,137 | | |
$ | 1,415,143 | | |
$ | 3,787,303 | |
Issuance of Series A Preferred Stock for secured
revolving credit note | |
$ | – | | |
$ | 252,000 | | |
$ | 252,000 | |
Refinancing of convertible debt - related party
Revolving line of credit | |
$ | – | | |
$ | – | | |
$ | 3,180,393 | |
Issuance of common shares in various debt settlements and partial satisfactions | |
$ | – | | |
$ | – | | |
$ | 629,451 | |
Issuance of unsecured convertible debentures for accounts payable | |
$ | – | | |
$ | – | | |
$ | 476,866 | |
Issuance of common stock for debt repayment - DMBM/Wonderland, net | |
$ | – | | |
$ | – | | |
$ | 35,214 | |
Noncontrolling interest, net | |
$ | – | | |
$ | – | | |
$ | 2,447 | |
Issuance of common stock for T&T legal settlement and accrued interest | |
$ | – | | |
$ | – | | |
$ | 1,035,000 | |
Issuance of convertible note to acquire interest in unconsolidated subsidiary | |
$ | – | | |
$ | – | | |
$ | 782,814 | |
Issuance of common shares, options and warrants - V Clip acquisition | |
$ | – | | |
$ | – | | |
$ | 1,502,479 | |
Issuance of common shares - repurchase product royalty rights, China Market | |
$ | – | | |
$ | – | | |
$ | 231,000 | |
Issuance of common shares and warrants - Carcinotek acquisition | |
$ | – | | |
$ | – | | |
$ | 1,000,000 | |
Restructuring of convertible debentures | |
$ | – | | |
$ | – | | |
$ | 1,198,167 | |
Issuance (settlement) of unsecured convertible debentures - patents | |
$ | – | | |
$ | – | | |
$ | 248,000 | |
Issuance of common stock for debt paid by third party | |
$ | – | | |
$ | – | | |
$ | 593,947 | |
Issuance of common stock for debt and interest | |
$ | – | | |
$ | – | | |
$ | 9,086,511 | |
Issuance of common stock for finder’s fee | |
$ | – | | |
$ | – | | |
$ | 450,000 | |
Warrants issued with convertible debentures and amendment of arrangement | |
$ | – | | |
$ | – | | |
$ | 516,800 | |
Transfer from derivative liabilities | |
$ | – | | |
$ | – | | |
$ | 2,004,423 | |
Issuance of warrant in partial consideration of notes payable | |
$ | – | | |
$ | – | | |
$ | 100,000 | |
Issuance of note in consideration of White Label acquisition | |
$ | – | | |
$ | – | | |
$ | 100,000 | |
See accompanying notes to consolidated financial
statements.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
NOTE 1 – ORGANIZATION AND DESCRIPTION OF
BUSINESS
VG Life Sciences Inc. (the “Company”
or “VGLS”), formerly Viral Genetics, Inc., was incorporated in California on July 11, 1995 and is in the development
stage. The Company is engaged in research and development of therapeutic and diagnostic pharmaceutical and medical products. The
Company was acquired by a publically traded Delaware Corporation and became a reporting issuer on October 1, 2001. On November
5, 2001, the publically traded company changed its name to Viral Genetics, Inc. On November 26, 2012, the Company’s name
was changed to VG Life Sciences, Inc. The Company’s fiscal year-end is December 31.
As of December 31, 2013 and 2012, the Company
has the following subsidiaries:
Subsidiary Name | |
Origination/Acquisition Date | |
Ownership Percentage |
V-Clip Pharmaceuticals | |
2008 | |
100% |
Carcinotek, Inc. | |
2008 | |
100% |
White Label Generics, Inc. | |
2008 | |
49% |
MetaCytolytics, Inc. | |
2009 | |
100% |
Viral Genetics Beijing, Ltd. | |
2009 | |
100% |
VG Energy, Inc. (“VGE”) | |
2010 | |
81.65% |
The various subsidiaries were organized or acquired to
facilitate the use of the Company’s Targeted Peptide Technology (“TPT”) and Metabolic Disruption Technology,
(“MDT”). As of December 31, 2013 and 2012, these subsidiaries were inactive.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies
is presented to assist in understanding the consolidated financial statements. The consolidated financial statements and notes
are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the United States of America (“GAAP”), and have been
consistently applied in the preparation of these consolidated financial statements.
Management believes that the accompanying
consolidated financial statements and financial information for each of the years ended December 31, 2013 and 2012 and for the
period from July 11, 1995 (Inception) to December 31, 2013 have been prepared in accordance with generally accepted accounting
principles in the United States, consistently applied; that all material matters necessary for a fair presentation are included
and disclosed to the extent necessary and that all material adjustments have been made.
Going Concern
As of December 31, 2013, the Company had
a deficit accumulated during the development stage of approximately $99.8 million and requires substantial additional funds to
continue its research and development, to support its operations and to achieve its business development goals, the attainment
of which are not assured. The Company has been able to satisfy certain liabilities with convertible indebtedness and common shares
and enter into debt settlement arrangements facilitated by third party financing with vendors and creditors for substantial amounts
of its various financial obligations. Convertible instruments have also been converted into equity. However, substantial indebtedness
remains and substantial recurring losses from operations and new additional liabilities continue to be incurred.
These factors and uncertainties raise substantial
doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in existence. Management has designed plans for sales of the Company’s
future pharmaceutical related products. Management intends to seek additional capital from new equity securities offerings, from
debt financing and debt restructuring to provide funds needed to increase liquidity, fund internal growth and fully implement
its business plan. However, management can give no assurance that these funds will be available in adequate amounts, or if available,
on terms that would be satisfactory to the Company.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
The timing and amount of the Company’s
capital requirements will depend on a number of factors, including the need for funds to support research and development and payment
requirements to sustain licensing rights, demand for products and services and the availability of opportunities for international
expansion through affiliations, to maintain its status as a public company, shareholder and investor relations, to establish and
maintain current and new business relationships and for other general corporate business purposes.
Consolidated Financial Statements
The accompanying financial statements include
those of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
For purposes of the statements of cash flows,
the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Development Stage Enterprise
The Company is a development stage company
and will continue to be considered as such until it has its own significant operations and revenues. The Company does not currently
have any revenue and expects to continue to incur substantial additional research, development and operating costs related to the
continuation of the development of therapeutic and diagnostic pharmaceutical and medical products.
Impaired Asset Policy
The Company follows generally
accepted accounting policies related to Accounting for the Impairment or Disposal of Long-Lived Assets. This provides for a
single accounting model for long-lived assets to be disposed of by sale, including discontinued operations. This policy
requires that these long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether
reported in continuing operations or discontinued operations.
Reclassifications and Restatements
Certain amounts from prior periods have
been reclassified with respect to the years ended December 31, 2013 and 2012 to conform to the current period presentation. These
reclassifications have not resulted in any material changes to the Company’s accumulated deficit or the net losses presented.
Research and Development
Research and development expenses are charged
to operations as incurred.
Use of Estimates
The process of preparing financial statements
in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions
and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
Basic and Diluted Net Loss Per Share
The Company computes loss per share in accordance
with generally accepted accounting principles which requires presentation of both basic and diluted earnings per share on the face
of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted
average number of outstanding common shares during the period. The treasury stock method is used to determine the dilutive effects
of stock options and warrants. Dilutive loss per share is equal to the basic loss per share for the years ended December 31, 2013
and 2012 because common stock equivalents would have been anti-dilutive.
Fair Value of Financial Instruments
Fair value is defined as the price that
would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants
at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be
calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific
to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the entity’s
own credit risk.
A fair value hierarchy for valuation inputs
is established. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair
value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined
by the lowest level input that is significant to the fair value measurement in its entirety.
These levels are:
Level 1 – inputs are based upon unadjusted
quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon quoted
prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active,
and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated
by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable
and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow
models, and similar techniques.
The Company’s financial instruments
consist of cash, notes payable, accounts payable, accrued expenses, and accrued interest, convertible notes payable and various
forms of convertible indebtedness. The carrying value of these financial instruments approximates their fair value based on their
liquidity, their short-term nature or application of appropriate risk based discount rates to determine fair value. These financial
assets and liabilities are valued using level 2 inputs, except for cash which is at level 1. The Company is not exposed to significant
interest, exchange or credit risk arising from these financial instruments, except that certain convertible instruments may be
satisfied in shares of common stock at the option of the holder and in some instances by the Company, which per share price can
fluctuate.
Stock-Based Compensation
The Company records stock-based compensation
by using the fair value method. All transactions in which goods or services are the consideration received for the issuance of
equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument
issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as
consideration are measured and recognized based on the fair value of the equity instruments issued.
VG LIFE SCIENCES INC. (FORMERLY
VIRAL GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
Income Taxes
The Company accounts for income taxes
using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that
deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between
the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards.
Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when
the differences are expected to reverse. The Company has recorded a full valuation allowance to reduce the deferred tax asset
associated with its accumulated losses $99.6 million to zero, which is the amount that is more likely than not to be
realized.
Concentration of Credit Risk
The Company has financial instruments that
are exposed to concentrations of credit risk and consist primarily of cash. The Company routinely maintains cash and temporary
cash investments at certain financial institutions in amounts substantially in excess of Federal Deposit Insurance Corporation
(“FDIC”) insurance limits. Management believes that these financial institutions are of high quality and the risk of
loss is minimal. At December 31, 2013, the Company had cash balances in excess of FDIC limits of approximately $500,000.
Compensated Absences
The Company has not accrued a liability
in accordance with ASC 710, as the amount of the liability cannot be reasonably estimated at December 31, 2013 and 2012.
Contingencies
Certain conditions may exist as of the date
the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more
future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities,
and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that
are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates
the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought
or expected to be sought therein.
If the assessment of a contingency indicates
that it is possible that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability
would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material
loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent
liability, together with an estimate of range of possible loss if determinable and material, would be disclosed.
New Accounting Pronouncements
The Company has implemented all new accounting
pronouncements that are in effect and that may impact its financial statement and does not believe that there are any other new
accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Subsequent Events
The Company evaluates subsequent events
through the date when financial statements are issued.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
NOTE 3 – PATENTS AND LICENSES
Patents and Licenses consisted of the following at December
31, 2013 and 2012:
Patent Rights Acquisitions | |
2013 | | |
2012 | |
V-Clip Pharmaceuticals | |
$ | 803,836 | | |
$ | 803,836 | |
Colorado/Vermont | |
| 248,000 | | |
| 248,000 | |
Carcinotek, Inc. (net of $475,000 impairment) | |
| 25,000 | | |
| 25,000 | |
| |
| | | |
| | |
| |
$ | 1,076,836 | | |
$ | 1,076,836 | |
V-Clip Acquisition-
V-Clip Pharmaceuticals, Inc. (“V-Clip”)
was formed by the Company and other founding shareholders (44% owned by the Company and 56% owned by other founding shareholders)
as the vehicle to acquire rights to certain patents and patent applications (owned by the University of Colorado) in the fields
of diagnosis and treatment of HIV, AIDS, Hepatitis C, and Herpes developed by Karen Newell, PhD, at the University of Colorado.
In November 2007, the University of Colorado granted to V-Clip, a subsidiary of the Company, an exclusive worldwide license of
the University’s patent rights to make, use, sell, offer to sell, and import any licensed products pertaining to patented
technology owned by the University relating to the diagnosis and treatment of HIV, AIDS, Hepatitis C and Herpes. As part of the
license, the Company had the right to acquire the 56% of V-Clip not already owned by the Company. Successful completion of preliminary
tests indicated a match between the Company’s own work and compounds predicted by Dr. Newell’s work. As a result, the
Company exercised its right to acquire the remainder of V-Clip in October 2008. The Company exercised its option to obtain the
remaining 56% of V-Clip that it did not already own and merged V-Clip into the Company as a wholly-owned subsidiary. In connection
with the transaction, valued by the Company at $803,836, the Company issued 26,683,078 common shares and 43,854,355 warrants to
purchase common shares at prices between $0.03 and $0.282 per share (pre-split).
Colorado/Vermont-
Effective in December 2009, the Company
entered into agreements with the University of Vermont and the University of Colorado (together the “Universities”)
whereby it agreed to reimburse them for certain prior patent costs they incurred for a Metabolic Disruption portfolio totaling
approximately $248,000. On December 3, 2009, the Company issued two 5% Unsecured Convertible Notes to the Universities evidencing
these obligations pursuant to the Company’s licensing agreements with these institutions. Royalties and milestone payments
are payable by the Company upon completion of certain milestones, including FDA clinical trial approval and commercialization,
as well as upon sublicensing of the rights. The Company now holds exclusive direct licenses to the underlying patents, patents
rights, patent applications and other rights.
Carcinotek Acquisition-
In March 2009, the Company completed the acquisition of Carcinotek
in exchange for five million shares of Series A Preferred Shares. Through this transaction, the Company obtained the last remaining
rights to use of the TNP technology that were not previously owned by the Company – in this case, those relating to cancer
and other applications.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
NOTE 4 – CONVERTIBLE DEBT – RELATED PARTIES
The following are the components of Convertible Debt –
Related Parties:
| |
2013 | | |
2012 | |
Secured Revolving Credit Note-Related Party, matures December 31, 2013 (amended), interest rate-5.0% per annum, principal and accrued interest can be converted into units (composed of one share of company stock and a warrant to purchase one share of company stock at 1.5 times the conversion price, exercisable immediately) at any time at the volume-weighted average closing price of the stock for the 20 trading days immediately prior to the conversion date. Warrants expire five years from date of issuance. Outstanding balance was collateralized by all assets. | |
$ | – | | |
$ | 646,970 | |
| |
| | | |
| | |
Convertible Unsecured Note-Related Party, matures December 31, 2018, interest
rate-5.0% per annum, principal and interest can be converted into units (composed of one share of company stock and a warrant
to purchase one share of company stock at 1.5 times the conversion price, exercisable immediately) at any time at the
volume-weighted average closing price of the stock for the 20 trading days immediately prior to the conversion date.
Warrants expire five years from the date of issuance. Convertible into 2,657,800 common shares at December 31,
2013. | |
| 577,328 | | |
| – | |
| |
| | | |
| | |
Convertible Debentures-MedBridge Venture Fund –Related Party, net of discount ($1,476,747); matures September 15, 2015; interest rate- 8%; principal and accrued interest are convertible at any time at the holders’ option at conversion price 10% lower than the lowest three day average closing prices of the Company’s common stock starting on July 16, 2013 and ending on September 15, 2013 ($0.0588). The Company also issued warrants to purchase four common shares for each $1 of principal at $0.45 per share, exercisable on any date from the four-year anniversary to the five-year anniversary from the date of the agreement. Convertible into 27,976,190 common shares at December 31, 2013. | |
| 168,253 | | |
| – | |
| |
| | | |
| | |
Line of credit-MedBridge Development Company, LLC, the line of credit (not to
exceed $550,000) remains in effect till March 18, 2015. Letter of credit consists of $50,000 deposit, $300,000
available in monthly installments over 24 months, and $200,000 available at the lender’s
discretion. Lender’s fees ($20,000/month) for services are to be paid in shares at the average closing price
per calendar quarter minus 10%. Cash advances are to be paid in shares at the average price in the 20-day period preceding
effective date of the agreement ($0.1465); plus warrants for one share for each share issued at the respective defined
average price, exercisable for 18 months after a two-year lockup period. Convertible into 497,203 common shares at
December 31, 2013. | |
| 97,500 | | |
| – | |
| |
| | | |
| | |
Convertible Revolving Credit Notes to Consultants-mature December 31, 2015, non-interest bearing, principal may be converted into common shares at the election of the holder at any time prior to the maturity date; principal is convertible at 80% of the 20-day volume-weighted average closing price immediately prior to the date of notice of conversion. Convertible into 5,764,034 common shares at December 31, 2013. | |
| 1,001,651 | | |
| 793,906 | |
| |
| | | |
| | |
TOTAL CONVERTIBLE DEBT-RELATED PARTY | |
$ | 1,844,732 | | |
$ | 1,440,876 | |
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
Effective on October 1, 2013, the Company
and Best Investment Trust (“BIT”) entered into an unsecured note in the amount of $993,023 ($577,328 at December 31,
2013) with interest at 5% per annum, due December 31, 2018. In addition, the Company issued an identical note in the amount of
$63,375 to another individual who participated in the arrangement with BIT. This note was issued as a replacement and amendment
of the secured revolving line of credit dated March 5, 2008 and subsequently assigned to BIT. All or any portion of the principal
balance and accrued interest may be exchanged for Units at any time. Any unpaid principal due on the maturity date shall automatically
be exchanged for Units based upon the exchange price upon maturity. BIT is controlled by the Company’s Chairman, Vice President
of Research and Development and Secretary.
Effective on July 13, 2013, the Company
and MedBridge Venture Fund, LLC (“MVF”) entered into a Convertible Promissory Note and Warrant Purchase Agreement.
The note may be partially converted at any time based on the discretion of MVF. If the notes or any portion of them are not converted
by MVF prior to maturity, on maturity the outstanding amount of the notes and accrued interest will automatically be converted
into common stock at the conversion price. In the event that the Company is in default at maturity, the balance due under the note
would be payable in cash. The agreement provides that MVF will provide up to $2,500,000 in cash advances and services. At December
31, 2013, MVF had provided a total of $1,765,000 in cash advances and services and converted $120,000 of debt into 2,040,816 common
shares. The services to be provided by MVF include a management team (President and CEO), Chief Operating Officer, Controller,
grant application coordinator, finance administrative assistant and public relations resources. To the extent not converted earlier
at the option of the holders, shares will be issuable on conversion of these notes in total in four equal tranches (25% each) on
the following dates: December 15, 2014, March 15, 2015, June 15, 2015 and September 15, 2015. Under certain circumstance, while
the notes are outstanding, the conversion price shall be adjusted to the lower price at which the Company issues shares or other
securities convertible into shares or exercisable for shares, except for issuances related to borrowings from banks or similar
financial institutions; securities issued to employees, consultants, officers or directors pursuant to any compensation plan approved
by the board of directors and limited to 15% of the then outstanding common stock of the Company; or securities in a public offering
with an aggregate offering price to the public of at least $50,000,000. In the event of a change in control of the Company, as
defined in the agreement, MVF shall be entitled to receive, prior to the close of any such change of control, including shares
and warrants pledged/earned and any remaining stock to which MVF would have been entitled under the note or the conversion thereof
and to receive and exercise any and all shares under the corresponding warrants to which it would have been entitled.
Pursuant to the Strategic Collaboration
Agreement with MedBridge Development Company (“MDC”), MDC shall provide accounting, document support, clerical, reception
public relations and other administrative support as mutually agreed, as well as office space for the corporate headquarters of
the Company. MDC will provide a maximum line of credit of $550,000, consisting of cash advances and services. In 2013, MDC advanced
$175,000 and provided $189,032 in services. MDC converted $266,532 of debt into 2,008,087 common shares. In the event of a change
in control of the Company, as defined in the agreement, MDC shall be entitled to receive, prior to the close of any such change
of control any stock which MDC would have been entitled (i) under the full value of the LC (ii) for the full value of the Services
that MDC would have provided to the Company during the full term of this agreement absent the change of control and (iii) shall
be entitled to receive and exercise any and all warrants to which it would be entitled. A principal of MDC is an investor, officer
and shareholder in the Company.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
| |
2013 | | |
2012 | |
Convertible Debt-DMBM, net of discount ($79,794); matures on September 15, 2015. Principal and accrued interest are convertible at any time at the holders’ option at a conversion price 10% lower than the lowest three day average closing prices of the Company’s common stock starting on July 16, 2013 and ending on September 15, 2013 ($0.0588). The Company also issued 880,000 warrants to purchase common shares for each $1 advanced at $0.45 per share, exercisable on any date from the four-year anniversary to the five-year anniversary from the date of the agreement. Convertible into 1,471,420 common shares at December 31, 2013. | |
$ | 6,873 | | |
$ | – | |
| |
| | | |
| | |
Convertible Promissory Notes-DMBM, issued monthly from November 3, 2011 – April 18, 2013, with one-year maturity, non-interest bearing. Notes issued prior to 2013 are convertible at the lower of $0.21 per share or a discount of 30% from the average common stock closing price for the 14 trading days preceding a conversion notice, and notes issued in 2013 are convertible at the lower of $0.05 per share or a discount of 30% from the average common stock closing price for the 14 trading days preceding a conversion notice. Convertible into 4,201,271 common shares at December 31, 2013 | |
| 347,650 | | |
| 892,850 | |
| |
| | | |
| | |
Demand Promissory Note–Wonderland Capital, interest rate-6%, unsecured demand note. Convertible into 102,647 common shares at December 31, 2013. | |
| 22,297 | | |
| 22,297 | |
| |
| | | |
| | |
Convertible Debenture to Timothy and Thomas, LLC, net of discount ($319,048), matures on January 1, 2020, interest rate-0.35%, principal and accrued interest are convertible at the 15-day volume-weighted average closing price prior to the conversion date. Convertible into 3,946,887 common shares at December 31, 2013. | |
| 543,452 | | |
| 872,222 | |
| |
| | | |
| | |
6% Convertible Debentures-mature one year after issuance, interest rate-6%, principal and accrued interest are convertible into common shares in a range of $0.05-$0.261 per share. Convertible into 4,507,757 shares at December 31, 2013. | |
| 443,000 | | |
| 338,750 | |
| |
| | | |
| | |
CONVERTIBLE DEBT-OTHER | |
$ | 1,363,272 | | |
$ | 2,126,119 | |
NOTE 5 – CONVERTIBLE DEBT - OTHER
The following are the components of Convertible Debt –
Other:
Effective on September 15, 2013, the Company
and DMBM, Inc. (“DMBM) entered into a Convertible Promissory Note and Warrant Purchase Agreement, pursuant to which DMBM
will provide cash advances for unsecured convertible notes in the amount of $220,000 and warrants to purchase an aggregate 880,000
common shares of the Company at $0.45 per share. If the notes or any portion of them are not converted by DMBM prior to maturity,
than on maturity the outstanding amount of the notes and accrued interest will automatically be converted into common stock at
the conversion price ($0.0588). In the event that the Company is in default at maturity, the balance due under the note would be
payable in cash. Shares will be issuable on conversion of these notes in total in four equal tranches (25% each) on the following
dates: December 15, 2014, March 15, 2015, June 15, 2015 and September 15, 2015, to the extent not earlier converted. Under certain
circumstance, while the notes are outstanding, the conversion price shall be adjusted to the lower price at which the Company issues
shares or other securities convertible into shares or exercisable for shares, except for issuances related to borrowings from banks
or similar financial institutions; securities issued to employees, consultants, officers or directors pursuant to any compensation
plan approved by the board of directors and limited to 15% of the then outstanding common stock of the Company; or securities in
a public offering with an aggregate offering price to the public of at least $50,000,000.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
Effective
on January 1, 2013, DMBM and the Company entered into an Amended and Restated Amendment to Convertible Debentures. In consideration
of change in conversion prices on outstanding debentures, the right to receive interest was waived and DMBM’s relinquished
its right to receive payment in cash. For advances made in 2012 or before, the debt may be converted into common shares at the
lower of $0.21 per share or a 30% discount to the volume-weighted average closing price for the 14 trading days prior to conversion.
For advances made in 2013, the debt may be converted into common shares at the lower of $0.05 per share or a 30% discount to the
volume-weighted average closing price for the 14 trading days prior to conversion. Under terms of the underlying debentures,
DMBM may not engage in any conversions of debt to shares including under the amended terms if upon receipt of such shares DMBM
would beneficially own an aggregate number of shares greater than 9.99% of the total issued and outstanding common shares of the
Company.
Effective on December 29, 2010, the Company
and Timothy & Thomas, LLC ("T&T") entered into a Release and Settlement Agreement in order to settle litigation
between them. The Company was originally issued a Convertible Debenture to T&T for a total of $1,900,000 payable over the course
of three years, as follows: $1,000,000 by November 1, 2011; $450,000 by November 1, 2012; and $450,000 by November 1, 2013, with
a stated interest rate of 0.35%. On November 8, 2011, the Company issued 136,093 (81,655,691 pre-split) of its common shares in
satisfaction of a $1,000,000 principal payment, plus $6,982 of accrued interest, due November 1, 2011. In 2013, $37,500 of the
debt was converted for 375,000 common shares. At December 31, 2013 the gross liability of $862,500 was recorded at its net present
value of $543,452 determined using an 8% discount rate. The debt may be converted into common shares at the 15-day volume-weighted
average closing price prior to the conversion.
At December 31, 2013 and 2012, unsecured
convertible debentures and other vendor notes consisted of the following:
Note Description | |
2013 | | |
2012 | |
| |
| | |
| |
Unsecured convertible debentures - investors | |
$ | 226,000 | | |
$ | 265,000 | |
Vendor notes | |
| 217,000 | | |
| 73,750 | |
| |
$ | 443,000 | | |
$ | 338,750 | |
These debentures are due within
a year of the date of issuance and are classified as current liabilities in the accompanying balance sheet. These securities are
generally convertible at 70% of the volume weighted average price following the record date of the Company’s 1-600 reverse
stock-split ($0.261). Subsequent to December 31, 2013, these investors elected to convert the principal amounts of their notes,
including any accrued regular and default interest to which they were entitled, into a longer term investment in the Company with
terms and conditions identical to the MedBridge Venture Fund.
Vendor notes are payable to two
parties consisting of two components of $98,250 and $118,750. The $98,250 component is convertible into 1,257,500 common shares
at prices of $0.05-$0.10 per share. The $118,750 component is convertible into 3,250,287 common shares at the lower of $.05 per
share or 70% of the 14-day volume weighted average closing price prior to the conversion date.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
NOTE 6 – COMMITMENTS AND CONTINGENCIES
The years ended December 31, 2013 and 2012,
rental expense related to office and laboratory space was $21,660 and $50,966, respectively. The Company’s office lease expired
on September 30, 2013, at which time the offices were relocated to the MedBridge Development Company offices in Santa Barbara,
California. MedBridge Development Company is paid $20,000 per month for services, office space, financial support and staff.
Effective January 1, 2011, the Company entered
into five–year employment and consulting agreements with its President and CEO and other certain consultants requiring annual
base salaries and fees and stock option grants in each year. The options are granted annually. Their exercise price will be the
VWAP based upon the 20 days after the grant date and will be fully vested on grant and expire in December 2018. The agreements
are generally cancellable by the Company with a one year severance provision in the event of termination without cause by the Company,
or no severance if terminated by the Company in the event of “good reason” as defined in the agreements. Otherwise,
no severance is due. The Company terminated two agreements with consultants covered by these agreements effective December 31,
2012. The options granted in 2013 to purchase 12,500 shares have an exercise price of $0.367 per share. Results of operations for
the year ended December 31, 2013 and 2012 include stock based compensation of $1,292,844 and $195,500, respectively. This represents
the fair value of the options vesting in the period determined using the Black-Scholes option pricing model. The consulting agreements
with the Chief Scientist and one other consultant provide for royalties based on sales. Each party also entered into a non-interest
bearing Unsecured Revolving Credit Note with the Company, which provides for the conversion of unpaid compensation under these
employment and consulting agreements into shares of the Company. Minimum base salary commitments under these agreements approximate
$594,000 for 2014 and 2015.
Under an Assignment of Patent agreement
between the Company and Therapeutic Genetics, Inc. (“TGI”), the Company, among other things, is obligated to pay a
royalty of 5% of the gross sales of any products derived directly from an early technology studied by the Company. Subsequently,
that royalty was assigned to Therapeutic Genetics, LLC. The royalty is payable for a period equal to the life of the patent underlying
the products being sold. The owners of Therapeutic Genetics LLC are substantially the same as the original founders of the Company.
In March 2013, the Company, Dr. M. Karen
Newell, Ph.D. (the Company’s Chief Scientist pursuant to her consulting agreement) and Scott & White Healthcare entered
into a two year Funding Agreement to reimburse the Company for its sole sponsorship of the Phase I clinical trial research expenses
it has or will incur during the term of the agreement, conducted for the benefit of the Company’s licensed MDT and TPT technologies.
The agreement can be cancelled by any party to it on 30 days advance notice, but all parties would remain obligated for their performance
through the date or any such termination. This research is in part funded through grants and other non-Company funding provided
to the lab of Dr. M. Karen Newell Rogers from donated funds received for this purpose by Scott & White Healthcare (a non-profit
organization) (“S&W”). Among other obligations under this agreement, the Company must (i) indemnify Scott &
White and Dr. Newell from and against all liabilities, claims, losses and damages they may incur arising from this agreement or
any act or omission of the Company related to its sponsorship of the clinical trial and (ii) procure and maintain certain commercial
general, professional liability and clinical professional liability insurance in the amount of $10 million for damages that may
arise from the agreement or any act or omission by the Company related to the Company’s sponsorship of the clinical trial.
Payments by Scott & White are to total $410,852 plus an additional $63,000 on behalf of Dr. Newell for past expenses of the
Company related to the preparation and drafting of the study protocol. In the year ended December 31, 2013, the Company received
$403,578, in reimbursements from Scott & White Health Sciences Center at San Antonio (including $63,000 on behalf of Dr. Newell).
Through December 31, 2013, $267,927 has been paid to the University of Texas by the Company and the remaining $135,650 is included
in accrued expenses. Actual amounts determined upon completion will be recorded at that time. Pursuant to the agreement, the Company
has agreed to incur at least $100,000 of expenses associated with the clinical trial during the term of this agreement.
Effective in July 2013, the Company and
S&W entered into a Patent License Agreement with respect to certain intellectual property and patents developed or co-developed
by Dr. M. Karen Newell for her employer, Texas A &M University Hospital Science Center (“HSC”). HSC has previously
granted S&W the exclusive right to market and license these rights. Under the agreement, S&W grants the Company an exclusive
license under the patent rights and intellectual property to make, have made, use and sell the Licensed Products worldwide and
in all applications, to the end of the patent term. The term shall last to the expiration of the last patent rights. The US and
International provisional patent rights include MHC Engagement and CLIP Modulation for the Treatment of Disease, CLIP Modulation
for the Treatment of Mucosal Diseases, Cancer Biomarkers and Therapeutics and Methods and Products For Treating Preeclampsia and
Modulating Blood Pressure. The Company may terminate this agreement on 90 days advance written notice. S&W may cancel the agreement
by giving notice of a material breach by the Company which is not cured within 60 days after receipt of notice to cure the breach.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
Among other terms and conditions contained
in the agreement, the Company was required to make an initial $50,000 payment to S&W, and is obligated to make royalty payments
to S & W of 3% of net sales (on an as collected basis) in developed countries and 0.5% of net sales in underdeveloped countries
(as defined by the World Bank), of licensed products or services requiring their use, subject to adjustment as defined in the agreement.
In order to maintain the license, the Company must pay S&W minimum annual consideration, in combination with the aforementioned
royalties, as follows:
(a) | |
Calendar Year 2013, payable January 1, 2014 | |
$ | 20,000 | |
(b) | |
Calendar Year 2014, payable January 1, 2015 | |
$ | 40,000 | |
(c) | |
Calendar Year 2015, payable January 1, 2016 | |
$ | 70,000 | |
(d) | |
Calendar Year 2016, payable January 1, 2017 | |
$ | 100,000 | |
(e) | |
Calendar Year 2017, payable January 1, 2018 | |
$ | 150,000 | |
(f) | |
Calendar Year 2018, payable January 1, 2019 and each January 1 year thereafter through the expiration of the Agreement | |
$ | 200,000 | |
The Company is in
compliance with these payment terms.
In addition, the Company is obligated for
certain milestone payments –
| · | For each Phase I clinical trial - $100,000 |
| · | Upon successful conclusion of each Phase III clinical trial or any other clinical trial following a Phase II clinical trial
for each licensed product - $500,000 |
| · | Upon each regulatory/market approval on each licensed product/indication - $2,000,000. |
The Company may sublicense its rights to
parties that are satisfactory to S&W, and must pay royalties to S&W as indicated above, for receipts derived from net sales
of products. There may be certain reductions in the event the Company must pay consideration to third parties.
The Company is responsible for prosecution
and maintenance of the patent rights after the effective date and will be directly responsible for such future expenses of filing
and protection of patent claims, including counsel fees. The agreement contains other obligations on the Company for timely periodic
reporting of its activities and other matters that are material to maintenance of the patent rights.
NOTE 7 – DERIVATIVE LIABILITY AND EXPENSE
Fair value is defined as the price that
would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants
at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be
calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific
to the entity. In addition, the fair value of liabilities should include consideration of non-performance risks including the entity’s
own credit risk.
A fair value hierarchy for valuation inputs
is established. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair
value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined
by the lowest level input that is significant to the fair value measurement in its entirety.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
These levels are:
Level 1 – inputs are based upon unadjusted
quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon quoted
prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active,
and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated
by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable
and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow
models, and similar techniques.
The following is a summary of the embedded
conversion features associated with the Company’s Level 2 financial instruments:
| |
Level 1 | | |
Level 2 | | |
Level 3 | |
Year Ended December 31, 2012 | |
| | | |
| | | |
| | |
Embedded Conversion Feature | |
$ | – | | |
$ | 706,239 | | |
$ | – | |
Option Value | |
$ | – | | |
$ | 195,500 | | |
$ | – | |
Year Ended December 31, 2013 | |
| | | |
| | | |
| | |
Embedded Conversion Feature | |
$ | – | | |
$ | 2,183,440 | | |
$ | – | |
Option Value | |
$ | – | | |
$ | 1,292,844 | | |
$ | – | |
Warrants Issued for Services | |
$ | – | | |
$ | 150,000 | | |
$ | – | |
Derivative expense recognized was $2,495,663 and $582,362 in
December 31, 2013 and December 31, 2012, respectively.
| |
2013 | | |
2012 | |
Balance - January 1, 2012 and 2011 | |
$ | 706,239 | | |
$ | 230,877 | |
Derivative Expense | |
| 2,495,663 | | |
| 582,362 | |
Conversions | |
| (1,018,462 | ) | |
| (107,000 | ) |
Balance - December 31, 2013 and 2012 | |
$ | 2,183,440 | | |
$ | 706,239 | |
The
values of conversion shares were determined using the Black-Scholes formula. In connection with the valuation of conversion shares,
the Company used the following assumptions:
| |
2013 | |
2012 |
Dividend Yield | |
0% | |
0% |
Risk Free Interest Rate | |
.11%-.33% | |
.16%-.25% |
Price Volatility | |
223%-329% | |
412%- 690% |
Term | |
0.5Yr.-1.0Yr. | |
1.0 Yr. |
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
NOTE 8 – INCOME TAXES
The Company uses the liability method in
accounting for income taxes. Deferred income tax assets and liabilities are determined based upon differences between financial
reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.
The potential benefit of net operating loss carry forwards has
not been recognized in the accompanying consolidated financial statements since the Company cannot be assured that it is more likely
than not that such benefit will be realized in future years.
The Company is subject to United States
federal and state income taxes at an approximate rate of 34%. The reconciliation of the provision for income taxes at the United
States federal statutory rate compared to the Company’s income tax expense as reported for the years ended December 31, 2013
and 2012 is as follows:
| |
2013 | | |
2012 | |
| |
| | |
| |
Net loss | |
$ | (7,419,722 | ) | |
$ | (6,850,634 | ) |
Income tax rate | |
| 34.0% | | |
| 34.0% | |
Income tax benefit | |
| 2,522,705 | | |
| 2,329,216 | |
Permanent difference | |
| (1,716,133 | ) | |
| (1,541,024 | ) |
Valuation allowance | |
| (806,572 | ) | |
| (788,192 | ) |
Net benefit | |
$ | – | | |
$ | – | |
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes. The significant components
of future income tax assets and liabilities at December 31, 2013 and 2012 are as follows:
| |
2013 | | |
2012 | |
Change in tax assets loss benefit | |
$ | 14,863,726 | | |
$ | 14,057,154 | |
Allowance | |
| (14,863,726 | ) | |
| (14,057,154 | ) |
Net change | |
$ | – | | |
$ | – | |
The Company has recognized a valuation allowance
for the deferred tax assets for which it more likely than not that the realization will not occur. The valuation allowance is reviewed
periodically. When circumstances change and this causes a change in management’s judgment about the realizeability of deferred
tax assets, the impact of the change on the valuation allowance is generally reflected in current income.
The net operating loss carryfowards for
income tax purposes are approximately $44,000,000 and $41,000,000 at December 31, 2013 and 2012, respectively, and will begin to
expire in 2015. Neither the Company nor any of its subsidiaries have ever been the subject of an examination of the Internal Revenue
Service. Pursuant to Section 382 of the Internal Revenue Code, use of the Company’s net operating loss carryfowards may be
limited if the Company experiences a cumulative change in ownership greater than 50% in a moving three year period. Ownership changes
could impact the Company’s ability to utilize its net operating losses and credit carryfowards remaining at the ownership
change date. The limitation would be determined by the fair market value of common stock outstanding prior to the ownership change,
multiplied by the applicable federal rate. The Company has never had an examination by the Internal Revenue Service.
NOTE 9 – PREFERRED STOCK
Effective November 27, 2012 the Company
reduced the number of authorized shares of Series A Preferred Stock from 250,000,000 to 10,000,000. At December 31, 2013, 10,000,000
Series A Preferred Stock shares are authorized and 9,715,443 shares have been issued and are outstanding. The Series A Preferred
shares are convertible into 161,924 common shares.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
The Series A Preferred Shares are not redeemable
by the Company, and rank on par with Company common stock in the payment of dividends of any kind being declared on common stock.
There is no sinking fund provision for the Series A Preferred Shares. The issued Series A Preferred Shares vote as common stock
in all matters presented to stockholders for approval, but have special voting rights such that the aggregate of all then issued,
outstanding and unconverted Series A Preferred Shares possesses a number of votes equal to all of the then issued and outstanding
common shares of the Company multiplied by 1.01. The effect of the voting rights is that the holders of common stock by definition
possess fewer aggregate votes than the aggregate of the then issued, outstanding and unconverted Series A Preferred Shares stockholders.
Series A Preferred Shares are exchangeable into shares of common stock at the rate of ten (10) shares of common stock for each
share of Series A preferred stock. The Series A Preferred Shares have an aggregate liquidation preference of $1,000,000 such that
in the event of the dissolution, winding-down, or other liquidation of the Company the Series A Preferred Shares holders shall
receive the first $1,000,000 of net proceeds after payment of debts. Following the payment of this liquidation preference, the
holders of common stock would receive the next $1,000,000 of net proceeds. All other remaining net proceeds would then be split
ratably between the Series A preferred stockholders and common stockholders on an as-converted basis. The effect of the liquidation
preference is to subordinate the claims of the common stockholders on residual net proceeds after such a winding down, liquidation
or dissolution, and to reduce by $1,000,000 the overall claims common stockholders hold on residual assets after payment of debts
The holders of any majority of the then
issued and outstanding Series A Preferred Shares have the authority to require all holders of Series A Preferred Shares to exercise
the conversion feature described above. Other than where transferred for estate planning purposes, the Series A Preferred Shares
automatically convert to common shares upon any transfer.
NOTE 10 – COMMON STOCK
Effective November 27, 2012 the Company
completed several changes to its capital structure and changed its name from Viral Genetics, Inc. to VG Life Sciences Inc. As a
result of the capital structure changes, the numbers of authorized shares of common stock were reduced to 60,000,000 and preferred
stock was reduced to 10,000,000. The 1-for-600 reverse stock split resulted in the cancellation of 920,837,717 pre-split common
shares which left 1,694,761 post-split common shares outstanding. In the consolidated statement of stockholders’ deficit,
the reverse stock split has been reflected as if it occurred on December 31, 2011, due to the extended equity (deficit) history
presented in this consolidated statement. Effective December 31, 2013, the Board of Directors and shareholders authorized the total
number of shares to be issuable increased to 160,000,000 of which Preferred Stock authorized is designated as 10,000,000 shares
with a par value per share of $0.0001 and Common Stock authorized is designated as 150,000,000 shares with a par value per share
of $0.0001.
The Company has reserved the following shares
for issuance or conversions related to outstanding stock options, warrants and convertible securities based upon transactions consummated
through December 31, 2013:
| |
Shares | |
Convertible Debt | |
| 53,803,543 | |
Warrants | |
| 18,212,848 | |
Stock Options | |
| 5,952,497 | |
Total | |
| 77,968,888 | |
The following is a summary of stock warrants
activity:
| |
Number of Warrants | |
Warrants outstanding at December 31, 2011 | |
| 394,886 | |
Granted | |
| 30,000 | |
Expired | |
| (160,650 | ) |
Exercised | |
| (74,904 | ) |
| |
| | |
Warrants outstanding and exercisable at December 31, 2012 | |
| 189,332 | |
| |
| | |
Granted | |
| 18,099,176 | |
Expired | |
| (75,660 | ) |
Cancelled | |
| – | |
| |
| | |
Warrants outstanding and exercisable at December 31, 2013 | |
| 18,212,848 | |
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
As of December 31, 2013,
the weighted average remaining contractual life of warrants outstanding approximated 50 months and the weighted average
exercise price per common share approximated $0.46.
During the year ended December 31, 2013,
the fair value of each option granted was estimated using the Black-Scholes Option Pricing Model. In 2013, 1,377,963 warrants were
issued as payment for services and were valued at $150,000.
Substantially all warrants and option conversion
rights were exercisable at December 31, 2013 except for options granted pursuant to the 2013 Equity Incentive Plan and those warrants
which are exercisable for a one year period commencing four years after the date of purchase.
The following is a summary of stock option
activity:
| |
Number
of Options | | |
Weighted
Average Exercise Price | |
Options outstanding and exercisable at January 1, 2012 | |
| 108,500 | | |
$ | 49.51 | |
Granted | |
| 19,167 | | |
$ | 10.26 | |
Converted to Series A Preferred Stock | |
| (72,167 | ) | |
$ | 22.55 | |
Expired | |
| (35,501 | ) | |
$ | 99.00 | |
| |
| | | |
| | |
Options outstanding and exercisable at December 31, 2012 | |
| 19,999 | | |
$ | 21.38 | |
| |
| | | |
| | |
Granted | |
| 5,932,498 | | |
$ | 0.23 | |
Exercised | |
| – | | |
$ | – | |
Expired | |
| – | | |
$ | – | |
| |
| | | |
| | |
Options outstanding and exercisable at December 31, 2013 | |
| 5,952,497 | | |
$ | 0.77 | |
As of December 31, 2013, the weighted
average remaining contractual life of options outstanding approximated 9.9 years.
Prior to the adoption of the 2013 Equity
Incentive Plan, there was no formal stock option plan in place. Stock options were issued by the Company for services as deemed
appropriate.
During the year ended December 31, 2013
and 2012, the fair value of each option granted was estimated using the Black-Scholes Option Pricing Model using the following
assumptions: risk free interest of 3.04%; volatility of 273.55%; expected life of 5 years; and no expected dividends. The value
of these options is $1,292,844 and $195,500 in 2013 and 2012, respectively. Option cost is included in Research and Development
($95,376) and General and Administrative Expense ($1,197,468) in 2013 and $195,500 is included in General and Administrative expense
in 2012.
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
Adoption of 2013 Equity Incentive
Plan
On December 30, 2013, the Stockholders approved
the Company’s 2013 Equity Incentive Plan. Persons eligible to receive stock awards are employees, directors and consultants.
The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Affiliates. Stock awards include: (i) Incentive Stock Options (employees only), (ii) Non-statutory
Stock Options, (iii) Restricted Stock Awards and (iv) Stock Appreciation Rights. The Board of Directors of the Company is designated
as the Plan administrator and, among other things, (i) has the right to determine which persons shall receive stock awards, when
and how and in what quantities (ii) reduce the exercise price of any option (iii) cancel and re-grant a new option covering the
same or different numbers of shares of Common Stock, but not less than for newly granted stock awards, with certain exceptions.
The termination date of the Plan shall be December 20, 2024. The Board may delegate administration of the Plan to a committee or
committees of one or more members of the Board. The common stock that may be issued pursuant to Stock Awards shall not exceed 12,000,000
shares of common stock, subject to adjustment for any change in common stock without the receipt of consideration.
Unless the grantee under the Plan is a 10%
Stockholder, the exercise price of each Incentive Stock Option shall not be less than 100% of the Fair Market Value of the Common
Stock subject to the Option on the date the Option is granted. The exercise price of a Non-statutory Stock Option or Restricted
Stock Award shall not be less than 85% of the Fair Market Value of common stock on the date the option is granted. However, a Restricted
Stock Award may be awarded as a stock bonus, that is, with no cash purchase price to be paid.
A 10% Stockholder shall
not be granted an Incentive Stock Option unless the exercise price of such Option is at least 110% of the Fair Market Value of
the Common Stock on the date of grant and the Option is not exercisable after the expiration five years from the date of grant.
A 10% Stockholder shall not be granted a Non-statutory Stock Option unless the exercise price of such Option is at least 100% of
the Fair Market Value of the Common Stock on the date of grant, nor shall a 10% Stockholder be granted a Restricted Stock Award
or Stock Appreciation Right (if such award could be settled in shares of Common Stock), unless the purchase price of the restricted
stock is at least 100% of the Fair Market Value of the Common Stock on the date of grant.
The purchase price
of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either
(i) in cash at the time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Non-statutory Stock Option) (1) by delivery to the Company of other Common Stock, (2) according to
a deferred payment or other similar arrangement with the Option holder or (3) in any other form of legal consideration that may
be acceptable to the Board.
The Plan is currently
administered by the Company’s Board which has the authority to delegate administration of the Plan to a committee. The following
table summarizes information regarding the Company’s equity compensation plans as of December 31, 2013:
Summary
of Equity Compensation Plan
Plan Description |
|
Number of Securities
to be Issued Upon
Exercise of Outstanding
Options |
|
Weighted Average
Exercise Price
of Outstanding
Options |
|
Number of Securities
Remaining Available
for Future Issuance |
2013 Equity Incentive Plan | |
5,920,000 | |
$0.2249 | |
6,080,000 |
VG LIFE SCIENCES INC. (FORMERLY VIRAL
GENETICS, INC.) AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Years Ended December 31, 2013 and 2012
and
For the Period from July 11, 1995 (Inception)
to December 31, 2013
NOTE 11 – SUBSEQUENT EVENTS
On January 24, 2014 KED Consulting Group
LLC, (the “Investor”) entered into a convertible promissory note and warrant purchase agreement with the Company in
the amount of $270,000. Of this amount, $100,000 will be applied directly to the payment of a company liability and $170,000 in
cash will be advanced to the Company in six equal monthly installments beginning in January 2014.
On March 28, 2014, the Company entered into
an Investment Agreement (“the Agreement”) with Dutchess Opportunity Fund II L.P. (“Dutchess”) whereby Dutchess
may purchase up to that number of common shares having an aggregate purchase price of $5,000,000. Under terms of the Agreement,
the Company may, at its sole discretion, deliver a Put Notice to Dutchess stating the dollar amount of common shares which the
Company intends to sell to Dutchess on a closing date. The maximum amount that Dutchess can be required to purchase at any one
time shall be equal to (1) 200% of the average daily volume for the three trading days immediately preceding the formal date of
the notice to Dutchess or (2) $150,000, determined at the sole discretion of the Company. The share purchase price is 94% of the
lowest daily volume-weighted average price of Company stock for the 5 consecutive trading days beginning with the notice date and
the ensuing four trading days. The Agreement is for a term of three years from the date of execution, or, if earlier, the sale
of $5,000,000 or written notice to Dutchess by the Company. The Company has undertaken to file a related registration statement
with the Securities and Exchange Commission by August 31, 2014.
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
The following discussion
and analysis of our financial condition and results of operation should be read in conjunction with the consolidated
financial statements and notes to those statements included elsewhere in this prospectus for the nine months ended September
30, 2014 and 2013 and our audited consolidated financial statements for the years ended December 31, 2013 and 2012 and with
the “Risks Related to Our Business” starting on page 3.
This report contains forward-looking
statements as defined under the federal securities laws. All statements other than statements of historical facts included in this
report regarding our financial performance, business strategy and plans and objectives of management for future operations and
any other future events are forward-looking statements and based on our beliefs and assumptions. Words such as “may,”
“will,” “expect,” “might,” “believe,” “anticipate,” “intend,”
“could,” “estimate,” “project,” “plan,” and other similar words are one way to
identify such forward-looking statements. Actual results could vary materially from these forward-looking statements. Such statements
reflect our current view with respect to future events and are subject to certain risks, uncertainties, and assumptions including,
without limitation, those risks and uncertainties contained in the Risk Factors section of the Registration Statement on Form 10-12G.
Although we believe that our expectations are reasonable, we can give no assurance that such expectations will prove to be correct.
Based upon changing conditions, any one or more of these events described herein as anticipated, believed, estimated, expected
or intended may not occur. All prior and subsequent written and oral forward-looking statements attributable to our Company or
persons acting on our behalf are expressly qualified in their entirety by this cautionary statement. We do not intend to update
any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes
in our expectations, except as required by law.
Business Overview
We are a drug discovery and development
company researching two core technologies: Targeted Peptide Technology, or TPT, which is currently our main focus, and Metabolic
Disruption Technology, or MDT, which is our secondary focus. We have one drug research program in clinical stage, a MDT therapy,
which helps, in combination, with other drugs to fight cancers with solid tumors in situations where the cancer is resistant to
the initial cancer drug therapy. Our MDT trials were initially for ovarian cancer, but have since expanded to include other solid
tumors, including those located in the breast, colon, liver, lung, and pancreas. Additionally, we have one drug research program
in pre-clinical stages, a TPT therapy for HIV/AIDS using VG1177, our computationally designed peptide. This TPT therapy requires
significant additional work before the commencement of clinical trials, including favorable animal toxicity study results and then
regulatory review and approval of protocols, as well as additional financing.
Our research and development programs are
based on technology that Dr. M. Karen Newell Rogers developed while working at the University of Colorado, the University of Vermont,
and Texas A&M University. We hold the exclusive license to this technology. We have also collaborated with a multitude of scientists
and clinicians at universities throughout the country, including Stanford University, Harvard University, and the Scott & White
Healthcare Center, where we test TPT in inflammatory disease applications in which we believe TPT could have a benefit.
Plan of Operation
Current Studies
Physician’s IND Phase
I study
Our Physician’s Investigational
New Drug, or P-IND, Phase I clinical trial on late-stage patients with solid tumors is entering its fourth cohort with
maximum dosing, and we are completing the analysis of the results of those trials. This trial is designed to assess the
safety of a combination treatment using hydroxychloroquine, or HCQ, and a cancer drug sorafenib, which is currently marketed
as NexavarTM. The combination treatment is designed to disrupt the metabolism of the cancer cells, making them
more prone to the effects of sorafenib. To date, patients in the P-IND Phase I trial have not experienced unacceptable levels
of toxicity. On March 14, 2014, we reported two clinical responses in cohort 3 with disease stabilization in a patient with
four months of disease stabilization in a patient with metastatic ovarian cancer, which has spread throughout portions of the
body, and five months of disease stabilization in a patient with triple-negative breast cancer, which is a type of cancer
that does not express three genes that are key to traditional cancer treatment, making treatment more difficult. The final
patient in cohort number 3 has stage IV, or metastatic, adenocarcinoma of the lung, which is a common form of lung cancer,
and has four separate lung lesions. During the course of the study, the four lesions have all regressed about 20% in size.
We hold an exclusive license to the use patent application for this combination treatment.
This study, funded in part by a grant of
$1.5 million to the Scott and White Foundation, is being conducted at the Cancer Therapy and Research Center at the University
of Texas Health Sciences Center at the San Antonio Institute for Drug Development, or CTRC, and Scott and White Hospital, or S&W,
in Temple, Texas, under primary investigator, Dr. Tyler Curiel. The study is being carried out by physicians and scientists at
the CTRC, with the close involvement of Dr. M. Karen Newell Rogers and a liaison employed by the Company to coordinate administration
and communication. Also, the Institutional Review Board of the University of Texas Health Science Center San Antonio has approved
further study to include all solid tumors, which include breast, colon, lung, liver, pancreatic, and other types of cancers.
VG1177
In October 2013, we contracted ITR Canada,
Inc. to conduct IND-enabling animal safety studies with our patented peptide VG1177. We now expect these studies to conclude in
early 2015. These animal safety studies are the next important step to move toward clinical trials.
Plans
With the completion of the P-IND Phase
I study with the combination treatment for solid carcinomas, we anticipate a Phase II trial, though we presently do not have the
funds to pursue this further development.
We have authorized and funded an animal
study to develop our proprietary peptide VG1177, a series of studies that we believe will be complete in early 2015, and assuming
adequate funding, we intend to initiate a Phase I study using an injectable form of VG1177 thereafter.
Results of Operations
Critical Accounting Policies and Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make judgments
and estimates.
We believe the following critical accounting
policies affect our more significant judgments and estimates used in preparation of our financial statements.
Cash and Cash Equivalents
For purposes of the statement of cash flows,
we consider all highly liquid investments with original maturities of three months or less to be cash equivalents.
Impaired Asset Policy
We follow generally accepted accounting
policies related to accounting for the impairment of long-lived assets. Long-lived assets are measured at the lower of carrying
amount or fair value less cost to sell, whether reported in continuing operations or discontinued operation.
Research and Development
We charge research and development expenses
to operations as incurred.
Use of Estimates
The process of preparing financial statements
in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions
and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
Basic and Diluted Net Loss Per Share
We compute loss per share in accordance
with generally accepted accounting principles, which requires presentation of both basic and diluted earnings per share on the
face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by
the weighted average number of outstanding common shares during the period. The treasury stock method is used to determine the
dilutive effects of stock options and warrants. Dilutive loss per share is equal to the basic loss per share for the three and
nine month periods ended September 30, 2014 and 2013 because common stock equivalents would have been anti-dilutive.
Fair Value of Financial Instruments
Fair value is defined as the price that
would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants
at the measurement date and in the principal or most advantageous market for that asset or liability. We calculate fair value based
on assumptions that market participants use in pricing the asset or liability, not on assumptions specific to our Company.
We measure the fair value based on whether
values are observable in the market.
These levels are:
Level 1 – inputs are based upon unadjusted
quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon quoted
prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active,
and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated
by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable
and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow
models, and similar techniques.
Our financial instruments consist of: cash,
notes payable, accounts payable, accrued expenses, and accrued interest, convertible notes payable and various forms of convertible
indebtedness. The carrying value of these financial instruments approximates their fair value based on their liquidity, their short-term
nature or application of appropriate risk based discount rates to determine fair value. These financial assets and liabilities
are valued using level 2 inputs, except for cash, which is at level 1.
Stock-Based Compensation
We record stock-based compensation by using
the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments
are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever
is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are
measured and recognized based on the fair value of the equity instruments issued.
Concentration of Credit Risk
We have financial instruments that are
exposed to concentrations of credit risk and consist primarily of cash. We maintain cash at certain financial institutions and,
from time to time, these amounts are substantially in excess of Federal Deposit Insurance Corporation, or FDIC, insurance limits.
We believe that these financial institutions are of high quality and the risk of loss is minimal. At December 31, 2013, we had
cash balances in excess of FDIC limits of approximately $500,000.
Comparison of Fiscal Periods Ended September
30, 2014 and September 30, 2013
| |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 | |
EXPENSES: | |
Total | | |
Non- Cash | | |
All other | | |
Total | | |
Non- Cash | | |
All other | |
Research and development | |
$ | 975,864 | | |
$ | 82,199 | | |
$ | 893,665 | | |
$ | 349,636 | | |
$ | 4,500 | | |
$ | 345,136 | |
Management salaries and fees | |
| 780,625 | | |
| – | | |
| 780,625 | | |
| 489,307 | | |
| 3,900 | | |
| 485,407 | |
Legal and professional | |
| 1,077,551 | | |
| 142,944 | | |
| 934,607 | | |
| 696,586 | | |
| – | | |
| 696,586 | |
Consulting fees | |
| 37,629 | | |
| 4,500 | | |
| 33,129 | | |
| 152,915 | | |
| 800 | | |
| 152,115 | |
General and administrative | |
| 730,502 | | |
| 538,393 | | |
| 192,109 | | |
| 84,649 | | |
| – | | |
| 84,649 | |
Total operating expenses | |
$ | 3,602,171 | | |
$ | 768,036 | | |
$ | 2,834,135 | | |
$ | 1,773,093 | | |
$ | 9,200 | | |
$ | 1,763,893 | |
Derivative (benefit) expense | |
$ | 94,935 | | |
$ | 94,935 | | |
$ | – | | |
$ | 2,098,134 | | |
$ | 2,098,134 | | |
$ | – | |
Interest expense | |
$ | 2,093,704 | | |
$ | 2,093,704 | | |
$ | – | | |
$ | 502,875 | | |
$ | 502,875 | | |
$ | – | |
| |
Three Months Ended September 30, | |
| |
2014 | | |
2013 | |
EXPENSES: | |
Total | | |
Non- Cash | | |
All other | | |
Total | | |
Non- Cash | | |
All other | |
Research and development | |
$ | 339,881 | | |
$ | 26,552 | | |
$ | 313,329 | | |
$ | 300,196 | | |
$ | 1,500 | | |
$ | 298,696 | |
Management salaries and fees | |
| 214,376 | | |
| – | | |
| 214,376 | | |
| 259,425 | | |
| 1,300 | | |
| 258,125 | |
Legal and professional | |
| 179,878 | | |
| 11,913 | | |
| 167,965 | | |
| 190,723 | | |
| – | | |
| 190,723 | |
Consulting fees | |
| – | | |
| – | | |
| – | | |
| 50,415 | | |
| – | | |
| 50,415 | |
General and administrative | |
| 64,637 | | |
| 3,560 | | |
| 61,077 | | |
| 52,873 | | |
| – | | |
| 52,873 | |
Total operating expenses | |
$ | 798,772 | | |
$ | 42,025 | | |
$ | 756,747 | | |
$ | 853,632 | | |
$ | 2,800 | | |
$ | 850,832 | |
Derivative (benefit) expense | |
$ | (414,895 | ) | |
$ | (414,895 | ) | |
$ | – | | |
$ | 633,000 | | |
$ | 633,000 | | |
$ | – | |
Interest expense | |
$ | 687,800 | | |
$ | 687,800 | | |
$ | – | | |
$ | 71,672 | | |
$ | 71,672 | | |
$ | – | |
Certain employee salaries and consulting
fees are not paid in cash as incurred under the respective agreements, but are evidenced by unsecured convertible non-interest
bearing notes due December 31, 2015. The holder may convert any amount of these notes prior to maturity at a 20% discount from
the 20 day VWAP on the conversion date. All notes that remain outstanding on maturity are automatically convertible into common
shares at a 20% discount from the 20 day VWAP upon maturity.
Revenue
We have not generated any revenue from product sales or royalties
from product sales to date. We do not expect to earn revenues until we have received FDA approval to market our products, if that
occurs.
Research and Development
Research and development expenses increased
by 179% to $975,864 in the nine month period ended September 30, 2014 as compared to $349,636 in the same period in 2013. We incurred
$526,181 in the nine months ended September 30, 2014 as compared to $122,738 in the same period in 2013 with respect to new testing
being conducted for us by ITR Canada, under which payments began in the fourth quarter of 2013. Other expenditures consisted principally
of compensation to consultants and advisors assisting in development of our licensed science. Also included were reimbursement
of certain expenses related to the development of our licensed patents by the University of Texas, including fees for Dr. Newell’s
services pursuant to a funding agreement with Dr. M. Karen Newell, Scott & White, a non-profit organization, and us. Non-cash
expenses consisted of the fair value of common stock purchase options which was $59,136 in 2014 as compared to $4,500 in 2013.
The increase is attributable to options granted and vested in the nine months ended September 30, 2014 pursuant to our 2013 Equity
Incentive Plan adopted by our Board of Directors and approved by shareholders in December 2013.
General and Administrative Expenses
General and administrative expenses increased
by 763% to $730,502 in the nine month period ended September 30, 2014 from $84,649 in the same period in 2013. In 2014 we incurred
a non-cash charge of $538,133 in stock based compensation for the fair value of common stock options granted in the nine months
ended September 30, 2014 pursuant to the 2013 Equity Incentive Plan as compared to $0 in 2013.
Interest Expense and Interest Income
Interest expense increased by 316% to $2,093,704
in the nine month period ended September 30, 2014 from $502,875 in the same period of 2013 or an increase of $1,590,829. The current
period includes amortization of the debt discount associated with the valuation of warrants granted in connection with financing
transactions of convertible debenture and warrants. Interest expense incurred is substantially all non-cash.
Derivative Expense
Derivative expense decreased by 95% to
$94,935 for the nine months ended September 30, 2014 as compared to $2,098,134 for the comparable period of 2013. Derivative expense,
a non-cash charge, consists principally of the fair valuation of certain discounts from market price of conversion features and
the period to period changes in these amounts. These 2013 and 2014 amounts were principally attributable to amended and restated
convertible promissory notes, modifications with DMBM and with respect to other transactions related to satisfactions of liabilities
in shares, and in 2014, recognition of debt discount on financing transactions as financing costs.
Management Salaries
Management salaries, including fees, increased
by 60% to $780,625 in the nine month period ended September 30, 2014 from $489,307 in the comparable period of 2013. This increase
was largely due to $180,000 in fees for services incurred ($129,000 in 2013) in connection with the MedBridge Development Company,
or MDC arrangement, and $381,250 ($125,000) in the three months ended September 30, 2013, inception of agreement) in executive
services funded by the MedBridge Venture Fund financing, both of which originated after the 2013 first quarter.
Legal and Professional Fees
Legal and professional fees increased
by 55% to $1,077,551 in the nine month period ended September 30, 2014 from $696,586 in the same period of 2013 or an
increase of $380,965. This was principally due to increased legal, accounting and auditor fees related to our preparation and
filing with the SEC of our Form 10, partially offset by a reduction in counsel fees incurred in registering patents and
licenses of our licensed sciences in the appropriate jurisdictions. Audit fees were $425,734 in the nine months ended September 30, 2014
as compared to $0 in the comparable period of the preceding year. Accounting consulting services of $238,834 (including stock
based compensation) were incurred for the nine months ended September 30, 2014 as compared to $67,200 in the preceding
period. Services in 2013 related to (i) intellectual property (ii) domestic and international patent protection filings
regarding licensed technologies and (iii) OTC Markets filings and status, as well as other normal corporate legal matters. In
the nine month period ended September 30, 2014, audit fees incurred in connection with audit procedures related to the Form
10 were substantially higher than fees incurred in the comparable period of the preceding year. Non-cash expense, included
above, in 2014 in the amount of $142,944 related to the issuance of common stock for certain accounting services to a
consultant and for legal fees.
Consulting Fees
Consulting fees decreased by 75% to $37,629
in the nine month period ended September 30, 2014 from $152,915 in the comparable period of 2013 or a decrease of $115,286, principally
due to decreases for services related to investor relations and other expenses.
Net Loss
Our net loss attributable to common shareholders
for the nine month period ended September 30, 2014 was $5,765,004 as compared to $4,342,399 for the comparable period of 2013.
Operating expenses increased by 103% to $3,602,171 in the 2014 period as compared to $1,773,093 for the comparable period of 2013.
Aggregate non-cash expenses incurred in the nine months ended September 30, 2014 approximated $2,834,000 as compared to $2,579,000
in the comparable period of 2013, an increase of $255,000.
Comparison of Fiscal Year Ended December
31, 2013 and December 31, 2012
|
|
Years Ended December 31, |
|
|
|
2013 |
|
|
2012 |
|
EXPENSES: |
|
|
Total |
|
|
|
Non-Cash |
|
|
|
All other |
|
|
|
Total |
|
|
|
Non-Cash |
|
|
|
All other |
|
Research and development |
|
$ |
808,517 |
|
|
$ |
246,876 |
|
|
$ |
561,641 |
|
|
$ |
496,245 |
|
|
|
89,500 |
|
|
$ |
406,745 |
|
Management salaries and fees |
|
|
772,432 |
|
|
|
3,900 |
|
|
|
768,532 |
|
|
|
367,500 |
|
|
|
51,000 |
|
|
|
316,500 |
|
Legal and professional |
|
|
874,133 |
|
|
|
(620 |
) |
|
|
874,753 |
|
|
|
551,060 |
|
|
|
(8,550 |
) |
|
|
559,610 |
|
Consulting fees |
|
|
98,421 |
|
|
|
1,200 |
|
|
|
97,221 |
|
|
|
845,871 |
|
|
|
178,674 |
|
|
|
667,197 |
|
General and administrative |
|
|
1,354,127 |
|
|
|
1,188,895 |
|
|
|
165,312 |
|
|
|
337,836 |
|
|
|
– |
|
|
|
337,836 |
|
Total operating expenses |
|
$ |
3,907,630 |
|
|
$ |
1,343,771 |
|
|
$ |
2,413,859 |
|
|
$ |
2,598,512 |
|
|
$ |
310,624 |
|
|
$ |
2,287,888 |
|
Derivative expense |
|
$ |
(2,495,663 |
) |
|
$ |
(2,245,663 |
) |
|
$ |
– |
|
|
$ |
(582,362 |
) |
|
$ |
(532,362 |
) |
|
$ |
– |
|
Interest expense |
|
$ |
(1,075,905 |
) |
|
$ |
(1,075,905 |
) |
|
$ |
– |
|
|
$ |
(3,758,840 |
) |
|
$ |
(3,758840 |
) |
|
$ |
– |
|
The above table shows the cash and non-cash components of each
of the expense categories included in results of operations in the year ended December 31, 2013 and 2012. Any portion of employee
salaries and consulting fees not paid in cash as incurred under the respective agreements are satisfied with unsecured convertible
non-interest bearing notes due December 31, 2015. The holder may convert any amount of these notes prior to maturity at a 20%
discount from the 20 day VWAP on the conversion date. All notes that remain outstanding on maturity are automatically convertible
into common shares at a 20% discount from the 20 day VWAP upon maturity.
Revenue
We have not generated any revenue from
product sales or royalties from product sales to date. We do not expect to earn revenues until we have received FDA approval to
market our products.
Research and Development
Research and development expenses increased
by 63% to $808,517 in 2013 as compared to $496,245 in 2012. It consisted principally of compensation to consultants and advisors
assisting in development of our licensed science. Research and development expenses include reimbursement of certain research and
development expenses related to the development of our licensed patents by the University of Texas, including fees for Dr. Newell’s
services pursuant to a funding agreement with Dr. M. Karen Newell, Scott & White, a non-profit organization, and the Company.
This arrangement was entered into in March 2013 for a two year period.
Through December 31, 2013, we have received
$474,000 in proceeds all of which has been paid or accrued as a reimbursement to the University of Texas. Non-cash expenses consisted
principally of the fair value of common stock purchase options included in 2013 approximating $247,000 in 2013 as compared to $90,000
in 2012. The increase is attributable to options granted and vested in 2013 pursuant to our 2013 Equity Incentive Plan adopted
by our Board of Directors and approved by shareholders in December 2013.
General and Administrative Expenses
General and administrative expenses increased
by 301% to $1,354,127 in the year ended December 31, 2013 from $337,836 in the same period in 2012. In 2013 the Company incurred
a non-cash charge approximating $1,189,000 in stock based compensation related to common stock options granted in 2013 pursuant
to the 2013 Equity Incentive Plan that it did not incur in the previous year. Therefore the comparable cash component of general
and administrative expenses decreased to approximately $165,000 in 2013. In 2013, management conducted a review of its outstanding
accounts payable liabilities and determined that a reduction in these liabilities approximating $122,000 was required. This amount
is reflected as a credit in general and administrative expenses. After eliminating the effect of this credit, expenses incurred
in 2013 approximated $317,000 as compared to $267,000 in 2012, an adjusted increase of $50,000 or 19%. The current year also includes
the write-off of a $100,000 investment in an unconsolidated subsidiary deemed worthless by management, increases in insurance expense,
and reductions in travel and entertainment, rent and other miscellaneous expenses.
Interest Expense and Interest Income
Interest expense declined 71% to $1,075,905
in 2013 from $3,758,840 in 2012 or a decrease of $2,682,935. Interest expense incurred is substantially all non-cash. The following
are the principal elements of the change in interest expenses between 2013 and 2012:
Convertible Debt – Related Parties
Interest expense incurred with related
parties increased to $352,000 in the year ended December 31, 2013 as compared to $42,000 in the same period in 2012. The principal
item is the amortization of debt discount related to the MedBridge Venture Fund financing of $223,000 in 2013 as compared to $0 in
2012. Interest expense associated with the secured revolving credit note and convertible unsecured note when combined increased
by approximately $52,000 in 2013 as compared to 2012, partially as a result of an increase in the interest rate associated with
the current arrangement as compared to the prior one and other miscellaneous adjustments. Imputed interest related to convertible
revolving credit notes increased by $30,000 in 2013 as compared to 2012.
Convertible Debt – Other
Interest expense incurred related to other
parties decreased to $724,000 in the year ended December 31, 2013 as compared to $3,717,000 in 2012. The principal item in this
category is related to the interest expense associated with the convertible debt with DMBM. We received $106,000 in funds in 2013
as compared to $762,000 in 2012. Amendments and restatements were agreed to by the parties with respect to the notes issued for
proceeds approximating $850,000 in the period November 2011 to December 2012, including extending the maturity, limiting satisfaction
under most circumstances to issuance of Company common stock at a discount, and the elimination of any existing defaults, accrued
and future interest. Adjustments were agreed to with respect to conversion prices subsequent to our reverse stock split. The charges
resulting from these modifications in 2012 of $3,453,000 included the beneficial conversion feature arising from the original note
issuance and subsequent changes caused by stock price fluctuation; changes in the beneficial conversion arising from the aforementioned
amendments and subsequent fluctuations in the stock price. Interest on the DMBM facility declined to $488,000 in 2013, including
amortization of debt discount related to the MVF financing. In 2013 and 2012, we incurred approximately $0 and $114,000, respectively,
associated with the beneficial conversion feature of unsecured notes and warrants issued to several investors. We also incurred
interest aggregating $186,000 in 2013 as compared to $86,000 in 2012 related to several debt settlement arrangements.
Derivative Expense
Derivative expense increased to $2,495,663
in the year ended December 31, 2013 as compared to $582,362 in the year ended December 31, 2012. Derivative expense, consisting
of all non-cash charges, consists principally of the fair valuation of certain discounts from market price of conversion features
and the period to period changes in these amounts. These amounts have increased primarily as a result of the MedBridge Venture
Fund financing and similar transactions as well as the amended and restated convertible promissory notes and modifications with
DMBM.
Management Salaries
Management salaries, including fees, increased
by 110% to $772,432 in the year ended December 31, 2013 from $367,500 in the year ended December 31, 2012 due to $339,000 in fees
for services incurred in connection with the MedBridge Development Company, or MDC, arrangement and $125,000 in executive services
pursuant to the MedBridge Venture Fund financing, both in 2013, partially offset by certain consulting agreements cancelled in
2012. Non-cash expenses, consisting of stock based compensation declined as a result of the aforementioned terminations.
Legal and Professional Expenses
Legal and professional fees increased by
59% to $874,133 in the year ended December 31, 2013 from $551,060 in the same period in 2012 or an increase of $323,073. This increase
was principally due to increased counsel fees pursuing and registering patents and licenses of our licensed sciences. Services
related to (i) intellectual property (ii) domestic and international patent protection filings regarding licensed technologies
and (iii) OTC Markets filings and status, as well as other normal corporate legal matters.
Consulting Fee Expenses
Consulting fees decreased by 88% to $98,421
in the year ended December 31, 2013 from $845,871 in the previous year or a decrease of $747,450 . The Company did not renew its
consulting agreements with two corporate consultants who were performing fund raising, corporate communications and corporate finance
services. These agreements expired December 31, 2012. This accounted for a reduction in 2013 as compared to 2012 of $570,000 in
fees and approximately $177,000 in stock based compensation, partially offset by increases for services related to investor relations
and other expenses.
Net Loss
Our net loss attributable to common shareholders
for the year ended December 31, 2013 was $7,419,722 as compared to $6,850,634 for the comparable period of the preceding year.
Operating expenses increased by 50% to $3,907,630 for the year ended December 31, 2013 as compared to $2,598,512 in the same period
in 2012.
The above table shows the cash and non-cash components of each
of the expense categories included in results of operations in the year ended December 31, 2013 and 2012. Any portion of employee
salaries and consulting fees not paid in cash as incurred under the respective agreements are satisfied with unsecured convertible
non-interest bearing notes due December 31, 2015. The holder may convert any amount of these notes prior to maturity at a 20% discount
from the 20 day VWAP on the conversion date. All notes that remain outstanding on maturity are automatically convertible into common
shares at a 20% discount from the 20 day VWAP upon maturity.
Liquidity and Capital Resources
We reported a net loss attributable to
common shareholders of $5,765,004 for the nine months ended September 30, 2014. At September 30, 2014, our accumulated deficit
amounted to $105,544,317. In the future, we may raise additional capital from external sources in order to continue the longer
term efforts contemplated under our business plan. We expect to continue incurring losses for the foreseeable future and may need
to raise additional capital to pursue our product development initiatives, to penetrate markets for the sale of our products and
continue as a going concern. We cannot provide any assurances that we will be able to raise additional capital. Our management
believes that we have access to capital resources through possible public or private equity offerings, debt financings, corporate
collaborations or other means, if needed; however, we can provide no assurance that new financing will be available on commercially
acceptable terms, if needed.
Sources of Liquidity
As of September 30, 2014, we had cash and
cash equivalents of $53,842. Those funds have since been utilized. Subsequent to September 30, 2014, we received $100,000 from
related parties as described in our unaudited financial statements included elsewhere herein. Since our inception, substantially
all of our operations have been financed through sales of equity securities and various loans. The following are financing transactions
pursuant to which we have received proceeds in the nine months ended September 30, 2014, or pursuant to which we may be contractually
entitled to receive additional proceeds.
DMBM, Inc.
On July 1, 2013, DMBM, Inc. and the Company
executed a Release and Settlement Agreement (“R & S”) modifying the conversion price of convertible debentures
aggregating $135,000 issued or to be issued by the Company to JTL Enterprises Corp. (“JTL”) and acquired by DMBM. On April 1, 2012 we issued a convertible debenture to JTL for $54,750.
On December 31, 2012, we issued a convertible debenture to JTL for $19,000. On June 30, 2013, we issued a convertible debenture
to JTL for $21,000. On August 1, 2013, DMBM and JTL entered into note purchase agreements for these three convertible debentures,
dated April 1, 2012, December 31, 2012 and June 30, 2013 for a series of cash payments made to JTL aggregating $94,750. On December
1, 2013, we issued a convertible debenture to JTL for $24,000. On December 1, 2013, DMBM and JTL entered into note purchase agreement
for a cash payment made to JTL of $24,000. On December 31, 2013, we issued a convertible debenture to JTL for $11,250. On December
31, 2013, DMBM and JTL entered into note purchase agreement for a cash payment made to JTL of $11,250. On January 31, 2014, we
issued a convertible debenture to JTL for $5,000. On January 1, 2014, DMBM and JTL entered into note purchase agreement for a cash
payment made to JTL of $5,000. Through September 30, 2014 DMBM has made $121,500 in payments and is delinquent in its payment obligation
for the remaining balance of $13,500. JTL has the right to demand that we make payments pursuant to the terms of the original notes.
We have not received such demand. The R & S provides that in order to retire the debt we issue shares of common stock at the
lower of $0.05 per share or at a discount of 30% from the average of the closing price for the 14 trading days prior to the date
of conversion of the JTL notes acquired by DMBM. On September 11, 2014, DMBM submitted a notice of conversion to us pertaining
to the above mentioned note purchase agreements and converted $68,000 outstanding principal balance and received 1,360,000 common
shares at $0.05 per share.
On September 15, 2013, we entered into
a convertible promissory note and warrant purchase agreement with DMBM pursuant to which, through September 30, 2014, DMBM funded
$220,000 in exchange for a convertible note, due September 15, 2015, with an interest at the rate of 8% per annum. Of the proceeds,
$86,667 was received in 2013, and $133,333 was received in the nine month period ended September 30, 2014. DMBM received a warrant
to purchase 880,000 shares of our common stock at $0.45 per share, exercisable for the period from the fourth year anniversary
to the fifth year anniversary from the date of the agreement. The warrant includes a cashless exercise feature.
KED Consulting Group
On January 24, 2014, we entered into a
convertible promissory note and warrant purchase agreement with KED Consulting Group, pursuant to which KED Consulting Group is
obligated to provide $270,000 in funding at a rate of 8% interest per annum; $100,000 was paid directly in satisfaction of a Company
vendor liability and $170,000 was paid to us in installments through September 30, 2014. KED Consulting Group received warrants
to purchase 1,080,000 shares of common stock at $0.45 per share, upon execution of this agreement. The warrant is exercisable,
in whole or in part, on or after the fourth anniversary of the issue date and up to the and including the fifth anniversary. The
warrant includes a cashless exercise feature.
Other Financing Agreements
In March 2014, individuals holding $115,000
in convertible notes entered into convertible promissory notes at a rate of 8% interest per annum and warrant purchase agreements
replacing their original notes with us, waiving accrued interest and any other defaults that may have existed as of that date.
These individuals also received warrants to purchase 460,000 shares of common stock on execution of this agreement. We also received
an additional $50,000 from another investor in the 2014 period under similar terms.
On
August 22, 2014, we entered into a convertible promissory note and warrant purchase agreement with an individual, Hock
Tiam Tay, an unrelated party, pursuant to which we received $50,000 in
cash. In exchange, we issued a convertible promissory note with a principal amount of $50,000 and a warrant to purchase 200,000
shares of our common stock. The note has an annual interest rate of 8% and is convertible at the option of the holder in four
equal tranches on November 22, 2015, February 22, 2016, May 22, 2016 and August 22, 2016. The conversion price is $0.113 per share.
The warrant has an exercise price of $0.85 per share and shall be exercisable from August 22, 2018 until August 22, 2019. The
warrant has a cashless exercise feature.
Dutchess Opportunity Fund II, L.P.
On March 28, 2014, we entered into an Investment Agreement with
Dutchess Opportunity Fund II L.P., whereby Dutchess Opportunity Fund may purchase up to that number of common shares having an
aggregate purchase price of $5,000,000. Under terms of the agreement, we may, at our sole discretion, deliver a put notice to Dutchess
Opportunity Fund stating the dollar amount of common shares which we intend to sell to Dutchess Opportunity Fund on a closing date.
The maximum amount that Dutchess Opportunity Fund can be required to purchase at any one time shall be equal to (1) 200% of the
average daily volume for the three trading days immediately preceding the formal date of the notice to Dutchess Opportunity Fund
or (2) $150,000, determined at our sole discretion. The share purchase price is 94% of the lowest daily volume-weighted average
price of our stock for the five consecutive trading days beginning with the notice date and the ensuing four trading days. The
agreement is for a term of three years from the date of execution, or, if earlier, the sale of $5,000,000 or written notice to
Dutchess Opportunity Fund by us. On September 4, 2014, we amended the agreement to require us to file a Registration Statement
on Form S-1 (or other appropriate form) with the SEC covering and registering securities that may be issued under the agreement
within 30 days of the completion of the review of the Form 10 by the SEC. We were notified by the SEC of the completion of the
SEC’s review on October 14, 2014. We must initially register for resale up to 10,000,000 shares of common stock. This agreement
will be effective on December 13, 2014, which is 60 days after the SEC completed its review of our Form 10 on October 14, 2014.
Related Party Financings
MedBridge Development Company
Effective March 18, 2013, we entered into
a Strategic Collaboration Agreement, or SCA, with MedBridge Development Company, LLC, or MDC, pursuant to which MDC is providing
funding and services to fund continuing research and development and operations and providing administrative assistance to us through
March 31, 2015. Services valued at $20,000 per month, subject to adjustment, during the term are to be provided, as well as a line
of credit providing $12,500 per month during the term. In the nine month period ended September 30, 2014, $180,000 in services
and $112,500 in cash proceeds have been received. At September 30, 2014, $62,500 remains to be received in monthly proceeds, and
an additional $200,000 at the discretion of MDC. MDC has conversion rights within thirty days of the end of each quarter during
the term of the agreement. MDC is owned 42.66% by the Tynan Family Trust, of which our CEO and director, John Tynan is the trustee;
42.66% by our CFO and director, David Odell; 4.87% by EDK, LLC, which is managed by Edward Koke; 7.31% by West Beach Investments,
LLC, which is managed by Steven Schott; and 2.5% by Ruth Loomer, an individual.
On August 27, 2014, we entered into a convertible
promissory note and warrant purchase agreement with MDC, pursuant to which MDC provided us with $50,000 in cash. In exchange, we
issued MDC a convertible promissory note with a principal amount of $50,000 and a warrant to purchase 200,000 shares of our common
stock. The note has an annual interest rate of 8% and is convertible at the option of the holder in four equal tranches on November
27, 2015, February 27, 2016, May 27, 2016 and August 27, 2016. The conversion price is $0.113 per share. The warrant has an exercise
price of $0.85 per share and shall be exercisable from August 27, 2018 until August 27, 2019. The warrant has a cashless exercise
feature.
MedBridge Venture Fund, LLC
Effective on July 13, 2013, we entered
into a Convertible Promissory Note and Warrant Purchase Agreement with MedBridge Venture Fund, LLC, or MVF, pursuant to which MVF
agreed to purchase a minimum of $250,000 and a maximum of $2,500,000 in convertible notes and warrants to purchase up to 10,000,000
common shares if all proceeds are received. The notes are convertible at $.0588 per common share, or a maximum of 42,517,000 shares
if all proceeds are received. The notes bear interest at 8% per annum and mature September 15, 2015, and to the extent not converted
prior to maturity, the outstanding amount of the notes and accrued interest will automatically be converted into common stock at
a defined conversion price. However, in the event that we are in default at maturity, the balance due under the note would be payable
in cash.
Through October 15, 2014, we have received
$2,206,250 consisting of cash proceeds of $1,450,000 from MVF, $100,000 from an unrelated investor, and management services valued
at $656,250 in exchange for which we issued convertible notes and warrants to MVF to purchase 8,425,000 common shares. Additional
notes for monthly services to be provided by MVF from October 1, 2014 to January 12, 2015 valued by the parties at $78,750 and
warrants to purchase an additional 315,000 shares of common stock, at a monthly rate stipulated in the agreement, are to be provided.
The services to be provided by MVF include a management team with a President and CEO, Chief Operating Officer, Controller, grant
application coordinator, finance administrative assistant and public relations resources. Through October 15, 2014, MVF converted
$120,000 in principal at a defined conversion price of $0.0588 per share and received 2,040,817 common shares. If not earlier
converted at MVF’s option, common shares will be issuable on conversion of these notes in total in four equal tranches (25%
each) on the following dates: December 15, 2014, March 15, 2015, June 15, 2015 and September 15, 2015. The warrants to purchase
our common shares are exercisable at $0.45 per share, but not before 48 months and not after 60 months after the date of issuance.
The warrants include a cashless exercise feature. MVF is co-managed by Wild Harp Holdings, LLC, which is 100% owned by our CEO
and director, John Tynan, and DW Odell Company, LLC, which is 100% owned by our CFO and director, David Odell.
Best Investment Trust
On October 1, 2013, we entered into an
unsecured note with Best Investment Trust, or BIT, formerly known as Best Investments, Inc., in the amount of $993,023, with interest
at 5% per annum, due December 31, 2018. As a result of conversions to common stock, this balance was reduced to $63,952 on September
30, 2014. This note was issued as a replacement
and amendment of the secured revolving line of credit dated March 5, 2008 and subsequently assigned to BIT. All or any portion
of the principal balance and accrued interest may be exchanged for Units, each unit consisting of one share of common stock and
one warrant to purchase one share of voting common stock, at any time. In the nine month period ended September 30, 2014, an aggregate
of $513,376 in principal was converted into 2,441,792 common shares and warrants to purchase an equal number of shares at 1.5 times
the conversion prices. If not converted earlier, unpaid principal of $63,952 at September 30, 2014, plus accrued interest, due
at maturity shall automatically be exchanged for Units based upon the exchange price upon maturity. BIT is controlled by Haig Keledjian,
our Chairman of the Board, Vice President of Research and Development and Secretary.
Wild Harp Holdings, LLC
On July 9, 2014, we entered into a Convertible
Promissory Note and Warrant Purchase Agreement with Wild Harp Holdings, LLC, pursuant to which Wild Harp Holdings is obligated
to provide us with a minimum of $100,000 and a maximum of $250,000 to be received no later than July 9, 2015. On July 9, 2014,
we received the minimum $100,000 and, in exchange, issued Wild Harp Holdings a convertible promissory note in the amount of $100,000
with an 8% interest rate per annum and a warrant to purchase 400,000 shares of common stock at an exercise price of $0.93 per share
that may be exercised at any time from July 9, 2018 to July 9, 2019. The warrants have a cashless exercise provision. The note
shall be convertible at the option of Wild Harp Holdings in four equal tranches on October 9, 2015, January 9, 2016, April 9, 2016
and July 9, 2016. The defined conversion price is $0.1245 per share. If the remaining principal and interest due under the note
is not paid by July 9, 2016, the maturity date, then the remaining amount shall automatically be converted into shares of common
stock using the same conversion ratio above.
On September 16, 2014, we received an additional
$50,000 from Wild Harp Holdings, LLC and issued Wild Harp Holdings a convertible promissory note in the amount of $50,000 with
an 8% interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.63 per share
that may be exercised from September 16, 2018 to September 18, 2019. The note and warrant have the same terms and conditions as
the ones we issued in July 2014, except that the defined conversion price of the note shall be $0.084.
On October 27, 2014, we received an additional
$50,000 from Wild Harp Holdings, LLC and issued Wild Harp Holdings a convertible promissory note in the amount of $50,000 with
an 8% interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.49 per share
that may be exercised from October 27, 2018 to October 26, 2019. The note and warrant have the same terms and conditions as the
ones we issued in July 2014, except that the defined conversion price of the note shall be $0.065.
DW Odell Company, LLC
On July 9, 2014, we entered into a Convertible
Promissory Note and Warrant Purchase Agreement with DW Odell, LLC, pursuant to which DW Odell is obligated to provide us with a
minimum of $100,000 and a maximum of $250,000 to be received no later than July 9, 2015. On July 9, 2014, we received the minimum
$100,000 and, in exchange, issued DW Odell a convertible promissory note in the amount of $100,000 with an 8% interest rate per
annum and a warrant to purchase 400,000 shares of common stock at an exercise price of $0.93 per share that may be exercised at
any time from July 9, 2018 to July 9, 2019. The warrants have a cashless exercise provision. The note shall be convertible at the
option of DW Odell in four equal tranches on October 9, 2015, January 9, 2016, April 9, 2016 and July 9, 2016. The defined conversion
price is $0.1245 per share. If the remaining principal and interest due under the note is not paid by July 9, 2016, the maturity
date, then the remaining amount shall automatically be converted into shares of common stock using the same conversion ratio above.
On September 16, 2014, we received an additional
$50,000 from DW Odell Company, LLC and issued DW Odell Company a convertible promissory note in the amount of $50,000 with an 8%
interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.63 per share that may
be exercised from September 16, 2018 to September 18, 2019. The note and warrant have the same terms and conditions as the ones
we issued in July 2014, except that the defined conversion price of the note shall be $0.084.
On October 27, 2014, we received an additional
$50,000 from DW Odell Company, LLC and issued DW Odell Company a convertible promissory note in the amount of $50,000 with an 8%
interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.49 per share that may
be exercised from October 27, 2018 to October 26, 2019. The note and warrant have the same terms and conditions as the ones we
issued in July 2014, except that the defined conversion price of the note shall be $0.065.
Off-Balance Sheet Transactions
We currently have no off-balance sheet
arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes
in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Quantitative and Qualitative Disclosures
About Market Risk
As a smaller reporting company, we are
electing scaled disclosure reporting obligations and therefore are not required to provide the information required by this Item.
Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
There have been no disagreements with our independent
registered public accounting firm in regards to accounting and financial disclosure.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, or persons controlling
our Company pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
PART II — INFORMATION
NOT REQUIRED IN PROSPECTUS
OTHER
EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of the issuance and
distribution of the securities registered under this prospectus are denoted below. Please note that all amounts are estimates other
than the Commission’s registration fee.
| |
Amount to be paid | |
Approximate SEC Registration Fee | |
$ | 128 | |
Transfer agent fees | |
$ | 1,000 | |
Accounting fees and expenses | |
$ | 20,000 | |
Legal fees and expenses | |
$ | 25,000 | |
Miscellaneous (including EDGAR filing fees) | |
$ | 872 | |
Total | |
$ | 47,000 | |
Indemnification
of Directors and Officers
Section 145 of the Delaware General
Corporation Law provides for the indemnification of officers, directors, and other corporate agents in terms sufficiently broad
to indemnify such persons under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under
the Securities Act of 1933 (the “Securities Act”). Our Employment contract with Haig Keledjian as well as our Strategic
Collaboration Agreement between VG Life Sciences Inc. and MedBridge Development Company, LLC require us, among other things, to
indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers to the
fullest extent not prohibited by law.
Recent
Sales of Unregistered Securities
Since
January 1, 2012, we have issued the securities indicated below. Unless otherwise indicated, each of the securities described below
was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) as a transaction not involving
a public offering or as a transaction made offshore to non-U.S. persons. None of the offerings were registered or qualified in
any jurisdiction. In each case, the number of investors was limited, the investors were either accredited or otherwise qualified,
had access to material information about us, and restrictions were placed on the resale of the securities. Certain amounts of the
common stock were issued, as noted, as free trading since the consideration rendered for the common stock was rendered more than
twelve months prior to the issuance of the common stock. References to pre-split shares and related amounts indicate changes resulting
from our 1-for-600 reverse stock split effective November 26, 2012 and references to dates subsequent to that date are for post-split
shares. The volume weighted average price, or VWAP, refers to the average closing price of our common stock multiplied by the trading
volume for the twenty-day period before the notice of exercise or conversion. All shares listed have been adjusted for the effect
of the stock split.
Stock Options issued
pursuant to 2013 Equity Incentive Plan adopted in fourth quarter 2013
Fourth
Quarter 2013
The following
individuals were awarded stock options in the amount indicated pursuant to the above referenced plan. All options were granted
at an exercise price of $0.2249 per share, were fully vested on date of grant, and are exercisable for a period ten years. Any
shares issued on exercise within first year would be restricted for one year from date of option grant.
|
Arthur Keledjian |
400,000 |
|
David Odell |
1,400,000 |
|
Leslie Benet |
40,000 |
|
Marshall C. Phelps |
40,000 |
|
Brennan de Raad |
440,000 |
|
Caleb Rhoads |
320,000 |
|
Haig Keledjian |
1,400,000 |
|
Eric Rosenberg |
40,000 |
|
Karen Newell Rogers |
440,000 |
|
John Tynan |
1,400,000 |
First
Quarter 2014
The following
individuals were awarded nonstatutory stock options in the amount indicated pursuant to the above referenced plan. All options
were granted at an exercise price of $0.223 per share, were fully vested on date of grant, and are exercisable for a period ten
years. Any shares issued on exercise within first year would be restricted for one year from date of option grant.
|
Arthur Keledjian |
100,000 |
|
David Odell |
350,000 |
|
Brennan de Raad |
110,000 |
|
Caleb Rhoads |
80,000 |
|
Haig Keledjian |
350,000 |
|
Eric Rosenberg |
10,000 |
|
Karen Newell Rogers |
115,000 |
|
John Tynan |
350,000 |
|
Richard Tobin |
25,000 |
|
Garrett Johnson |
25,000 |
Second
Quarter 2014
The following
individuals were awarded nonstatutory stock options in the amount indicated pursuant to the above referenced plan. All options
were granted at an exercise price of $0.17 per share, were fully vested on date of grant, and are exercisable for a period ten
years. Any shares issued on exercise within first year would be restricted for one year from date of option grant.
|
Arthur Keledjian |
100,000 |
|
David Odell |
350,000 |
|
Brennan de Raad |
110,000 |
|
Caleb Rhoads |
80,000 |
|
Haig Keledjian |
350,000 |
|
Eric Rosenberg |
10,000 |
|
Karen Newell Rogers |
115,000 |
|
John Tynan |
350,000 |
|
Robin Tobin |
25,000 |
|
Garrett Johnson |
25,000 |
Third Quarter
2014
The following individuals were
awarded nonstatutory stock options in the amount indicated pursuant to the above referenced plan. All options were granted at an
exercise price of $0.075 per share, were fully vested on date of grant, and are exercisable for a period ten years. Any shares
issued on exercise within first year would be restricted for one year from date of option grant.
|
Arthur Keledjian |
100,000 |
|
David Odell |
350,000 |
|
Brennan de Raad |
110,000 |
|
Caleb Rhoads |
80,000 |
|
Haig Keledjian |
350,000 |
|
Eric Rosenberg |
10,000 |
|
Karen Newell Rogers |
115,000 |
|
John Tynan |
350,000 |
|
Robin Tobin |
25,000 |
|
Garrett Johnson |
25,000 |
On April 30, 2006, we entered into a Consulting
Agreement with Louis W. Sullivan pursuant to which he provided health insurance policy advising services in exchange for $8,000.
On April 6, 2012, we issued 667 shares of common stock to Mr. Sullivan, valued at $12.00 per share.
On September 14, 2007, we entered into
a six-month Consulting Agreement with Anthony Freda, Jr. pursuant to which Mr. Freda provided us with business advisory services
in exchange for 667 restricted common shares, as well as 83 warrants at $90.00 per share. On August 25, 2010, we entered into an
Extension Addendum and on February 6, 2012, where we provided Mr. Freda consideration of 2,083 shares of common stock. On February
24, 2012, we issued 2,083 shares of common stock to Mr. Freda.
On January 1, 2008, we entered into a Consulting
Agreement with Marshall C. Phelps pursuant to which he provided advisory services in exchange for common stock. On December 15,
2011, we entered into an Extension and Confirmation Agreement with Marshall C. Phelps. On April 6, 2012, we issued 667 shares of
common stock to Mr. Phelps.
On March 5, 2008, we entered into an Unsecured
Revolving Credit Note with Best Investments, which is owned and controlled by Haig Keledjian. On April 30, 2012 we issued 10,947
shares of common stock valued at $6.84 per share to Haig Keledjian in partial satisfaction of the note. On January 7, 2014, we
issued 285,714 shares valued at $0.07 per share, including 285,714 warrants at $0.105 per share to Haig Keledjian in partial satisfaction
of the note.
Effective October 1, 2008, we entered into
a Marketing and Publication Agreement with Imperial Consulting Network pursuant to which we agreed to compensate Imperial Consulting
Network in common stock for their services. On January 27, 2012, we issued Imperial Consulting Network 13,333 shares of our common
stock valued at $12.00 per share.
Effective October 1, 2009, we entered into
a Consulting Services Agreement with JTL Enterprises Corp for financial services. On January 1, 2011, we entered into an Addendum
to the Consulting Services Agreement. On January 23, 2012, we issued 7,275 shares of common stock to designees of JTL Enterprises
Corp, in exchange for services earned in 2010 and 2011, valued at $6.00 per share. On January 30, 2012, we issued 2,392 shares to
designees of JTL Enterprises Corp, in exchange for services earned in 2010 and 2011, valued at $6.00 per share.
On January 8, 2010, we entered into a Consulting
Agreement with John Michael Johnson pursuant to which he provided investor relations services in exchange for 1,667 shares for
the first 6 months. On July 6, 2012, we issued 3,333 shares of common stock valued at $12.00 per share to Mr. Johnson.
On February 3, 2010, we entered into an
Extension Agreement extending our original Consulting Agreement dated July 1, 2006 with Eric Rosenberg pursuant to which he provided
us with research and medical consulting services in exchange for $3,750 per month. On February 1, 2012, pursuant to the terms of
the agreement, we issued a non-interest bearing convertible debenture to Mr. Rosenberg in the amount of $52,500 for unpaid services
that matured on June 30, 2012. On June 20, 2013, we issued a second note to Mr. Rosenberg in the amount of $70,750 with a 1% per
annum interest rate that matured on June 30, 2013. Subsequently on September 30, 2013, Stephen B. Schott acquired the notes from
Mr. Rosenberg. On December 27, 2012, we issued 500,000 shares valued at $0.05 per share to Mr. Schott.
On June 21, 2010 we entered into a Subscription
Agreement with Myron and Sandi Rosenaur pursuant to which they purchased 167 units stock, comprised of one share of common stock
and one warrant to purchase common stock at a price of $12.00 per unit. Pursuant to this agreement, we issued Myron and Sandi Rosenaur
167 shares of our common stock on January 9, 2012 and the 167 warrants expired on January 30, 2014.
On July 1, 2010, we issued an unsecured
convertible note in the amount of $250,000 at 5% interest per annum to DMBM, Inc. On January 11, 2012, in partial satisfaction
of the note in the amount of $56,943 we issued 37,962 shares of common stock to DBMB valued at $1.50 per share.
On August 1, 2010, we entered into a Consulting
Agreement with SheehanBoyce, LLC pursuant to which SheehanBoyce provided scientific advising in exchange for $12,000. On April
6, 2012, we issued 1,000 shares to SheehanBoyce, valued at $12.00 per share.
On August 5, 2010, we entered into a Consulting
Agreement with Patton Capital Corp pursuant to which Patton Capital Corp provided us with transaction listing services. In exchange
for these services we agreed to pay a monthly fee of $8,000 and to issue 11 million pre-split warrants to purchase our common stock.
On February 24, 2012 we issued 6,136 shares of common stock valued at in satisfaction of $72,000 owed for their services.
On August 17, 2010, we entered into a Subscription
Agreement with Rodney Williams pursuant to which he purchased 1,667 units of stock, comprised of 500,000 shares of common stock
at a price of $24.00 per unit and 500,000 warrant shares to purchase common stock at a price of $18.00 per unit. Pursuant to this
agreement, we issued Mr. Williams 1,667 shares of our common stock on March 14, 2012 and 833 warrants that expired on August 17,
2012.
On October 19, 2010, we entered into a
Settlement Agreement and Mutual Release with Timothy & Thomas, LLC, Mr. Timothy Wright, and Mr. Thomas Little, or T&T,
and issued them a Convertible Debenture in the amount of $1,900,000. On November 8, 2011, we issued 136,093 shares in satisfaction
of $1,000,000 of this indebtedness. On February 15, 2013, we entered into a Debenture Purchase Agreement with DMBM, Inc. whereby
DMBM was obligated to pay $450,000 to T&T in exchange for a convertible note. In March 2013, DMBM satisfied $37,500 in debt
and on February 26, 2013 we issued 187,500 shares valued at $0.10 per share to DMBM, Inc. and on April 2, 2013, we issued 187,500
shares valued at $0.10 per share to DMBM, Inc. in full satisfaction for this partial satisfaction. Thereafter, as a result of DMBM,
Inc.’s failure to perform beyond payment of $37,500, we entered into a debt settlement modification agreement with T&T
and issued to them a convertible debenture in the amount of $862,500, maturing January 1, 2020 and bearing interest at 0.35% per
annum. This note is generally convertible at the 15 day volume weighted average price, or VWAP, prior to conversion.
On January 1, 2011, we entered into a Consulting
Agreement with Robert Berliner pursuant to which he provided us with legal services in exchange for $5,000 per month. On November
29, 2013, we issued 464,338 shares valued at $0.06 per share to Mr. Berliner.
On January 1, 2011, we entered into a Consulting
Agreement with Monica Ord pursuant to which she would provide business services in exchange for $16,250 per month. Pursuant to
the agreement, all unpaid amounts were automatically added to a convertible note with a maturity date of December 31, 2015. Ms.
Ord was terminated effective December 31, 2012. On March 14, 2012, we issued Ms. Ord 139, 204 shares of our common stock valued
at $9.66 per share.
On January 1, 2011, we entered into a Consulting
Agreement with Michael Capizzano pursuant to which he provided us with legal services in exchange for $12,500 per month. On January
1, 2013, we issued two convertible notes in the amount of $20,300 and $3,535 to Michael Capizzano related to a debt settlement
and for expenses, respectively, advanced to us pursuant to the consulting agreement. The shares were to be issued at a 20% discount.
On August 20, 2013, we issued 425,435 shares comprised of 369,435 shares valued at $0.06767 per share and 56,000 shares valued
at $0.07143 per share to Mr. Capizzano for services rendered for the months ending June 30, 2012 and July 31, 2012. On January
9, 2014, we issued 150,000 shares valued at $0.14 per share to Mr. Capizzano for services rendered during the months for the months
ending April 30, 2012 and May 31, 2012. On February 13, 2014, we issued 170,250 shares valued at $0.14 per share to Mr. Capizzano.
On January 26, 2011, we entered into a
Consulting Agreement with Martin E. Weisberg pursuant to which he provided us with legal services in exchange for $5,000 per month
for a period of one year. On February 24, 2012 we issued 11,538 shares valued at $11.70 per share and on April 30, 2012, we issued
4,277 shares valued at $8.76 per share.
On February 10, 2011, we entered into a
Services Agreement with Combustion Studios Inc. pursuant to which Combustion Studios provided business support services in exchange
for $15,000. On April 6, 2012, we issued 1,250 shares of common stock to Combustion Studios, valued at $12.00 per share.
On March 25, 2011, we entered into a Letter
Agreement in the amount of $100,000 to Wonderland Capital Corp for the right to loan us two tranches of $50,000 each. On the same
date, Wonderland Capital Corp entered into an Agreement with DMBM, Inc. to transfer the right and title of the Agreement to DMBM,
Inc. Thereafter, DMBM, Inc. made two payments of $50,000 and we issued DMBM, Inc. a Promissory Note dated March 25, 2011. On April
27, 2012 and May 8, 2012, we issued 33,333 and 33,333 shares of common stock respectively to DMBM, Inc., valued at $1.50 per share
in partial and full satisfaction, respectfully, of the note.
In March and April, 2011, we entered into
a Note Purchase Agreements in the amount of $266,547, including accrued interest of $29,219, to DMBM, Inc., for the assumption
of debt owed to University License Equity Holdings, Inc. and the University of Vermont originally incurred in December 2009. On
October 6, 2011 we entered into a Release and Settlement Agreement with DMBM, Inc. On February 22, 2012, we issued 16,667 shares
to DMBM, Inc. valued at $1.20 per share. On March 20, 2012, we issued 16,667 shares of common stock to DMBM, Inc. related to the
April 11, 2011 Note Purchase Agreement and subject to the October 6, 2011 Release and Settlement Agreement, valued at $1.50 per
share,. On March 28, 2012, we issued 16,667 shares of common stock to DMBM, Inc. related to the April 11, 2011 Note Purchase Agreement
and subject to the October 6, 2011 Release and Settlement Agreement, valued at $1.50 per share. On August 15, 2012 we issued 100,000
shares valued at $0.30 per share to DMBM, Inc. in partial satisfaction of the note. On August 23, 2012 we issued 100,000 shares
valued at $0.30 per share to DMBM, Inc. in partial satisfaction of the note. On November 7, 2012 we issued 106,667 shares valued
at $0.075 per share to DMBM, INC. in partial satisfaction of the note. On November 15, 2012 we issued 160,000 shares valued at
$0.075 per share to DMBM, INC. in partial satisfaction of the note. On December 31, 2012, we issued 146,666 shares valued at $0.15
per share to DMBM, Inc. in partial satisfaction of the Note.
On October 25, 2011 we issued a restated
convertible debenture, or RCD, in the amount of $34,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from October
11, 2011 to October 25, 2011. On October 31, 2012, we issued 90,667 shares valued at $0.375 per share to DMBM, Inc. in full satisfaction
of the note.
On November 3, 2011, we issued a Convertible
Debenture to DMBM, Inc. in the amount of $611,700 based on loans advanced to us by DMBM from January 1, 2011 through November 3,
2011. On February 8, 2012, March 2, 2012, April 10, 2012, May 8, 2012, June 18, 2012 and July 16, 2012 we issued 46,000, 41,333,
25,667, 55,000, 8,333 and 33,333 shares of common stock to DMBM, respectively, valued at $1.50 per share in partial satisfaction
of the note. On July 5, 2012 we issued 26,000 shares valued at $1.50 per share to DMBM, Inc. in partial satisfaction of the debenture.
On August 2, 2012 we issued 50,000 shares valued at $1.00 per share to DMBM, Inc. in partial satisfaction of this debenture. On
August 14, 2012, we issued 16,667 shares valued at $1.50 per share to Two Knights and a Queen, Inc., at the direction of DMBM, Inc.,
in partial satisfaction of the November 3, 2011 debenture.
On November 25, 2011, we issued a RCD in
the amount of $64,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from November 1, 2011 through November 25, 2011.
On January 9, 2013, we issued 150,000 shares valued at $0.14 per share to DMBM, Inc. in partial satisfaction of the RCD. On January
14, 2013, we issued 150,000 shares valued at $0.14 per share to DMBM, Inc. in full satisfaction of the RCD.
On December 15, 2011 we entered into a
Consulting Agreement with Dr. Brett Mitchell pursuant to which he provided us research and medical consulting services in exchange
for $7,500 per each three month term. On September 19, 2012, we issued 2,321 shares of common stock valued at $6.72 per share to
Dr. Mitchell.
On December 15, 2011, we extended our Consulting
Agreement with Richard Gerstner that was originally entered into on January 1, 2008 pursuant to which Mr. Gerstner provided us
with business strategy services. On February 28, 2012, we issued 667 shares of common stock at $12.00 per share to Mr. Gerstner
pursuant to the extension in satisfaction of the amounts owed for the two years ended December 31, 2011.
On December 23, 2011, we issued an RCD
in the amount of $64,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from December 2, 2012 to December 23, 2012,
which has been amended pursuant to an Amended and Restated Amendment to Convertible Debentures, effective January 1, 2013. On January
24, 2013, we issued 142,857 shares valued at $0.14 per share to DMBM, Inc. On January 30, 2013, we issued 142,857 shares valued
at $0.14 per share to DMBM, Inc. On February 5, 2013, we issued 171,428 shares valued at $0.14 per share to DMBM, Inc. in full
satisfaction of the RCD.
On January 27, 2012, we issued an RCD in
the amount of $73,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from January 1, 2012 to January 27, 2012, which
has been amended pursuant to an Amended and Restated Amendment to Convertible Debentures, effective January 1, 2013. On February
12, 2013, we issued 162,337 shares valued at $0.154 per share to DMBM, Inc. On February 19, 2013, we issued 155,844 shares valued
at $0.154 per share to DMBM, Inc. in partial satisfaction of the RCD. On February 22, 2013, we issued 155,844 shares valued at
$0.154 per share to DMBM, Inc. in full satisfaction of the RCD.
On February 22, 2012, we entered into an
Extension Agreement of the Consulting Agreement dated June 1, 2008 with C. Edward Koop pursuant to which he provided medical consulting
services in exchange for common stock. On April 30, 2012, we issued 2,000 shares of common stock valued at $12.00 per share for
the services that Mr. Koop rendered in the years ended May 31, 2009, 2010 and 2011.
On February 28, 2012, we issued an RCD
in the amount of $137,000 to DMBM, Inc., based on loans advanced to us by DMBM, Inc. from February 1, 2012 to February 28, 2012,
which has been amended pursuant to an Amended and Restated Amendment to Convertible Debentures, effective January 1, 2013. On March
1, 2013, we issued 200,000 shares valued at $0.14 per share to DMBM, Inc. in partial satisfaction of the RCD. On March 14, 2013,
we issued 241,312 shares valued at $0.1036 per share to DMBM, Inc. in partial satisfaction of the RCD. On March 21, 2013, we issued
218,818 shares valued at $0.0914 per share to DMBM, Inc. in partial satisfaction of the RCD. On March 28, 2013, we issued 251,572
shares valued at $0.0954 per share to DMBM, Inc. in partial satisfaction of the RCD. On April 23, 2013, we issued 244,618 shares
valued at $0.1022 per share to DMBM, Inc. in partial satisfaction of the RCD. On April 30, 2013, we issued 156,250 shares valued
at $0.096 per share to DMBM, Inc. in full satisfaction of the RCD.
On March 1, 2012, we entered into a Subscription
Agreement with Robert Siegel pursuant to which he purchased 16,667 units of stock, comprised of one share of common stock and one
warrant to purchase common stock at a price of $1.50 per unit. Pursuant to this agreement, we issued Mr. Siegel 16,667 shares of
our common stock on April 30, 2012 and 16,667 warrants, which expired on March 1, 2014.
As of April 27, 2012, we issued an RCD
in the amount of $80,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from April 1, 2012 to April 27, 2012, which
has been amended pursuant to an Amended and Restated Amendment to Convertible Debentures, effective January 1, 2013. On November
13, 2013, we issued 350,000 shares valued at $0.0492 per share to DMBM, Inc. On November 26, 2013, we issued 120,845 shares valued
at $0.1655 per share to DMBM, Inc. On December 10, 2013, we issued 156,095 shares valued at $0.21 per share to DMBM, Inc. in full
satisfaction of these RCDs. The balance of $10,000 was applied against a $75,000 penalty assessed to DMBM, Inc. in full satisfaction
of the note.
On May 24, 2012, June 30, 2012, and July
31, 2012, we entered into RCD’s in the amounts of $99,000, $84,000, and $39,500, respectively, with DMBM, Inc. for cash advanced
to us from May 1, 2012 through July 31, 2012. On February 21, 2014, we issued 785,760 shares valued at $0.1599 per share to DMBM,
Inc. in full consideration of these restated convertible debentures, adjusting for allowances and penalties.
As of March 30, 2012, we issued an RCD
in the amount of $152,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from March 1, 2012 to March 30, 2012, which
has been amended pursuant to an Amended and Restated Amendment to Convertible Debentures, effective January 1, 2013. On May 3,
2013, we issued 269,106 shares valued at $0.0929 per share to DMBM, Inc. On May 16, 2013, we issued 240,673 shares valued at $0.0831
per share to DMBM, Inc. On May 22, 2013, we issued 256,410 shares valued at $0.078 per share to DMBM, Inc. On June 6, 2013, we
issued 286,532 shares valued at $0.0698 per share to DMBM, Inc. On June 13, 2013, we issued 226,586 shares valued at $0.0662 per
share to DMBM, Inc. On June 19, 2013, we issued 273,311 shares valued at $0.05488 per share to DMBM, Inc. On July 1, 2013, we issued
277,777 shares valued at $0.054 per share to DMBM, Inc. On July 3, 2013, we issued 432,900 shares compromised of 282,900 shares
valued at $0.0462 per share to DMBM, Inc. and 150,000 shares valued at 40.0462 per share to Two Knights and a Queen, Inc., at the
direction of DMBM, Inc., in full satisfaction of the note.
As of May 24, 2012, we issued an RCD in
the amount of $99,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from May 1, 2012 to May 24, 2012, which has been
amended pursuant to an Amended and Restated Amendment to Convertible Debentures, effective January 1, 2013. As of June 22, 2012,
we issued a restated convertible debenture in the amount of $84,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from
June 1, 2012 to June 22, 2012. As of July 31, 2012, we issued an RCD in the amount of $39,500 to DMBM, Inc. based on loans advanced
to us by DMBM, Inc. from July 1, 2012 to July 31, 2012. On December 18, 2013, we issued 256,739 shares valued at $0.1558 per share
to DMBM, Inc. in partial satisfaction of the May 24, 2012 RCD. On January 14, 2014, we issued 785,760 shares valued at $0.1559
per share to DMBM, Inc., including credits and penalties totaling $25,000 and $35,000, respectively, in full satisfaction of these
RCDs.
As of August 30, 2012 we issued a RCD in
the amount of $1,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. on August 24, 2012, which has been amended pursuant
to an Amended and Restated Amendment to Convertible Debentures, effective January 1, 2013. We have not issued any shares to DMBM,
Inc. related to this convertible debenture.
On September 20, 2012, subject to the amendment
dated September 14, 2012, we issued 106,667 shares valued at $0.075 per share to DMBM in partial satisfaction of the note. On September
27, 2012 we issued 86,667 shares valued at $0.075 per share to DMBM, Inc. in partial satisfaction of the note. On October 11, 2012,
we issued 86,667 shares valued at $0.075 per share to DMBM, Inc. in partial satisfaction of the note. On October 31, 2012 we issued
90,667 shares valued at $0.375 per share to DMBM, Inc. in partial satisfaction of the note.
As of September 30, 2012, we issued an
RCD in the amount of $54,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from September 1, 2012 to September 30,
2012, which has been amended pursuant to an Amended and Restated Amendment to Convertible Debentures, effective January 1, 2013.
As of October 31, 2012, we issued a restated convertible debenture in the amount of $15,000 to DMBM, Inc. based on loans advanced
to us by DMBM, Inc. from October 1, 2012 to October 31, 2012. As of November 30, 2012, we issued a restated convertible debenture
in the amount of $15,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from June 1, 2012 to June 22, 2012. On January
14, 2014, we issued 359,947 shares valued at $0.1528 per share to DMBM, Inc., including a $29,000 credit we received from DMBM,
Inc. related to penalties, in full satisfaction of these RCDs.
On September 30, 2012, October 31, 2012,
and November 30, 2012, we entered into RSD’s with DMBM, Inc. for $54,000, $15,000, and $15,000, respectively, to us from
September 1, 2012 through November 30, 2012, which has been amended pursuant to an Amended and Restated Amendment to Convertible
Debentures, effective January 1, 2013. On March 25, 2014 we issued 359,947 shares valued at $0.1528 per share to DMBM, Inc. in
full satisfaction of these restated convertible debentures, adjusting for allowances and penalties.
On October 2, 2012, we issued a convertible
note in the amount of $50,000 to Sandra Valentine with an interest rate of 6% and a maturity date of October 1¸ 2013. On
April 3, 2014, we issued 214,398 shares of common stock valued at $0.25932 per share to Ms. Valentine in satisfaction of the note
and accrued interest.
As of December 13, 2012, we issued a RCD
in the amount of $20,500 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from December 12, 2012 to December 14, 2012,
which has been amended pursuant to an Amended and Restated Amendment to Convertible Debentures, effective January 1, 2013. On May
8, 2014, we issued 443,723 shares valued at $0.0462 per share to DMBM, Inc. in full satisfaction of the RCD. There was an error
in the conversion calculation price per share for this issuance, which will be reconciled in future DMBM, Inc. issuances.
On January 1, 2013, we entered into a Consulting
Agreement with BlueWater Advisory Group for public relation services. On February 26, 2014, we issued 8,333 shares valued at $0.18001
per share to BlueWater Advisory Group. On March 6, 2014, we issued 18,367 shares valued at $0.16334 per share to BlueWater Advisory
Group. On April 16, 2014, we issued 37,218 shares valued at $0.1209 per share to BlueWater Advisory Group. On May 5, 2014, we issued
74,436 shares valued at $0.06045 per share to BlueWater Advisory Group in partial satisfaction of the debt.
As of January 30, 2013, we issued a convertible
debenture in the amount of $64,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from January 1, 2013 to January 30,
2013. On May 28, 2014, we issued 900,000 shares valued at $0.05 per share to DMBM, Inc. in partial satisfaction of the convertible
debenture. We were credited 100,000 shares in order to partially reconcile the May 8, 2014 issuance error.
As of February 28, 2013, we issued a convertible
debenture in the amount of $52,800 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from February 1, 2013 to February
28, 2013. We have not issued any shares to DMBM, Inc. related to this convertible debenture.
As of February 28, 2013, we issued a convertible
debenture in the amount of $20,500 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. on April 18, 2013. We have not issued
any shares to DMBM, Inc. related to this convertible debenture.
On March 4, 2013, we retired 10,713 shares
due to a lawsuit settlement for Mr. Harry Zhabilov.
On March 18, 2013, we entered into an Agreement
with MedBridge Development Company pursuant to which MDC was to provide us services for $20,000 per month and a line of credit
of up to $550,000. On December 19, 2013 we issued 2,008,087 shares to MDC which consisted of 341,297 shares valued at $0.1465 per
share for conversion of a $50,000 note; 597,270 shares valued at $0.1465 per share for cash advanced to us for management and 1,069,521
valued at $0.1206 per share for administrative services. On April 3, 2014, we issued 516,612 shares to MDC which consisted of 255,973
shares valued at $0.1465 and 260,639 shares valued at $0.2302 per share for administrative services. On April 16, 2014, we issued
560,435 shares to MDC which consisted of 255,973 shares valued at $0.1465 and 304,462 shares valued at $0.19707 per share for administrative
services.
As of March 20, 2013 we issued a convertible
debenture in the amount of $6,000 to DMBM, Inc. based on loans advanced to us by DMBM, Inc. from March 1, 2013 to March 20, 2013.
We have not issued any shares to DMBM, Inc. related to this convertible debenture.
On May 7, 2013, we issued 2 shares due
to a rounding error.
On July 1, 2013, we and DMBM, Inc.
executed a Release and Settlement Agreement (“R & S”) modifying the conversion price of convertible
debentures aggregating $135,000 issued or to be issued by us to JTL Enterprises Corp. (“JTL”). These debentures
were given in partial consideration of services rendered by JTL for the period from 2012 to June 30, 2013 (a total of
$118,750) and thereafter (in the amount of $16,250). On April 1, 2012 we issued a convertible debenture to JTL for $54,750.
On December 31, 2012, we issued a convertible debenture to JTL for $19,000. On June 30, 2013, we issued a convertible
debenture to JTL for $21,000. On August 1, 2013, DMBM and JTL entered into note purchase agreements for these three
convertible debentures, dated April 1, 2012, December 31, 2012 and June 30, 2013 for a series of cash payments made to JTL
aggregating $94,750. On December 1, 2013, we issued a Convertible Debenture to JTL for $24,000. On December 1, 2013, DMBM and
JTL entered into note purchase agreement for a cash payment made to JTL of $24,000. On December 31, 2013, we issued a
convertible debenture to JTL for $11,250. On December 31, 2013, DMBM and JTL entered into note purchase agreement for a cash
payment made to JTL of $11,250. On January 31, 2014, we issued a convertible debenture to JTL for $5,000. On January 1, 2014,
DMBM and JTL entered into note purchase agreement for a cash payment made to JTL of $5,000. Through September 30, 2014 DMBM
has made $121,500 in payments and is delinquent in its payment obligation for the remaining balance of $13,500. JTL has the
right to demand that we make payments pursuant to the terms of the original notes. We have not received such demand. The R
& S provides that in order to retire the debt we will issue shares of common stock at the lower of $0.05 per share or at
a discount of 30% from the average of the closing price for the 14 trading days prior to the date of conversion of the JTL
notes acquired by DMBM. On September 11, 2014, DMBM submitted a notice of conversion to us pertaining to the above mentioned
note purchase agreements and converted $68,000 outstanding principal balance and received 1,360,000 common shares at $0.05
per share.
On July 13, 2013, MedBridge Venture Fund,
LLC, or MVF, agreed to provide up to $2,500,000 in cash advances and services to us. MVF may convert the cash advanced to us ($1,500,000)
and the cost of services earned to ($520,968 as of May 31, 2014) into shares of common stock at any time, subject to lock-up provisions.
MVF also received one warrant to purchase four shares of common stock at $0.45 per share with an exercise date beginning 48 months
after the date of the agreement and terminating 60 months after the date of the agreement. As of May 31, 2014, MVF had converted
$120,000 in cash advances owed into 2,804,816 shares of common stock.
On August 25, 2013, we issued a Subscription
Agreement in the amount of $5,000 to Rodney Williams, as well as one warrant per share with a price of $1.00 which expire August
25, 2014. On January 14, 2014, we issued 83,333 shares of common stock valued at $0.0588 per share.
On October 1, 2013, we issued an unsecured
note in the amount of $993,023 with interest of 5% per annum due December 31, 2018 to Best Investments Trust. On December 23, 2013,
we issued 2,000,000 shares of common stock valued at $0.24 per share to Best Investments Trust. We also issued a warrant to purchase
the same number of shares on a cashless basis within five years at an exercise price of $0.36 per share. On April 1, 2014, we issued
1,030,032 shares valued at $0.2184 per share to Best Investment Trust. We also issued a warrant to purchase the same number of
shares on a cashless basis within five years at an exercise price of $0.3276 per share. On May 19, 2014, we issued 188 shares valued
at $0.2184 to reconcile a prior issuance error to Best Investments Trust on April 1, 2014. On May 15, 2014, we issued 1,118,764
shares valued at $0.2011 per share. We also issued a warrant to purchase the same number of shares on a cashless basis within five
years at an exercise price of $0.30165 per share.
On October 1, 2013 we issued an unsecured
note in the amount of $63,675.55 with an interest rate of 5% and warrant coverage of 289,434 shares at $0.33 per share to Mary
Sinanyan. On April 1, 2014, we issued 292,808 shares valued at $0.21747 per share to Mary Sinanyan in full satisfaction of the
note.
On October 1, 2013, we stopped accruing
Mr. Keledjian’s salary to his revolving note and began accruing salary to Notes Payable. On May 27, 2014, we issued 466,152
shares valued at $0.16089 per share to Nisca Irrevocable Trust, which is controlled by Mr. Keledjian, for $75,000 due to Mr. Keledjian
for services in 2013.
On October 28, 2013, we issued 72,000 shares
valued at $0.20 per share to Myron Landin, related to JTL Enterprises Corp in partial consideration for services rendered in the
months of January 2012 to September 2012.
On October 28, 2013, we issued 66,000 shares
to Myron Landin compromised of 18,000 shares valued at $0.20 per share for services rendered in the months of October 2012 to December
2012, and 48,000 shares valued at $0.15 per share for services rendered in the months of January 2013 to March 2013. These issuances
were related to JTL Enterprises Corp in partial consideration for services rendered in those periods.
On November 29, 2013, we issued 92,000
shares to Samuel Zemsky comprised of 60,000 shares valued at $0.20 per share to for services rendered in the months of January
– December 2012 and 32,000 shares valued at $0.15 per share to Myron Landin for services rendered in January-March, 2013,
related to JTL Enterprises Corp in partial consideration for services rendered.
On January 1, 2014 we entered into a Services
Agreement with JTL Enterprises Corp for accounting services. On March 21, 2014, we issued 289,000 shares of common stock valued
at $0.0588 per share to JTL Enterprises Corp. for partial consideration of services rendered January 1, 2014 to January 31, 2014.
On April 16, 2014, we issued 335,000 shares valued at $0.0588 per share to JTL Enterprises Corp for partial consideration of services
rendered February 1, 2014 to February 28, 2014. On May 27, 2014, we issued 420,000 shares valued at $0.0588 per share to JTL Enterprises
Corp for partial consideration of services rendered April 1, 2014 to April 30, 2014. On May 28, 2014, we issued 241,000 shares
valued at $0.0588 per share to JTL Enterprises Corp for partial consideration of services rendered March 1, 2014 to March 30, 2014.
On July 14, 2014, we issued 331,000 shares valued at $0.0588 per share to JTL Enterprises Corp for partial consideration of services
rendered May 1, 2014 to May 31, 2014. On August 8, 2014, we issued 106,000 shares valued at $0.0588 per share to JTL Enterprises
Corp for partial consideration of services rendered June 1, 2014 to June 30, 2014. On August 20, 2014, we issued 173,000 shares
valued at $0.0588 per share to JTL Enterprises Corp for partial consideration of services rendered July 1, 2014 to July 31, 2014.
On October 3, 2014, we issued 135,000 shares valued at $0.0588 per share to JTL Enterprises Corp for partial consideration of services
rendered August 1, 2014 to August 31, 2014.
On March 3, 2014, we issued 2,481 shares
of common stock valued at $12.00121 per share to Robert A Forrester for legal services rendered in October 2011.
On July 9, 2014, we entered into a Convertible
Promissory Note and Warrant Purchase Agreement with Wild Harp Holdings, LLC, pursuant to which Wild Harp Holdings is obligated
to provide us with a minimum of $100,000 and a maximum of $250,000 to be received no later than July 9, 2015. On July 9, 2014,
we received the minimum $100,000 and, in exchange, issued Wild Harp Holdings a convertible promissory note in the amount of $100,000
with an 8% interest rate per annum and a warrant to purchase 400,000 shares of common stock at an exercise price of $0.93 per share
that may be exercised at any time from July 9, 2018 to July 9, 2019. The warrants have a cashless exercise provision. The note
shall be convertible at the option of Wild Harp Holdings in four equal tranches on October 9, 2015, January 9, 2016, April 9, 2016
and July 9, 2016. The defined conversion price is $0.1245 per share. If the remaining principal and interest due under the note
is not paid by July 9, 2016, the maturity date, then the remaining amount shall automatically be converted into shares of common
stock using the same conversion ratio above. In addition, we agree to issue 50,000 shares of our Series B Preferred Stock to Wild
Harp Holdings. John P. Tynan, our President & Chief Executive Officer, is the natural person with voting and investment control
over Wild Harp Holdings.
On July 9, 2014, we entered into a convertible
promissory note and warrant purchase agreement with DW Odell, LLC, pursuant to which DW Odell is obligated to provide us with a
minimum of $100,000 and a maximum of $250,000 to be received no later than July 9, 2015. On July 9, 2014, we received the minimum
$100,000 and, in exchange, issued DW Odell a convertible promissory note in the amount of $100,000 with an 8% interest rate per
annum and a warrant to purchase 400,000 shares of common stock at an exercise price of $0.93 per share that may be exercised at
any time from July 9, 2018 to July 9, 2019. The warrants have a cashless exercise provision. The note shall be convertible at the
option of DW Odell in four equal tranches on October 9, 2015, January 9, 2016, April 9, 2016 and July 9, 2016. The defined conversion
price is $0.1245 per share. If the remaining principal and interest due under the note is not paid by July 9, 2016, the maturity
date, then the remaining amount shall automatically be converted into shares of common stock using the same conversion ratio above.
In addition, we agreed to issue 50,000 shares of our Series B Preferred Stock to DW Odell. David W. Odell, our Chief Financial
Officer, is the natural person with voting and investment control over DW Odell.
On July 19, 2014, we entered into the First
Amendment to the Convertible Promissory Note and Warrant Purchase Agreement with Wild Harp Holdings in order to remove all references
to Series B Preferred Shares and removing the agreement to issue 50,000 shares of our Series B Preferred Stock. All other terms
and conditions of the Convertible Promissory Note and Warrant Purchase Agreement remain unmodified and in full force and effect.
On July 19, 2014,
we entered into the First Amendment to the Convertible Promissory Note and Warrant Purchase Agreement with DW Odell Company in
order to remove all references to Series B Preferred Shares and removing the agreement to issue 50,000 shares of our Series B Preferred
Stock. All other terms and conditions of the Convertible Promissory Note and Warrant Purchase Agreement remain unmodified and in
full force and effect.
On August 27, 2014, we entered into a convertible
promissory note and warrant purchase agreement with MDC, pursuant to which MDC provided us $50,000 in cash. In exchange, we issued
MDC a convertible promissory note with a principal amount of $50,000 and a warrant to purchase 200,000 shares of our common stock.
The note has an annual interest rate of 8% and is convertible at the option of the holder in four equal tranches on November 27,
2015, February 27, 2016, May 27, 2016 and August 27, 2016. The conversion price is $0.113 per share. The warrant has an exercise
price of $0.85 per share and shall be exercisable from August 27, 2018 until August 27, 2019. The warrant has a cashless exercise
feature.
On September 16, 2014, we received an
additional $50,000 from Wild Harp Holdings, LLC and issued Wild Harp Holdings a Convertible Promissory Note in the amount of $50,000
with an 8% interest rate per annum and a Warrant to purchase 200,000 shares of common stock at an exercise price of $0.63 per
share that may be exercised from September 16, 2018 to September 18, 2019. The Note and Warrant has the same terms and conditions
as the ones we issued in July 2014 except that the defined conversion price of the Note shall be $0.084.
On September 16, 2014, we received an
additional $50,000 from DW Odell Company, LLC and issued DW Odell Company a Convertible Promissory Note in the amount of $50,000
with an 8% interest rate per annum and a Warrant to purchase 200,000 shares of common stock at an exercise price of $0.63 per
share that may be exercised from September 16, 2018 to September 18, 2019. The Note and Warrant has the same terms and conditions
as the ones we issued in July 2014 except that the defined conversion price of the Note shall be $0.084.
On October 27, 2014, we received an additional
$50,000 from Wild Harp Holdings, LLC and issued Wild Harp Holdings a convertible promissory note in the amount of $50,000 with
an 8% interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.49 per share
that may be exercised from October 27, 2018 to October 26, 2019. The note and warrant have the same terms and conditions as the
ones we issued in July 2014, except that the defined conversion price of the note shall be $0.065.
On October 27, 2014, we received an additional
$50,000 from DW Odell Company, LLC and issued DW Odell Company a convertible promissory note in the amount of $50,000 with an
8% interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.49 per share that
may be exercised from October 27, 2018 to October 26, 2019. The note and warrant have the same terms and conditions as the ones
we issued in July 2014, except that the defined conversion price of the note shall be $0.065.
UNDERTAKINGS
(a) The undersigned registrant
hereby undertakes:
(1) To file, during any
period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) |
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
|
|
(ii) |
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
(iii) |
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
|
|
(2) That,
for the purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purposes
of determining liability under the Securities Act of 1933 to any purchaser
(A) |
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) (§230.424(b)(3) of this chapter) shall be deemed to be part of this registration as of the date the filed prospectus was deemed part of and included in the registration statement; and |
(B) |
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), (b)(7) (§230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) (§230.415(a) (1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be a part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in this prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however; that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
(5) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Exhibit No |
Description |
2.10 |
Agreement and Plan of Merger dated June 30, 2004, including the Agreement of Merger attached as Exhibit B (included as exhibits 2.1 and 2.2 to the 8-K filed by Viral Genetics, Inc. September 28, 2004, and incorporated herein by reference). |
3.10 |
Certificate of Incorporation, filed June 8, 1998 (included as exhibit 3.1 to the Form 10-SB filed by Viral Genetics, Inc. on July 29, 1999, and incorporated herein by reference). |
3.20 |
Certificate of Amendment, filed April 22, 1999 (included as exhibit 3.2 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
3.30 |
Certificate of Amendment, effective November 20, 2001 (included as exhibit 3.2 to the 10-KSB field by Viral Genetics, Inc. on April 24, 2002, and incorporated herein by reference). |
3.40 |
Certificate of Amendment, effective November 17, 2004 (included as exhibit 3.3 to the Form 10-KSB filed by Viral Genetics, Inc. on April 5, 2005, and incorporated herein by reference). |
3.50 |
Certificate of Designation of Series A Preferred Stock, filed May 12, 2009 (included as exhibit 3.7 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
3.60 |
Certificate of Amendment, filed May 13, 2009 (included as exhibit 3.8 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
3.70 |
Certificate of Amendment, filed January 3, 2011 (included as exhibit 3.5 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
3.80 |
Certificate of Amendment to the Certificate of Designation of Series A Preferred Stock, filed August 22, 2012 (included as exhibit 3.9 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
3.90 |
Certificate of Amendment, filed October 22, 2012 (filed as Exhibit 3.9 to the Form 10-12G/A filed September 10, 2014, and incorporated herein by reference). |
3.10 |
Certificate of Amendment, filed November 13, 2012 (included as exhibit 3.10 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
3.11 |
Certificate of Amendment, filed March 18, 2014 (included as exhibit 3.11 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
3.12 |
Certificate of Amendment, effective July 15, 2014 (filed as Exhibit 3.12 to the Form 10-12G/A filed September 10, 2014, and incorporated herein by reference). |
3.13 |
Certificate of Restatement and Integration of Articles of Incorporation, dated September 4, 2014 (filed as Exhibit 3.13 to the Form 10-12G/A filed September 10, 2014, and incorporated herein by reference). |
3.14 |
Amended and Restated Certificate of Designation of Series A Preferred Stock, dated September 4, 2014 (filed as Exhibit 3.14 to the Form 10-12G/A filed September 10, 2014, and incorporated herein by reference). |
3.15 |
Bylaws (included as exhibit 3.12 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
5.1** |
Opinion of Trombly Business Law, PC |
10.10 |
Consulting Services Agreement between VG Life Sciences Inc. and Dr. Eric Rosenberg, dated July 1, 2006 (included as exhibit 10.128 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.20 |
Consulting Agreement between Viral Genetics, Inc. and Anthony Freda, Jr., dated September 14, 2007 (included as exhibit 10.1 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.30 |
Exclusive License Agreement by and between V-Clip Pharmaceuticals, Inc. and University License Equity Holdings Inc. (subsequently amended and restated) (included as exhibit 10.3 to the 8-K filed by Viral Genetics, Inc. on December 20, 2007, and incorporated herein by reference). |
10.40 |
Subscription Agreement between V-Clip Pharmaceuticals, Inc. and University License Equity Holdings Inc. (included as exhibit 10.4 to the 8-K filed by Viral Genetics, Inc. on December 20, 2007, and incorporated herein by reference). |
10.50 |
Memorandum of Understanding dated November 30, 2007 by and among Viral Genetics, Inc., V-Clip Pharmaceuticals, Inc. and University License Equity Holdings, Inc. (included as exhibit 10.5 to the 8-K filed by Viral Genetics, Inc. on December 20th, 2007, and incorporated herein by reference). |
10.60 |
Debt Restructuring Agreement between Viral Genetics, Inc. and Best Investments, Inc. dated March 5, 2008 (included as exhibit 10.1 to the 8-K filed by Viral Genetics, Inc. on July 8th, 2008, and incorporated herein by reference). |
10.70 |
Security Agreement between Viral Genetics, Inc. and Best Investments, Inc. dated March 5, 2008 (included as exhibit 10.2 to the 8-K filed by Viral Genetics Inc. on July 8th, 2008, and incorporated herein by reference). |
10.80 |
Purchase Agreement between Viral Genetics, Inc. and Michael Capizzano, dated July 1, 2008 (included as exhibit 10.7 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.90 |
Subsidiary Guarantee dated March 5, 2008 (included as exhibit 10.3 to the 8-K filed by Viral Genetics, Inc. on July 8th, 2008, and incorporated herein by reference). |
10.10 |
Business Marketing Agreement between Viral Genetics, Inc. and Imperial Consulting Network, Inc., aka Performance Profiler Quarterly, effective October 1, 2008 (included as exhibit 10.9 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.11 |
Agreement and Plan of Merger by and between Viral Genetics, Inc., a Delaware Corporation, V-Clip Pharmaceuticals, Inc., and Viral Genetics, Inc., a California corporation dated October 28, 2008 (included as exhibit 10.1 to the 8-K filed by Viral Genetics, Inc. on November 18, 2008, and incorporated herein by reference). |
10.12 |
Consent and Understanding by and between Viral Genetics, Inc., a Delaware Corporation, V-Clip Pharmaceuticals, Inc., and Viral Genetics, Inc., a California corporation dated October 28, 2008 (included as exhibit 10.2 to the 8-K filed by Viral Genetics, Inc. on November 18, 2008, and incorporated herein by reference). |
10.13 |
Extension and Amendment to Agreement between Viral Genetics, Inc. and M. Karen Newell Rogers, effective July 1, 2009 (included as exhibit 10.12 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.14 |
Exclusive License Agreement with the University of Colorado, dated August 25, 2009 (included as exhibit 10.13 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference) |
10.15 |
Consulting Services agreement between Viral Genetics, Inc. and JTL Enterprises Corp., dated October 1, 2009 (included as exhibit 10.14 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.16 |
Exclusive License Agreement with the University of Colorado, dated November 30, 2009 (included as exhibit 10.15 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.17 |
Business Services Agreement between Viral Genetics, Inc. and John Michael Johnson, dated January 8, 2010 (included as exhibit 10.16 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.18 |
Extension Agreement between Viral Genetics, Inc. and Eric S. Rosenberg, dated February 3, 2010 and effective June 30, 2008 (included as exhibit 10.17 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.19 |
Consulting Services Extension Agreement between VG Life Sciences Inc. and Dr. Eric Rosenberg, dated February 3, 2010 (included as exhibit 10.129 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.20 |
Promissory Note between Viral Genetics, Inc. and Wonderland Capital Corp., dated March 10, 2010 (included as exhibit 10.18 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.21 |
Lease Agreement between Viral Genetics, Inc. and Texas Life-Sciences Collaboration Center, commencing May 1, 2010 and expiring April 30, 2013 (included as exhibit 10.19 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.22 |
Subscription Agreement Between Viral Genetics, Inc. and Myron and Sandi Rosneaur, dated June 21, 2010 (included as exhibit 10.20 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.23 |
Subscription Agreement between Viral Genetics, Inc. and Myron and Sandi Rosenaur, dated June 28, 2010 (included as exhibit 10.21 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.24 |
Unsecured Convertible Note between Viral Genetics, Inc. and DMBM, dated July 1, 2010 (included as exhibit 10.22 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.25 |
Agreement to issue securities for services - SheehanBoyce, LLC, dated August 1, 2010 (included as exhibit 10.23 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.26 |
Agreement to issue securities for services - Patton Capital Corp., dated August 5, 2010 (included as exhibit 10.24 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.27 |
Subscription Agreement and Warrant Agreement between VG Life Sciences Inc. and Rodney Williams, dated August 17, 2010 (included as exhibit 10.25 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.28 |
Letter Agreement between Viral Genetics, Inc. and T. Joseph Natale, dated September 21, 2010 (included as exhibit 10.26 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.29 |
Letter Agreement between Viral Genetics, Inc. and David Odell, dated September 21, 2010 (included as exhibit 10.27 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.30 |
Settlement and Mutual Release Agreement between Viral Genetics, Inc. and Timothy & Thomas, LLC, Mr. Timothy Wright, and Mr. Thomas Little, dated October 19, 2010 (included as exhibit 10.28 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.31 |
Agreement and Amendment to Convertible Debenture Issued by VG Life Sciences Inc. and held by DMBM Inc., dated February 2013 and effective October 19, 2010. (included as exhibit 10.29 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.32 |
Securities Purchase Agreement between the Viral Genetics, Inc., VG Energy, Inc., and John D. Lefebvre, dated October 20, 2010 (included as exhibit 10.30 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference) |
10.33 |
Assignment between Viral Genetics, Inc. and MetaCytoLytics, Inc., dated October 28, 2010 (included as exhibit 10.31 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.34 |
Assignment between Viral Genetics, Inc. and VG Energy, Inc., dated October 28, 2010 (included as exhibit 10.32 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.35 |
Release and Settlement between Viral Genetics, Inc. and Michael Capizzano, dated December 8, 2010 (included as exhibit 10.33 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.36 |
Amendment to the Settlement and Mutual Release Agreement between Viral Genetics, Inc. and Timothy & Thomas, LLC, Mr. Timothy Wright, and Mr. Thomas Little, dated October 19, 2010, effective December 28 2012 (included as exhibit 10.34 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.37 |
Consulting Agreement between Viral Genetics, Inc. and M. Karen Newell Rogers, effective January 1, 2011 (included as exhibit 10.35 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.38 |
Consulting Agreement between Viral Genetics, Inc. and Robert Berliner, effective January 1, 2011 (included as exhibit 10.37 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.39 |
Consulting Agreement between Viral Genetics, Inc. and Bastiat Consulting Ltd., effective January 1, 2011 (included as exhibit 10.37 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.40 |
Consulting Agreement between Viral Genetics, Inc. and Evan Newell, effective January 1, 2011 (included as exhibit 10.38 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.41 |
Consulting Agreement between Viral Genetics, Inc. and Monica Ord, effective January 1, 2011 (included as exhibit 10.39 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.42 |
Employment Agreement between Viral Genetics, Inc. and Haig Keledjian, effective January 1, 2011 (included as exhibit 10.40 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.43 |
Extension Agreement between Viral Genetics, Inc. and Leslie Z. Benet, effective January 1, 2011 (included as exhibit 10.41 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.44 |
Consulting Agreement between VG Energy, Inc. and Robert Berliner, effective January 1, 2011 (included as exhibit 10.42 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.45 |
Consulting Agreement between VG Energy, Inc. and M. Karen Newell Rogers, effective January 1, 2011 (included as exhibit 10.43 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.46 |
Consulting Agreement between VG Energy, Inc. and Bastiat Consulting Ltd., effective January 1, 2011 (included as exhibit 10.44 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.47 |
Consulting Agreement between VG Energy, Inc. and Monica Ord, effective January 1, 2011 (included as exhibit 10.45 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.48 |
Employment Agreement between VG Energy, Inc. and Haig Keledjian, effective January 1, 2011 (included as exhibit 10.46 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.49 |
Cancellation Agreement between Viral Genetics, Inc. and Imperial Consulting Network, Inc., effective January 1, 2011 (included as exhibit 10.47 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.50 |
Addendum to Consulting Services agreement between Viral Genetics, Inc. and JTL Enterprises Corp., dated January 1, 2011 (included as exhibit 10.48 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.51 |
Consulting Services agreement between Viral Genetics, Inc. and Martin E. Weisberg, dated January 26, 2011 (included as exhibit 10.49 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.52 |
Securities Purchase Agreement between the Company, Michael Binnion, and VG Energy, Inc., dated January 27, 2011 (included as exhibit 10.50 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.53 |
Purchase and Sale Agreement between Viral Genetics, Inc. and John Tynan, dated January 28, 2011 (included as exhibit 10.51 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.54 |
Purchase and Sale Agreement between Viral Genetics, Inc. and David Odell, dated January 31, 2011 (included as exhibit 10.52 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.55 |
Services Agreement between Viral Genetics, Inc. and Combustion Studios Inc., dated effective February 10, 2011 (included as exhibit 10.53 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.56 |
Release and Settlement Agreement between Viral Genetics, Inc. and University of Vermont - DMBM, Inc., dated March 1, 2011 (included as exhibit 10.54 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.57 |
Note Purchase agreement between Viral Genetics, Inc. and DMBM, Inc., dated March 10, 2011 (included as exhibit 10.55 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference) |
10.58 |
Letter Agreement between Viral Genetics, Inc., DMBM, Inc., and Wonderland Capital Corp, dated May 25, 2011 (included as exhibit 10.56 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.59 |
Release and Settlement Agreement dated April 1, 2011 (University of Colorado) - DMBM, Inc. and Viral Genetics, Inc. (included as exhibit 10.57 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.60 |
Amending Agreement to agreement to issue securities for services - Patton Capital Corp., dated June 1, 2011 (included as exhibit 10.58 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.61 |
Amendment to Note Purchase Agreement between Viral Genetics, Inc. and DMBM Inc., dated October 6, 2011 (included as exhibit 10.59 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.62 |
Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated October 25, 2011 (included as exhibit 10.60 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.63 |
Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated November 3, 2011 (included as exhibit 10.61 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.64 |
Investment Advisory Services Agreement between Viral Genetics, Inc. and Research 2.0 Inc., dated December 12, 2011 (included as exhibit 10.62 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.65 |
Extension and Confirmation Agreement between Viral Genetics, Inc. and Richard Gerstner, dated December 15, 2011 (included as exhibit 10.63 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.66 |
Agreement to issue securities for services - Brett Mitchell, dated December 15, 2011 (included as exhibit 10.64 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.67 |
Extension and Confirmation Agreement between Viral Genetics, Inc. and Marshall C. Phelps, dated December 15, 2011 (included as exhibit 10.65 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.68 |
Cancellation Agreement between Viral Genetics, Inc. and Imperial Consulting Network, Inc. dated January 1, 2011 (included as exhibit 10.66 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.69 |
Restated Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated January 27, 2012 (included as exhibit 10.67 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.70 |
Extension and Conversion Agreement between Viral Genetics, Inc. and Martin Eric Weisberg, dated January 30, 2012 (included as exhibit 10.68 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.71 |
Convertible Debenture between Viral Genetics, Inc. and Eric Rosenberg, dated February 1, 2012 (included as exhibit 10.69 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.72 |
Extension of agreement to issue securities for services - Anthony Freda, dated February 6, 2012 (included as exhibit 10.70 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.73 |
Exclusive License Agreement with Texas A&M, dated February 14, 2012 (included as exhibit 10.71 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.74 |
Agreement to issue securities for services - C. Everett Koop, dated February 22, 2012 (included as exhibit 10.72 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.75 |
Restated Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated February 28, 2012 (included as exhibit 10.74 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.76 |
Subscription Agreement between Viral Genetics, Inc. and Mr. Robert Siegel, dated March 1, 2012 (included as exhibit 10.75 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.77 |
Transfer Agreement between Wonderland Capital Corp and DMBM, Inc., dated March 25, 2012 (included as exhibit 10.77 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.78 |
Promissory Note between Viral Genetics, Inc. and DMBM, Inc. dated March 25, 2011 (included as exhibit 10.78 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.79 |
Restated Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated March 30, 2012 (included as exhibit 10.79 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference) |
10.80 |
Convertible Debenture between VG Life Sciences Inc. and JTL Enterprises Corp., dated April 1, 2012 (included as Exhibit 10.80 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.81 |
Restated Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated April 27, 2012 (included as exhibit 10.82 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.82 |
Restated Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated May 24, 2012 (included as exhibit 10.83 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.83 |
Restated Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated June 30, 2012 (included as exhibit 10.84 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.84 |
Convertible Debenture between Viral Genetics, Inc. and Robert Siegel, dated July 31, 2012 (included as exhibit 10.85 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.85 |
Restated Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated July 31, 2012 (included as exhibit 10.86 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.86 |
Convertible Debenture between the Viral Genetics, Inc. and Robert Siegel, dated August 11, 2012 (included as exhibit 10.87 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.87 |
Subscription Agreement between Viral Genetics, Inc. and Best Investments Trust, dated August 12, 2012 (included as exhibit 10.88 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.88 |
Convertible Debenture between Viral Genetics, Inc. and Ken Kopf, dated August 14, 2012 (included as exhibit 10.89 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.89 |
Manufacturing Agreement between VG Energy, Inc. and Eno Research & Consulting Services, LLC, dated September 5, 2012 (included as exhibit 10.91 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.90 |
Convertible Debenture between Viral Genetics, Inc. and Rod Williams, dated September 7, 2012 (included as exhibit 10.92 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference |
10.91 |
Convertible Debenture between Viral Genetics, Inc. and David Odell, dated September 12, 2012 (included as exhibit 10.93 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.92 |
Restated Convertible Debenture between Viral Genetics, Inc., and DMBM Inc., dated September 30, 2012 (included as exhibit 10.94 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.93 |
Convertible Debenture between Viral Genetics, Inc. and Morales Investment Trust, dated October 1, 2012 (included as exhibit 10.95 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.94 |
Convertible Debenture between Viral Genetics, Inc. and Sandra Valentine, dated October 2, 2012 (included as exhibit 10.96 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.95 |
Restated Convertible Debenture between Viral Genetics, Inc., and DMBM Inc., dated October 31, 2012 (included as exhibit 10.97 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.96 |
Restated Convertible Debenture between Viral Genetics, Inc., and DMBM Inc., dated November 30, 2012 (included as exhibit 10.98 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.97 |
Letter Agreement between VG Life Sciences Inc. and DMBM, Inc., dated December 2, 2012 (included as exhibit 10.99 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.98 |
Amended Convertible Debenture between VG Life Sciences Inc. and DMBM, Inc., dated December 13, 2012 (included as exhibit 10.100 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.99 |
Restated Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., dated December 23, 2012 (included as exhibit 10.101 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.100 |
Amendment between VG Life Sciences Inc. and Timothy and Thomas LLC, effective December 28, 2012 (included as exhibit 100.102 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.101 |
Addendum to the Consulting Agreement between VG Life Sciences Inc. and JTL Enterprises Corp, dated December 31, 2012 (included as exhibit 10.103 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.102 |
Convertible Debenture between VG Life Sciences Inc. and JTL Enterprises Corp., dated December 31, 2012 (included as Exhibit 10.102 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.103 |
Amended Convertible Debenture between Viral Genetics, Inc. and DMBM, Inc., effective January 1, 2013 (included as exhibit 10.104 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.104 |
Bluewater Advisory Group Consulting Agreement, dated January 1, 2013 (included as exhibit 10.105 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.105 |
Convertible Note between VG Life Sciences Inc. and Michael Capizzano, dated January 1, 2013 in the amount of $3,535.00 (included as exhibit 10.106 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.106 |
Convertible Note between VG Life Sciences Inc. and Michael Capizzano, dated January 1, 2013 in the amount of $20,300.00 (included as exhibit 10.107 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.107 |
Debenture Purchase Agreement between Timothy & Thomas, LLC and DMBM, Inc. dated February 15, 2013 (included as exhibit 10.108 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.108 |
Memorandum of Understanding between VG Life Sciences Inc. and MedBridge Development, LLC, dated March 18, 2013 (included as exhibit 10.109 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.109 |
Strategic Collaboration Agreement between VG Life Sciences Inc. and MedBridge Development Company, LLC, dated March 18, 2013 (included as exhibit 10.110 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.110 |
Consulting Services Agreement between VG Life Sciences Inc. and JTL Enterprises Corp, dated April 16, 2013 (included as exhibit 10.111 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.111 |
Strategic Alliance Agreement between VG Life Sciences Inc., VG Energy, Inc. and DAK Renewable Research related to the production of corn and subsequent oil studies, dated May 13, 2013 (included as exhibit 10.112 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.112 |
Convertible Debenture between VG Life Sciences Inc. and Eric Rosenberg, dated June 20, 2013 (included as exhibit 10.113 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.113 |
Convertible Debenture between VG Life Sciences Inc. and JTL Enterprises Corp., dated June 30, 2013 (included as Exhibit 10.113 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.114 |
Convertible Promissory Note and Warrant Purchase Agreement between VG Life Sciences Inc. and MedBridge Venture Fund, LLC, dated July 13, 2013 (included as exhibit 10.114 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.115 |
Consulting Services Contacts between VG Life Sciences Inc. and Chrysalis Pharma Partners, LLC, dated July 17, 2013 (included as exhibit 10.127 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.116 |
Release and Settlement between VG Life Sciences Inc. and DMBM, Inc., dated as of July 1, 2013 (included as Exhibit 10.116 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.117 |
Exclusive license agreement with Scott & White Healthcare, dated July 18, 2013 (included as exhibit 10.115 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.118 |
Consulting Agreement between VG Life Sciences Inc. and Richard Tobin, dated August 1, 2013 (included as exhibit 10.128 to the Form 10-12G/A filed September 10, 2014, and incorporated herein by reference). |
10.119 |
Securities issued upon conversion of debt - Rodney Williams, dated August 25, 2013 (included as exhibit 10.116 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.120 |
Convertible Promissory Note and Warrant Purchase Agreement between VG Life Sciences Inc. and DMBM, Inc., dated September 15, 2013 (included as exhibit 10.117 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.121 |
Note Purchase Agreement between Eric Rosenberg and Stephen B. Schott, dated September 30, 2013, for the Convertible Debenture between Viral Genetics Inc. and Eric Rosenberg, dated February 1, 2012 (included as exhibit 10.118 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.122 |
Note Purchase Agreement between Eric Rosenberg and Stephen B. Schott, dated September 30, 2013, for the Convertible Debenture between Viral Genetics, Inc. and Eric Rosenberg, dated June 20, 2013 (included as exhibit 10.119 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.123 |
Restatement and Amendment of Unsecured Note with Best Investment Trust, dated October 1, 2013 (included as exhibit 10.120 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.124 |
Five year 5% convertible note in the amount of $63,675.55, convertible in the amount of the VWAP for the 20 days preceding the date of conversion with Mary Sinanyan, dated October 1, 2013 (included as exhibit 10.121 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.125 |
Consulting Services Agreement between VG Life Sciences Inc. and Gary Musso, PhD, dated October 7, 2013 (included as exhibit 10.131 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.126 |
Consulting Services Agreement between VG Life Sciences Inc. and Catherine Strader, PhD, dated October 29, 2013 (included as exhibit 10.130 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.127 |
Convertible Debenture between VG Life Sciences Inc. and JTL Enterprises Corp., dated December 1, 2013 (included as Exhibit 10.127 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.128 |
Convertible Debenture between VG Life Sciences Inc. and JTL Enterprises Corp., dated December 31, 2013 (included as Exhibit 10.128 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.129 |
2013 Equity Incentive Plan for VG Life Sciences Inc., adopted December 20, 2013, approved by stockholders December 30, 2013 (included as exhibit 10.122 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.130 |
Consulting Agreement between VG Life Sciences Inc. and JTL Enterprises Corp, dated January 1, 2014 (included as exhibit 10.132 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.131 |
Convertible Promissory Note and Warrant Purchase Agreement between VG Life Sciences Inc. and KED Consulting Group LLC, dated as of January 24, 2014 (included as Exhibit 10.131 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.132 |
Convertible Debenture between VG Life Sciences Inc. and JTL Enterprises Corp., dated January 31, 2014 (included as Exhibit 10.132 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.133 |
Tg IT, Inc. d/b/a Anchor Point IT Solutions Memorandum of Understanding, dated February 1, 2014 (included as exhibit 10.123 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.134 |
Convertible Promissory Note and Warrant Purchase Agreement between VG Life Sciences Inc. and KED Consulting Group LLC, dated March 1, 2014 (included as exhibit 10.124 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.135 |
Convertible Promissory Note between VG Life Sciences Inc. and KED Consulting Group, LLC, dated March 1, 2014 (included as exhibit 10.125 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.136 |
Investment Agreement with Dutchess Opportunity Fund II L.P. dated March 28, 2014 (included as exhibit 10.126 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
10.137 |
Convertible Promissory Note and Warrant Purchase Agreement between VG Life Sciences Inc. and Wild Harp Holdings, LLC, dated July 9, 2014 (included as exhibit 10.129 to the Form 10-12G/A filed September 10, 2014, and incorporated herein by reference). |
10.138 |
Convertible Promissory Note and Warrant Purchase Agreement between VG Life Sciences Inc. and DW Odell Company, LLC, dated July 9, 2014 (included as exhibit 10.130 to the Form 10-12G/A filed September 10, 2014, and incorporated herein by reference). |
10.139 |
First Amendment to the Convertible Promissory Note and Warrant Purchase Agreement between VG Life Sciences Inc. and Wild Harp Holdings, LLC, dated July 9, 2014 and made effective August 14, 2014 (included as exhibit 10.131 to the Form 10-12G/A filed September 10, 2014, and incorporated herein by reference). |
10.140 |
First Amendment to the Convertible Promissory Note and Warrant Purchase Agreement between VG Life Sciences Inc. and DW Odell Company, LLC, dated July 9, 2014 and made effective August 14, 2014 (included as exhibit 10.132 to the Form 10-12G/A filed September 10, 2014, and incorporated herein by reference). |
10.141 |
Convertible Promissory Note and Warrant Purchase Agreement between VG Life Sciences Inc. and MedBridge Development Company, LLC, dated August 27, 2014 (included as exhibit 10.133 to the Form 10-12G/A filed October 1, 2014, and incorporated herein by reference). |
10.142 |
Amendment to the Registration Rights Agreement with Dutchess Opportunity Fund II, LP, dated September 4, 2014 (included as exhibit 10.134 to the Form 10-12G/A filed October 1, 2014, and incorporated herein by reference). |
10.143 |
Notice of Conversion between VG Life Sciences Inc. and DMBM Inc., dated September 11, 2014, for conversion under the Note Purchase Agreements dated August 1, 2013, December 1, 2013, and January 31, 2014. (included as Exhibit 10.143 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.144 |
Convertible Promissory Note issued September 16, 2014 to DW Odell Company, LLC (included as exhibit 10.135 to the Form 10-12G/A filed October 1, 2014, and incorporated herein by reference). |
10.145 |
Warrant issued September 16, 2014 to DW Odell Company (included as exhibit 10.136 to the Form 10-12G/A filed October 1, 2014, and incorporated herein by reference). |
10.146 |
Convertible Promissory Note issued September 16, 2014 to Wild Harp Holdings, LLC (included as exhibit 10.137 to the Form 10-12G/A filed October 1, 2014, and incorporated herein by reference). |
10.147 |
Warrant issued September 16, 2014 to Wild Harp Holdings, LLC (included as exhibit 10.138 to the Form 10-12G/A filed October 1, 2014, and incorporated herein by reference) |
10.148 |
Convertible Promissory Note issued October 27, 2014 to DW Odell Company, LLC (included as Exhibit 10.148 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.149 |
Warrant issued October 27, 2014 to DW Odell Company (included as Exhibit 10.149 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.150 |
Convertible Promissory Note issued October 27, 2014 to Wild Harp Holdings, LLC (included as Exhibit 10.150 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
10.151 |
Warrant issued October 27, 2014 to Wild Harp Holdings, LLC (included as Exhibit 10.151 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2014, and incorporated herein by reference). |
23.1* |
Consent of Independent Registered Public Accounting Firm. |
23.2** |
Consent of
Trombly Business Law, PC (included in Exhibit 5.1). |
101.INS*# |
XBRL Instance Document |
101.SCH*# |
XBRL Taxonomy Extension Schema Document |
101.CAL*# |
XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF*# |
XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB*# |
XBRL Taxonomy Extension Label Linkbase Document |
101.PRE*# |
XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith.
** To be filed with amendment.
# Pursuant to Rule 406T of Regulation S-T,
the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes
of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized
in the City of Santa Barbara, State of California, on November 25, 2014.
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VG LIFE SCIENCES INC.
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Date: November 25, 2014 |
By: |
/s/ John Tynan |
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John Tynan
Chief Executive Officer
(Principal Executive Officer) |
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Pursuant to the requirements of the Securities Act of 1933,
this registration statement was signed by the following persons in the capacities and on the dates stated.
Signature |
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Title |
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Date |
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President, Chief Executive Officer and |
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November 25, 2014 |
/s/ John Tynan |
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Director (Principal Executive Officer) |
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John Tynan |
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Chief Financial Officer and Director |
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November 25, 2014 |
/s/ David Odell |
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(Principal Financial Officer, and |
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David Odell |
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Principal Accounting Officer) |
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/s/ Haig Keledjian |
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Chairman of the Board and Director |
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November 25, 2014 |
Haig Keledjian |
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/s/ Arthur Keledjian |
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Director |
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November 25, 2014 |
Arthur Keledjian |
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We hereby consent to the use of our report dated April 30,
2014 in the Registration Statement on Form S-1 (File No. 333-_________) of VG Life Sciences Inc., with respect to
the consolidated financial statements for the years ended December 31, 2013 and 2012 and to the reference to our firm under
the heading “Experts” in the prospectus.
/s/ KWCO, PC
KWCO, PC
Odessa, Texas
November 25, 2014
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